NU Responds to Purchasing Card Review
"The University is committed to good stewardship of financial resources, transparency of business operations, and accountability to Nebraska's taxpayers," said Regent James E. McClurg, Chairman of the Audit Committee of the Board of Regents. "We welcome the State Auditor's review of the purchasing card program, which identified ways we can improve business practices, strengthen internal controls, and reduce risk of fraud and abuse. That is exactly the benefit of a review of this nature."
The purchasing card program allows authorized employees to pay suppliers with a credit card rather than by check, thus reducing administrative costs for both the University and the State Treasurer’s Office and resulting in businesses being paid more promptly. The Auditor selected and reviewed approximately 1,600 transactions for compliance with established policies and procedures, supporting documentation, and reasonableness and necessity of the purchase. Although some examples were found of noncompliance with University policy, no evidence was identified of material weakness in the University’s internal controls or intentional wrongdoing by cardholders or reconcilers.
David E. Lechner, Vice President for Business and Finance, said the University concurs in general with the Auditor’s recommendations and plans to do the following:
- reinforce and re-examine policies and guidelines;
- increase management oversight of purchasing card use and reconciliation;
- review and reinforce proper procedures with employees through training and communication, and
- improve documentation.
“The purchasing card program saves millions of dollars annually by improving the efficiency and cost-effectiveness of the purchasing process,” Lechner said. “It is a fairly high reward and low risk program, but it can be improved, as the Auditor’s review has illustrated. We are committed to having sound internal controls and strengthening public confidence in this valuable program.”
During the period of the Auditor’s attestation review, July 1, 2007 to December 31, 2008, the University of Nebraska made nearly 215,000 purchasing card transactions totaling about $63 million. RPMG Research Corporation, in its 2005 study of purchasing cards, estimated a savings of $67 per transaction for entities using purchasing cards versus other payment methods. In addition, the University realizes more than $500,000 in rebates each year.