Rethinking the audit process.

Compliance hurdles. Recurring audit findings. Costly manual audit processes. These types of challenges detract from the benefits of Commercial Card usage. Fortunately, there are things you can do to reduce the issues and strengthen your auditing approach. To gain another expert’s insights, I spoke with Doug Hindsley of Card Integrity, a global procurement card expense management service company. Read on to see his perspectives on common P-Card policy infractions, how to address chronic problems, frequently overlooked audit criteria, the drawbacks of manual audits, and more.

Common Policy Infractions

Q: What type of violation or policy infraction do you see most often?

A: Purchasing from the wrong supplier or using the wrong process (e.g., not using the designated e-procurement portal to ensure negotiated pricing is obtained). Most organizations have preferred suppliers that purchasing has worked hard to cultivate. There is potential for huge dollar savings that can also increase the growth potential for the card program. If cardholders do not use the preferred suppliers, while this is not fraud, there can be a high cost. Many organizations lack the time and resources to monitor hundreds or thousands of micro-buyers with P-Cards to identify who is using the wrong suppliers and/or process for their purchases.

Addressing Chronic Problems

Q: What advice would you (or do you) give to organizations that have the same types of recurring issues each month?

A: It is all about communication. First, determine whether your published policies or procedures are outdated, thereby causing the issues. If not, when the same issue occurs time after time, it signals a need for change in the communication process. Talking to the cardholder or cardholder’s manager may not be enough. I recommend quantifying and summarizing the issues, based on the data, then distributing the findings to the various department heads. Instead of showing all the various issues at a transaction level, a summary can prioritize findings by department and compare one department to another. Seeing how each department stacks up to each other will help foster change.

Secondly, a program manager can focus on the impact brought on by recurring issues and why the change is needed. Often, communication focuses more on why cardholders can’t do something. However, the cardholder and/or manager may not understand the reason behind the issue or they may think the reason is unimportant. It can be helpful to translate an issue into something important to the offending department (e.g., budget, audit write up, canceling cards, etc.).

Considerations Regarding the Audit Process

Q: What are some examples of audit criteria that organizations commonly overlook but should include?

A: Everyone seems to focus on fraud. While this is critical, having additional checks and balances will increase confidence in the program. Some other aspects to check for include duplicate payments (between a card transaction and other payment, such as an employee reimbursement), debarred suppliers, internal spend, and procurement-related findings (e.g., service contracts on file).

Q: Besides process cost, what are some drawbacks of doing manual audits, especially manually auditing all transactions every month/cycle?

A: Most organizations have limited resources for this activity. Plus, a manual review/audit can have negligible findings, giving a false sense of comfort. We have found that companies with a 100% manual review process have employees (e.g., auditors or others) page through paper or imaged receipts for all the transactions. For each receipt, it is very difficult for anyone to look for multiple things that might signal fraud or a policy infraction. Scientific studies show that the average person can only recall about seven things in their mind at any given time. Even the most diligent of auditors may reach a point where the mind starts slipping into ‘is there any receipt attached or not’ type of review. Virtually no real thought has time to transpire from manual review. More effective reviews examine the tougher questions:

  • What does the merchant sell and should we have bought it?
  • Was it purchased following the correct procedures?
  • Does the receipt need supporting documentation for review?

The advantage of the manual review is the presumed reduction of false positives. The people doing the 100% manual review know the exceptions during the first pass. Some possible caveats include:

  • Manual receipt review is brain-numbing work, as indicated above.
  • The reviewers/auditors overlook transactions due to the volume.
  • Some transactions are assumed okay since the reviewer/auditor knows the cardholder (potential conflict).
  • An organization loses internal knowledge when the receipt review people leave or retire.

There is inefficiency in that the company looks at 100% of the transactions to find the 1% they claim need follow up.

About Auditing Solutions

Q: What is an advantage of using a third-party auditing service/solution?

A: A company like Card Integrity reviews 100% of the transactions to find the 5% requiring the customer’s review. When we look at the data, we apply upwards of 200 types of alerts on each transaction. We also compare transactions to each other, identify patterns for cardholders, review category and supplier adoption—something that realistically cannot be done manually. Our service pulls out the items that need the customer’s judgement, specifically pointing out what might be in question on the transaction. The customer then only looks at a much smaller subset of data with targeted reasons why they are looking at it. The time saved can be applied to better program communication and program growth.

Q: Organizations with smaller card programs might think third-party auditing technology/services are beyond their reach. What do you think? Is there a certain transaction volume that typically yields a quick ROI?

A: The smallest programs we work with have about 100 cards and, yes, there is value. At that size program, the value comes from not having to worry about only one person doing the audit. Normally, the same person who is reviewing the program is the one in charge of expansion. Reducing the workload on the audit allows for program growth or enhanced communication to build confidence.

Who is Card Integrity?

In my own words... Talking with Doug expanded my knowledge of Card Integrity, which was limited initially; I only knew they offered an auditing solution. As I learned more, I found they share my passion for helping organizations improve their card programs. Card Integrity provides a service rather than software. They use proprietary analytical tools to review and transform your data into customized reports that you can use for program management, as well as sourcing initiatives and more. Visit their website to learn more and, if you will be at the NAPCP Commercial Card and Payment Conference next week, stop by their exhibit table.

Related Resources

For additional content related to auditing, visit the Purchasing Card Audits webpage.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Why some technology projects fail.

We know that people can make or break an organization’s purchase-to-pay strategies. I previously wrote two related posts about the influence of executives and staff members (see below). However, even when the right people are on board, a technology project might not turn out as expected. Following are three reasons why, tips, and specific advice for an AP automation pursuit.

Unrealistic Expectations

The trouble can begin early on when an organization thinks technology will solve all their issues, but they fail to identify the root causes of problems. As an example, AP Now’s 2016 State of Invoice Processing Survey ( reveals slow internal invoice approval is the most common ongoing invoice issue experienced by organizations. Technology is not the magic answer for this. While technology can make approvals easier to do, the slow people will probably continue to be slow unless they are held accountable to a defined timeline. 


Determine your biggest pain points and explore why they occur. Do you need a change in policies and/or procedures? Do employees need more training? To what extent will technology help resolve the problem?


Rushing to select and implement a technology solution often means that an organization fails at multiple levels during a project. You might overlook elements needed by stakeholders or the complete picture of how a process works (and where new technology is most critical). If you skip doing thorough system testing, manageable hiccups can turn into emergencies when the system goes live. 


  • Assign the project manager role to someone who is equipped with project management knowledge and skills.
  • Document existing processes, stakeholder requirements, goals, etc.
  • Address how you will resolve any conflicting requirements between stakeholders. What will take precedence?
  • Develop and follow test scripts to ensure the technology works as expected before fully implementing. 

Lack of Communication

No list of pitfalls is complete without the proverbial lack of communication. This could mean forgetting to revise relevant policies and procedures, a lack of training to system users, failing to communicate with affected suppliers, and more.


The obvious action is to turn this around by communicating effectively throughout the organization and with suppliers. 

  • Note who will be impacted by the technology and, therefore, need training.
  • Offer a clear place to go if people have questions.
  • Explain the purpose of the new technology.
  • Monitor how users are handling the technology and the common errors.

Related Blog Posts

The previous posts about the influence of 1) executives and 2) staff members are:

  1. Two issues plaguing B2B payments
  2. Staff members are a wildcard
Frustration with a technology project is more likely to occur if your organization does not do solid advance planning.

Frustration with a technology project is more likely to occur if your organization does not do solid advance planning.

AP Automation Advice

When it comes to AP automation, respondents to AP Now’s 2016 State of Invoice Processing Survey recommend:

  • Ensure you will have dedicated IT support throughout the project.
  • Try out/demo different solutions before committing to one.
  • Verify that all your applicable systems will be compatible with each other.
  • Anticipate that AP will receive a spike in questions until users are comfortable; plan staffing accordingly.
  • Be assertive with suppliers regarding rules for invoice submission.
  • Do a longer pilot period before rolling out to everyone. 

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
— Bill Gates

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Putting cardholders at ease.

There are many, many ways to improve a Purchasing Card program, but one answer is ensure the cards are easy to use. Satisfied cardholders (and managers) translate into support that can move your program to the next level. Below are three elements to assess in an effort to determine whether your program is causing unnecessary pain. 

Purchase-to-Pay Process

Consider the basis of P-Cards and the reasons your organization pursued a program. P-Cards are intended to simplify the purchase-to-pay (P2P) process, resulting in cost savings and efficiencies. Using a card to purchase needed business goods and services should be the quickest and easiest option. If it isn’t, identify the pain points. For example, are cardholders required to obtain pre-purchase approval for every purchase? This creates more work and slows the process down. Does it really add value, especially for low-dollar purchases?

Allowed and Prohibited Purchases

Do your program policies center on everything cardholders should not purchase? I have seen policies that consume an entire page outlining what is prohibited, but, for allowed purchases, there is only a brief mention of the card’s per-purchase limit. This is discouraging. No one will want to use their card and, given all the restrictions, they might be afraid of making a mistake.

First, it might be time for your organization to expand allowable purchases and/or limits. However, either way, make it enticing to use the card by describing the benefits. Be specific about the targeted purchases, helping cardholders easily see what they can and should do. 


Manual tasks can be painful. Ensure cardholders and managers have access to technology to help them more efficiently execute their responsibilities. Technology goes beyond transaction review functionality, but some organizations still rely on paper statements (yes, it is true). Most technology solutions from the card issuers include a mobile option especially useful to managers who need to approve transactions on the go. Also explore whether receipt imaging is available to improve how supporting transaction documentation is handled.  

Obtain Feedback

Ease of use depends on the eye of the beholder. See if your assessment aligns with that of program participants. Select a limited number, but diverse group, of cardholders and managers. Invite their feedback, sharing your goal to enhance ease of card use. Then prioritize what to improve first.

Help is Available

If you need assistance with evaluating your program improvement opportunities, please submit a contact form. Recharged Education can help!

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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