P-cards are a useful tool for organizations, including School Nutrition Programs; however, a sound p-card management system is essential to maintaining the integrity of program.
Know the Rules
The first step to a successful p-card management system is knowing the rules.
When enrolling in the district’s p-card program, be sure to obtain any policies and procedures and read them carefully. There are likely many rules that need to be followed to maintain compliance with state and local regulations, and you need to be very familiar with them.
If your district does not have a set of written policies or procedures for use of p-cards, reconsider whether it is worth the risk. Auditors will certainly find this unacceptable since there is a high risk of noncompliance in the absence of written policy.
Determine Cardholders
Determine who in your program needs access to a p-card. In general, it is best to limit access as much as possible to better control p-card management.
Note that p-cards should always be issued to an individual, not a program or school. For example, you might set up a cafeteria manager at XYZ High School with a p-card, and it would be printed with her name on it. You would NOT issue a card to XYZ High School.
This ensures that the cardholder maintains responsibility for their own card, as the individual will be held accountable for their own purchases.
Cardholders also should never share their card with another person.
Determine Cardholder Limits
Like credit cards, p-cards have the ability to limit how much a cardholder can purchase in a month. However, p-cards also have the ability to limit each transaction the cardholder can make. This applies both to the total price and the type of transactions.
For example, a cardholder could have a $500 transaction limit, $2,500 monthly limit, and be blocked from purchasing alcohol, gas, or computer supplies.
Each person within the department doesn’t necessarily need the same limits. For example, cafeteria managers just doing emergency grocery runs likely need lower limits than the person responsible for placing smallwares orders online.
You may or may not have control over cardholder limits. If you do, it’s always better to start restrictive and loosen up if needed. This is better than starting too lenient and discovering the person wasn’t responsible or trustworthy.
Train Cardholders
One of the key elements to a p-card management system is training. Auditors want to see that cardholders are regularly trained on p-card policies and procedures.
This typically is conducted before they are given their p-card, and once annually.
Ensure each cardholder receives this training. Review the policies and procedures and cover commonly asked questions or common errors. Be sure to emphasize which types of purchases are authorized and which are not.
Document this training and keep on file.
Log Transactions
This recommendation has to do with the required Procurement Review (PR) your state will conduct and is based on a previous experience in my district.
During a PR, your reviewer will ask for a report of all purchases that were made. The report includes the vendor name, amount paid, and number of transactions. This can usually be generated from your district’s financial software.
But with a p-card, that report is going to show your payments to your p-card vendor NOT the places you used your p-card at.
During my procurement review, my reviewer noted this and required we submit a list of all the transactions on our p-cards.
But before we started manually compiling thousands of records from our monthly statements, our angel of an administrative assistant saved the day! She had been logging purchases made with vouchers on a spreadsheet and never stopped when we switched to p-cards. So we already had that information compiled!
We now know that it’s important to keep this log so that we can easily report this information to our reviewer on a PR.
Segregate of Duties
Good p-card management requires there are always multiple people involved in the purchasing chain to ensure that no one person can cheat the system.
For example, the cardholder who makes the purchase should not be the one paying the bill without any other oversight.
In my district, when one of my employees uses their p-card, our accountant enters the transaction into our financial software system, I approve it, then someone in the finance department pays the bill.
Separating these duties reduces the risk that someone will make an unauthorized purchase and puts more eyes on it in case someone does.
Monitor Expenses
In addition to reviewing each transaction, I also recommend stepping back to see the big picture and review purchases as a whole to identify trends.
For example, a cafeteria manager making frequent “emergency” grocery store purchases may need coaching on proper ordering. A maintenance employee frequently replacing tools may be purchasing inferior tools or may be losing or breaking tools too often.
You also want to be mindful of frequent p-card purchases that may put your program at risk for non-compliance. For example, it may appear that an employee is intentionally splitting purchases to avoid getting quotes. Or, the amount spent with one vendor may exceed an allowable threshold.
Reviewing each purchase, as well as purchases as a whole will help ensure each transaction is compliant, but also that money is being spent wisely.
Summary
By incorporating these elements, school nutrition programs can establish a well-structured and p-card management system that streamlines the procurement process, enhances financial controls, and improves overall efficiency.
For more information on p-card management, check out NAPCP’s website.
