2015-01 Performance Audit Report: County of Hawai'i's Purchasing Card (pCard) Program

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Introduction The Office of the Legislative Auditor conducted this performance audit of the County's purchasing card program pursuant to Section 3-18 of the Hawaii County Charter, which outlines the Office of the Legislative Auditor's primary duties. Performance audits typically examine the effectiveness, economy, or efficiency of a government program. They can include analyzing the services of an entire department or activity, identifying possible cost savings, identifying the outcomes achieved by a program, or comparing actual department practices against the practices called for in law or policy. Our objective in performance auditing is to improve public services provided by county government. We do this by recommending specific actions that will address the issues we raise and by providing valuable information to the public, the administration, program leadership, the Hawai"i County Council, and the Mayor. A performance audit of the County's purchasing card program was included in the fiscal year 2014-2015 annual audit plan based on the results of our countywide risk assessment. There are inherent risks associated with the implementation of a purchasing card system. When internal controls are not functioning as designed, the risks related to the program increase, thereby increasing the risk exposure to the County. The potential for fraudulent use is one such inherent risk. On a national level, fraudulent use of purchasing cards and fraudulent claims for travel and entertainment expenses rank among the most commonly occurring types of employee fraud. Due to this potential risk, the Office of the Legislative Auditor determined that a thorough examination of purchasing card policies, procedures, and processes was warranted. Purchasing Card Program :: Introduction 11