City audit finds issues in purchase card use
Report includes 14 recommendations
An illegible receipt from a Rio Rancho brewery was among the transactions red-flagged during a performance audit examining the city of Albuquerque’s purchasing usage, prompting auditors to say the city should consider revising policy to require that cardholders “obtain and provide a legible itemized receipt for every transaction.”
All told, the city’s Office of Internal Audit made 14 recommendations for improvement in the report issued last month. The city has begun implementing the changes and should complete them by January, a top finance official said Wednesday.
OIA tested 107 purchasing card (P-Card) transactions and 63 travel card (T-Card) transactions from the last two fiscal years. Every T-Card purchase complied with city policy, the report said, but auditors identified some issues with P-Card activity.
City employees, for example, incorrectly paid gross receipts tax on 28 transactions, according to the report. The city is exempt from paying GRT on goods.
Auditors also found no available receipt for 11 purchases, and that eight transactions did not get the required department director approval.
In addition, OIA found that city staff had not completed — or could not provide proof they completed — reconciliations for nearly half of the P-Card transactions reviewed. Reconciliation involves uploading all receipts and invoices and making sure they align with a weekly transaction report, plus verifying the goods have been received.
Over a third of the transactions reviewed involved food — including off-site meals for employees or refreshments at city meetings — and 16 of those 41 did not get necessary pre-approval. Only 33 had an associated receipt, but 10 of those receipts were not itemized.
“For instance, a P-Card purchase was made at a Rio Rancho brewery in the amount of $121, for which pre-approval was not obtained from either the Department Director or (the city’s chief administrative officer). Additionally, the business justification was for a seasonal event held in Rio Rancho and the itemized receipt provided was illegible,” the report states.
The city’s P-Card manual requires receipts and supporting documentation, but “purchasing will clarify the need for itemized receipts,” the city’s Department of Finance and Administration wrote in response to the auditors’ recommendation.
DFAS Director Renée Martinez said in emailed responses to Journal questions that the audit showed fewer findings than other recent audits but efforts already are underway to act on the results.
“There were no findings of fraud and with additional training and guidance for employees on the reconciliation process, our Department of Finance and Administration expects to see improved compliance,” she wrote.
Nearly 400 employees across 35 city departments had P-cards — which are credit-limited charge cards — in fiscal year 2020, the report states. They spent a combined $3.9 million in 2020 on 11,895 total transactions.
A spokeswoman for Mayor Tim Keller — the former New Mexico State Auditor — said the administration welcomes opportunities to improve.
“We’re always concerned, and take audit findings very seriously as we continue to make improvements to entrenched challenges,” spokeswoman Ava Montoya said in an email. “We are proactively working to better procedures, as well as implementing changes based on the recommendations in the audit.”