Fiscal Management@UGA

Petty Cash vs. P-Cards Fiscal Management@UGA

Goals • History of Petty Cash • Understand Issues and Concerns of Petty Cash • Future of Petty Cash Accounts • History of P-Card • Migrating to P-Card • Understanding P-Card Policies and Procedures • How to Obtain a P-Card

History of Petty Cash • General Purpose • Routine “small purchases” • Single item must be under $99.99 • Limit of $500 from one vendor within consecutive days • Items that cannot be invoiced to UGA • Annual purchase volume • Should be equal to no less than 10 times the size of the advance • Funds should be reimbursed at least on a semi-monthly basis for active funds

History of Petty Cash – Cont. • Accounts Payable payment process was not as efficient • P-Card did not exist • Technology lacking

Understand Issues and Concerns of Petty Cash • Fraud • UGA employee stole more than $21,000 from a University of Georgia petty cash fund • Fraudulent receipts for purchases • Former accountant in the College of Education dean’s office is charged with forgery and theft for allegedly stealing more than $6,700 Note: Conviction for either first-degree forgery or theft by conversion of more than $500 can result in a sentence of up to 10 years in prison under Georgia Law.

Understand Issues and Concerns of Petty Cash – Cont. • Fraud – Cont. • Petty cash custodian currently under investigation for fraudulent invoices, possible commingling of UGA funds with personal funds • Audit report and investigation finds that the employee routinely ignored petty cash spending limits

Understand Issues and Concerns of Petty Cash – Cont. UGA Fraud Policy www.uga.edu/audit/IAD_fraud_policy.htm Purpose – The University of Georgia is committed to maintaining the highest professional standards in its administrative operations, promoting ethical practices among its faculty and staff, and ensuring a level of accountability appropriate for a public institution. This policy and related procedures for the investigation, reporting and resolution of fiscal irregularities are established as an integral part of the University’s efforts to ensure that all faculty and staff conduct themselves in accordance with high ethical standards and that university performance with respect to these matters is consistently applied. Administrators, faculty and staff who know or suspect that other employees are engaged in theft, fraud, embezzlement, fiscal misconduct or violation of University financial polices have a responsibility to report it to their supervisor and the Controller’s Office.

Understand Issues and Concerns of Petty Cash – Cont. • Liability to the Custodian • Custodians are personally responsible for all bank account overdraft fees • Currently one petty cash account at UGA has over $2,000 in overdraft fees • Propriety of expenditures • Prompt cooperation with Internal Audit Division • Reporting of Overages and Shortages to Bursar’s Office

Understand Issues and Concerns of Petty Cash – Cont. • Liability to the University • External Fraud • Debit card compromised on the internet for petty cash account

Understand Issues and Concerns of Petty Cash – Cont. • Audit Findings • “Our review of the petty cash account disclosed that the custodian was not properly trained in handling petty cash as defined in the university policy to ensure that funds are monitored and controlled”. • “Bank accounts that are not reconciled monthly can be overdrawn and fraudulently charged without the knowledge of the custodian”. • “The Department should consider discontinuing the practice of issuing pre-signed blank checks”.

Understand Issues and Concerns of Petty Cash – Cont. • Audit Findings – cont. • “There is no independent verification of the petty cash fund balance or review of the bank reconciliation”. • “We recommend that the balance per the bank statement be reconciled to the check register balance each month”. • “We recommend that the department improve petty cash fund practices by following the Bursar’s guidelines. The reconciliation of the fund and all supporting documentation should be submitted to the Bursar’s Office by the closing date thereby terminating the responsibility of the custodian”.

Understand Issues and Concerns of Petty Cash – Cont. • Audit Findings • “We noted that the petty cash fund for “X” department was not utilized since March 2003. We recommend that the Department contact the Bursar’s Office and implement procedures to close the petty cash fund”. • “Since the fund appears to be underutilized, we recommend that the funds be reduced”. • “The Department does not process reimbursement requests timely”. • “Several receipts for expenditures were not retained”.

Future of Petty Cash Accounts • Review general purpose petty cash funds • Determine necessity • Discuss alternatives to petty cash • Close out begins FY2007 • Review petty cash funds used for research participation • Centralized function for stored value cards • Review special purpose petty cash funds • Review studies abroad petty cash funds

History of P-Card Available in Georgia since July, 1996 State wide contract with Bank of America Sales tax exempt WORKS on-line reconciliation Used at UGA since March, 2000

History of UGA P-Card Use *FY06 is thru 3/15/06

Migrating to P-Card • Reduce Liability • Protection from Bank of America • Lost Cards • Fraud and Misuse • Allows better tracking of expenditures • Web based system shows all transactions • Enables better reporting for UGA • Improves accountability • Broadens oversight • Improved audit capabilities

Migrating to P-Card – cont. • Broader Use • Increased spending threshold • More methods of use • Purchase of non inventoried equipment allowed

Understanding P-Card Policies and Procedures • Card issued to an individual not department • Ability for individualized set-up • Default account • Single transaction/monthly limit • Merchant category codes • Allowable Uses

Understanding P-Card Policies and Procedures – Cont. • Restrictions on Use • State Restrictions • Cash Advances • Travel and Entertainment Expenses • Motor Vehicle Charges • Professional Services • Personal Purchases • Additional UGA Restrictions • Inventoried Equipment • Lab Chemicals Governed by Laboratory Safety Manual • Memberships • Construction • Radioactive and Hazardous Material • Wireless Communication Devices • Departmental Restrictions

Understanding P-Card Policies and Procedures – Cont. • Reconciliation of Charges • Departmental Roles • Card Holder • Card Holder cannot act in any of the following roles • Coordinator • Propriety Reviewer • WORKS Manager • WORKS Proxy Reconciler One person can fulfill the above 4 roles or they can be multiple individuals.

P-Card/Areas of Caution • Receipts missing or receipt does not adequately describe the items purchased. • Original receipts/documents not in the possession of the coordinator. • Unallowable expense (i.e. electronic equipment costing more than $500 or used for meals). • Active cards in the name of employees no longer with department. • Paying sales tax. • Split purchases • This applies to both P-card and Petty Cash

Split purchases • FY 2005 State Audit Finding – Split Purchases on P-cards • State audit testing disclosed instances where departments split large P-card purchases into two transactions. While this may not be an intentional tactic to avoid purchasing “red-tape”, in the absence of explanation, these split purchases result in audit points and findings which conclude that UGA does not comply with purchasing policy.

Split purchases – cont. • Splitting Orders No single purchase shall exceed $4,999. The practice of splitting a large order into two or more orders, as well as purchasing the same items from two or more vendors may well be considered an attempt to evade the limitations of the P-card and could lead to revocation of the individual’s card. Source: UGA Procurement Card Manual

Split purchases – cont. • Department “A” made three separate P-card purchases from the BD Supply Co. on 3/31/2005 • $3,164.00 • $3,283.00 • $4,525.00 Total purchased from BD Supply Co. on 3/31/2005 was $10,972

How to Obtain a P-Card • Complete P-Card request form http://www.busfin.uga.edu/forms/pcard_reqform.pdf • Attend Mandatory Training Class • Department Head and all individuals holding a role must attend • Complete Employee Agreement Form http://www.busfin.uga.edu/forms/employeeagreement.pdf

More P-Card Information • Additional Information on P-Card use and the WORKS program can be found at: http://www.busfin.uga.edu/procurement/p_card.html

Petty Cash vs. P-Cards Remember: Fiscal Management @ UGA is our collective responsibility. http://www.busfin.uga.edu/controller/fiscal.html

Petty Cash vs. P-Cards Questions?

Fiscal Management@UGA