CITY OF CITRUS HEIGHTS CREDIT CARD USAGE
Subject of Investigation
The use of credit cards by officials in the City of Citrus Heights.
Reason for Investigation
A grand jury in another county found problems with the use of credit cards by employees of various local governments in that county.
Method of Investigation
The following information was requested from the County of Sacramento and the cities of Sacramento, Folsom, Citrus Heights, Elk Grove, Galt, and Isleton
After reviewing the materials initially submitted, additional information was requested from and meetings were scheduled with officials of the City of Citrus Heights and the City of Folsom.
The use of credit cards by governmental agencies is a relatively new phenomenon as a means of purchasing goods and services. Consequently, a review of specific credit card charges needs to be evaluated in relation to the existence and conformance to policies and procedures governing the purchase of goods and services and travel on government business.
City staff provided the requested information regarding actual credit card usage, but did not indicate if the city council had approved the use of credit cards. Following is a list of positions, with revolving credit limits, issued a separate MasterCard by River City Bank.
Members of the Grand Jury reviewed the nine months of statements submitted and identified charges that they determined needed further review. The questions were grouped in the following categories:
Food. For the nine-month period, the members tabulated total charges of $7,868 for food. This included charges at restaurants and purchases at food stores. Of the total, $2,051 was identified as food purchased in conjunction with city council meetings.
Travel/Training. For the nine-month period, the members tabulated total charges of $35,160 for these two items. (It was hard to distinguish when travel was for the sole purpose of training.) For the category members classified as training, a total of $24,332 was charged. Members were concerned whether or not the charges conformed to policies related to budgeting, prior approval of trips, approval of amounts charged, and proper accounting of charges by department and budget account.
Equipment. The members were concerned whether or not several pieces of equipment were purchased without bid, and if so, what was the justification.. These included: $2,294 for a drinking fountain for the new council chambers; $868 for a digital camera; $1,224 for a refrigerator; and $1,123 for an unidentified item purchased at an appliance store.
Based on the concerns raised by the review of the initial information submitted, the subcommittee sent a second letter to the City Manager requesting a meeting and the following additional materials:
· Council resolution establishing city credit cards and their use.
a) established limits on credit card use;
· Copies of travel request and expenditure forms and justification for those expenditures.
Members of the Grand Jury met with the Citrus Heights City Manager and Finance Director to discuss questions on specific charges and to review the above requested materials.
a) The demand is legally due and owing by the City;
For regular claims the city uses a check request form and a reimbursement request form with justification and backup attached to the forms. With each monthly credit card billing, a backup sheet is attached to provide information on the purpose of the charge. Also, according to staff, a Purchasing Ordinance is being developed.
City staff provided adequate, but sometimes incomplete, responses to the concerns raised by the members of the Grand Jury. However, the review by the Grand Jury would have been aided by clearly defined policies adopted by the city council, and detailed control procedures to ensure that credit card charges conform to those policies, laws governing purchases, and approved budget appropriations. Existence of such policies and procedures would be of even greater value to persons who might be interested in reviewing the use of credit cards by Citrus Heights officials.
Since this is a new city that has been in existence since January 1, 1997, the Grand Jury concluded that the current procedures contained in Ordinance 97-14 are working reasonably well. However without a detailed audit, the grand jury cannot state with certainty that there has been no abuse of the use of credit cards. Without the necessary policies adopted by the council and procedures established by management, charges by individual employees are open to question as to propriety. Also there is the issue of consistency of use these cards among departments. Lack of policies and procedures raise questions concerning the possibility of abuse, and ultimately could lead to such abuse. The lack of review and approval of charges increases the possibility of abuse
Findings and Recommendations
Finding #1. The provisions of Ordinance No. 97-14, Section 3. Audit and Approval of Demands do not adequately address the use of credit cards for the purchases of goods and services, and does not set limits for meals, lodging, and incidental expenses for employees traveling on official city business.
Recommendation #1a. The City Council, by resolution or ordinance, should adopt policies regarding the issuance (including the per-card revolving credit limit) and use of credit cards by all officials and employees.
Recommendation #1b. The City Council should direct the City Manager to prepare and submit to the council for approval and filing with the City Clerk policies and procedures governing travel on official city business, including prior approval, a detailed listing of expenses claimed, and departmental manager approval of the claim for payment by the appropriate official.
Penal Code Section 933.05 requires that specific responses to both the findings and recommendations contained in this report be submitted to the Presiding Judge of the Sacramento Superior Court by September 30, 2001, from:
· Citrus Heights City Council