Compliance Review of Purchasing Cards for Department of Recreation and Parks
Cover Letter
DATE: June 26, 2018
TO: Michael Shull, General Manager Recreation and Parks Department
FROM: Georgia Mattera, Chief Deputy Controller Office of the Controller
SUBJECT: COMPLIANCE REVIEW OF PURCHASING CARDS
The Office of the Controller completed a compliance review of the Department of Recreation and Parks (RAP) oversight of Purchasing Card (PCard) usage to ensure expenditures are authorized, supported, and comply with the City’s PCard Program Cardholder Manual (Manual).
Management of each City department must design, implement, and maintain a system that reasonably assures PCard usage is authorized, supported, and complies with the Manual. The Office of the Controller assists management by performing periodic assessments of the effectiveness of this departmental system. These assessments complement, but do not in any way replace, management’s assurance responsibilities.
Our review identified certain areas in which RAP can enhance its oversight to ensure PCard usage is authorized, supported, and complies with the Manual, as detailed in the attached report.
Background
The City of Los Angeles (City) created the PCard Program to provide departments with an efficient, cost-effective way of routinely paying for low value items, and a quick way to make large purchases during disasters. PCards are credit cards issued to City employees. The Office of the Controller Office administers the PCard Program for Council-controlled departments, while each department’s management chooses which employees to receive PCards, approves and reviews PCard transactions, and ensures compliance with the City’s PCard Program Cardholder Manual (Manual). The Department of Recreation and Parks (RAP) also developed its own Special Purchasing Card Handbook (RAP Handbook) which contains specific RAP PCard guidelines to supplement the Manual. The Office of the Controller conducts periodic compliance reviews of PCard usage to ensure expenditures are authorized, supported, and comply with the Manual and department specific policies (e.g., the RAP Handbook).
Key Facts
FACT #1: RAP oversees more than 16,000 acres of parkland, offering recreation, social and cultural programs at 444 park sites in the City. RAP maintains and operates hundreds of athletic fields, 422 playgrounds, 321 tennis courts, 184 recreation centers, 72 fitness areas, 62 swimming pools and aquatic centers, 30 senior centers, 26 skate parks, 13 golf courses, 12 museums, 9 dog parks, and 187 summer youth camps.
FACT #2: RAP’s $235 million budget for fiscal year 2018 included $72 million for land maintenance, $44 million for recreational programing, and $23 million for building and facilities maintenance. RAP has approximately 1,437 employees.
FACT #3: RAP assigned 305 PCards to certain employees and they collectively spent $3.2 million through PCards.
FACT #4: Most PCards issued to RAP employees have a $7,000 monthly limit and a $1,000 single purchase limit. However, six RAP managers also hold Emergency PCards that have a $250,000 limit.
Compliance Review Results
We identified opportunities where RAP can enhance its oversight and ensure PCard usage by its employees is authorized, supported, and complies with the Manual, as follows:
- Ensure PCard holders are not using PCards to purchase items from vendors with established contracts in the City’s procurement program, as the City’s purchasing agent may have negotiated better prices.
- Periodically remind PCard holders of prohibited purchase items, such as electronics and advertising services.
- Canceling PCards for employees who fail to submit their monthly PCard Payment Record (PCPR) and related receipts.
Further, during 2017, RAP employees used PCards to purchase tickets totaling $1.3 million for amusement parks and related attractions for youth (and accompanying employees and chaperones) for summer camp programs. However, the RAP Handbook does not include any procedures for purchasing, redeeming, or inventorying these types of tickets.
Due to the associated risks of improprieties, all recreation center and park facilities should apply the same guidelines to monitor and track these ticket purchases. Further, RAP may be forgoing opportunities to better negotiate ticket purchase prices.