Audits of FlexCard purchases may be conducted at several different levels: your department, FlexCard Program Administration, Audit & Advisory Services and various external auditors.
Your department should conduct three separate types of audits:
1. Transaction Pending Allocation Self-Audit
As noted in the section on the FlexCard Purchasing Process, under Responding to FlexCard Allocation Module Email Notification of New Transaction Pending Review, the Cardholder should audit each new transaction in order to verify that s/he made the purchase: this self-audit is the first line of defense against fraudulent misuse of the FlexCard.
2 . Departmental Self-Audits
Your department should conduct periodic self-audits of its FlexCard purchasing. It should review a sample of transactions to ensure that all necessary documentation has been assembled and retained for each purchase: generally, a request for delivery/order approval (if appropriate) and a dated and initialed itemized packing slip/pro forma invoice/cash register receipt. Each transaction should be reconciled to a U.S. Bank Memo Statement and to the General Ledger.
 Back to Top
FlexCard Program Administration will conduct two main types of program audit, on the transaction and the department/campus level.
1. Transaction-Level Audits
Transaction level audits will not target specific departments or Cardholders. The FlexCard Management Module will notify FlexCard Program Administration of certain TYPES of transactions that have been flagged for automatic audits in order to ensure compliance with the policies that govern the procurement card program and in order to protect the campus, departments and Cardholders against certain kinds of fraud or misuse.
For example, if multiple charges for the same amount from the same Merchant appear on multiple cards, this may be a warning that batches of account numbers have been compromised and that fraud is occurring. Individual Cardholders might not recognize the pattern as quickly as the entire system.
Other types of transactions that may trigger transaction-level audits include (but are not limited to):
-
single charges over the per transaction limit
-
transactions that appear to have been split in order to evade the per
transaction limit
-
purchases at multi-purpose Merchants, where prohibited commodities (food, office furniture) may be purchased in addition to allowable ones (office supplies)
-
purchases at vendors whose Merchant code indicates that they sell prohibited commodities
- purchases from out-of-state Merchants that, in whole or in part, are declared non-taxable in order to exempt them from payment of Use Tax will be heavily audited, in order to ensure that the University is complying with all State Board of Equalization requirements – see below, State of California Sales and Use Tax Audits.
2. Statistical Sampling Audits
FlexCard Administration will conduct cyclical campus-level (cross-department) and department-level audits. An entire group of transactions – all transactions during a limited time period, X number of randomly-selected transactions per department during a limited time period – will be selected for a statistical sampling audit.
Statistical sampling audits will be performed to monitor the program as a whole, and individual departments as separate entities, in order to determine compliance with the UC and local policies that govern the procurement card program and in order to demonstrate that proper controls are being maintained.
Whether the audit is at transaction or campus/department level, the FlexCard Program Administration audit procedure will follow essentially the same path:
-
FlexCard Program Administration will notify your department via email of the transaction(s) being audited.
-
Your department will mail, or fax, FlexCard Program Administration a copy of all documentation for each transaction.
-
FlexCard Program Administration will audit the documentation and record the results in the Management Module.
- All audit results will be communicated to your department, including any findings. Depending upon the findings, and their severity, appropriate action will be taken: recommendations for better practices, mandatory retraining, card suspension or revocation, referral of the findings to Audit & Advisory Services and/or law enforcement.
FlexCard purchases, like all other purchases and financial transactions, will be subject to audit by UCSB Audit & Advisory Services as part of their routine audits of campus departments.
Back to Top
All University financial transactions (FlexCard purchases included) are regularly audited by several external agencies:
1. State Board of Equalization
The California State Board of Equalization conducts a rigorous annual Sales and Use Tax Audit. Any FlexCard purchase is subject to audit and, as the Office of Record, your department must be able to produce complete documentation if one or more of its FlexCard purchases is selected. All requests for FlexCard purchase documentation related to a Sales and Use Tax Audit will be relayed to your department by UCSB Accounting Services & Controls, the campus liaison for the State Board of Equalization.
2. University of California External Auditors
The University of California contracts with an external audit service (currently PriceWaterhouseCoopers) to conduct annual audits of all aspects of its financial systems and transactions. The FlexCard program will be included as part of the annual review process and your department may be requested to produce purchase documentation. All requests for FlexCard purchase documentation related to a PWC Audit will be relayed to your department by UCSB Accounting Services & Controls.
3. Federal Contract Compliance Audits
All Federal contracts, grants and cooperative agreements are subject to audit as part of Federal Contract Compliance Audits. Any FlexCard purchase made with Federal funds could be selected for review by the Office of Naval Research (the current Federal cognizant agency) during their annual audit. All requests for FlexCard purchase documentation related to a University of California External Audit will be relayed to your department by the Extramural Funds unit of UCSB Accounting Services & Controls.
The purpose of all audits is not to punish your department or any individual but rather to assist you in the operation of a departmental FlexCard program that maintains all mandated controls and retains all necessary documentation, in order to minimize your department’s (and the University’s) exposure to risk and loss.
Back to Top
|
