Credit Card & P-Card Requirements to Help You Comply
by Jessica Sanchez, Staff Associate II
Posted on May 20, 2019
School districts typically implement a credit card or purchasing (p-card) program to ease the purchasing process for small and frequent purchases of goods or services; in addition, this provides an alternative method for vendors that do not accept purchase orders. With all the benefits that a credit card or p-card program can bring to a district, is it any easier to stay in compliance with the Uniform System of Financial Records (USFR) requirements? What lessons can we learn from school districts that currently use these cards?
The credit cards and p-cards are featured together in the Compliance Questionnaire with similar characteristics. Some of these requirements include, but are not limited to:
- a separation of responsibilities,
- establishing appropriate purchase limits,
- documentation of card user agreements, and
- necessary training on district policies and procedures.
In addition to credit card requirements, the USFR requires that p-cards use merchant category codes for purchase cards to prevent purchases from unauthorized vendors and apply pre-established purchasing limits.
One of the most common compliance issues for school districts related to credit cards and p-cards involves the timeliness of payments. It is advised that districts do this to avoid late fees or finance charges incurred during the year. Now that more financial institutions provide electronic access to all transactions with detail year round, it is a best practice to review balances on an ongoing basis rather than wait until a physical statement is received. Doing so can expedite the reconciling process and help anticipate expected monthly balances to be paid.
Another common noncompliance issue noted involves the requirement and retainage of signed card user agreements that outline the District’s card use policies and procedures. It is in a district’s best interest to not only make card users aware of District policies and procedures, but to hold them personally liable for any unauthorized purchases. To “hit two birds with one stone” and correct the third most common noncompliance issue noted, a district can provide individual trainings for employees as they sign the agreement. If a sentence is included in the agreement that states that the employee was provided training, this can provide the evidence required to document compliance with the USFR. This can minimize the number of staff trainings held and primarily reserve any kind of staff-wide credit card trainings for overall updates and changes to the policies and procedures.
Requirements set forth by the USFR allow a district to reduce the number of improper transactions made. Abnormal transactions can be detected sooner when monitoring electronic bank statements. Improper transactions could be prevented with documentation of training that holds employees accountable for understanding and upholding District policies and procedures. Although only a few suggestions were listed, it best to familiarize yourself with all guidelines the USFR has to offer. For more information, take a look at section VI-G in the USFR.