Have you done your annual credit card inventory?

As first mentioned in our recently updated resource, Best practices for credit card programs (PDF), reviewing your credit card program each year can help ensure only appropriate people have credit cards, credit limits do not exceed business needs, and that you received the proper rebate payments. It also helps you to determine what future steps you should take to improve your program.

Below are eight things you should do:

Verify issued credit cards

1. Review active cardholders 

Obtain a listing of active cardholders from your credit card provider and compare it to your records of active employees. Someone might have forgotten to collect a credit card from a separated employee. If that occurs, check for any transactions that occurred after the separation date.

Also review this list for anyone who should not have a card. You might discover someone bypassed procedures to obtain an unauthorized card.

2. Physically verify credit cards

Using the listing of active cardholders obtained directly from your credit card provider, have each cardholder show you the physical card. You want to make sure employees have not lost their card or entrusted it to another person. This is a good time to inspect for damaged protective sleeves too (if you use them).

Limit fraud exposure

3. Review infrequently used cards 

Cardholders with little to no spending may not need their card. When you have active, unused cards with open credit limits, it unnecessarily exposes you to potentially fraudulent activity. Close accounts if possible and retain written justification for any left open.

4. Review credit limits

Evaluate credit limits, considering each cardholder’s monthly spending trends, to determine if you should lower some of them. Your overall credit card exposure should not exceed your business needs. High-ranking officials should not have high credit limits solely because of their position; they should have a verifiable business need.

5. Review merchant restrictions and other limits

Double check any restrictions or limits that you impose, to make sure they meet your needs and adequately lower risk. For example, you might restrict certain expenditure types or block a certain type of merchant. Also review any limits, such as per transaction or per day.

Practice program oversight

6. Review cardholder activity trends

Consider how each cardholder’s credit card activity aligns with the terms of policies and use agreements. If you find patterns of unauthorized use or violations you may want to take disciplinary action, provide additional training, clarify your policy requirements or modify internal controls.

7. Check the rebate revenue

If you have not already done so, review the rebate payments you received during the year to ensure the credit card issuer accurately paid you.

For more information on various finance-related best practices, refer to our Resource Library.

8. Immediately report suspected losses

Remember that state law requires Washington governments to immediately report suspected losses to the State Auditor’s Office. This includes the use of government credit cards for personal purchases, even if the employee paid it back or used their government card accidentally. Reports can be filed directly through the Report Fraud or a Loss form.

For help

For guidance on best practices, resources or internal controls, contact the Center for Government Innovation, as service of the Office of the Washington State Auditor by emailing Center@sao.wa.gov.