NSW Audit Office - Better Practice - 1997 - Guidelines for the Internal Control of the Corporate Credit Card

>


	These guidelines fall into four basic groups: Agency Policy: stating the intended purpose of the corporate card by agency personnel and identifying all relevant documents influencing use. Controls Over Card Issue: management of corporate card issue so that the card meets the operational requirements of the agency and assists card holders to efficiently and effectively discharge their duties. Agency Procedures: clarity of process for both card holders and administrators by setting out instructions for: the review of transactions reporting to senior management individual card holders. Card Holder Obligations: acknowledgment by card holders of receipt of cards and their obligations in using those cards.
>
	Identify all relevant documents governing the use of the corporate card, for example: the bank's conditions of use Treasurer's Directions 205.01 to 205.08 Treasury Circular No. G1992/22 guidelines/instructions of the agency. All card holders should be familiar with the contents of all relevant documentation.

	Descriptions of positions and work functions that would potentially qualify for the issue of a corporate card, for example: program managers, administrative and information technology support staff for purchases and payments unique to their work needs officers travelling on a regular basis (usage could be restricted to travel related expenses) library officers for the purchase of library material, subscriptions, periodicals etc. office managers paying for urgent office supplies.

	Those transactions where the corporate card is not to be used should be specified, for example: any use that is of a personal or private nature petrol, where petrol is to be purchased under an existing contract of supply cash advances, except in specified circumstances fines, for example a motor vehicle parking fine or a speeding offence which was incurred while on agency business.
	Specify expenditure limits on certain types of transactions, for example, office supplies purchased on corporate card are not to exceed a maximum amount for each item. Also individual limits are to be set for each card holder at the time an application for a corporate card (by an employee) is approved.

	Identify which types of transactions require prior approval before expenditure may be incurred.
	An agency should identify the approved method(s) of processing transactions. Alternatives include: across the counter (the card holder signs a purchase slip at the time of purchase) by telephone (the transaction is completed by quoting corporate card details to the supplier). In these circumstances the card holder should maintain a record of transactions, and by mail, quoting card number on orders to suppliers, eg library subscription renewals, book supplier accounts etc. Similarly, records need to be maintained of transactions.
	Agency Policy should include a statement that: those issued with a corporate card are in a position of trust in regard the use of public funds improper use of that trust may render the card holder liable to disciplinary/legal action/criminal prosecution expenditure by corporate card will be reviewed on a regular basis by the agency for compliance with guidelines.
>
	Requests for a corporate card should be in writing by the requesting officer, with all the necessary details included, for example: the name of the officer and the position held the proposed use of the corporate card profile of use stated in bank merchant codes the proposed credit limit and the estimated frequency of use the nomination is to be accompanied by a completed Card Holder Registration Form.
	Criteria for assessment of applications for the issue of a corporate card should be established. Criteria could include, for example: expenditure on items most requested previously by recipient the proposed use is consistent with operational requirements of the agency and the needs of the relevant job function the issue of a corporate card has the support of the applicant's supervisor the supervisor is able to effectively monitor card use alternative arrangements have been evaluated but are considered inferior to the issue of a card to the applicant the officer is of sufficient seniority and / or experience the expected frequency of use will provide for an efficient and effective use of the corporate card the credit limit requested is reasonable proposed arrangements specify what transactions are covered by a general standing approval and those that require specific approval prior to the transaction occurring.
	The delegated officer within the agency is to approve the issue of the corporate card to the applicant provided the delegated officer is satisfied that criteria for the issue are reasonably satisfied.

	An outcome of the application and approval process should be a document that satisfies agency criteria and adequately explains the rationale for the issue of the corporate card.
	The Treasury requirement to maintain a Register Of Card Holders should be complied with. The register should detail the name of the card holder, card account number, credit limit and expiry date for all cards. The register should be maintained up to date and reflect changes notified to the credit provider bank.



>
	Adequate internal control procedures to review and process corporate card transactions should be established, for example monthly statements are to be referred to the card holder for checking, certification and preparation of claims to acquit expenditure where expenditure by corporate card is specifically chargeable to a cost centre, only expenditure by approved card holders is to appear on the cost centre summary it should be confirmed that expenditure charged to the organisation is incurred by only authorised corporate card holders and on goods/services provided for within established guidelines corporate card expenditure to be approved by the card holder's supervisor, certified and authorised by personnel within established financial delegations an officer with delegated responsibility (for corporate card transactions) is to ensure that all card holder statements and associated documentation (required for acquittal of the expenditure) are received, examined and appropriately endorsed by the due date if the required documentation is not received by the due date the officer with delegated responsibility shall advise both the card holder and his/her supervisor that documents for acquittal are outstanding and request adjustment as soon as possible.
	Periodically prepare and submit to the Chief Executive Officer or delegated officer, a report on corporate card use. The report to include details of: expenditure for the period and year to date in summary form instances where the use of corporate cards is contrary to agency guidelines, for example: credit limits being exceeded acquittal documentation not received on time from card holders inappropriate use of the card.
	any matters noted which affect the efficiency or effectiveness of the corporate card, for example: cards not used or where usage very low. action taken in relation to matters raised in the report and results of action in response to matters outstanding from previous reports.

General Matters	Specific instructions on the use of corporate cards should be developed and issued to card holders. The following is a suggested list of issues to be covered in those instructions: the types of transactions permitted and not permitted using corporate card the types of purchase methods allowed in the use of the corporate card a requirement to give, where necessary, the supplier an official purchase order to claim exemption from sales tax card holders are not permitted to make deposits to the corporate card accounts where cash advances are to be permitted, pin numbers to be arranged by the agency directly with the credit provider bank matters for card holders to consider before using the corporate card, for example, the payment is for a purpose for which the card has been issued the value of goods or services is within the established limit of authority to incur expenditure or an officer with an appropriate financial delegation has approved the expenditure the purchase is not split into individual amounts below delegated limits the proposed transaction will not cause the credit limit to be exceeded the corporate card is not used routinely to circumvent compliance with the normal requisitioning regular or periodic payments are not charged against corporate card accounts without prior approval.

Review of Statement	The card holder should review his/her corporate card statement and undertake the following duties on a periodical (monthly) basis verify that each entry on the statement is correctly charged report to the relevant section within the agency concerned any disputed transactions. These should be passed on to the Bank Service Centre.

Acquittal of Expenditure	In order to account for corporate card expenditure the card holder should to provide the following documentation: approval to make purchases or undertake travel original dockets containing sufficient detail for reviewing officers to be able to gain an assurance that the expenditure is valid and relates to the official business of the agency provide a written explanation and account codes for each transaction endorse the corporate card statement to the effect that all entries accurately reflect the transactions made during the month and were for official purposes a completed travel claim (contingency voucher) and/or general claim.

Review of Corporate Card Usage	An independent reviewing officer is to examine on a regular basis the documentation provided by the card holder to ensure that expenditure is valid and incurred in an official capacity.

Submission of Documentation	Ensure that acquitted documentation (endorsed by reviewing officer) is provided by a predetermined date each month.

Periodic Reconciliation	Each cardholder should periodically reconcile their own records of corporate card use with reports received from the card supplier. The use of a running sheet by the cardholder is recommended where the volume of corporate card transactions is significant.


Increases in Credit Limit	Card holders are required to apply to the delegated officer for a temporary or permanent credit increase. At the conclusion of any interim period, the credit limit should revert to the amount of the original approval.

Cancellation Of Card	Where corporate cards are no longer required the card holder should ensure that: all outstanding transactions are cleared and properly accounted for the card is returned to the officer responsible for the issue of corporate card who is to arrange for the card's destruction the officer returning the card is to obtain an acknowledgment for the return of the corporate card.

Safe Custody of Cards	Card holders are personally responsible and accountable for the safe custody of the corporate card issued. Card holders should: secure the card at all times to safeguard against loss or theft ensure that personal identification numbers (PINs) are not written on nor carried with cards or within the wallets of the card holder in the event that a corporate card is lost or stolen the card holder should : telephone the bank as soon as the loss is discovered report the loss to the designated officer within the agency.

Damaged Cards	In the event of a damaged card the card holder should return the card to the designated officer for destruction and replacement.

>
	The card holder is to acknowledge receipt of the corporate card and instructions for use.
	The acknowledgment from a card holder should include all matters that the agency considers essential aspects relating to the issue and use of the card. This might be for example, that the card holder will abide by all Treasury, agency and card supplier guidelines and conditions of use.