Internal Audit Report - Acquisition Cards
January 2006
Executive Summary
As part of the Internal Audit Plan for 2005 - 2006, the Internal Audit branch conducted an internal audit of the Acquisition Card usage within CIHR.
In carrying-out the audit, multiple sources of information were used to support the findings and conclusions. These included a thorough review of the relevant policies, interviews and consultations with relevant staff.
In our professional judgment, the audit procedures followed and the evidence gathered are appropriate and sufficient to provide reasonable assurance on the accuracy of the findings of this report.
The audit was conducted in accordance with the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing, the Treasury Board’s Policy on Internal Audit and the CIHR’s Internal Audit Policy.
Key Observations- The management framework established by Finance and Administration to mitigate risks associated with the acquisition cards program is not consistently followed. In addition, the monitoring of the acquisition card activities is weak.
- The verification of monthly statements and their reconciliation to purchases by cardholders is weak. The audit team found many cases of incomplete reconciliations, missing supporting documentation and expenses not accurately reflected in the accounting system.
- Acquisition Cards were often used without any evidence on file that pre-authorizations were obtained, as required by CIHR’s Financial Policy for the Use of Acquisition Cards, to pay for items which the latter restricts, or for items which require the prior authorization of the Responsibility Centre Manager.
- The audit team found many instances of non-compliance with CIHR’s Financial Policy for the Use of Acquisition Cards and the Treasury Board Policy on Acquisition Cards.
- The number of cards in circulation seems high in comparison with the usage rate.
Key Recommendations
R-1 Finance and Administration should ensure that internal controls with regards to acquisition cards are effectively applied across the organization. Also, the acquisition card activity should be monitored.
R-2 As stated in CIHR’s Financial Policy for the Use of Acquisition Cards, accountability for the use of cards rests with the Responsibility Centre Manager. Consequently, mandatory training on financial responsibilities should be provided to all Responsibility Center Managers on an annual basis. Mandatory training should also be provided to cardholders on an ongoing basis.
Table of Contents
- Executive Summary
1. Objectives, Scope, Approach and Criteria
2. Background
3. Key Risk Factors
4. Audit Observations
5. Recommendations
Appendix 1 – Action Plan
1. Objectives, Scope, Approach and Criteria
1.1 Objectives
The objectives of this audit were:
- To assess the adequacy of the existing management framework for the use of acquisition cards; and
- To assess the level of compliance with CIHR’s policy and procedures for the administration, accounting and monitoring of acquisition cards, and with the Acquisition Card Policy of the Treasury Board of Canada.
1.2 Scope
The scope of the audit covered all aspects related to the use of acquisition cards at CIHR for the period from April 1, 2004 to August 31, 2005 including the management of acquisition cards and the process in place for approval of cards as well as the adequacy of the controls in place that are being exercised over the use of acquisition cards such as spending limits and supervisory review.
1.3 Audit Approach
Out of a total of 1686 transactions processed through the Bank of Montreal Acquisition cards during the period from April 1, 2004 to August 31, 2005 for a total of $412,278.21, a sample of 542 transactions amounting to $238,222.19 was selected. The sample was based on a combination of judgment and random sample selection method. Consideration was given to the amount of individual transactions, nature of transactions and the nature of the business the transaction was made from.
Table 1 – Sample Size
|
Total number of transactions (April 2004 to August 2005) |
Total amount of acquisition card transactions |
Number of transactions used for audit |
Amount of sample |
|
1686 |
$412,278.21 |
542 |
$238,222.19 |
|
100% |
100% |
32% |
58% |
The following steps were followed in carrying-out the audit:
- Review of Treasury Board Policy and directives as they relate to the use of acquisition cards;
- Examination of CIHR’s Financial Policy for the Use of Acquisition Cards and related procedures;
- Interviews with selected Finance and Administration staff and selected cardholders; and
- Analysis of procedures being followed in using the acquisition cards, reconciling monthly purchases, recording to the General Ledger, as well as, the usage of cards.
1.4 Audit Criteria
Criteria were established based on the Financial Policy for the Use of Acquisition Cards issued by CIHR and the Policy on Acquisition Cards and Acquisition Cards Program – Management Guide issued by the Treasury Board of Canada:
- Existence and availability of complete, specific, clear and properly documented policies and procedures.
- Consistent application of CIHR’s policies and guidelines, where appropriate, and of the Treasury Board of Canada’s Policy on Acquisition Cards.
- Clearly defined roles and responsibilities.
- Training programs that promote awareness of employees and managers of their responsibilities and obligations.
- Monitoring and reporting processes that allow for the analysis of card use.
- A risk management process that identifies and actions inappropriate use of acquisition cards.
- Existence of a designated coordinator for the issuing, cancelling and controlling of the acquisition cards as well as reconciling purchases to monthly statements.
- Proper authorization of acquisition cards by the Responsibility Centre Manager with reasonable credit limits and vendor restrictions.
- Cards are placed in a secure location and used only as permitted.
- Valid purchases supported by detailed receipts and accurate recording in financial systems.
- Inventory items are recorded to inventory.
- Tasks relating to acquisition cards are performed at different levels of authority as appropriate.
2. Background
Acquisition cards were approved for use in government departments and agencies in late 1991 with the purpose of reducing and simplifying the process for the procurement of goods and services and reducing or eliminating local purchase orders and petty cash funds. As at February 2004, more than 35,000 cards were in use across the federal government and the monthly purchasing volume in 2002 was $560 million1.
CIHR uses the Bank of Montreal as its acquisition card provider. Acquisition cards allow employees to charge purchases for which full payment is made by CIHR to the card provider as soon as the statement becomes available. There is no fee for the cards and conditional discounts can be obtained in exchange for faster and/or electronic settlement.
Acquisition Cards Administration
As stipulated by CIHR’s Financial Policy for the Use of Acquisition Cards, an Acquisition Card Coordinator has been designated by the Manager, Corporate Financial Services with the primary responsibility of managing the acquisition cards. The duties of this function as specified in the role profile are to maintain the government acquisition card system, issue and cancel cards, monitor expenses and train employees to ensure appropriate use of cards. The role of Acquisition Card Coordinator is currently being assumed, at CIHR, by the Senior Accounting Operations Officer.
Acquisition Cards Framework
The use of acquisition cards is subject to the following documents:
- Financial Policy for the use of Acquisition Cards issued in March 2003 by CIHR as well as a list of Frequently Asked Questions to support the policy; and
- The Treasury Board Policy on Acquisition Cards as well as the Acquisition Cards Program – Management Guide.
Acquisition Card Activity
As of August 31, 2005, 59 CIHR employees were in possession of 61 acquisition cards with limits ranging from $500 to $25,000 for a total monthly available credit of $396,000. Two employees hold two cards each, to pay for purchases for two responsibility centres.
Table 2 – Distribution of Credit Limits
|
Credit Limit |
Number of Cards |
Percentage |
|
$500 - $3,000 |
10 |
16.4 |
|
$5,000 - $7,000 |
39 |
64 |
|
$10,000 - $15,000 |
10 |
16.4 |
|
$25,000 |
2 |
3.2 |
|
Total |
61 |
100 |
3. Key Risk Factors
The increasing use of acquisition cards has had an impact on traditional paper-based control frameworks. As a result, there are concerns about increased risks of error or abuse that might go undetected. The potential risks include:
- unauthorized possession of card due to weak controls at the time of issue;
- unauthorized purchases as defined in the Financial Policy for the Use of Acquisition Cards e.g. travel, automobile supplies, attractive items (as defined in the policy, see section 4.2.2), etc. due to lack of training and/ or account verification;
- misuse of card after expiry of entitlement or in the event of its loss due to inappropriate or weak monitoring process;
- payment splitting to circumvent the credit limit for individual acquisition card transactions due to incomplete policies, insufficient training and weak monitoring of card usage;
- incorrect classification of expenses due to limited and weak monitoring;
- payment for goods which may never have been received by the organization due to weak and insufficient internal controls; and
- multiple reimbursements due to the lack of monitoring or insufficient controls.
4. Audit Observations
4.1 Management Control Framework
4.1.1 Risk Mitigation and Monitoring
Although Finance and Administration has established a control framework to mitigate risks associated with the acquisition cards program, it is not consistently followed. In addition, the monitoring of the acquisition card activities is weak.
The current monitoring process is limited to a visual scanning of individual monthly card statement by the Acquisition Card Coordinator. Comments on unusual transactions (travel related or multiple transactions with the same supplier) are forwarded to the Accounting Operations Officer, without consideration of:
- completeness of information and documentation of monthly purchases;
- follow-up with the Accounting Operations Officer to ensure that questionable expenses have been investigated, resolved and documented; and
- usage rate of cards.
As a result, the opportunity to mitigate risks is weak, cases of non-compliance may not always be flagged, purchases may be made and payments processed without being challenged. These cases are further discussed in the compliance section of this report.
4.1.2 Acquisition Card Reconciliation
The acquisition card reconciliations are in many cases incomplete, lack supporting documentation and are not processed on a timely basis.
On a monthly basis, the Acquisition Card Coordinator downloads individual statements (for the 61 cards in circulation) from the Bank of Montreal Website for processing. Outstanding balances are paid individually and statements are sent to cardholders for the reconciliation and verification of their purchases for the month. Records of purchases made with acquisition cards must be kept for audit trail purposes and to provide support documents for reconciliation purposes and account verification requirements. Upon the receipt of reconciliations, Finance and Administration process the expenses in the accounting system.
Supporting Documentation
For the sample reviewed, the quality of acquisition card documentation in cardholders’ files was weak. The audit team noted instances of files not being well organized, supporting invoices not on hand and instances where other supporting documentation such as pre-authorizations was not retained, making it difficult to verify certain transactions. On the other hand, some examples of good documentation practices were noted with a few cardholders.
Of the acquisition card transactions sampled, we found 87 purchases ($27,380) out of a total of 542, or 16% that were not supported by an invoice, 10 (2%) that were supported by a credit card slip or a cash receipt with no details on the purchase and 34 (6%) that were supported by either a registration form, subscription form, registration confirmation or a copy of an application mainly printed from the supplier’s website. Cardholders explained that if orders are placed over the Internet, the vendor would not always transmit an invoice.
Even though appropriate and complete transaction documentation was not available, Responsibility Centre Managers approved transactions.
The absence of complete documentation including original invoices increases the risk of loss due to error or fraud.
Completeness of Reconciliations
Despite the lack of appropriate supporting documentation, the reconciliations were processed; in addition, other types of errors were identified, such as the following:
- one purchase of $3,135.10 was only supported by an invoice of $2,362.56 which had already been paid by a different acquisition card; and
- one invoice appeared to have been paid twice; due to the credit limit being exceeded on one card, an invoice of $4,173 was split into 2 equal payments and charged to two different cards; only one charge had an invoice attached to it.
These instances did not seem to trigger the need to further investigate the charge. The audit team obtained copies of the invoices during the audit directly from the cardholders to verify that all payments were legitimate.
- in July 2004, 4 amounts of $750 each were charged against one acquisition card, were not recognized by the cardholder, and were posted in the accounting system as overpayments to be received. In April 2005, the entry was reversed and the amount of $3,000 was posted to Conference fees. No supporting documentation was found on file;
- in October 2004, 2 expenses totaling $541.57 were not recognized by the cardholder. They were cleared in the accounting system in December 2004, however, no justification was found on file to support the entries;
- posting to the General Ledger (GL) is not done based on the actual invoice; instead, it is based on the card register downloaded from the Bank of Montreal where all amounts charged within Canada are deducted by 7%. Therefore, when the Provincial Sales Tax (PST) or other charges are paid, these are not correctly posted to the proper General Ledger; and
- the responsibility for ensuring that proper financial coding is applied to purchases rests with the cardholder; however, the code applied by the cardholder is not always accurate. In the audit sample, 41 entries (7.5%) were made to the wrong financial code; for the purchases where no invoice was provided (87 or 16%), we were unable to verify the actual expense, and consequently the financial code.
Timeliness of Financial Coding
The verification of monthly statements by cardholders ensures the goods or services purchased with the acquisition card have been properly invoiced and appropriately paid by Finance and Administration. This allows the Responsibility Centre Manager to conduct contract performance and price verification in accordance with section 34 of the Financial Administration Act. When the verification is not done shortly after the payment, the effectiveness of the process is diminished, and errors may not be detected on a timely basis.
The review of the sampled transactions revealed that reconciliations are not always done on a timely basis. Out of the 542 transactions verified, 95 transactions (or 18%) were reconciled and posted to the accounting system more than two months after the payment date.
4.1.3 Number and Limit of Cards
The number of cards in circulation as well as certain credit limits seem high in comparison with the current spending patterns.
Employees in various positions within CIHR have been issued acquisition cards for the purchase of low-dollar value goods and services. Discussions with the Acquisition Card Coordinator revealed that the card inactivity is not being monitored. As a means of determining the extent of card inactivity, an analysis of acquisition card activity was performed for the 12-month period from September 1, 2004 to August 31, 2005. The analysis indicated the following:
Table 3 – Number of Inactive Cards
|
Period of Inactivity |
Number of Cards |
Total Monthly Available Credit |
|
For the last 3 months |
12 |
$72,500 |
|
For the last 6 months |
8 |
$57,500 |
|
For the last 12 months |
3 |
$32,000 |
Table 4 below provides information, for the period from September 2004 to August 2005, about the distribution of acquisition cards and their usage rate. On average, there is an acquisition card for every 5 employees and the percentage of utilization of credit limit is 6%.
From discussions with cardholders and a review of cardholder files, we found that some cardholders are low volume, low dollar users. A high number of cardholders increases the risk of loss or misappropriation.
Table 4 – Distribution of Cards and Usage
| Portfolio | Available Monthly Credit Limit | Number of Cards | Average Monthly Credit Limit per Card | Number of Employees | Number of Employees per Card | Total Purchases Sep 04 to Aug 05 | Average Monthly Usage | % of Utilization of Credit Limit |
| Ethics Office |
$5,000 |
1 |
$5,000 |
11 |
11 |
$12,563 |
$1,047 |
21% |
| Secretariat on Research Ethics |
$7,000 |
1 |
$7,000 |
5 |
5 |
$14,758 |
$1,230 |
18% |
| Corporate Affairs |
$60,000 |
12 |
$5,000 |
53 |
4.4 |
$55,790 |
$4,649 |
9% |
| Service & Operations |
$175,500 |
18 |
$9,750 |
95 |
5.3 |
$135,358 |
$11,280 |
6% |
| Research |
$106,000 |
20 |
$5,300 |
129 |
6.45 |
$56,557 |
$4,713 |
4% |
| Institutes (Ottawa-based Institute Staff) |
$42,500 |
9 |
$4,722 |
21 |
2.3 |
$20,138 |
$1,678 |
4% |
| Total |
$396,000 |
61 |
$6,492 |
314 |
5.1 |
$295,16 4 |
$24,597 |
6% |
Provincial Sales Tax
Treasury Board and CIHR policies require that provincial sales taxes (PST) not be paid by the federal government for purchases. Our testing found that in 10 % of the sample, PST was charged on purchases made on the Acquisition Cards, for an approximate $707 for transactions totaling $10,313. There was no evidence on files that Finance and Administration question the payment of PST with cardholders for the purpose of recovering the amounts paid and minimizing its occurrence.
Sections 5(e) and 5(f) of the Financial Policy for the Use of Acquisition Cards state that the cardholder must ensure that the merchant does not charge provincial sales tax except as a component part of Harmonized Sales Tax and advise the merchant of CIHR’s Provincial Sales Tax exemption number. During interviews with cardholders, they noted that in some cases they did not have the PST number and in others that the tax-exempt status was not honored by the merchant, although “PST exempt” is printed on all acquisition cards.
Card Issuer Rebate
Rebates are available to CIHR based on both the volume of purchasing and the speed with which the outstanding balance is paid to the Bank of Montreal. Currently, the acquisition card balances are not being paid with enough speed to maximize the rebate payable to the Agency.
Acquisition card purchases during the 2004 calendar year totaled $309,159.56. The rebate obtained based on the current rates with the Bank of Montreal was $1,468.51.
Discussions with the Acquisition Card Coordinator revealed that in order to pay outstanding balances sooner and maximize the rebate payable to CIHR, the centralized billing method should be adopted. Therefore, all individual statements would be billed to CIHR in one single amount. If payment is made within the 7-day grace period, the rebate is increased to 0.75% on the purchase volume, and if made within 4 days of the billing, the rebate would be 0.79%. Based on the 2004 volume, the rebate would increase to $2,442.36. The Acquisition Card Coordinator is currently investigating the possibility to change the billing method.
Although moveable goods (durable assets that are not real property) purchased through the Administration section are being inventoried in AMMIS (Automated Materiel Management Information System), CIHR does not have a Material Management policy.
As a result of the lack of orientation on moveable goods in the Financial Policy on the use of Acquisition Cards (see 4.2.5), purchases made using acquisition cards are not always reported to the Accommodation & Facilities Officer for recording in the inventory control system, thereby increasing the risk of losing such items.
The review of acquisition cards purchases indicated that cards were used in many instances to acquire and pay for moveable goods and attractive items with no indication that these items had been reported for inclusion in the inventory. The purchase of a digital camera for a value of $2,412.78 was reported for inclusion in the inventory only when the reconciliation of monthly purchases was submitted to Finance and Administration, and after the card coordinator had questioned the purchase.
According to the Treasury Board Acquisition Policy requirements, Departments must ensure that an acquisition card purchase is recorded in the inventory management system if the value of the item exceeds the department's threshold value for inventory purposes which presently does not exist for CIHR.
4.2 Compliance with Policies And Procedures
The lack of formal monitoring and inadequate segregation of duties between staff who are involved in the acquisition card purchase process and those involved in the approval of the acquisition card payments create unnecessary risk for CIHR.
The Treasury Board Secretariat’s Acquisition Cards Program - Management Guide indicates that, although acquisition cards are used for low-risk dollar transactions, the basic principle of segregation of duties must be recognized. The Financial Administration Act (FAA) also dictates that no person shall exercise spending authority (section 34) with respect to a payment from which he or she can benefit, directly or indirectly. This becomes important if the cardholder happens to be the manager who exercises authority for execution of the contract pursuant to section 34 of the Financial Administration Act.
The review of the sample of card transactions revealed the following:
- for a period of 4 consecutive months between November 2004 and February 2005, the monthly reconciliation of card purchases to monthly statements was signed by the cardholder with no evidence of managerial review. The absence of this critical control increases the likelihood of improper purchases being made;
- the Accounting Operations Officer is a cardholder. Purchases made on the card are properly authorized for section 34. However, expenses are entered in the accounting system by the cardholder. According to the Director, Finance and Administration, this situation has since been rectified; and
- there was no evidence in the acquisition card files that Responsibility Centre Managers have obtained a pre-approval from a higher level of authority for expenses incurred by cardholders on their behalf (such as conference fees, association memberships) and for which they have provided the Section 34 approval.
4.2.2 Eligibility of Expenditures
The Financial Policy on the Use of Acquisition Cards has set some restrictions on the use of acquisition cards. These include travel-related expenses; personal use purchases; vehicle operating and maintenance expenses; and attractive items. Attractive items are goods of an electronic nature. Examples of attractive items include but are not limited to the following:
- cellular phones and accessories;
- personal Digital Assistants and accessories;
- computer Hardware and accessories; and
- computer Software.
In addition to the above restrictions, some eligible items such as furniture, hospitality and conference fees require a pre-authorization prior to payment by way of acquisition card as stipulated in existing policies at CIHR.
The review of the audit sample uncovered several cases where acquisition cards were used for purchase of restricted items as showed in Table 5.
Table 5 - Restricted Items Purchases
| Category | Description |
Number of Occurrences |
Amount |
| Conference fees not pre-authorized | Various conferences |
66 |
$34,352 |
| Attractive Items | Digital Camera, camera chargers, camera cases, cell phone, cell phone headset, 2 stand alone Personal Computers, label makers, telephone headsets and amplifiers, printers, blackberries (IT) and travel chargers, headphones, software |
22 |
$26,704 |
| Hospitality fees not pre-authorized | Various functions |
6 |
$1,776 |
| Travel Related | Hotel Reservations, seat change |
7 |
$1,309 |
| Other | Subscription to the Guardian newspaper sent directly to home address of 2 employees working for the same unit |
2 |
$342 |
| Total |
103 |
$64,483.00 | |
| Percentage of the sample |
19% |
27% | |
- Blackberries, travel chargers and personal computers as well as most software purchases were made by the Client Services and Desktop Support and the Software and Infrastructure Management units. During the interviews with these units’ managers, they explained that in many cases, software purchases are done through the internet and the only option for payment is by way of credit card;
- discussions with cardholders revealed that headsets and amplifiers were purchased from the Office Supplies Catalogue and were not thought to be attractive items.
Also, a total of 18 memberships were paid on behalf of employees. Only 2 were pre-approved by the Responsibility Centre Manager. Currently, no formal policy exists within CIHR for specifying the circumstances under which memberships and registration fees may be reimbursed. Treasury Board has a Membership Fees Policy in place as part of the employee entitlements.
Throughout the testing of acquisition card transactions, the audit team came across many expenses that did not seem reasonable considering the nature of the expenditure; these expenses were approved by the Responsibility Centre Manager as part of the reconciliation of purchases, which is done after the transaction has taken place. For example,
- a digital camera for the amount of $2,412.78 was purchased by the Secretariat on Research Ethics for the purpose of taking pictures of Panel members for publishing on the website, as well as for inclusion in displays and communication material. This item seems excessive in requirement; CIHR's Creative Services branch could have provided the service for the Secretariat free of charge, avoiding this expense;
- Professional Science Photodisc software for the amount of $763.60 was purchased without an approval or a justification for its use, in addition to software being a restricted item;
- a multi-purpose collection of icons was purchased for the amount of $454.12 without justification or pre-authorization;
- a swatch book for the amount of $118.24 was purchased without a pre-authorization for the purpose of verifying the actual colour when it is printed from the computer;
- two subscriptions (one being a renewal) to the Guardian newspaper for two individuals working in the same unit delivered to their home address without a pre-authorization or justification; and
- an office lamp for the amount of $136.88 was purchased at a furniture store by a cardholder for the cardholder when such item is available through the Office Supplies Catalogue at a discounted price.
4.2.4 Card Issuance and Cancellation
Acquisition cards are not always being issued and cancelled in accordance with CIHR’s Financial Policy for the Use of Acquisition Cards’ requirements. A number of current practices need to be modified in order to achieve full compliance to policy.
The Acquisition Card Coordinator does not keep a register of all active cards as stipulated by the Financial Policy for the Use of Acquisition Cards; while a binder containing all acquisition cards applications is maintained by the Acquisition Card Coordinator, no master list of current cardholders and their corresponding card numbers is maintained.
As of August 31, 2005, 61 acquisition cards were held by 59 employees. However, at different times during the audit period, cards were held by other employees who had been transferred, were on leave, or had left CIHR. The review included 69 acquisition cards issuances. The audit team noted a number of weaknesses in the process including control on cards issued. The following instances were uncovered:
| Observation | Occurrence | Percentage |
| Authorization to issue an acquisition card obtained from the Manager–Corporate Financial Services subsequent to the receipt of card by the cardholder |
25 |
36% |
| Acknowledgement of responsibilities and obligations not signed by cardholders as required by Treasury Board Policy. |
3 |
4% |
| Acknowledgement of receipt of the card not signed by cardholders |
3 |
4% |
| Application authorized by an employee with no signing authority |
1 |
1% |
| Card not cancelled for employee on maternity leave since May 2005 |
1 |
1% |
| Card used while employee was on sick leave for a business-related expense |
1 |
1% |
In addition to the above observations, the audit team noted the following weaknesses in the process:
- the policy doesn’t require the cancellation of acquisition cards when the cardholder is on extended leave of absence such as sick leave;
- there is no formal process in place to inform the Acquisition Card Coordinator that a cardholder has left a manager’s responsibility centre to another;
- the primary responsibility for the completion of the “Employee Departure Document” rests with the departing employee whereas parts of the document must be filled and signed by the various units where the employee has outstanding accounts, an acquisition card, or other items loaned by CIHR. The same applies for employees departing on maternity leave; and
- in 7 instances, e-mails filed in the acquisition card files provided evidence that the card was used by an individual other than the cardholders to make purchases. In 4 other instances, documentation on file reflected a perception that acquisition card purchases were made by individuals other than the cardholder.
These instances contravene the Financial Policy for the Use of Acquisition Cards as well as the Treasury Board Policy on Acquisition Cards.
CIHR’s Financial Policy for the Use of Acquisition Cards was issued in March 2003 and is available to CIHR employees through the Intranet. During the audit, it was examined and compared to the equivalent Treasury Board of Canada Secretariat’s policy and guidelines, in order to identify any gaps or inconsistencies.
CIHR’s policy is reasonably detailed and is complemented by a list of Frequently Asked Questions as well as a list of eligible and non eligible items. However, the policy does not restrict the procurement of moveable items nor does it require their recording in inventory or propose an internal process to ensure proper recording of these items in inventory.
5. Recommendations
R-1 Finance and Administration should ensure that internal controls with regards to acquisition cards are effectively applied across the organization. Also, the acquisition card activity should be monitored.
R-2 As stated in CIHR’s Financial Policy for the Use of Acquisition Cards, accountability for the use of cards rests with the Responsibility Centre Manager. Consequently, mandatory training on financial responsibilities should be provided to all Responsibility Center Managers on an annual basis. Mandatory training should also be provided to cardholders on an ongoing basis.
Appendix 1 – Action Plan
Summary of Recommendations and Management Action Plan
| Recommendation | Action Plan | Responsibility |
Time Frame |
|
Recommendation #1: Finance and Administration should ensure that internal controls with regards to acquisition cards are effectively applied across the organization. Also, the acquisition card activity should be monitored . |
F & A will develop checklists to be used by RC Managers and Account Verification Officers and will put in place a quality control program. As part of the Acquisition Cards Framework, F & A will also include a periodic review of the number of cards and cardholders profile. |
VP Service and Operations | Feb. 06 |
|
Recommendation #2: As stated in CIHR's Financial Policy for the Use of Acquisition Cards, accountability for the use of cards rests with the Responsibility Centre Manager. Consequently, mandatory training on financial responsibilities should be provided to all Responsibility Center Managers on an annual basis. Mandatory training should also be provided to cardholders on an ongoing basis. |
We agree with this recommendation. F & A is developing a Policy on Expenditure management and training will be made mandatory to all RC Managers. Mandatory training is already provided to first time card holders and will be made mandatory to all RC Managers who have an employee holding an acquisition card. |
VP Service and Operations |
March 06 |
1Source: Canada’s Magazine on public sector purchasing- February 2004