HomeMy WebLinkAboutIR 8282 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8282
October 24, 2000
To the Mayor and Members of the City Council
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SUBJECT: USE OF CREDIT CARDS BY CITY DEPARTMENTS
The City has been involved in a credit card purchasing program for the past three years. We
currently have approximately 350 active cardholders, representing each department and most
special agencies of the City. For the fiscal year just ended, employees made over 20,000
purchases, totaling approximately $3.4 million.
The City introduced credit cards to replace Local Purchase Orders (LPG's). LPG's are designed for
non-repetitive purchases under $3,000 that do not require involvement from the Purchasing
Division. At the time credit cards were introduced, LPG's comprised over 65% of all transactions
going through the financial system but less than 1.5% of the monies spent. Currently, almost 90%
of LPO purchases occur on credit cards. In addition to LPO's, credit cards are used for employee
travel. However, credit cards are not authorized for any purchases covered by City contracts,
annual agreements or competitively-bid purchase orders.
For accountability purposes, credit cards are issued to individual employees (as opposed to a
"departmental" card). All card purchases are approved by the same supervisory personnel in the
lepartments that are authorized to sign invoices for payment. All cards have multiple layers of
controls that differ somewhat, depending upon whether the employee is authorized to use the card
far travel expenses. Controls available include:
• the total credit limit per billing cycle,
• the total credit limit per day,
• the dollar limit per transaction,
• the number of transactions per cycle,
• the number of transactions per day,
the days of the week the card is active,
• the hours during the day the card is active, and most importantly,
• the merchants allowed to accept the card.
Controls can be changed and cards suspended or cancelled via a phone call from the card
administrator in the Finance Department. The Finance Department also maintains a 24-hour
beeper exclusively for credit card users. Calls to this number will obtain assistance with lost or
stolen cards and card acceptance problems.
Every two weeks, the Financial Systems Administration Division of the Finance Department
receives the City's detailed billings electronically from the credit card company (First USA Financial
Services). The transactions are then forwarded to departmental coordinators who are responsible
to insure that all purchases are appropriate for the user, a proper approval signature is obtained for
, `,he invoices, and that each transaction is assigned to the correct fund/account/center for recording
the expenditure. The transaction file then receives a second level of review and reconciliation
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8282
October 24, 2000
dt KWJ-0 To the Mayor and Members of the City Council
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SUBJECT: USE OF CREDIT CARDS BY CITY DEPARTMENTS
within the Finance Department where the hardcopy invoice is then stored for records retention and
audit purposes. Credit card transactions are posted to the General Ledger and reported as a
normal financial transaction in each department's month-end reports.
Our experience with credit cards has been entirely positive. Since the beginning of this program,
we have experienced very few problems. We have had fewer than 10 cards lost or stolen, only two
of which were used to make fraudulent purchases. (Neither case resulted in a loss to the City).
We have had only two instances in which personal purchases were made. Both were simply errors,
and both persons quickly reimbursed the City when the problem was discovered.
Credit card purchases have proven to be both economical and well controlled. They provide a
flexibility in our procurement system that allows small purchases to be made by the persons
needing the item.
If you have any questions or would like further information, please let me know.
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Bob Terrell
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS