Fiscal ManagementUGA

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Fiscal Management_at_UGA

• Petty Cash vs. P-Cards

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Goals

• History of Petty Cash
• Understand Issues and Concerns of Petty Cash
• Future of Petty Cash Accounts
• History of P-Card
• Migrating to P-Card
• Understanding P-Card Policies and Procedures
• How to Obtain a P-Card

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History of Petty Cash

• General Purpose
• Routine small purchases
• Single item must be under 99.99
• Limit of 500 from one vendor within consecutive
  days
• Items that cannot be invoiced to UGA
• Annual purchase volume
• Should be equal to no less than 10 times the size
  of the advance
• Funds should be reimbursed at least on a
• semi-monthly basis for active funds

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History of Petty Cash Cont.

• Accounts Payable payment process was not as
  efficient
• P-Card did not exist
• Technology lacking

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Understand Issues and Concerns of Petty Cash

• Fraud
• UGA employee stole more than 21,000 from a
  University of Georgia petty cash fund
• Fraudulent receipts for purchases
• Former accountant in the College of Education
  deans office is charged with forgery and theft
  for allegedly stealing more than 6,700
• Note Conviction for either first-degree forgery
  or theft by conversion of more than 500 can
  result in a sentence of up to 10 years in prison
  under Georgia Law.

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Understand Issues and Concerns of Petty Cash
Cont.

• Fraud Cont.
• Petty cash custodian currently under
  investigation for fraudulent invoices, possible
  commingling of UGA funds with personal funds
• Audit report and investigation finds that the
  employee routinely ignored petty cash spending
  limits

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Understand Issues and Concerns of Petty Cash
Cont.

• UGA Fraud Policy www.uga.edu/audit/IAD_fraud_poli
  cy.htm
• Purpose The University of Georgia is committed
  to maintaining the highest professional standards
  in its administrative operations, promoting
  ethical practices among its faculty and staff,
  and ensuring a level of accountability
  appropriate for a public institution. This
  policy and related procedures for the
  investigation, reporting and resolution of fiscal
  irregularities are established as an integral
  part of the Universitys efforts to ensure that
  all faculty and staff conduct themselves in
  accordance with high ethical standards and that
  university performance with respect to these
  matters is consistently applied.
• Administrators, faculty and staff who know or
  suspect that other employees are engaged in
  theft, fraud, embezzlement, fiscal misconduct or
  violation of University financial polices have a
  responsibility to report it to their supervisor
  and the Controllers Office.

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Understand Issues and Concerns of Petty Cash
Cont.

• Liability to the Custodian
• Custodians are personally responsible for all
  bank account overdraft fees
• Currently one petty cash account at UGA has over
  2,000 in overdraft fees
• Propriety of expenditures
• Prompt cooperation with Internal Audit Division
• Reporting of Overages and Shortages to Bursars
  Office

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Understand Issues and Concerns of Petty Cash
Cont.

• Liability to the University
• External Fraud
• Debit card compromised on the internet for petty
  cash account

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Understand Issues and Concerns of Petty Cash
Cont.

• Audit Findings
• Our review of the petty cash account disclosed
  that the custodian was not properly trained in
  handling petty cash as defined in the university
  policy to ensure that funds are monitored and
  controlled.
• Bank accounts that are not reconciled monthly
  can be overdrawn and fraudulently charged without
  the knowledge of the custodian.
• The Department should consider discontinuing the
  practice of issuing pre-signed blank checks.

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Understand Issues and Concerns of Petty Cash
Cont.

• Audit Findings cont.
• There is no independent verification of the
  petty cash fund balance or review of the bank
  reconciliation.
• We recommend that the balance per the bank
  statement be reconciled to the check register
  balance each month.
• We recommend that the department improve petty
  cash fund practices by following the Bursars
  guidelines. The reconciliation of the fund and
  all supporting documentation should be submitted
  to the Bursars Office by the closing date
  thereby terminating the responsibility of the
  custodian.

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Understand Issues and Concerns of Petty Cash
Cont.

• Audit Findings
• We noted that the petty cash fund for X
  department was not utilized since March 2003. We
  recommend that the Department contact the
  Bursars Office and implement procedures to close
  the petty cash fund.
• Since the fund appears to be underutilized, we
  recommend that the funds be reduced.
• The Department does not process reimbursement
  requests timely.
• Several receipts for expenditures were not
  retained.

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Future of Petty Cash Accounts

• Review general purpose petty cash funds
• Determine necessity
• Discuss alternatives to petty cash
• Close out begins FY2007
• Review petty cash funds used for research
  participation
• Centralized function for stored value cards
• Review special purpose petty cash funds
• Review studies abroad petty cash funds

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Goals

• History of Petty Cash
• Understand Issues and Concerns of Petty Cash
• Future of Petty Cash Accounts
• History of P-Card
• Migrating to P-Card
• Understanding P-Card Policies and Procedures
• How to Obtain a P-Card

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History of P-Card

• Available in Georgia since July, 1996
• State wide contract with Bank of America
• Sales tax exempt
• WORKS on-line reconciliation
• Used at UGA since March, 2000

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History of UGA P-Card Use
FY06 is thru 3/15/06
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Migrating to P-Card

• Reduce Liability
• Protection from Bank of America
• Lost Cards
• Fraud and Misuse
• Allows better tracking of expenditures
• Web based system shows all transactions
• Enables better reporting for UGA
• Improves accountability
• Broadens oversight
• Improved audit capabilities

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Migrating to P-Card cont.

• Broader Use
• Increased spending threshold
• More methods of use
• Purchase of non inventoried equipment allowed

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Understanding P-Card Policies and Procedures

• Card issued to an individual not department
• Ability for individualized set-up
• Default account
• Single transaction/monthly limit
• Merchant category codes
• Allowable Uses

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Understanding P-Card Policies and Procedures
Cont.

• Restrictions on Use
• State Restrictions
• Cash Advances
• Travel and Entertainment Expenses
• Motor Vehicle Charges
• Professional Services
• Personal Purchases
• Additional UGA Restrictions
• Inventoried Equipment
• Lab Chemicals Governed by Laboratory Safety
  Manual
• Memberships
• Construction
• Radioactive and Hazardous Material
• Wireless Communication Devices
• Departmental Restrictions

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Understanding P-Card Policies and Procedures
Cont.

• Reconciliation of Charges
• Departmental Roles
• Card Holder
• Card Holder cannot act in any of the following
  roles
• Coordinator
• Propriety Reviewer
• WORKS Manager
• WORKS Proxy Reconciler
• One person can fulfill the above 4 roles or they
  can be multiple individuals.

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P-Card/Areas of Caution

• Receipts missing or receipt does not adequately
  describe the items purchased.
• Original receipts/documents not in the possession
  of the coordinator.
• Unallowable expense (i.e. electronic equipment
  costing more than 500 or used for meals).
• Active cards in the name of employees no longer
  with department.
• Paying sales tax.
• Split purchases
• This applies to both P-card and Petty Cash

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Split purchases

• FY 2005 State Audit Finding Split Purchases on
  P-cards
• State audit testing disclosed instances where
  departments split large P-card purchases into two
  transactions. While this may not be an
  intentional tactic to avoid purchasing
  red-tape, in the absence of explanation, these
  split purchases result in audit points and
  findings which conclude that UGA does not comply
  with purchasing policy.

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Split purchases cont.

• Splitting Orders
• No single purchase shall exceed 4,999. The
  practice of splitting a large order into two or
  more orders, as well as purchasing the same items
  from two or more vendors may well be considered
  an attempt to evade the limitations of the P-card
  and could lead to revocation of the individuals
  card.
• Source UGA Procurement Card Manual

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Split purchases cont.

• Department A made three separate P-card
  purchases from the BD Supply Co. on 3/31/2005
• 3,164.00
• 3,283.00
• 4,525.00
• Total purchased from BD Supply Co. on 3/31/2005
  was 10,972

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How to Obtain a P-Card

• Complete P-Card request form
• http//www.busfin.uga.edu/forms/pcard_reqform.pdf
• Attend Mandatory Training Class
• Department Head and all individuals holding a
  role must attend
• Complete Employee Agreement Form
• http//www.busfin.uga.edu/forms/employeeagreement
  .pdf

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More P-Card Information

• Additional Information on P-Card use and the
  WORKS program can be found at
• http//www.busfin.uga.edu/procurement/p_card.html

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Goals

• History of Petty Cash
• Understand Issues and Concerns of Petty Cash
• Future of Petty Cash Accounts
• History of P-Card
• Migrating to P-Card
• Understanding P-Card Policies and Procedures
• How to Obtain a P-Card

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Petty Cash vs. P-Cards

• Remember
• Fiscal Management _at_ UGA is our collective
  responsibility.
• http//www.busfin.uga.edu/controller/fiscal.html

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Petty Cash vs. P-Cards

• Questions?