Credit Card Statements: You Can Charge But You Can’t Hide

by Brian Riley 0

credit card

Three reads in today’s news illustrates one of the many wonderful things about credit cards: they force documentation.  The documentation can often lead to internal audits.  You can count on the fact that if someone used a credit card, there is a transaction behind the posting.

First,  this link talks about Nashville General Hospital.

  • Three Nashville (Tenn.) General Hospital leaders spent $401,419 in credit card purchases over two years, but the hospital does not have documentation for 85 percent of the transactions, The Tennessean reported, citing a new city internal audit.
  • The credit card purchases reportedly include nearly $32,000 for airfare, which the hospital said was hospital-related; $22,000 to Jason’s Deli, which the hospital said was for catering; and $20,000 spent at Regal Cinemas; which the hospital said was for gift certificates for employee birthdays.
  • Nashville General was unable to provide auditors with credit card statements, transaction receipts or other documentation for 40 out of 47 of the transactions, The Tennessean Auditors could see how much was spent via the website of a J.P. Morgan Chase credit card, but the hospital does not have documentation to determine whether the purchases supported the hospital’s mission.

Moving to the heartlands of middle America, we see an audit at the town of Glenview, Illinois.

  • A recent Pioneer Press investigation found that in May 2017, Deputy Village Manager Don Owen charged $207.24 on his village-issued credit card at Grandpa’s Place, a restaurant and bar, to buy alcohol at a farewell gathering for a former trustee.
  • Previously, the credit card policy itself did not specifically address the purchase of alcohol. But the policy referred cardholders to the travel and training reimbursement policy, which clearly stated that “alcoholic beverages are not reimbursable.”

And then, to New Mexico, where the Attorney General launches an investigation on a golf junket, to of all places, golfer’s heaven: Scotland.  Search Warrants and all.

  • Continued secrecy and changing stories about a $25,000 donation linked to a scandal-plagued Scotland golf junket prompted the state Attorney General’s Office to search the University of New Mexico Foundation office earlier this week.
  • Special agents from Attorney General Hector Balderas’ office seized banker’s boxes, financial records, a computer hard drive and more from the foundation’s Albuquerque headquarters Wednesday as they investigated possible violations of the state’s Government Conduct Act, according to the search warrant affidavit filed in state District Court.

As an industry, we spend time talking about growth, risk and security in the credit card business.  Think about these three incidents and consider the importance of accounting systems.  These systems post more than 4 trillion transactions a year, passing through merchant to network, then network to issuer, then back again.

Transactions may be nothing less than perfect; and for people who abuse corporate cards, there is little place to hide.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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