2018 June 26 - Follow Up Report: County of Hawai'i's Purchasing Card (pCard) Program

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Report Highlights Followmup County of Review: HawaiTs Purchasing Card Program Status The County of Hawai "i Department of Finance and the Hawai "i County Council has implemented all six recommendations made in our July 2015 audit report. Background In 2001, the State of Hawai`i's State Procurement Office established the Purchasing Card Program (pCard program) to improve efficiency, flexibility, and convenience when buying goods and services. The County of Hawaii adopted the State's program in 2003 and it is administered by the County's Department of Finance and coordinated with the State Procurement Office. Both state and county policies limit types of purchases paid with a pCard. Purpose The purpose of the audit was to evaluate if the program's internal controls were adequate to reduce the risk of fraud and misuse of purchase cards and to identify potential areas for improvement. The audit also looked at pCard transactions to see if they were in compliance with county and state laws and regulations, County policies, and industry best practice. J June 26, 2018 The County of Hawai`i's pCard program includes several industry best practices. This design has resulted in the program generally being used appropriately. The majority of the departments we reviewed clearly demonstrated the legitimate department purpose of the pCard transactions and the benefit to the County and taxpayers. However, our audit did identify 164 transactions totaling $29,961.41 that did not follow County policy, had a questionable public purpose, and may have violated state law. Furthermore, some transactions were not reimbursed timely. Gaps in existing policy and procedures should be addressed and program oversight could be improved to help prevent and detect any future inappropriate transactions. We identified six recommendations for management to increase internal controls for County -issued purchasing cards: • Updating the County Code; • Treating all employees and departments fairly and equitably; • Updating pCard Policy and Procedures; • Strengthening monitoring practices to ensure expenditures are for a legitimate department purpose and demonstrate a clear benefit to the County and taxpayers; • Providing on-going training to departments; and • Using available technology from the card issuer to improve monitoring practices.