Another organization landed in the news concerning frivolous P-Card spend. Namely, food purchases and various gifts created the biggest stir. Is your organization at risk, too? Are your policies and procedures explicit enough about prohibited P-Card purchases and practices? It is not enough to say “Use your P-Card wisely to make business purchases.” Keep reading to see tips on what to convey, as well as an overview of the controversial spend situation.
About the Controversial Spend
As reported by The News-Gazette in Illinois a couple months ago, employees of Champaign Community Unit School District No. 4 (“Unit 4”) used their Purchasing Cards to buy “scores of catered meals, working lunches and snacks, a $200 retirement print from the Larry Kanfer Gallery, flowers for funerals, and thousands of dollars in gift cards…” There was no written policy—and, I assume, little to no training—to direct cardholders on appropriate and inappropriate purchases. When concerns about P-Card usage were brought to the superintendent’s attention nearly a year ago, she failed to properly address the issue.
One employee had over 100 personal purchases with Smoothie King, which she documented with receipts, but no one ever questioned until recently. Food purchases occurred throughout Unit 4 by employees at various job levels, including school principals. Many transactions were over $500, which is not necessarily bad depending on the event, but there were no parameters or rules.
What About Your Organization?
Do your policies (P-Card or other) specifically address food and gifts, including flowers, balloons, gift cards, and charitable donations? If not, you are risking more than frivolous purchases and possible budget issues. It could be hard to terminate an employee for improper purchases unless the policy is clear and you can prove there was a violation.
What to Include in Your Policies
Under what circumstances will the organization pay for food and gifts? For example:
The purchase of funeral flowers are only allowed if the deceased person was a current employee.
Purchasing flowers/plants for decoration purchases are prohibited except for approved landscaping projects managed by the Maintenance Department.
Charitable contributions of any kind or any dollar amount are prohibited (e.g., allowing a vendor to add a $5 donation for a local food shelf).
The organization will not pay for food/beverages for onsite organization meetings, celebrations, etc. except when an event is intended for all employees and planned by Human Resources.
What are the dollar limits for allowed purchases? For example:
Funeral flowers cannot exceed $X.
Food for a working lunch should not exceed $X per person.
Is any employee/cardholder allowed to purchase food, flowers, and/or gifts? Or is this privilege granted to only certain employees? Monetary gifts like gift cards have tax implications and must be tracked appropriately, such as by Human Resources.
Are pre-purchase approvals required? If yes, by whom? What information must be documented within the request and approval? What other supporting documentation is required? Are there any related approved/preferred vendors?
Just when I think nothing will surprise me, I was surprised to read that Unit 4 did not have a written P-Card policy and the people in power allowed it to be this way for years. Policies and procedures are the foundation of any P-Card program. As a best practice, review yours annually and update when needed.
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What: Creating a Robust P-Card Policy and Procedures Manual
When: Thursday, July 25, 2019
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About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…