Perform a credit card clean up to reduce your risk for fraud and mismanagement
Sep 8, 2020
Government-issued credit card programs provide convenience to employees while reducing procurement costs for small, frequently purchased items. Not only do these programs decrease the administrative burden of processing employee reimbursements, they also reduce the hassle of creating purchase orders with various vendors. It's no wonder these programs are growing in popularity.
While credit cards have many benefits, they also create an increased risk for misuse, mismanagement and fraud. That's why SAO recommends periodically performing a credit card cleanup to keep your program running efficiently and securely.
To get started on your own credit card cleanup, we've compiled a list below of easy steps you can follow. Be sure to check out SAO's Best Practices for credit card programs to learn more.
Here's how to do your own credit card cleanup:
- Inventory all credit card programs. Start by looking at all the programs you have for procurement cards, general purpose cards, fuel cards, calling cards, or merchant-specific cards. Take a moment to consider whether each program is still justified, or if it might be time to discontinue one or more of them.
- Verify the active cardholders. Obtain a list of cardholders directly from each card issuer and compare it to your records. Are there any differences? If someone was given a card without management approval, assess how this occurred and review for any unauthorized spending activity.
- Check for employment changes. Scan the list of cardholders again, this time looking for anyone who is no longer employed or who may have changed positions. If you identify anyone who should not have a card, cancel the card immediately and review for any unauthorized spending activity.
- Identify cards without recent activity. Employees who are not using their credit cards may not need them or may have lost them. Consider canceling any unused cards. For any cards that remain active, verify the employees still have them.
- Reevaluate credit limits. Consider how much each cardholder has charged for each of the last six months and compare purchase levels to their credit limit. If there is a significant gap, consider reducing the credit limit. Remember, you can always increase the credit limit later if necessary.
- Review alerts and restrictions. Some credit cards offer alert options like email or text notifications for some or all charges. Another option is to place restrictions—either by merchant type, location or dollar amount. Take some time to review if these are enabled and up to date for all active cards.
- Check expiration dates and card replacements. Make sure your issuers are using reasonable expiration dates on each card. If you have cards without an expiration date, consider asking for replacements with new card numbers to minimize your fraud exposure.
Live training coming up at WFOA
Looking for more in-depth training for credit card programs? SAO's Assistant Director for the Center for Government Innovation, Debbie Pennick, CPA, will offer a one-hour session on best practices for credit card programs at next week's WFOA conference.
For help
Remember, we are here to help. If you have technical questions, please submit them using our HelpDesk in the client portal.
We also have financial management specialists at SAO's Center for Government Innovation available to talk with you about best practices, resources or internal controls. For assistance, reach out to us at Center@sao.wa.gov.