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Report: Oversight Of City-Issued Credit Cards Is Lacking

Audit Commission Recommends Ban On Use Of 'P-Cards' For Entertainment

By JENNA CARLESSO

May 03, 2013

HARTFORD —— The city's internal audit commission, after reviewing more than 400 purchases made with city-issued credit cards, recommended better oversight and enforcement of spending policies, and urged a ban on use of the cards for business-related entertainment.

The commission also recommended that the city council seek a legal opinion on whether a $707 charge for a New Year's Eve dinner attended by the mayor and other city officials violates the city's code of ethics.

City Council President Shawn Wooden said Friday that he and others on the panel would review the findings and consider whether to pursue the commission's recommendations on purchasing cards, or p-cards.

"The oversight of the p-card program has been abysmal," he said. "This council feels very strongly about rooting out any waste, fraud and abuse within city government. To the extent that that has occurred, we will certainly pursue all avenues to protect taxpayer dollars. We're particularly interested in looking at the back-up support for a variety of transactions."

In its 11-page report released Friday, the audit commission, which focused on purchases made between August 2012 and March 2013 totaling about $225,232, found that most transactions were supported by documentation, but that in some cases — most of which were prior to the dates specifically reviewed in the report — such documentation was missing.

"Some procedural controls also needed strengthening, including providing details as to those attending and the business purpose of all business meals/entertainment," commissioners wrote in the report. "Adherence to the city travel policy requiring the preparation of a travel expense report should also be enhanced and enforced."

The city's finance department was "not always exercising control over [purchasing] card activity" and did not enforce penalties "related to specific p-card policy infractions," the report said.

One commissioner, Bruce Rubenstein, recommended in an email that the city council forward the commission's report to the chief state's attorney's office for review. Rubenstein also suggested that the council hire an independent attorney to provide an opinion on the matter and help recoup money for any purchases not supported by backup documentation, such as itemized receipts or invoices.

City officials spent tens of thousands of dollars on travel and dining in the past two years — including visits to high-end spots such as Max Downtown and The Hartford Club — a recent Courant review of city purchasing records found. The expenditures have come under increasing scrutiny as the city grapples with a $70 million budget deficit.

The internal audit commission began investigating use of the cards in March at the request of the city council. About 185 employees, including members of the city's board of education, have purchasing cards.

In their report, commissioners recommended that the city stop using the purchasing cards for business entertainment.

"Business entertainment should be pre-approved and paid for by employees' personal credit cards, and then the employee could seek reimbursement through the travel expense policies and procedures," the report said.

Auditors found no evidence that expense reports were prepared and submitted to the finance department for review for the travel- and entertainment-related charges, the report stated.

"Although this issue is not directly related to this audit, we recommend that controls be established to make sure travel expense reports are completed and approved when p-card documentation indicates that a travel expense report should accompany the documentation," the commissioners wrote.

The commission also suggested that officials review purchasing card documentation for all meals and entertainment charges — including the names of those in attendance — to verify that the expenses were business-related. In analyzing 108 charges made by Jared Kupiec, the mayor's chief of staff, the commission found that "generally, the persons entertained and the related business purpose" of meals and other expenses "were not indicated on the restaurant receipts," according to the report.

Only five transactions reviewed by the auditors didn't have the proper backup documentation, the report stated, but they noted that at the end of the 2011-12 fiscal year, there was about $30,391 worth of charges not supported by backup documentation. Those charges "primarily related to the mayor's, chief operating officer's and corporation counsel's offices," the report stated.

The commission's report specifically addressed a New Year's Eve dinner in which Mayor Pedro Segarra, Kupiec and six others spent $707 on a meal at Max Downtown — a portion of which Segarra said he has since reimbursed — and recommended that the council seek a legal opinion on whether the dinner posed an ethical violation.

In an email Friday, Segarra's spokeswoman, Maribel La Luz, said that the mayor and other city officials plan to "review the report thoroughly and then take any appropriate action."

Segarra last month ordered a freeze on the cards, except those of department heads and personnel in accounts payable, through the end of the fiscal year to help balance the current budget.

The Courant reviewed records for a handful of top city officials and department heads from January 2011 to March 2013. They showed a wide range of expenditures, including about $6,200 spent on meals by Segarra between January 2011 and December 2012; more than $4,300 spent on dining by Kupiec between February 2012 and February 2013; $9,700 in charges to The Hartford Club by city Treasurer Adam Cloud between June 2011 and March 2013; and $6,300 on dining by Jose Colon-Rivas, the director of families, children, youth and recreation, including $3,000 at Costa del Sol restaurant in Hartford and $764 at Tanino in Los Angeles.