An internal audit found Atlanta Public Schools employees spent nearly $20 million over two years using district-issued purchasing cards with lax oversight.
The audit examined the use of 538 Visa cards held by 284 APS employees, including some principals, secretaries, business managers and central office managers responsible for budgets. Cardholders made 44,226 transactions from May 2016 to May 2018, racking up a total of $19,484,470 buying things such as office supplies, books, equipment and auto parts.
The purchasing card program aims to reduce the use of petty cash funds and streamline the purchase of items needed to run schools and do district business. But the audit found APS was not monitoring transactions “for appropriateness” — leading to policy violations such as cardholders’ failure to keep receipts and get multiple quotes for purchases over $2,001. Auditors also found examples of the purchasing cards being used to buy gift cards.
The report, completed last fall and obtained by The Atlanta Journal-Constitution through an open-records request, uncovered other problems. Cardholders were not required to receive training before using their cards and some got cards even though their applications for the program were not completed, approved and on file. When employees stopped working for APS, the district didn’t always know to cancel their cards.
One cardholder, the executive director of transportation, had no purchase limit on single transactions. APS said that was to pay for emergency maintenance for buses.
The audit noted that “effective controls and adequate management oversight must be present to ensure potentially fraudulent, improper and abusive card usage does not go undetected.”
Government credit cards can be ripe for problems because of the vast number of users and transactions. The potential misuse of City of Atlanta credit cards is part of a federal corruption investigation. AJC and Channel 2 Action News previously reported on the use of city credit cards for Paris hotel stays, steak dinners and political donations. Some of the questionable purchases have since been repaid.
Public agencies that give employees purchasing cards are advised to provide ongoing training, have spending and transaction limits, require record keeping and conduct periodic checks for sales receipts and documentation, according to the Government Finance Officers Association, which represents thousands of public finance officials.
The use of cards by public agencies has become increasingly common since the association adopted those guidelines in 2011, said deputy executive director Mike Mucha. Cards have become “an essential component of procuring goods and services,” leading to a proliferation of cardholders in organizations.
Some APS employees have multiple cards to avoid commingling funds from different budgets.
District spokesman Ian Smith said that the district has adopted all of the audit recommendations and taken extra precautions to improve oversight. That includes doing more monitoring, including random data sampling and requesting documents from cardholders. The district now requires annual training for cardholders and has established single-transaction credit limits and improved the process to notify the district when a cardholder’s employment status changes, he said.
Smith said those changes are in addition to safeguards in place before the audit, such as restricting what kinds of goods and services can be bought using a card.
“That audit has helped us strengthen existing protocols and procedures and mitigate any potential risks,” he said, in a written statement.
School board member Leslie Grant, chairwoman of the audit committee, said the committee will track the district's response to ensure it follows all recommendations.
Several years ago, the accounting and consulting firm PwC, also known as PricewaterhouseCoopers, helped the district identify areas that posed risk and warranted the district taking a closer look. A purchasing card review was among the suggested audits. Grant said misuse of purchasing cards may not pose a huge financial risk but can damage the district’s reputation if someone with easy access to a card makes a bad decision.
Because it involves the public trust, those problems can become bigger issues, she said.
“I am glad that we are putting together a comprehensive program of risk assessment, competent audit processes and the right type of oversight that will be open and accessible to the public,” Grant said.
About the APS purchasing card audit
Review period: May 2016 to May 2018
Number of cards: 538
Number of cardholders: 284
Number of transactions: 44,226
Number of vendors: 20,641
Total dollars spent: $19.48 million