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January 23, 2008

Better Financial Controls by Area
Local Governments Can Prevent Credit Card Abuse

Local governments could avoid paying for personal items – or overpaying for authorized goods and services – with stronger controls over credit card use, according to an audit of local government credit card usage released today by State Comptroller Thomas P. DiNapoli.

“Used right, government credit cards can be a good tool for tracking expenditures and managing government procurement,” DiNapoli said. “But if local officials don’t have clear guidelines for how credit cards are used and who can use them, that tool can be abused.”

In the City of Plattsburgh, 29 individuals, including 16 retired city employees and members of the Plattsburgh Rescue Hose company, were authorized to use fuel credit cards – even though they were not employed by the city. Warren County and the City of Troy, on the other hand, have comprehensive credit card use policies in place. Warren County adopted a resolution that is amended regularly to reflect who is authorized to use county credit cards.

DiNapoli’s auditors looked at credit card usage by eight local governments in the capital region and North Country: the cities of Troy and Plattsburgh, counties of Warren and Essex, villages of Lake Placid and Saranac Lake, and towns of Long Lake and Milton. Generally, auditors found that local government credit card purchases were made for legitimate municipal purposes, but there were several findings, including:

  • Officials in Lake Placid and Plattsburgh made purchases that were personal in nature;
  • A Plattsburgh official from 2005 to 2006 made $6300 in charges and indicated that $1,100 were for personal costs, but the city had no way of knowing whether the official had identified all of his personal charges;
  • Each municipality except Lake Placid had adopted travel expenditure policies;
  • Milton and Plattsburgh had a credit card authorization resolution in place but they did not regularly amend it to reflect all authorized users and cards in use; and
  • Out of 223 cards issued by these governments, only 12 were authorized by board resolution.

To correct deficiencies identified in the audit, Comptroller DiNapoli made the following recommendations:

  • Governing boards should formally authorize the acquisition and use of all cards;
  • Policies should identify all users, set purchasing limits, require documentation for all transactions, ensure that goods and services are being purchased for municipal needs and establish a means to recoup all unauthorized expenditures;
  • Local governments should audit all claims and ensure there is proper receipts and that authorized individuals are using the cards;
  • Officials and employees should not use cards for personal use; and
  • Local governments should be repaid by those who made unauthorized or inappropriate charges.

Officials generally agreed with the Comptroller’s recommendations and indicated they would take corrective action.

Click here for a copy of the audit.



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