Can I have a Waverunner with that?

Public sector abuse of P-Cards continues to be rampant.  The Dallas Independent School District, Knox County TN, Wake County NC, and more recently in Georgia, as reported in the Atlanta Journal Constitution.   In this recent Georgia case, an administrator for Georgia Tech used her P-Card to make nearly 3,000 fraudulent purchases totaling more than $300,000.  

The Georgia Tech administrator, Donna Gamble, has pled guilty to 22 counts of mail fraud and theft, and will be sentenced later this month in Federal Court.  Among her unauthorized purchases with federal grant monies included a Waverunner personal watercraft and lawn tractors.

Public and private sector organizations are replacing expensive purchase orders and procurement processes with P-Cards, as the cost per transactions is very favorable.  Aberdeen Research shows that P-Card purchases often cost less than 1/3 the amount of more traditional purchase order and invoice purchases.  Yet these P-Card purchases introduce more risk, and all types of organizations are challenged by how to best control and monitor credit card spend.  

Supervisory review, transaction review by a central p-card administrator, and limiting card usage at certain merchants and merchant types are all controls that organizations use to ensure charges are authorized and in compliance with preferred vendor agreements.   But the news headlines suggest strongly that these controls are not sufficient.

Stay tuned in coming weeks as we look to chronicle other organizations that have implemented continuous controls monitoring for frequent, in-depth, and efficient transaction review.

Joe Oringel
Visual Risk IQ
Charlotte NC, USA

Procurement Card Fraud at the Dallas Independent School Board - Could this happen to you?

Though my Blogger account seemingly allows nearly unlimited storage, there may not be sufficient space to chronicle the P-Card Fraud at the Dallas Independent School District (ISD) and the resulting costs to the local taxpayers. The ISD suffered considerable hard-dollar costs and reputation damage that was reported during 2007 by the Dallas Morning News, and this week's audit report from Deloitte provides more details.

Yesterday's news included a report that the ISD may have to return $8 million to the Federal Government because the P-Card fraud caused the ISD to violate federal grant guidelines for education spending. Continuous monitoring doesn't sound nearly so expensive anymore.

For more complete coverage of the ISD P-Card fraud, see any or all of the following links:

May 2007 Story in Dallas Morning News

Forensic Report from Navigant Consulting regarding P-Card abuse at the Dallas ISD

This week's coverage summarizes the Deloitte audit report, which includes numerous control weaknesses and significant deficiencies.

"Weaknesses and Significant Deficiencies" cited by Deloitte & Touche:

• District policies that "do not exist, are ineffective or not consistently applied"

• Poor staff training

• Lack of oversight from superiors

• Failure to comply with grant requirements from the federal government

• Inability to reconcile some financial accounts

• "Significant" adjustments to district ledgers

• Poor record-keeping and accounting for debts, capital assets, payroll and personnel

Stay tuned - each time I think story is over, another interesting tidbit appears.

Joe Oringel
Visual Risk IQ
Charlotte NC, USA