Madera County’s credit cards inadequately monitored, open to misuse | Grand Jury News

Although partially impeded in its investigation, the Madera County Grand Jury has reported the use of Visa credit cards by some department heads is inadequately monitored, and the county credit cards program (CAL-Card) is susceptible to misuse.
The county has two Visa master accounts. One account serves the board of supervisors, chief clerk of the board, and the county administrative office headed by County Administrative Officer (CAO) Eric Fleming. All other departments of the county are included in the second master account.
County Purchasing, which is overseen by the CAO, administers the CAL-Card program.
The cards provide a simple, expedient method for paying for approved travel expenses. It is used whenever possible in lieu of petty cash or small value purchase orders, thus avoiding paperwork and processing time required to use the purchasing department. The county receives a rebate from the bank for all card purchases.
The card is to be used for county business only, and personal purchases and rentals are prohibited.
In its investigation of the county’s use of the CAL-Card Program, the grand jury focused on a two-year period from October 2014 through September 2016, and requested records from elected officials and county administration. Seven interviews were conducted with county officials and staff.
The grand jury’s investigation was partially impeded by the failure of two departments to submit copies of records requested according to the report. None of the records requested from Auditor-Controller Todd Miller were received. The Clerk of the Board of Supervisors, Rhonda Cargill, provided about half of the records requested the report pointed out after consulting with county counsel. These records were for the board of supervisors and the chief clerk.
Facts reported by grand jury
Facts reported by the grand jury include the following:
☆ Monthly summary reports show that approximately $30,000 has been outstanding on cardholders’ accounts, and the county has not identified which accounts are involved.
☆ Fleming has the authority to suspend or revoke the use of the card at any time.
☆ Disciplinary action up to and including termination may be taken against a cardholder who violates any policy or procedure of the CAL-Card program.
☆ Cardholders have attempted to make purchases which exceed their transaction or spending limit, cards have been used by persons other than the designated cardholders, some cardholder accounts have not been paid in a timely manner causing the master account to become delinquent and purchases to be declined, and cards have been misused for personal purchases.
☆ The card was misused by a management level cardholder in the auditor-controller’s office. The cardholder used the card to rent vehicles for personal use six times between March 29, 2015 and Aug. 1, 2015. The monthly statements were not processed through the county’s payment system. The cardholder sent personal payments to the bank for the vehicle rentals upon receipt of the monthly statements. All vehicle rental costs were paid. The misuse was uncovered by the administrator during review of a monthly summary report. A vehicle rental transaction was questioned, prompting review of other transactions. Miller does not receive any statements or reports from the bank and was not aware of the vehicle rentals, and the cardholder is no longer employed by the county.
Findings by the grand jury
Findings reported by the grand jury include:
☆ There is no monitoring system in place to assure that CAL-Card program policies and procedures are followed.
☆ The reports and information available to Fleming and Miller are inadequate to support proactive monitoring of the program’s operations.
☆ The card’s ease of use promotes lack of planning, resulting in higher costs for “emergency” purchases.
☆ The county’s CAL-Card program is susceptible to misuse.
One issue the jury reported on was Fleming’s use of his card to host lunch meetings with county staff and local officials at local restaurants. Fleming told the jury that he hosts informal quarterly lunch meetings as a tool to promote team building and boost morale among management staff.
During the two-year period of review, 172 meetings were held, with 627 meals purchased for the attendees at a cost of $13,498.
The grand jury went on to report that 78% of the meetings were held at The Vineyard restaurant in Madera, with meal costs averaging $22, and 16% of the meetings were held at various other restaurants where meal costs averaged $16. Delicatessen food was purchased for four meetings at an average cost of $9 per attendee. The remaining meetings were held out of town. The cost of an individual meal ranged from $9 to $53 including gratuities. The lunch reimbursement rate allowed by the out-of-county travel per diem is $12.
Although Fleming paid for additional lunch meetings with other local leaders such as city managers and school superintendents, most of the 627 meals were for department heads and other members of the management team.
Fleming defends his quarterly lunch meetings as a good return on investment.
“I stand behind these lunches 100%,” Fleming told the Star. “As a taxpayer myself, I’m always conscious of how taxpayer dollars are spent and this is a good return on investment. Shortly after becoming CAO, I implemented quarterly lunch meetings with every board member and every member of the County’s Management Team. The managers are usually grouped together by functional area such as public safety, development services and so on. For an example, when I have my quarterly lunch meeting with the public safety group, the sheriff, district attorney, chief of probation, and chief of corrections are in attendance. The five of us have extremely busy schedules and scheduling working lunches is the easiest way to get everyone together. I gain an hour of productivity from this group without compensating them, which is a cost avoidance of over $400 per hour. The total meal cost is about $120, so that’s a net savings of $280 for getting an extra hour of worthwhile productive time with this group that is so critical to the public safety of our entire county.”
Grand Jury recommendations
At the end of the report, the grand jury made 10 recommendations with regards to the CAL-Card program including:
☆ The administrator immediately inform all cardholders of their spending and transaction limits.
☆ County purchasing provide refresher training to cardholders who violate program policies and procedures.
☆ Fleming and Miller work with the bank to institute program changes, including the administrator receive copies of cardholder account statements to review for appropriateness of purchases.
☆ Fleming and Miller collaborate with the bank to determine the origin and appropriate disposition of the $30,000 in question.
☆ The CAO reduce meal costs by changing the time and/or location for meetings.
☆ The board of supervisors and CAO provide transparency for the intended use of taxpayer funds for meal costs in the budget process.
The board of supervisors has up to 90 days to respond to the grand jury’s report, which was issued June 1.

http://cgja.blogspot.com/2017/06/grand-jury-madera-countys-credit-cards.html

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