Quarterly Purchasing Card Administrators’ Meeting Thursday, August 29, 2013 – 9:00-noon Winewood Office Center, Building 4

AGENDA Introductions Special Presentations

Strengthening PCard Controls and Using Forensic Analytics to Detect Fraud, Errors, Waste and Abuse – Lisa Wilkerson, DOT

Ongoing Items

MRE Training

ITN Update

Internal Travel Agent/Co-traveler Issue

Convenience Fees

Charge Reviews – Erica Catledge

New Items

Use of PeopleFirst ID

PCard Approvers Class

Rep Letters

Reports

Special Announcement

Questions/Other Discussion

Conference Call Information

Join by Phone (850) 413-1558

Conference ID: 1309238

If you have problems with the conference line during the meeting, please call (850) 528-5995.

Remaining Meetings for 2013

November 19th

Quarterly Purchasing Card Administrators’ Meeting Minutes Thursday, August 29, 2013 – 9:00-11:00 Winewood Office Center, Building 4 Facilitator: Michelle Oliver

Introductions Special Presentations

Strengthening PCard Controls and Using Forensic Analytics to Detect Fraud, Errors, Waste and Abuse – Lisa Wilkerson, DOT

(presentation posted to the PCard meetings website)

Ongoing Items

MRE Training – Two dates were offered for MRE classes for PCard Administrators - September 19th or October 3rd. The administrators chose October 3rd. The Statewide Administrator’s Office will send out an email about registering for the class.

ITN Update –DFS and DMS are continuing to work on the solicitation for a new PCard Program contract. The Statewide Administrator’s Office will inform the Agency Administrators once the ITN is released.

Internal Travel Agent /Co-traveler issues –This issue was introduced at the May 2013 meeting. The Statewide Administrator’s Office is drafting a new policy and will provide it to the Agency Administrators once it is complete and approved by management.

Convenience Fees – The Statewide Administrator’s Office is continuing to work with DFS Legal staff to craft guidance for the Agency Administrators to use when vendors charge convenience fees. According to the Agency Administrators in attendance, the main issue is with utility companies charging convenience fees.

Charge Reviews – This is a new item that was introduced and will become an “ongoing item.” Erica Catledge, with the Statewide Administrator’s Office, presented common “findings” that were discovered through the charge reviews performed during the previous quarter. During the conversation after Erica’s presentation, the idea to provide a quarterly summary to the Agency Administrators and their supervisors was proposed. The summary would include the number of charge reviews completed during the quarter, and the number of reviews that were determined to be unallowable, unsupported,

and/or non-compliant. (Erica’s presentation is posted on the PCard meetings website.)

New Items

Use of PeopleFirst ID – The Bureau of Vendor Relations at DFS is investigating the possibility of using employees’ PeopleFirst IDs in lieu of the SSNs in FLAIR. This includes the use of the SSN on the PE Record and the sub-vendor field in the charge screen in the Purchasing Card Module. The agencies will be notified if/when any policy changes are made.

PCard Approvers Class – Several attendees at the last few PCard Approver classes have not been approvers, some did not even have any knowledge of the PCard program. Although well-trained employees are encouraged, DFS would appreciate if the Agency Administrators would inform approvers to register for the classes. The Statewide Administrator’s Office also suggests that new Agency Administrators, who may not be familiar with the approving process, take the class. The next class is scheduled for October 24th.

Rep Letters – DFS sends out representation letters around this time of year to the agency heads. The letter is to ensure that proper internal controls are in place within the agency’s PCard program.

Reports

o 10-day reports – Currently, Lee Rayner (in the Statewide Administrator’s Office) is the contact person for the Reportcaster 10-day reports sent to Agency Administrators. The 10-day report process will be reassigned to Tyesin Payne and Evangaline Benton.

o New reports – Information Warehouse staff has been working on new PCard reports. The Statewide Administrator’s Office will be testing the reports soon and will inform the Agency Administrators once the reports are posted to the PCard website. Michelle asked the Agency Administrators to let her know of any report that may be needed. The Statewide Administrator’s Office may be able to create the report in MRE or request Information Warehouse to build web reports.

Special Announcement – Lisa Wilkerson was recognized, as she will no longer be DOT’s PCard Administrator.

Remaining Meetings for 2013

November 19th

Purchasing Card Administration

What We Look For in a Charge Review

We verify the charge has appropriate authority, approval, justification and documentation, per the Reference Guide.

From our review, we determine if charges are allowable and compliant. We also look to determine if the cardholder has committed fraud or misuse of state funds.

What We Look For in a Charge Review

Misuse/Abuse Personal charges being placed on purchasing card

(Publix, Amazon, etc)

Keeping rental vehicle while not in travel status

Purchases not meeting ADA requirements

Fraud Cardholder set up a Paypal account in her name and was

paying herself. This looked suspicious when the cardholder name and the vendor name was essentially the same.

Level 3 Line Item Detail

Charges marked as

Non-Compliant/Not Allowed Non-Compliant – Purchases that are allowable state

expenditures, but the agency does not have proper approval to pay for them. Use of Internal Travel Agents or Vehicle

Repairs/Maintenance when it is not approved in your agency’s PCard Plan

Charge reviews will be marked as non-compliant when we receive no response from the agency

Not Allowed – Purchases that are not an allowable use of state funds, according to Florida statutes and/or the Reference Guide. Food (unless the agency has statutory authority to

purchase food)

Prohibited expenditures

Payment of items used for personal convenience

Corrective Action Plan

Corrective action plans are to ensure the avoidance of non-compliant and unallowable transactions in the future. Typically when the Reference Guide for State Expenditures is not followed.

Receipt Requirements, per the

Reference Guide Purchasing Card Transactions

The following requirements apply to all receipts supporting purchasing card transactions.

1. Original receipts supporting transactions are maintained by the agency. Thermo fax documents, because of their temporary nature, shall not be filed as the original at the agency. They should be copied on a standard photocopy machine and the copies should contain the statement “original receipt was a thermo fax document; agency records show that this obligation has not been previously paid.”

2. Receipts must clearly reflect a description of the goods or services acquired, number of units, and cost per unit. The combination of several documents to provide the description, number of units, and cost per unit may be used (i.e., quote sheets, packing slips, web page screen-prints, cash register receipts, charge slips). Numerical code descriptions alone are not acceptable.

3. (a) All receipts for commodities shall be signed and dated by the cardholder to indicate the receipt, inspection, and acceptance of the goods or services. (b) Receipts for services require clear evidence that services were satisfactorily received.

4. Acronyms and non-standard abbreviations for programs or organizational units within an agency should not be used in the supporting documentation unless an explanation is also included.

NOTE: A statement or invoice will not be acceptable unless it meets the criteria contained in the Purchasing Card requirements of the “Invoices” section.

Justification for the purchase

Good justification can cut down on additional emails between us and the agency

The more detail the better

We are not as familiar with each agency and how purchases relate to specific job duties

If the purchase is for an expenditure that requires additional justification by the Reference Guide, include the justification with the initial response to the charge review. Such as items that could be used for the personal

convenience of employees: ○ Hotels > $150/night

○ Valet Parking

○ Limousine services

Common Findings

Preferred Seating

Internal Travel Agent issues – this may be resolved through the new policy

Vendor Promotions

Level 3 Line Item Detail Not Matching

Charge Review Findings: Preferred Seating

Busn Nm Chrg Dt Chrg Amt

DELTA AIR 0060158125392 10/30/2012 $9.00

DELTA AIR 0060158925298 10/30/2012 $9.00

DELTA AIR 0060160901054 11/25/2012 $19.00

DELTA AIR 0060160901055 11/25/2012 $19.00

DELTA AIR 0060161204776 11/30/2012 $29.00

DELTA AIR 0060161204774 11/30/2012 $29.00

Preferred Seats Include: •Bulkhead seats

•Aisle seats toward the front of the plane

•Window seats toward the front of the plane

•Emergency exit row seats

Per Delta: Whether you want extra legroom or just want to add to your vacation experience, consider upgrading to

an Economy Comfort seat. Enjoy even more comfort with up to 4 more inches of legroom and Priority

Boarding when you upgrade. Prices start as low as $9 and seats are available on all two-class cabin

aircraft worldwide.

$114

worth!

Charge Review Findings: Vendor Promotions

Busn Nm Chrg Dt Chrg Amt Total Item Amt

Unit Item Amt

Item Qty Item Cd Item Desc Add Dt Trn Desc

OFFICE DEPOT #24

12/20/12 $101.74 $54.62 $54.62 1. 112999 INK,HP 96,TWIN PACK,BLAC 12/27/2012 OFFICE SUPPLIES

OFFICE DEPOT #24

12/20/12 $101.74 $47.12 $47.12 1. 438950 INK,HP 95,2/PK,COLOR 12/27/2012 OFFICE SUPPLIES

OFFICE DEPOT #24

12/20/12 $101.74 $15.00 $15.00 1. 586910 ITUNES $15 12/27/2012 OFFICE SUPPLIES

Vendors offering weekly promotions (Staples, Office Depot...)

•First option – refuse them

•Make sure internal controls are in place for accountability, such as, gift

cards should be given to management or a central fiscal office.

•Ensure they are used for state business or a public purpose purchase

Charge Review Findings: Vendor Promotions (continued)

Charge Review Findings: Level 3 Line Item Detail Not Matching

Busn Nm Chrg Dt Chrg Amt Total Item Amt

Unit Item Amt

Item Qty Item Cd Item Desc Add Dt Trn Desc

AMAZON MKTPLACE PMTS

12/18/12 $18.90 $12.95 $12.95 1. B003Y008IW ADULT SHORT SLEEVE LEOTARD

12/20/2012

RULES OF ORDER

.

Helpful Reminders

Please redact all sensitive/confidential information prior to

sending it to us.

We require verification of the deposit on items that were

reimbursed.

Cardholders must sign/date the actual receipt.

If a charge has certain requirements, please provide them

with the initial response, just like a voucher.

For example, Avis rental car fuel requires the Avis receipt

and travel voucher (per CFOM #2 2004-2005), so that

documentation should be provided with the original

response to the charge review.

Questions?

Please contact the Purchasing Card Administration:

Michelle Oliver

850-413-5451

Lee Rayner

850-413-5733

Tyesin Payne

850-413-5359

Erica Catledge

850-413-5539

Evangaline Benton

850-413-5669

1

P-Card Controls/Using Forensic Analytics to Detect Fraud, Errors, Waste & Abuse

Omni Dallas, January 15-16, 2013

Data File

Your data file for the workshop should be a file of P-Card transactions for a period of time (e.g.,

all of 2012, or Q4 of 2012). The file should be in an Excel 2007 or an Excel 2010 format.

You may have as many fields (columns of data) as you like. For the analysis we will prepare our

data for analysis by deleting the unneeded fields.

The fields that we would like are:

1. Merchant Name (MerchName)

2. Merchant Number (MerchNum)

3. Transaction Date (Date)

4. Card Number (CardNum)

5. Employee Name (CardName)

6. Transaction Details (Details)

7. Transaction Amount (Amount)in U.S. dollars

You will be fine by having either (1) or (2). However, having the merchant name helps with reviewing

the results.

You will be fine by having either (4) or (5). However, having the employee name helps with reviewing

the results.

The transaction details field is a text field that describes the purchases (e.g., gift card for $500). This

field is optional. It is useful but not essential.

An example of a file is shown below:

2

The first step in the hands-on session will be to rename the fields so that we are all using the

same names, and to delete the fields that are not needed. The useable file might look like,

In the above case we don't have Employee Name (one of the optional fields) or Transaction

Details (another one of the other optional fields).

Other files

The hands-on session will use three Excel templates and one data file with data from two time

periods. These files will be sent by e-mail before the workshop. They'll also be available from

the instructor on CD and on a USB flash drive on the days of the workshop. We will also provide

P-Card data on a USB flash drive to anyone that couldn't bring their own data to the workshop.

Data questions

Questions about the data files can be sent to Mark Nigrini at ForensicAnalytics@gmail.com.

STRENGTHENING P-CARD CONTROLS AND

USING FORENSIC ANALYTICS

TO DETECT FRAUD, ERRORS, WASTE AND

ABUSE

January 15 to 16, 2013

Dallas, TX

1

2

REVIEW OF INTERNAL CONTROLS

Risk analysis

Agency Purchasing Card Plan Review

Policies and procedures

User Manual

Pcard Administrator Manual

Card issuance

Prerequisites for obtaining a card

Supervisor approval

Pcard administrators are overlooked

3

REVIEW OF INTERNAL CONTROLS

Training

Demonstrate understanding of material

Require refresher training

Cardholder acknowledgement of requirements

Recommend recertifying on a recurring basis

Card closure

Termination reports, but transfers too

Transaction review and approval

Independent review of transactions by supervisor

Must establish a consistent process for late

processors

4

REVIEW OF INTERNAL CONTROLS

Auditing

All payment methods have risks, requiring

appropriate controls

Impossible to prevent all fraud and misuse, but

audits will act as a deterrence

May be performed by a variety of individuals, each

with a specific focus

Technology must be used to our advantage

5

REVIEW OF INTERNAL CONTROLS

Strategic Audits

High dollar transactions

High volume cardholders

Transactions with certain suppliers or mccs

Transactions with certain key words

Transactions occurring during non business hours

New cardholders

Entire departments on a rotating basis

6

REVIEW OF INTERNAL CONTROLS

Reporting

Results must be reported to management

Include action items

Review findings to determine needed program

improvements

Track instances of inappropriate use and mistakes

7

FORENSIC ANALYTICS

8

BE

NF

OR

D’S

LA

W

Refers to the

frequency of

distribution of

the first digit

of a number

using real life

sources of

data.

In this

distribution,

numbers

beginning

with 1 occur

30% of the

time while

numbers

beginning

with 9 occur

less than 5%

of the time.

9

BENFORD’S LAW

Disbursement data

Census data

Sales data

Insurance claims

Small samples

Assigned numbers

Check numbers

Social security numbers

Accounts with a built in

maximum or minimum

i.e. concert ticket sales

Numbers that

obey the law

Numbers that DON’T

obey the law

10

INSURANCE REFUNDS

11

http

://ww

w.a

ud

itnet.o

rg/a

rticles/J

FA

-V-1

-17

-34.p

df

FIRST DIGIT ANALYSIS-DOT

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

1 2 3 4 5 6 7 8 9

PR

OP

OR

TIO

N

FIRST DIGITS

Actual Benford

12

SECOND DIGIT ANALYSIS-DOT

0.000

0.005

0.010

0.015

0.020

0.025

0.030

0.035

0.040

0.045

0.050

10 20 30 40 50 60 70 80 90

PR

OP

OR

TIO

N

FIRST-TWO DIGITS

Actual Benford

13

www.salesreceiptstore.com

14

HIGH VOLUME CARDHOLDERS

15

PRESENTATION AND TEMPLATES

DFS will post the

presentation and provide the

templates shared in class.

16