CHILDREN AND YOUNG PEOPLE (SCHOOLS)
PURCHASE CARDS – BEST PRACTICE
DISCUSSION DATE:
PRODUCED BY:
L Reid
Date: January 2017
_____________________________________Audit Plan 2016/17
INTRODUCTION
1.
The Internal Audit Plan includes a resource to carry out reviews into the financial
management arrangements at a sample of schools. One of the areas that may be
covered is that of Purchase Cards. The purpose of this report is to highlight best
practice in relation to the operation of the Purchase Cards, ahead of any future
audits at individual schools.
2.
A self-assessment checklist is attached at Appendix 1. Any non-compliance with the
best practice referred to within this checklist could potentially result in adverse
consequences for a school.
3.
An audit has been recently carried out on Purchasing Card use across the Council.
A number of recommendations have been made to schools visited. The selfassessment checklist highlights key controls and associated risks, including areas
where concerns have been identified. Internal Audit may request to see completed
self-assessment checklists as a part of future review work.
ACTION REQUIRED
4.
The self-assessment checklist should be used by schools to identify whether they
need to implement any actions to improve the controls that are in place to mitigate
the likelihood of any issues arising.
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PURCHASE CARDS – BEST PRACTICE
APPENDIX 1
PURCHASE CARDS – BEST PRACTICE
RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
1. Arrangements are in place to ensure the security of Purchase
Cards.
Purchase Card holders should not write down their Purchase Card
Number or PIN or share them with other members of staff.
Purchase Card holders should keep their card on their person at all
times.
Under no circumstances should Purchase Card holders let another
person use their card.
Associated risk if control not in place:
Misuse of Purchase Card by someone other than the card holder.
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RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
2. Purchase Card holders terminating their employment are
required to hand over their card so that it can be terminated.
A Destruction of Purchase Card form should be completed and
returned promptly (with the Purchase Card) to the Council’s
Payments and Controls Team for destruction.
Associated risk if control not in place:
Misuse of Purchase Card after the employee has terminated their
employment.
3. Lost / stolen Purchase Cards and suspected fraud are
reported immediately in accordance with protocol.
Anyone who suspects that there is fraudulent activity on their
Purchase Card, or their Purchase Card has been lost / stolen, must
immediately contact the Lloyds Bank and the Purchase Card
Administrator in the Council’s Payments and Controls Team to
confirm the Purchase Card is stopped. The relevant phone numbers
should be readily available in the event of an incident.
Associated risk if control not in place:
Fraud / inappropriate expenditure of public money.
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PURCHASE CARDS – BEST PRACTICE
RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
4. Credit limits are agreed by the budget holder.
Purchase Card holders must not ‘split-line’ a transaction to bypass
the single transaction limit. This is the process of asking the merchant
to split the amount to pay into smaller, individual payments.
Purchase Card holders can only change their spending limits or
purchase categories by prior agreement with their Budget Holder or
Approver.
Changes are actioned by the Council’s Payments and Controls Team
once authorisation is confirmed. It should be noted that the changes
can be made quickly once email authorisation is received by the
Payments and Controls Team.
Associated risks if control not in place:
Inappropriate use of Purchase Cards.
Inaccurate recording of expenditure and inaccurate reporting within
the Council.
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PURCHASE CARDS – BEST PRACTICE
RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
5. Segregation of duties is in place in the key stages:



Purchase Card holder
Reviewer (it is noted that the Card Holder can perform this
role or a ‘delegate’)
Approver
This control links to Control 1; cards and log-in details cannot be
shared with anyone.
Associated risk if control not in place:
Non-detection of fraud / inappropriate expenditure.
6. Training and guidance is available to all staff involved in the
use of Purchase Cards.
Training and guidance can be found on the Lloyds website in the
news section as well as on the Council’s intranet by searching
“Purchase Card” in the intranet search box.
Card holders / reviewers / approvers should also refer to the content
of the user agreement they signed, periodically.
Protocol regarding VAT rules, recording VAT accurately and ‘splitWAKEFIELD COUNCIL INTERNAL AUDIT
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RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
lining’ can also be found on the intranet. It is also readily available by
contacting the Council’s Payments and Controls Team as well as the
Schools Finance Team.
Associated risks if control not in place:
Inappropriate use of Purchasing Cards.
Purchasing inappropriate goods / services.
Incorrect / incomplete recording of transaction information within the
controls system (SDG2).
7. Purchase Card holders record VAT accurately within the
Lloyd’s SDG2 system.
A Purchase Card VAT guide can be downloaded from the Lloyds
Resource Centre under the title ‘Wakefield Council - VAT Guidance’.
A VAT manual is available on the Council’s intranet.
There is also guidance within the intranet PCards documents
regarding attaching receipts to transactions recorded on the SDG2
system. These documents highlight the importance of obtaining valid
VAT receipts, attaching, saving / securing and only recording VAT
where a valid receipt is held and care being taken when purchasing
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RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
from Amazon.
A VAT receipt MUST be obtained in order for the school to reclaim
the VAT.
Associated risks if control not in place:
If VAT is recorded incorrectly or receipts are not kept as proof of
purchase then you will NOT be able to get any reimbursement on
your VAT. This has a direct impact on both yours and the Council’s
budget.
Non-compliance with HMRC requirements.
Adverse impact to the School budget and the Council’s ability to
reclaim all VAT.
8. Purchase Card holders record accurate expenditure details
within the controls system.
Purchase Card holders must always ensure that each purchase has
been coded to the correct account code and that the transaction
details have been correctly recorded in the transaction comments
box.
Spends of over £250 with government Purchase Cards must be
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RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
made available to members of the public through the Wakefield
Council website due to the Local Government Transparency Code
2014. Therefore it is recommended that as much detail as possible is
shown when recording transactions.
Associated risks if control not in place:
Inappropriate purchases may be made and not easily identified, if
expenditure is not being correctly coded. The budget will not
accurately reflect the type of expenditure incurred.
The School may be accused of not being transparent on Purchase
Card expenditure that is in excess of £250.
Inaccurate financial records and reporting.
9. Purchase Card holders (and transaction reviewers) regularly
check the controls system to review transactions, ensuring
the spend activity reflects card use.
Checks should be made on the SDG2 system by the Purchase Card
holder / reviewer on at least a weekly basis. This must be done
whether or not a Purchase Card is used frequently, in order to ensure
card details are not being used fraudulently (i.e. by 3rd parties).
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PURCHASE CARDS – BEST PRACTICE
RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
Associated risk if control not in place:
Untimely detection
transactions.
of
fraudulent
/
suspicious
/
erroneous
10. Purchases are appropriately scrutinised by the reviewer and
approver.
Checks should be made on the SDG2 system on at least a weekly
basis by the card holder / transaction reviewer to ensure all
purchases are appropriate and no fraudulent transactions have taken
place.
When conducting their role, the transaction reviewer and approver
should check that Value For Money has been achieved and that there
is a genuine need for the item(s) purchased. Where concerns arise,
advice / guidance can be sought from the Payments and Controls
Team.
An example of disallowed expenditure is flowers / gifts. These should
instead be funded by employee collections and not bought via
purchase cards.
Associated risks if control not in place:
Inappropriate or fraudulent transactions going unnoticed.
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PURCHASE CARDS – BEST PRACTICE
RELEVANT
ISSUE AT THE
SCHOOL?
ASSOCIATED CONTROLS
ACTIONS REQUIRED TO ADDRESS ISSUE
Y/N
11. Transactions are approved in a timely manner.
Approvers must respond to the system emails promptly to prevent
transactions being delayed in the system. Failing to comply with the
process for approving transactions will result in cards being blocked.
Associated risk if control not in place:
Delay in posting appropriate transactions to budgets.
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