P-card abuse surfaces at NDOT
By Bill Donovan
Special to the Times
WINDOW ROCK, March 28, 2013
The Navajo Nation Office of the Auditor General, in a audit review released recently, had severe problems with the use of the p-card by employees of the Navajo Division of Transportation.
The p-card is basically a credit card that is given to tribal employees to use to purchase items they need in the performance of their duties. The theory behind it is that it makes the purchase of needed items faster and more efficient than going through the regular purchase order process.
The p-card controversy has been going on for several years now with some people losing their p-card privileges because of abuse and others having restrictions put on their use.
Erny Zah, director of communications for Navajo Nation President and Vice President, said restrictions have been placed on staffers in that office on how and when their p-card can be used and the number of people with access to p-cards has been reduced.
The audit done at the tribe's Division of Transportation discovered a variety of problems that auditors say must be addressed by those overseeing use of the cards.
Among the problems discovered in the audit were: Failure of employees to get itemized receipts to validate the purchases, a pattern of exceeding travel per diem limits, using the card to purchase meals locally (which is not allowed), and p-card use for travel which was not authorized by the tribe.
Overall, the audit said, supervisors appeared to have poor control over the use of the cards.
The audit covered the period October 2007 to June 2012. During that period, NDOT employees used their p-cards to pay for $1,972,789 worth of expenses. The audit also revealed that p-card charges gradually increased every year, going from under $100,000 in 2008 to more than $700,000 in 2011, the last full year covered in the audit.
As part of the audit, the auditors looked at 398 p-card transactions totaling $451,993 to see if employees followed the proper procedures. They questioned $407,571 of these transactions - 90 percent - for one reason or another. In 97 percent of the cases, no effort was made to get quotes from other vendors to see if the employee could find a cheaper way to purchase the item or expense.
The audit also revealed that in 61 percent of the travel expenses that were examined, the employee did not follow established tribal travel policies. In some cases, because of the lack of supporting documents, auditors said they could not verify whether the expenses were consistent with the department's purpose and objectives.
Tribal employees who go on trips are given per diem limits on how much money they are authorized to spend. For example, the authorized per diem to go to Albuquerque is $81 for lodging but the auditors found numerous charges for actual lodging exceeding $100 per night.
They found the same situation for meals with employees allowed $56 a day for meals in Albuquerque. Employees on the average violated this and spent more 22 percent of the time.
The auditors also discovered that p-cards were used for promotional gifts, charitable contributions and groceries.
For example, between 2009 and 2011, NDOT employees spent more than $121,000 for fairs with most of this used to purchase promotional items such as flyers, ballpoint pens, bottle openers, bike bottles, thermos, toy bulldozers, toy traffic cones and candy that were distributed to kids and adults who attended the fair.
The department also spent during the 57-month period $24,000 on gifts like Pendleton blankets, jackets and turkeys. During the same period, $4,300 was spent on charitable contributions.
"These p-card purchases are questionable," said the audit, "because NDOT could have used these funds to cover direct service costs and as such, permitted NDOT to provide more direct road services such as road maintenance."
The auditors strongly suggested that more training be given to NDOT employees about the proper way to use the p-cards and for supervisors to set up procedures to better monitor how NDOT employees are using to p-cards to reduce abuse in the future.
Paulson Chaco, the director of the division, said that he has consulted with his staff and has found the audit "to be extremely helpful in improving the daily and long-term operations of this division."
However, a reading of the audit findings revealed that it will require a clear and concise direction from the tribe's Division of Finance to establish comprehensive ground rules for p-card use.
Chaco said that when he looked over the tribe's policies regarding p-card use, he discovered that no "finalized" or "adopted" policies and procedures exist.
"This creates potential problems for supervisors and managers who are striving to better the system," he said.
He stressed that the division will "utilize the audit as a tool to ensure compliance is upheld with the highest regard."
On the subject of spending $24,000 for things like Pendleton blankets and jackets, Chaco pointed out that this is not a violation of the purpose of the road fund, adding the department uses these funds to recognize employees of the department for accomplishments.
The amount spent (1 percent of the total budget) is low compared to what corporations across the United States spent on their valued employees, he said.
In closing, he said that NDOT has begun steps to conduct in-house training on a quarterly basis for those who use the cards as well as those who approve and supervise their usage. Steps have also been taken, he said, to streamline the reconciliation process "to easily detect errors and non-compliance."