CITY OF FOLSOM CREDIT CARD USAGE
Subject of Investigation
The use of credit cards by officials in the City of Folsom.
Reason for Investigation
A grand jury in another county found problems with the use of credit cards in 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 Folsom and the City of Citrus Heights.
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 (they provided twelve months of charges instead of the nine months requested), but did not indicate if the city council had approved the use of credit cards. City staff submitted the following list of Visa cards issued by the U. S. Bank with their limits.
Members of the Grand Jury reviewed the twelve months of statements submitted and identified charges, which they determined needed further review. They also were concerned with the extent of charges for food and beverages and for travel.
Food and Beverages. For the twelve-month period covered by the submitted statements, food and beverage charges exceeded $7,200. These charges included meals at local restaurants and the purchase of take out food for meetings at city facilities. The members were concerned about whether or not there was any written polices governing this type of expense and/or any review of the reasons for the charges.
Travel. Rather than the amount charged for travel, 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 to departmental budget accounts.
Based on the concerns raised by the review of the initial information submitted, the Grand Jury 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.
(b) approval authority for credit card expenditures;
(c) requirements for back-up receipts; and
(d) how credit card usage is audited.
· Copy of travel request and expenditure forms and justification for those expenditures.
Members of the Grand Jury met with the Folsom City Manager and Finance Director to discuss questions on specific charges and to review the above requested materials. Over 50 specific charges were questioned and answers provided for approximately half of them. At the close of the meeting additional information was requested on 24 items. City staff subsequently provided adequate responses to these items. More than 50 questions were asked, 25 written and the others resulting from the discussion. Twenty-four questions were not answered at the meeting, but the City Manager provided written answers to these questions.
According to City of Folsom staff, there are no approved guidelines for the issuance and use of credit cards and no limits set per transaction. There is no policy defining purposes or setting dollar limits covering the purchase of food and beverages by employees. There is no review and approval of monthly statements.
Although there is no formal travel policy, the city does use a comprehensive Travel & Meeting Expense Form that must be completed by each employee. The form includes information on the destination, purpose, and dates of the trip. The employee is required to list daily expenses by specific categories. The form also contains the following per diem for meals.
There were many charges exceeding these amounts, local as well as out of town, without information as to whether more than one person was included or who they were.
Based on the review and discussion of individual charges on the monthly statements submitted, the Grand Jury determined that the use of credit cards by the city is subject to a limited degree of control. 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 of 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 increase the possibility of abuse.
Findings and Recommendations
Finding #1. There are no clear policies governing the issuance and use of credit cards for the purchase of goods and services, or regulating the expenses for travelling on city business.
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:
· Folsom City Council