Citi Support: Techniques for Establishing a Successful Audit Process

Transcription

1 GSA SmartPay Conference Citi Support: Techniques for Establishing a Successful Audit Process David Ruda Citi Commercial Cards, Government Services

2 The Tenth Annual GSA SmartPay Conference Towards New Horizons! Denver, Colorado July 22 nd - July 24 th, 2008

3 Goals and Objectives Learn about techniques that will help you proactively manage your card program and be prepared for an audit

4 Agenda 1. Establishing an Audit Program 2. Tips for Establishing Policies and Procedures 3. Compliance 4. Fraud, Waste and Misuse Indicators 5. Tools 6. Summary

5 Basic Card Program Building Blocks 6 steps to remember Sourcing transparency and knowing your contract terms and conditions Order Placement match cardholder controls to your ordering guidelines Payment and Settlement use automation and default accounting codes when you can Reconciliation critical to have proper procedures in place Control and Audit important to have visibility into spending and know your triggers of when to audit Reporting back data integration, vendor spending reviews

6 Establishing an Audit Program Why? GAO s Mandate Strengthen Internal Controls Ability to Detect Fraud, Waste and Abuse Create your team Get your stakeholders involved Use technology when you can Mandate training Start before the card is used Peer Reviews

7 Audit Program - Start Where the Problems Are! Purchase Cardholder reconciliation Approving Official review Split/Fragmented Payment Exceeded Cardholder Authority Training Program Travel Delinquencies Expense Report Submission Cash advances Declined authorizations Appropriate Travel Management Centers (TMC) Use of GSA City Pair Airfare Training Program

8 Main Components of an Audit Program THE TOP THREE! Ongoing Card Program Reviews Document Retention Audits Internal Periodic Audits

9 Ongoing Card Program Reviews Frequent card program reviews (e.g. weekly or monthly) should be conducted by the Program Administrator to identify any misuse Items to watch for: Split transactions (i.e. two or more transactions which show the following similarities: same date, same supplier, same cardholder, and same amounts) Unusual increase in the cardholder s average spend and/or highest spend amount Purchase amounts over transaction limits Purchase amounts within one percent to three percent below purchase limits Purchases with unauthorized suppliers

10 Document Retention Audits AOPCs should also conduct periodic audits to ensure compliance with the your documentation and retention policies. A documentation and retention audit specifically includes: Confirmation that all cardholders have completed the mandatory cardholder training Verification that all cardholders have a signed, up-to-date Cardholder Agreement on file Analysis of all records to ensure that all card program or user profile changes are properly documented Review of card statements to ensure that cardholders are retaining purchase receipts with the statements

11 Internal Periodic Audits Internal audits should be performed periodically and include a review of card statements. Card statements should be audited for: Compliance with review, approval, and documentation/retention policies Frequency of exception requests (e.g. transaction limits and MCC blocks) Purchases with non-compliant suppliers and spend types

12 Internal Periodic Audits Finding the High Risk Population! Perform a random sample Start with 5 10 percent of active cardholders Include 50% of at risk cardholders At-risk cardholders typically meet one or more of the following criteria: Review high-dollar transactions Review high frequency of transactions within the billing cycle Look a prior history of non-compliance (e.g. spend with unauthorized suppliers or blocked MCCs)

13 Tips for Establishing Policies & Procedures: Policies Should Encourage Risk Management vs. Risk Avoidance Set specific policies to ensure proper controls are in place Create cross-functional team when establishing policies Involve auditors, IG representatives Publish procedures and widely distribute Develop agency-wide newsletters Use your intranet Incorporate policies into new cardholder training Use policies as the outline for training agenda

14 Tips for Establishing Policies & Procedures Develop reminder messages for all cardholders and managers Use statement messages or broadcast s Review policies and procedures at least annually Modify according to audit findings and feedback received during training sessions

15 Tips for Establishing Policies & Procedures: Suggested Items for Your Formal Guidelines Who should / should not have cards How to obtain, change and close an account Training requirements References to FARs Don t buy list Supply sources Reconciliation procedures

16 Tips for Establishing Policies & Procedures: Suggested Items for Your Formal Guidelines Audit procedures and frequency Review actual fraud / misuse cases Applying authorization controls Use MCC blocks to assist with enforcement of don t buy list Limit spending within MCCs Review transactions and modify as necessary

17 Compliance - Good training and Follow-Up What is the notification and follow-up process? Is non-compliance the result of overly strict policies? Is non-compliance the result of vaguely worded policies? Empower cardholders and managers, and hold them accountable Current cardholders and managers should participate in recurring training Ask current cardholders to lead training sessions or mentor new cardholders

18 Compliance - Record Keeping & Document Retention Records measure compliance Determine whether centralized / de-centralized storage is appropriate Investigate electronic storage Review proper record keeping techniques during training using actual examples Maintain attendance sheets from each training session Ensure all cardholders sign an agreement

19 Program Audit Tool New for SmartPay 2!! Program Audit Tool an audit, assessment and compliance assistance tool Electronic record of enforcement of policies Identifies Transactions of Interest that meet pre-defined business rules Allows AOs, APCs and auditors ability to identify misuse, abuse and perform monthly audit requirements Rules-based filters Dashboard summary view Report cards Integrated with Citibank Custom Reporting System (CCRS)

20 Account Management Exceptions Account credit limit in excess of <X> Single transaction limit in excess of <X> Account Cash limits over <X> Account Cash limits over <X>% of total Account Credit Limit New account not activated within 30 days of open date New account not used within <X> months of account open date # of cardholder accounts per hierarchy unit <X> # of cardholder accounts per billing account <X> # of inactive accounts per billing account; inactive = no activity for Y months NSF payment NSF payment with history of other NSF Posted payment amount that is <X>% of cardholder credit limit (111% recommendation)

21 Transaction Exception Rules Posted Transactions (s) causing over cardholder credit limit status Merchant city = cardholder account city <X>% of transaction from same merchant over <Y> billing cycles More than <X> # of merchant credits per billing cycle Merchant name = last name of cardholder Transaction amount in excess of account Single Credit Limit Single transaction amount within <X>% of credit limit Transaction amount over $<X> Posted transaction on closed account Suspect Merchant Names <X> Split Ticket -- multiple trans from same merchant, same tran date

22 Program Audit Tool

23 Program Audit Tool - Rules

24 The Program Audit Tool The Stop Light!

25 Program Managements is Easier with the Right Tools Here are some ideas: Employ electronic audit methods Test all transactions each month Use Citibank electronic tools to identify transactions requiring more research Transactions by MCC Review declined transactions Similar transactions each month GSA s Blueprint for Success GAO Web site: Auditing and Investigating the Internal Controls of Government Purchase Card Programs (Publication no: GAO G)

26 Summary Establishing your program Good policies and procedures Spotting fraud, waste and misuse Tools you can use

27 Reminders Thank you for attending this session Visit the Citi Welcome Center Exhibit Area Entrance, Sheraton Denver Conference Slide Show come see yourself shine Visit the Citi One-on-One Mini-Sessions Governor s Square Rooms 10 and 11 Please take a moment to complete your GSA survey for this session 27 go to View, Header and Footer to set date

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