Item - 2009.AU14.4
Tracking Status
- City Council adopted this item on January 26, 2010 without amendments.
- This item was considered by Audit Committee on December 16, 2009 and was adopted with amendments. It will be considered by City Council on January 26, 2010.
AU14.4 - City Purchasing Card (PCard) Program - Improving Controls Before Expanding the Program
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
City Council Decision
City Council on January 26 and 27, 2010, adopted the following:
1. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement clear and effective procedures to:
a. Reduce the number of monthly transactions with outstanding documents or approvals
b. Follow up on transactions with outstanding documents or approvals in a consistent manner
c. Recover the City’s GST rebates from PCard purchases
d. Ensure cancellation of individual PCards according to policy.
2. City Council request the Treasurer to validate employment status of all current cardholders. Further, in consultation with Heads of Divisions participating in the PCard program, the Treasurer develop and implement clear and effective procedures to address the timely cancellation of PCards upon employment termination or extended leave.
3. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement effective review, monitoring, and follow-up procedures, at the divisional and Corporate levels, to ensure compliance with PCard policies and procedures.
4. City Council request Heads of Divisions participating in the PCard program to ensure that a divisional approval list outlining cardholders and their respective approval supervisors is developed and routinely reviewed for appropriateness.
5. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard Program, to ensure adequate controls are incorporated into the PCard approval process to detect inappropriate authorization and minimize the risk of unauthorized alterations to purchase logs.
6. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard Program, to ensure that cardholder reconciliation of purchase logs with PCard system records is consistently implemented.
7. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard program, to develop procedures whereby management staff have regular access to information on the total number and types of PCard purchases made for their office/unit.
8. City Council request the Treasurer to ensure that PCard documents, including purchase logs and receipts, are stored in a secure manner to prevent unauthorized access.
9. City Council request the Treasurer to undertake the necessary steps to improve effectiveness of PCard training. Such steps should include, but not be limited to:
a. Ensuring the training includes a review of the importance of individual roles and responsibilities in the control framework
b. Providing refresher training where needed.
10. City Council request the Treasurer to undertake the necessary steps to improve efficiency of the PCard process, including steps to explore the feasibility of using the PCard system to generate purchase logs for cardholders, and re-assess what information is necessary for cardholders to provide in the purchase logs.
11. City Council request the City Manager to ensure that the Expense Claim Policy for Staff of the City of Toronto (March 10, 1998) is reviewed, updated, and made accessible to staff.
12. City Council request the Treasurer to develop and implement measures to improve compliance with Corporate policies and procedures pertaining to business expenses.
13. City Council request the Treasurer to develop standards or guidelines for providing food and/or beverages at staff meetings and functions.
14. City Council request the Treasurer to undertake the necessary steps to improve cardholder compliance with Corporate purchasing policies and procedures. Such steps should include, but not be limited to:
a. ensuring cardholders receive adequate training in purchasing policies and procedures
b. monitoring PCard purchases to identify non- compliance with purchasing policies.
15. City Council request the Treasurer to ensure that PCard purchases are regularly monitored and analyzed to identify opportunities for blanket contract.
16. City Council request the City Manager to review the current sundry expense policy and consider integrating the requirement to reduce the sundry expense claim when meals are provided at conferences or business meetings, or when meals are paid for by the City.
17. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement procedures to reduce the number of inactive or low usage cards, and cancel inactive cards where necessary.
18. City Council request the Treasurer to develop and implement strategies to promote and expand the use of PCards by City divisions. Such strategies should include, but not be limited to:
a. analyzing divisional purchasing patterns to identify potential areas for expansion
b. developing and implementing measures to increase the use of PCards by divisions
c. setting performance goals for the City based on the number of participating divisions and yearly PCard purchase volume.
19. City Council request the Treasurer to ensure adequate contract review and management practices for the PCard program including:
a. a thorough review of the contractual terms and rebate rates and volume tiers
b. retaining a copy of the final contract.
20. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop a long term strategy for continuous improvement of the PCard program including:
a. establishment of a City-wide User Group
b. regular reviews and updates of policies and procedures.
21. City Council request the Auditor General, in consultation with the Director, Internal Audit Division, to conduct random checks of PCard transactions, and report back to the Audit Committee for its July 2010 meeting on his findings and any further action needed.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25346.pdf
Appendix 1 - City Purchasing Card (PCard) Program - Improving Controls Before Expanding the Program
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25347.pdf
Appendix 2 - Management's Response
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25348.pdf
Motions (City Council)
That Members of Council be permitted a further opportunity to ask questions of City officials on Item AU14.4.
Vote (Extend Debate) Jan-26-2010 4:58 PM
Result: Carried | Two-Thirds Required - Audit 14.4 - Holyday motion to allow staff to respond to further questions |
---|---|
Total members that voted Yes: 26 | Members that voted Yes are Paul Ainslie, Sandra Bussin (Chair), Shelley Carroll, Raymond Cho, Janet Davis, Frank Di Giorgio, Rob Ford, Mark Grimes, Doug Holyday, Cliff Jenkins, Norman Kelly, Chin Lee, Gloria Lindsay Luby, Joe Mihevc, Denzil Minnan-Wong, Howard Moscoe, Frances Nunziata, Case Ootes, Cesar Palacio, John Parker, Gord Perks, Kyle Rae, Bill Saundercook, David Shiner, Michael Thompson, Adam Vaughan |
Total members that voted No: 2 | Members that voted No are Mike Del Grande, Peter Milczyn |
Total members that were Absent: 17 | Members that were absent are Brian Ashton, Maria Augimeri, Glenn De Baeremaeker, Mike Feldman, John Filion, Paula Fletcher, Adam Giambrone, Suzan Hall, A.A. Heaps, Giorgio Mammoliti, Pam McConnell, David Miller, Ron Moeser, Joe Pantalone, Anthony Perruzza, Karen Stintz, Michael Walker |
The Deputy City Manager and Chief Financial Officer be requested to report to the Audit Committee with a list of the names of the 1254 staff who have been issued a PCard, together with the expenses they charged during the period January 1 to August 31, 2009.
Vote (Amend Item (Additional)) Jan-26-2010 6:03 PM
Result: Lost | Majority Required - Audit 14.4 - Ford - Motion 1 |
---|---|
Total members that voted Yes: 6 | Members that voted Yes are Rob Ford, Chin Lee, Peter Milczyn, Denzil Minnan-Wong, Frances Nunziata, Anthony Perruzza |
Total members that voted No: 27 | Members that voted No are Paul Ainslie, Brian Ashton, Maria Augimeri, Shelley Carroll, Raymond Cho, Janet Davis, Mike Del Grande, Frank Di Giorgio, Mark Grimes, Suzan Hall, A.A. Heaps, Doug Holyday, Cliff Jenkins, Norman Kelly, Gloria Lindsay Luby (Chair), Pam McConnell, Howard Moscoe, Cesar Palacio, Joe Pantalone, John Parker, Gord Perks, Bill Saundercook, David Shiner, Karen Stintz, Michael Thompson, Adam Vaughan, Michael Walker |
Total members that were Absent: 12 | Members that were absent are Sandra Bussin, Glenn De Baeremaeker, Mike Feldman, John Filion, Paula Fletcher, Adam Giambrone, Giorgio Mammoliti, Joe Mihevc, David Miller, Ron Moeser, Case Ootes, Kyle Rae |
That the Deputy City Manager and Chief Financial Officer provide any Councillor who so requests, access to the list of staff who have been issued a PCard, together with the expenses they charged.
Vote (Amend Item (Additional)) Jan-26-2010 6:04 PM
Result: Lost | Majority Required - Audit 14.4 - Del Grande - Motion 2 |
---|---|
Total members that voted Yes: 15 | Members that voted Yes are Raymond Cho, Mike Del Grande, Frank Di Giorgio, Rob Ford, Mark Grimes, Doug Holyday, Cliff Jenkins, Norman Kelly, Chin Lee, Peter Milczyn, Denzil Minnan-Wong, Frances Nunziata, Cesar Palacio, Anthony Perruzza, Michael Walker |
Total members that voted No: 18 | Members that voted No are Paul Ainslie, Brian Ashton, Maria Augimeri, Shelley Carroll, Janet Davis, Suzan Hall, A.A. Heaps, Gloria Lindsay Luby (Chair), Pam McConnell, Howard Moscoe, Joe Pantalone, John Parker, Gord Perks, Bill Saundercook, David Shiner, Karen Stintz, Michael Thompson, Adam Vaughan |
Total members that were Absent: 12 | Members that were absent are Sandra Bussin, Glenn De Baeremaeker, Mike Feldman, John Filion, Paula Fletcher, Adam Giambrone, Giorgio Mammoliti, Joe Mihevc, David Miller, Ron Moeser, Case Ootes, Kyle Rae |
Vote (Adopt Item) Jan-26-2010 6:05 PM
Result: Carried | Majority Required - Audit 14.4 - Adopt the Item |
---|---|
Total members that voted Yes: 30 | Members that voted Yes are Paul Ainslie, Brian Ashton, Maria Augimeri, Shelley Carroll, Raymond Cho, Janet Davis, Mike Del Grande, Frank Di Giorgio, Suzan Hall, A.A. Heaps, Doug Holyday, Cliff Jenkins, Norman Kelly, Chin Lee, Gloria Lindsay Luby (Chair), Pam McConnell, Peter Milczyn, Denzil Minnan-Wong, Howard Moscoe, Cesar Palacio, Joe Pantalone, John Parker, Gord Perks, Anthony Perruzza, Bill Saundercook, David Shiner, Karen Stintz, Michael Thompson, Adam Vaughan, Michael Walker |
Total members that voted No: 3 | Members that voted No are Rob Ford, Mark Grimes, Frances Nunziata |
Total members that were Absent: 12 | Members that were absent are Sandra Bussin, Glenn De Baeremaeker, Mike Feldman, John Filion, Paula Fletcher, Adam Giambrone, Giorgio Mammoliti, Joe Mihevc, David Miller, Ron Moeser, Case Ootes, Kyle Rae |
AU14.4 - City Purchasing Card (PCard) Program - Improving Controls Before Expanding the Program
- Decision Type:
- ACTION
- Status:
- Amended
- Wards:
- All
Committee Recommendations
The Audit Committee recommends that:
1. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement clear and effective procedures to:
a. Reduce the number of monthly transactions with outstanding documents or approvals
b. Follow up on transactions with outstanding documents or approvals in a consistent manner
c. Recover the City’s GST rebates from PCard purchases
d. Ensure cancellation of individual PCards according to policy.
2. City Council request the Treasurer to validate employment status of all current cardholders. Further, in consultation with Heads of Divisions participating in the PCard program, the Treasurer develop and implement clear and effective procedures to address the timely cancellation of PCards upon employment termination or extended leave.
3. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement effective review, monitoring, and follow-up procedures, at the divisional and Corporate levels, to ensure compliance with PCard policies and procedures.
4. City Council request Heads of Divisions participating in the PCard program to ensure that a divisional approval list outlining cardholders and their respective approval supervisors is developed and routinely reviewed for appropriateness.
5. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard Program, to ensure adequate controls are incorporated into the PCard approval process to detect inappropriate authorization and minimize the risk of unauthorized alterations to purchase logs.
6. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard Program, to ensure that cardholder reconciliation of purchase logs with PCard system records is consistently implemented.
7. City Council request the Treasurer, in consultation with Heads of Divisions participating in the PCard program, to develop procedures whereby management staff have regular access to information on the total number and types of PCard purchases made for their office/unit.
8. City Council request the Treasurer to ensure that PCard documents, including purchase logs and receipts, are stored in a secure manner to prevent unauthorized access.
9. City Council request the Treasurer to undertake the necessary steps to improve effectiveness of PCard training. Such steps should include, but not be limited to:
a. Ensuring the training includes a review of the importance of individual roles and responsibilities in the control framework
b. Providing refresher training where needed.
10. City Council request the Treasurer to undertake the necessary steps to improve efficiency of the PCard process, including steps to explore the feasibility of using the PCard system to generate purchase logs for cardholders, and re-assess what information is necessary for cardholders to provide in the purchase logs.
11. City Council request the City Manager to ensure that the Expense Claim Policy for Staff of the City of Toronto (March 10, 1998) is reviewed, updated, and made accessible to staff.
12. City Council request the Treasurer to develop and implement measures to improve compliance with Corporate policies and procedures pertaining to business expenses.
13. City Council request the Treasurer to develop standards or guidelines for providing food and/or beverages at staff meetings and functions.
14. City Council request the Treasurer to undertake the necessary steps to improve cardholder compliance with Corporate purchasing policies and procedures. Such steps should include, but not be limited to:
a. ensuring cardholders receive adequate training in purchasing policies and procedures
b. monitoring PCard purchases to identify non- compliance with purchasing policies.
15. City Council request the Treasurer to ensure that PCard purchases are regularly monitored and analyzed to identify opportunities for blanket contract.
16. City Council request the City Manager to review the current sundry expense policy and consider integrating the requirement to reduce the sundry expense claim when meals are provided at conferences or business meetings, or when meals are paid for by the City.
17. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop and implement procedures to reduce the number of inactive or low usage cards, and cancel inactive cards where necessary.
18. City Council request the Treasurer to develop and implement strategies to promote and expand the use of PCards by City divisions. Such strategies should include, but not be limited to:
a. analyzing divisional purchasing patterns to identify potential areas for expansion
b. developing and implementing measures to increase the use of PCards by divisions
c. setting performance goals for the City based on the number of participating divisions and yearly PCard purchase volume.
19. City Council request the Treasurer to ensure adequate contract review and management practices for the PCard program including:
a. a thorough review of the contractual terms and rebate rates and volume tiers
b. retaining a copy of the final contract.
20. City Council request the Treasurer, in conjunction with Heads of Divisions participating in the PCard program, to develop a long term strategy for continuous improvement of the PCard program including:
a. establishment of a City-wide User Group
b. regular reviews and updates of policies and procedures.
21. City Council request the Auditor General, in consultation with the Director, Internal Audit Division, to conduct random checks of PCard transactions, and report back to the Audit Committee for its July 2010 meeting on his findings and any further action needed.
Origin
Summary
The City of Toronto began phasing in its Purchasing Card (PCard) program in 2005 to provide a more efficient and cost-effective means of procuring small dollar goods and services. Since its inception the yearly PCard purchase dollars have been steadily increasing from $2 million in 2006 to an estimated $8.5 million in 2009.
The primary goal of this review was to assess the adequacy of internal controls in the PCard program. Our review identified a number of gaps in its control framework, opportunities to improve efficiency, as well as the need for increasing compliance with PCard and related City policies.
A total of 20 recommendations are provided in the report. A management response to each of the recommendations is attached to this report.
Background Information
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25346.pdf
Appendix 1 - City Purchasing Card (PCard) Program - Improving Controls Before Expanding the Program
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25347.pdf
Appendix 2 - Management's Response
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-25348.pdf
Motions
That the Audit Committee recommend to City Council adoption of the recommendations contained in the report (October 27, 2009) from the Auditor General.
Vote (Adopt Item) Dec-16-2009
Result: Carried | Majority Required - Parker - Motion 1 |
---|---|
Total members that voted Yes: 4 | Members that voted Yes are Mike Del Grande, Doug Holyday (Chair), Chin Lee, John Parker |
Total members that voted No: 1 | Members that voted No are Rob Ford |
Total members that were Absent: 1 | Members that were absent are Anthony Perruzza |
The Deputy City Manager and Chief Financial Officer be requested to report to the Audit Committee with a list of the names of the 1254 staff who have been issued a PCard, together with the expenses they charged during the period January 1 to August 31, 2009.
Vote (Amend Item (Additional)) Dec-16-2009
Result: Lost | Majority Required - Ford - Motion 2 |
---|---|
Total members that voted Yes: 2 | Members that voted Yes are Mike Del Grande, Rob Ford |
Total members that voted No: 3 | Members that voted No are Doug Holyday (Chair), Chin Lee, John Parker |
Total members that were Absent: 1 | Members that were absent are Anthony Perruzza |
That the following Recommendation 21 be added:
21. The Auditor General, in consultation with the Director, Internal Audit Division, be requested to conduct random checks of PCard transactions, and report back to the Audit Committee for its July 2010 meeting on his findings and any further action needed.