March 28, 2007

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  NEWS: Audits Shows U-M P-Cards Misused

  The University of Michigan recently made public the results of an internal audit of its employee purchasing for the past year. The results show explicitly that U-M needs to tighten up on enforcement of appropriate purchasing over the 6,000 university employees holding official purchasing (‘P') cards. While no incidences of fraud were specifically found, auditors discovered hundreds of thousands of dollars of unauthorized purchases made on the P-cards by users at every level of administration. Furthermore, the audit concluded that measures necessary to curtail such misuse were nonexistent, or non-enforced. An embezzlement inquiry was opened against one employee who may have charged some $4000 in personal expenses to their P-card.
  
  Per the audit, the university shelled out approximately $300,000 for unauthorized purchases last year, for such items as office furniture, draperies, and carpeting. It is university policy that these items not be bought on credit cards, but obtained by requests submitted to the purchasing department, which negotiates with individual vendors and/or contractors to secure discounts. Furthermore, just under $1,000,000 was spent in violation of the university's policy of spending no more than $5,000 on any one transaction. Records show that many employees circumvented the policy by splitting up purchases, or making related transactions over multiple days.
  
  The audit recommended that more reviewers be hired, as currently, one reviewer may be responsible for overseeing the activity of anywhere up to 100 users. Also, it was recommended that P-card limits be dropped dramatically. A universal limit of $10,000 was recommended; some users currently have limits of over five times that. The university has responded to the audit results by implementing software to track patterns of use, says a representative.
  
  
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