Killeen’s very first audit of its 10-year-old city credit card program used by senior managers and other top leaders shows inappropriate uses of public money, according to results released Tuesday.
The procurement card program began in 2008, and throughout its early years until about 2012 was frequently used by leaders at the top and other managers for breakfast or lunch meetings, holiday parties, coffee and kitchen supplies, and for special occasions to recognize administrative assistants, according to the report composed by City Auditor Matthew Grady.
“Whether intentional or unintentional, executive management’s collective attitudes and practices in the workplace result in a ‘tone at the top’ that invariably filters down through the ranks of an organization,” Grady said in the report. “An internal control system cannot function effectively without the support of executive management, who must not only enforce an organization’s internal controls, but live by them, as well.”
The results of the city’s latest audit poured salt on wounds still fresh from the management audit of city finances that culminated Sept. 5. That was conducted by Houston-based auditors McConnell & Jones, an outside firm, at the request of council members and residents who were concerned about city financial practices. The firm issued 26 recommendations.
The city’s financial practices previously were questioned over the past nine years by two public accounting firms conducting annual external audits. Gersbach, Franklin & Niemeier of Temple, and Weaver in Fort Worth found violations in the way the city handled grant money.
Grady in his Tuesday report argued that top leaders, who were not named, set a detrimental tone early in the program’s history by failing to staff the program with a full-time administrator, and by failing to set a good example for city staff.
The types of expenditures documented are not uncommon in the private sector, but “they are generally frowned upon, and usually prohibited in the public sector,” he said.
The expenditures amounted to less than $10,000 over several years, the report said, adding that although the amount was not extravagant, “(the expenditures) were inappropriate uses of public dollars, and were symptomatic of an attitude of permissiveness on the part of senior management.”
Additional findings included:
• In the program’s 10-year history, no evidence of any p-card privileges revoked for misuse
• Public money safeguards were inconsistent or not in place, such as separation of duties
• No real p-card program administrator from 2008 to 2011
• About 40 percent of purchases didn’t require preauthorization
• Policies did not require statement reconciliation
• No system for tracking violations
• No training program on how to use city purchasing cards
• No refresher training program for purchasing violations
The report highlighted several steps already taken or underway to correct problem areas, including reducing the number of p-cards in circulation, developing training materials, increasing face-to-face meetings to discuss purchasing, and amending city policy.
City Manager Ron Olson, shortly after beginning work for the city in February, asked Grady to perform the audit based on several factors, including the number of p-cards in circulation and past violations documented by the previous city auditor.
See Thursday’s edition of the Herald for more on what was found and what’s to come. Go to http://bit.ly/killeenfinances for more #KilleenFinances coverage.