Breakout Session # 212 Janice Hill Director, Procurement Programs

1. NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

2. Purchase Card Quality Assurance Breakout Session # 212 Janice Hill Director, Procurement Programs U.S. Customs and Border Protection Date April 28, 2004 Time 2:45 pm - 3:45 pm NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

3. Department of Homeland Security U.S. Customs and Border Protection Purchase Card Program Quality Assurance NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

4. Today’s Agenda • U.S. Customs & Border Protection (CBP) Purchase Card (PC) Program Overview • CBP PC Quality Assurance Program • Role of the Approving Official • Tips for Establishing Polices and Procedures • Compliance • Fraud, Waste and Abuse Indicators • Tools • Questions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

5. U.S. Customs and Border Protection (FY 2004) • 42,000+ employees • 800+ new cardholders (trained between November, 2003 and February, 2004) NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

6. The Purchase Card System (PCS) • Automated system designed to control and account for purchases made with the Purchase Card • Allows authorized individuals to designate funds in advance of purchase • Records purchases as they occur • Certifies billing transactions posted to Citibank card accounts NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

7. Purchase Order Log • Actual purchase made from a merchant via the card and convenience checks • Serves as the funds obligation action in PCS • Within 5 business days after order is placed NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

8. Purchase Card Systems Accomplishments • Eliminated the requirement for a written requisition • Payment from the bank via EEF within 5 days (FY2004, 1 day) • Simplified use of Object Class Codes • On line entry of Purchase Order Log/edits for funds control/review of available funding • Statement requires Approving Official verification • Integration with agency’s Financial System • Auditing via statistical sampling NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

9. Internal Controls Philosophy • Critical factor for good management • Continual assessment and evaluation of internal controls by program management • Provides reasonable assurance, not absolute assurance NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

10. Internal Control Standards • Control Environment • Risk Assessment • Control Activities (Policy, Procedures, Use Standard Techniques) • Information and Communications • Monitoring NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

11. Internal Control Concerns • Prompt Statement Reconciliation and approval • Approving Officials need to look at receipts • Remove Cardholders/Approvers that are habitually late reconciliation/approving • Questionable purchases • Tracking Nontraditional Awards • Ensure Disputes are promptly handled • Cancel card for leaving / retiring employees • Use Convenience Checks appropriately, only the Cardholder signs the charge slip NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

12. Roles and Responsibilities • THE APPROVING OFFICIAL IS: • Accountable for purchases made under his/her supervision • Responsible for reviewing Cardholder’s monthly statement • Verifying that all transactions made are in accordance with established policies and procedures when approval is made • The first line of defense for identifying fraud, waste and misuse for the card program • Required. An Alternate Approving Official is strongly encouraged NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

13. Roles and Responsibilities • THE APPROVING OFFICIAL MUST: • Review and approve or reject Cardholder’s monthly statement within 7 calendar days after receipt in the Purchase Card System (PCS). • The monthly statement review includes examining receipts and invoices for the monthly statement to ensure that all transactions are legitimate government purchases • Reconcile Cardholder’s statement in their absence • Ensure the Bank and the Purchase Card Help Desk are notified in the event of a lost card. Notify Internal Affairs for a stolen card • Send a request to the Purchase Card Program Coordinator for convenience checks to be issued • Request cardholder account maintenance functions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

14. Establishing Policies & Procedures Tips..Your policies should encourage risk management vs. risk avoidance • Set specific policies to ensure proper controls are in-place • Create cross functional team when establishing policies – involve auditors, IG representatives • Publish procedures and widely distribute • Develop agency-wide newsletters • Use your IntraNet • Incorporate policies into new cardholder training • Use policies as outline for training agenda NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

15. Establishing Policies & Procedures Tips • Develop reminder messages for all cardholders and managers • Use statement messages or broadcast e-mails • Review policies & procedures at least annually • Modify according to audit findings and feedback received during training sessions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

16. Establishing Policies & Procedures Tips • Suggested items that should be part of your formal guidelines: • Who should/should not have cards • How to obtain, change, close an account • Training requirements • References to FAR • “Don’t buy” list • Supply sources • Reconciliation procedures • Audit procedures & frequency NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

17. Establishing Policies & Procedures Tips • Suggested items that should be part of your formal guidelines: • Review actual fraud/misuse cases • Applying authorization controls • Use MCC blocks to assist with enforcement of “Don’t buy” list • Limit spending within MCCs • Review transactions and modify as necessary NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

18. Compliance Tips…good training and follow up leads to compliance -- most of the time! • What is the notification and follow-up process? • Is non-compliance the result of overly strict policies? • Is non-compliance the result of vaguely worded policies? • Empower cardholders & managers, hold them accountable • Current cardholders and managers should participate in recurring training • Ask current cardholders to lead training sessions or mentor new cardholders NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

19. Compliance Tips • Record keeping & document retention is a vital component • Records measure compliance • Determine whether central/de-centralized storage is appropriate • Investigate electronic storage • Review proper record keeping techniques during training using actual examples • Maintain attendance sheets from each training session • Ensure all cardholders sign an agreement NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

20. Fraud, Waste, and Misuse Indicators • Multiple purchases to the same vendor in a very short time frame • Not using required sources • Missing receipts • Not reconciling and certifying the monthly statement timely • Failure to provide supporting documentation (cash register receipt, shipping invoice, copy of the property system screen for equipment) for review of statement transactions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

21. Fraud, Waste, and Misuse Indicators • “Split” transactions • Lack of variety among supply sources especially when items or services are not available from mandatory supply sources • Look for transactions from unknown merchants • Recurring charges may be suspect • Identify large numbers of transactions in even dollar amounts • Increments of $25, $50, $100 NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

22.   Tools • Managing your program is easier when you have the right tools. Here are some ideas: • Employ electronic audit methods • Test all transactions each month • Use Bank System, Ad Hoc programs to identify transactions requiring more research • Transactions by MCC • Review declined transactions • Similar transactions each month? • Talk to your IG’s office to see what tools they use NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

23. Summary • U.S. Customs and Border Protection’s Success Story • Good Procedures • Good Policies • Spotting Fraud, Waste and Abuse • Tools You Can Use NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

24. Questions NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”

25. That’s all folks! NCMA World Congress 2004 “Maximizing Value to Stakeholders…Contract Management in the Business World”