Everyone loves reading a juicy fraud story. We are instinctively drawn to the key information: what company was hit, what job did the fraudster do, how did they steal the money, and – most importantly – how much did they get?
These stories simultaneously make us happy that the fraud didn’t happen to us and frightened because we think it certainly could happen to us. One commonly-reported story is p-card fraud, with employees using their cards to buy luxury personal items like vacations and jewelry. While these stories fascinate and scare us, it’s important to put them into perspective.
Recently, Smyrna, GA’s human resources director of 14 years was fired after being accused of misusing his government p-card. Although the city has not revealed the extent of the fraud, it comes just a month after a neighboring city in the same county fired a court clerk currently awaiting trial for stealing $121,000.
In another, more high-profile case, the Tennessee Valley Authority – the nation’s largest public utility – is taking flak for a recent audit that found widespread p-card abuse. Although the total amount of the fraud hasn’t been determined, the Knoxville News-Sentinel reports that the TVA spends about $75 million on p-cards annually, with one-third of purchases in 2007 greater than $5,000.
According to the News-Sentinel, some of the purchases made on the cards include televisions, videogame consoles, alcohol, Internet software, DVD players and tuition. One cardholder charged more than $5.9 million on six cards over two years and provided no documentation.
While these stories clearly demonstrate the dangers of lax p-card control, what they are not showing is the majority of cardholders that follow the rules. It’s important for organizations not to focus solely on fraud cases like these when they are considering their own p-card programs. When properly managed, a p-card program can significantly reduce invoice volumes and streamline transaction processes.
However, this is not to say that p-card fraud cases should be totally ignored either. The key is to implement strong controls, such as price and MCC restrictions. Also, be sure to train cardholders about their expectations and responsibilities with the cards and quiz them regularly to make sure they haven’t forgotten.
Effective p-card controls are the difference between a smart company and one we read headlines about.
Patrick Harbin is Editor of The Accounts Payable Channel and Assistant Editor of The Accounts Payable Network
Comments
P-Card Fraud
The best way to avoid P-Card fraud is to establish strong preventive controls like establishing monthly and per transaction limits basing on the low dollar value purchase analysis. The prevention of purchase of Capital assests after a certain dollar limit also helps in controlling the fraud.
M.Sreenivasan Sarma, APM
Hyderabad
India- 500070
0919397888681