(20)AR 021908 Procurement Card Program

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CITY OF COLTON ITEM #20 AGENDA REPORT FOR THE COUNCIL MEETING OF FEBRUARY 19,2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: AURELIO DE LA TORRE, TREASURER DILU DE ALWIS, FINANCE DIRECTOR SUBJECT: APROVE AND ACCEPT THE CITY TREASURERS AUDIT REPORT OF THE PILOT PROCUREMENT CARD PROGRAM FOR THE PERIOD OF JULY 1, 2007 THROUGH DECEMBER 31, 2007 AND APPROVE THE EXPANSION OF THE PROGRAM CITYWIDE. DATE: FEBRUARY 7,2008 BACKGROUND: The State of Califomia entered into a Master Services Agreement with US Bank, for VISA Procurement Card services (CAL Card), effective October 19, 2006. On Febnjary 20, 2007 the City Council approved an addendum to participate in the State's CAL Card program and approved Purchasing staff to develop and implement a Procurement Card Pilot Program. Procurement Cards are a means of purchasing supplies, matedals, and equipment expediently without the need of obtaining a purchase order. The CAL -Card Program requires the City to maintain added controls over Procurement Cards. The controls include several spending controls, such as restdctions on the type of merchants the card will accept, and a more defined reporting structure to oversee card transactions. DISCUSSION/ANALYSIS: In tandem with the New CAL -Card agreement, Purchasing launched a New Procurement (P -Card) Pilot Program with a limited number of volunteers (8 cardholders plus purchasing staff). Volunteers were selected based on their vaded activities and their need for off-the-shelf type purchases, as well as their willingness to adhere to stdct testing procedures. The pilot program allowed Purchasing to fully test citywide control procedures to ensure the adequacy of the controls, compliance with policies and procedures, and sufficient administrative oversight. Key elements of the New P -Card Pilot Program are: a comprehensive Policy & Procedure Manual; Full use of built in system controls (buying limits, transaction limits, merchant/item restrictions); Travel arrangements made through Purchasing to ensure compliance with the City Travel Policy; Mandatory training for all Cardholders and Approving Officials; New Cardholder Agreements with disciplinary actions up to and including termination and payment for unauthorized charges; AccessOnline Training, User Guides, and Simulations for account reconciliation, dispute resolution, and reporting; and a 3rd party program audit, and appeals process.