Date: April 21, 2014 To: Albert Ilg, Acting Director, Finance Department From: Craig Trujillo, Deputy Chief Auditor
ST
 
Tele: Office 860-757-9952
 
Cell 860-422-3600 City of Hartford Finance Department Procurement Card Program Audit Report 1415 I. Executive Summary
In accordance with our audit plan for the fiscal year ending June 30, 2014, we completed a follow-up audit in April 2014 of the Procurement Card Program of the City of Hartford. The purpose of the examination was to evaluate and test internal accounting and operating controls, the accuracy and  propriety of transactions processed, the degree of compliance with established operating policy and procedures, and to recommend improvements where required. The results of our examination were confirmed with Corporation Counsel through a requested legal opinion. We thank Finance Department management and staff for their cooperation and courtesies extended to us during our audit. Background The City of Hartford (the City) Procurement Card (P-Card) program provider is Bank of America (BOA) and administered through their related
financial system called “
WORKS
”.
 On a bi-monthly basis, the Finance Department downloads the P-Card purchasing data recorded in WORKS to the City
’s
 MUNIS Financial Management System (MUNIS). The transactions are coded to the related budget accounts and approved through the MUNIS workflow process hierarchy. The P-Card is a procurement tool that is designed to increase efficiency in the purchasing process, reduce administrative costs, improve financial and managerial control and simplify the purchasing process for smaller dollar purchases. BOA provides a rebate to the City  based on the level of spending on the cards. The spending limits for most of the active cards is $3,000 to $5,000. City P-Card purchases for the first nine months of fiscal year 2014 totaled about $497,000 for 1,512 transactions. The Accounting Division of the City Finance Department
s responsibilities are to approve transactions for appropriate allocation and sufficient cash-in-fund; review card activity documentation for propriety; and reconcile WORKS transactions to BOA billing statements. The Purchasing Division of the Office of the Chief Operating Officer is responsible for the administration of the P-Card program including management oversight, issuing cards, training users and coordinating activities and communicating with BOA, the
Treasurer’s
 Office, Finance Department, Pre-Audit and Cardholders.
 
 
City of Hartford Finance Department Procurement Card Program Audit
2
General We found that corrective action was taken on all findings noted in our June 2013 City P-Card Audit Report #1314. However, we found one expenditure totaling $3,000 that was inappropriately: approved by the Mayor; charged on the Chief Operatin
g Officer’s assistant’s P
-Card; done at the direction of the Management and Budget Director; and condoned and approved by the former Interim Finance Director
and City’s Controller, who also
administers the financial aspects of the P-Card program. Also, the general ledger account charged for the transaction was inappropriately used and the supporting documentation was inadequate, as it was just a cash register receipt with no details. Scope The scope of our review included a detailed examination of 76 City P-Card transactions totaling about $32,500 or 6 % of the total expenditures during the nine months ended March 31, 2014. We also reviewed the updated policies and procedures, MUNIS workflow approvals and the management oversight process.
II. Detail Findings
P-Card Transaction Testing During our detailed examination of P-Card transactions, we found one expenditure totaling $3,000 made in December 2013 that was inappropriately:
approved by the Mayor; charged on the Chief Operating Officer’s assistant’s
 P-Card by his Administrative Assistant; done at the direction of the Management and Budget Director; and condoned and approved by the former Interim Finance Director
and City’s Controller, who also administers the
financial aspects of the P-Card program, and is a clear violation of the City P-Card Policy. Also, the general ledger account charged for the transaction was inappropriately used and the supporting documentation was inadequate, as it was just a cash register receipt with no details. The inappropriate expenditure was for a portion of the funeral expenses for a slain daughter of a City employee, neither of which are City residents. We obtained a copy of the detailed invoice from the funeral home and verified that the $3,000 was credited to the bill. The finding noted above was confirmed by Corporation Counsel in a legal opinion requested by us, and also given to the Mayor and the Chief Operating Officer, received April 11, 2014.
The legal opinion to our questions also contains the Mayor’s respon
ses to the audit finding based on questions posed to him by Corporation Counsel during their process of rendering a legal opinion in this case. C
orporation Counsel’s
opinion on this
matter also serves as management’s response to our audit finding and rela
ted corrective action. Also, it was brought to our attention that the Management and Budget Director volunteered to and will reimburse the City for the $3,000. It is also our understanding that no further disciplinary action will be taken on any of the other employees involved in this transaction.
 
 
City of Hartford Finance Department Procurement Card Program Audit
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Management Response and Legal Opinion from Corporation Counsel
 
The Mayor states that he did not authorize any charges to be placed on the P-
Card of Maritza or any City of Hartford employee’s P
-Card for the purpose you question. According to the Mayor, when a request to assist an employee with funeral expenses was presented to him by another employee (not the worker whose daughter was being buried) he agreed the City would contribute $3,000 if funds could be identified. The Mayor further stated that he expected an invoice to be presented for payment and to be told how the payment would be made in advance.
In the Mayor’s opinion he felt it was appropriate to assist a dedicated employee who was in dire need a
fter suffering a tragic loss. It is not
normally the role of this Office to opine on the Mayor’s determination of what constitutes an appropriate expenditure of fund
s absent some evidence of fraud, conflict of interest, personal gain or some other illegal activity. It is important to note that none of those factors are present here and it appears that the Mayor was only interested in assisting a valued employee. However, even though the Mayor did not authorize use of a P-Card to pay funeral expenses, it w
as nevertheless inappropriate to authorize payment of funeral expenses for an employee’s family
member using City money. City monies should only be used for a valid public or official purpose.
 
On September 2, 2012, the Mayor, Acting Chief Operating Officer and Finance Director signed off on a set of policies regarding the issuance and use of P-Cards. The policy sets forth the terms and conditions under which employees in various job categories may use P-Cards, including applicable credit card limits, commodity code restrictions and required supporting documentation. The terms and condition may differ depending on whether the employee is the COO, a Department Head, supervisor or other designated card holder, and further depending on the procurement needs of the particular department. The policy specifically provides that P-Cards issued pursuant to the program, shall only  be used for official City of Hartford purchases. According to the e-mail you provided me for review, Management and Budget Director Jose Sa
nchez directed Maritza Braithwaite to pay $3,000 to Carmen Funeral Home for the expenses of a City employee’s family member.
I understand from speaking to Jose Sanchez and Comptroller Leigh Ann Ralls who is copied on that e-mail that they both felt a P-Card was the  best and most appropriate method of paying that expense. In fact, the Comptroller and the Acting Finance Director both approved of that transaction. Maritza Braithwaite is the administrative assistant to the Chief Operating Officer. She only did as she was directed to do by senior management. I find that Maritza did not violate P-Card policy by using her P-Card as directed. In order to prevent this from happening in the future, the Mayor advises that he has directed that the P-Card policy be amended to prohibit departments from charging P-Card purchases on
another department’s P
-Card. The Mayor has further directed that no one can authorize a P-Card holder to use his or her P-Card to make an expenditure on their behalf even if they as authorizer could have appropriately made the expenditure on their own. It is my further opinion that the Director of Management and Budget, the Comptroller and the former Acting Finance Director all violated the P-Card policy by directing and authorizing payment of the expense in question. The P-Card policy contains a section entitled compliance which provides in part: a Public Official or employee of the City who knowingly incurs any obligation or authorizes any expenditure in violation of policies included in this manual and Procurement ordinances in general, will be subject to disciplinary action. While I have seen nothing to indicate that any of the three individuals mentioned previously intentionally violated the section of the policy which requires that P-Cards only be used for official City of Hartford purchases, the policy was nevertheless violated. It is for the Chief Operating Officer and the Mayor as administrators of the
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