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NYS Comptroller


Cost-Saving Ideas: Credit Card Accountability - Minimizing the Risk of Error, Misuse and Fraud

When employees need to make small one-time purchases, it is often more convenient for them to pay with a credit card than to fill out a procurement request form and wait for it to be approved. This also saves time and energy for procurement staff.

The cost of this convenience is the heightened risk of inappropriate spending, such as wasteful or personal purchases. To ensure that credit cards are used only for approved and necessary expenses, local governments must have both a credit card policy and a system of internal controls in place.

Review our best practices below as a reference for adopting a strong credit card policy and developing sensible internal controls.

Authorizing the Use of Credit Cards

  • Require each credit card be authorized by the governing board before it’s issued.
  • Train credit card holders and have them acknowledge in writing that they understand their responsibilities.
  • Issue cards in the names of the employees for better accountability.
  • Perform periodic analysis of the card’s activity and the card holder’s job duties.
  • Review and update annually a master list of all credit cards.
  • Cancel existing cards that are not needed or accounted for.

Restricting Credit Card Use

  • Prohibit the use of credit cards for personal expenses—no exceptions.
  • Don’t issue cards that allow cash advances or cash back from purchases.
  • Establish reasonable credit limits for each purchase, or for the total credit balance, and require prior higher authorization for any activity above these limits.
  • Require card holders who used the card for "emergency purposes" to provide clear documentation to justify the need.
  • Block certain types of vendors or purchases using Merchant Category Codes, such as charges from dry cleaners or health spas. (View Accredited Standards Committee X9)
  • Establish guidelines for phone, fax and Internet purchases.

Safeguarding Credit Card Use

  • Keep all cards in a secure location, such as a locked desk drawer, when not being used by authorized personnel.
  • Maintain a log for the use of credit cards shared by more than one staff member
  • Segregate procurement duties among staff, such as approval, verification and payment of claims.
  • Never allow anyone to review and approve their own purchases.
  • Have billing statements broken down by credit card holder.
  • Review bills and watch for red flags such as unusual destinations or items on the card.
  • Verify that the items purchased were actually received.
  • Have a reconciliation process and timetable.
  • Follow up on any identified discrepancies.
  • Establish a method for recouping inappropriate charges.
  • Don’t use automatic payment deductions to pay credit card bills.
  • Establish procedures for canceling cards for cases where they are lost or stolen or the credit card holder has left the organization.

Documenting Credit Card Purchases

  • Never pay claims without documentation.
  • Require all receipts be itemized.
  • Reconcile credit card statements with itemized receipts and invoices.
  • Document the purpose of each purchase.
  • Require card holders to provide the names of anyone who incurred the expense. (For example, if food was supplied at a meeting, indicate who was there.)

Additional Resources

© New York State Office of the State Comptroller