Many California local governments participate in the State of California’s CAL-Card procurement card program. The State contracted with U.S. Bank National Association to provide Visa credit cards to authorized State employees, and has opened the program for any local government in California that wants to participate.
The CAL-Card program is intended to enable designated local government employees to make authorized small dollar purchases of supplies, materials, equipment, and services for the local government not exceeding a maximum specified dollar amount. By allowing employees to purchase such items via a credit card, the local government streamlines the purchasing and payment process by:
What are Possible Drawbacks to the Purchasing Card Program?
While the program is a great way to make governments and their operations more efficient, the purchasing card program also subjects local governments to inherent risks by decentralizing the purchasing process and allowing a greater number of employees to directly purchase materials and supplies.
Although most local governments believe that the savings from simplifying high-volume, small-dollar purchases of materials and supplies justifies the risk of losses, it is important that management is vigilant and that controls are adequate.
Risks inherent in a purchasing card program are:
In order to manage these risks, following are 10 important internal controls over purchasing card programs that local governments should have in place:
The CAL-Card website has many forms, documents, templates, agreements that local governments can use to develop their purchasing card program. Perhaps the most helpful reference document is the Cardholder Guide. It contains descriptions of cardholder duties, including obtaining receipts, reconciling to bank statements, approvals, what to do in case of returns, lost cards or changing credit limits.
Read our next blog post covering audits of purchasing card programs here.
If you have any specific questions about the CAL-Card program, please reach out to Kevin directly at no charge:
Kevin Harper, CPA
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Kevin W. Harper is a certified public accountant in California. He has decades of audit and consulting experience, entirely in service to local governments. He is committed to helping government entities improve their internal operations and controls.
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