Fraud Prevention Tip #38: Approving Purchasing Card Transactions – Good Questions to Ask

The use of Purchasing cards or P-Cards for small dollar transactions makes a lot of sense. The cost per transaction is significantly less than that incurred when a requisition, purchase order, invoice and check payment takes place. But with the convenience of P-Cards comes an elevated risk of abuse and fraud.

Compounding the risk is the fact that many organizations train employees in the proper use of P-Cards, but very few teach new supervisors how to review this activity. The flawed belief is that if you know the rules of using P-Cards, then of course you know how to review transactions submitted by subordinates.

Here is a long list of example questions to ask yourself when reviewing P-Card transactions. Create a shorter list that better reflects your business culture and exposures, and keep it handy the next time you review these purchases. Share your list with others in your work group or in an article for all employees.

1. What is the business purpose of the charge? Is it reasonable for the person making the claim?
2. Are original receipts or other support attached for every item claimed (as required by policy)?
3. Is the expense allowable under organization policies?
4. Are the costs claimed ‘reasonable’ considering organization culture, policy, locations?
5. Does the receipt show the name, address and phone number of the vendor?
6. Were any costs split to avoid the allowable maximum?
7. Would this type of purchase normally require the issuance of a Purchase Order?
8. Could the item purchased be used in the home? If so, verify location of item.
9. Was the purchase date or time unusual – for example weekends, evenings or just prior to a holiday?
10. Was the quantity purchased reasonable?
11. Was the item returned for store credit?
12. Is P-Card spending in line with supervisor expectations and budget?
13. Does the purchase location make sense?
14. Where appropriate, verify that the place of business actually exists (for example, call the phone number printed on the receipt or search for their website).
15. If the charge is unfamiliar, consider entering SKU codes from receipts into the website of the vendor (for example, Home Depot.com).
16. For fuel purchases, review total charges over a period of several weeks or months. Compare to vehicle mileage.
17. Find what was purchased. Verify existence and business purpose.
18. When month-end control reports are received, perform a one-to-one match of every item on the control report back to original receipts.

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”