Control of card system sound, audit report says

An audit report says the way the Dunedin City Council controls its purchase-card system is "sound" but staff need more direction on what they can use their cards for.

The report also says managers should be reminded of the importance of reviewing staff use of the cards and the council should look at new software to help monitor it.

Auditor WHK was asked to review how the council controlled its Bank of New Zealand purchase-card system in the wake of an inquiry into staff card use.

That inquiry found council staff charged more than $4.8 million in 26,000 transactions to the council's 206 civic purchase cards over three years.

The top 36 managers and four personal assistants charged $534,500 to council cards and about $100,000 was spent on food, coffee, entertainment and drinking.

The inquiry also found the council had about one card for every three full-time equivalent positions, one of the highest card-to-staff ratios in the South Island.

The council asked WHK to identify the key risks of the system, assess how the council controlled the risks, and review what it did after a review in 2005.

It was not asked to comment on the number of staff who had purchase cards.

The audit found the council's overall control of the purchase-card system was "sound" and the process allowed a range of reports to be generated to help keep an eye on spending.

The cards were supposed to be used for "necessary business expenditure" but the council's draft sensitive-expenditure policy did not say what that sort of spending could be.

It also did not say what could be deemed "hospitality expenditure" - a "sensitive" expenditure category that also had opportunities for personal benefit.

The audit said the best safeguard against improper use of the cards was the review and approval of transactions by managers. Managers should be reminded of the importance of diligently reviewing transaction reports.

BNZ had replaced its purchase-card software with an online version with new functions, and the audit report recommended the council investigate it.

It noted council managers received reports detailing spending at "prohibited" businesses and giving transaction information to help their assessment.

Meanwhile, transaction limits would be lowered so more transactions would be reported in the "transactions exceeding limits" report.

Refresher courses on appropriate card use were also planned, the report noted.

Council chief executive Jim Harland could not be contacted yesterday, but he told the council's finance, strategy, and development committee on Monday the recommendations had, "in the main", been implemented.

He told councillors staff were talking to the BNZ about its new reporting regime but the extra cost of $25,000 a year was "questionable in terms of benefit".

He was confident the card-based system was more efficient than a paper-based invoice system and, in response to a question from Cr Lee Vandervis, that there was no spending "culture" at the council that needed to be addressed.

Cr Jinty MacTavish asked why the audit team was not asked to comment on how many people used the cards. Mr Harland said there was no established, pan-councils "best practice" to measure it.

Cr Teresa Stevenson said the hospitality spending could boost business if staff "circulated" to more cafes. Mr Harland said any cafe visits had to be based on a legitimate, council-focused need.

Cr Stevenson suggested staff who did not use their cards as much as others could be rewarded with a muffin shout.

• WHK was separately engaged to help analyse a random sample of 650 transactions made by council staff over the past three years. That report was expected before the end of the year.



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