Audit flags 'questionable' purchases on Anchorage employee p-cards
An annual review of Anchorage Municipal employee purchasing card records flagged some transactions as "questionable, or prohibited purchases," including: flu vaccinations, food and related items for employee training and lunch meetings, appliances for staff use, a gift for employees, artwork for a Christmas card, Christmas cards and premium satellite television subscriptions.
"We try to protect the municipality from things that could go bad," explained internal audit department director Michael Chadwick.
His department works as a quiet watchdog on the sixth floor of City Hall, making sure municipal resources are used wisely, effectively and efficiently.
In the case of the most recent audit of municipal procurement card purchases, the Internal Audit Department looked at 48,298 p-card purchases from 2016 amounting to $18,069,421 in transactions. That's an increase of about $1.5 million in p-card spending from 2015, when the department found employees had made 45,972 purchases amounting to $16,558,975.
In a summary to the Anchorage Assembly dated July 27, Chadwick wrote, "Based on our review, it is our opinion that, overall, most employees adhered to Municipal policies and procedures regarding the use of Procurement Cards."
The findings, however, include two areas of concern: The "questionable, or prohibited purchases," and 24 large purchases that were split to circumvent single transaction limits placed on p-cards.
The Anchorage Fire Department, Police Department, Equal Rights Commission and Information Technology Department, as well as Anchorage Water and Wastewater Utility (AWWU), Municipal Light and Power (ML&P) and Maintenance and Operations, all made split purchases totaling $119,076.
The items purchased were for legitimate department use, Chadwick said, like explosives for APD's bomb squad, however, when the Assembly audit committee met on Friday to go over the report, the information regarding split purchases jumped out to them.
"Purchasing has procedures put together to make sure that appropriate bids are obtained when purchases are for certain dollar amounts," he explained, "So, it just makes sure that we're getting the best price for the purchases that are made."
As for questionable or prohibited purchases, Chadwick says just because they caught the eyes of auditors, doesn't necessarily mean they're not justified.
APD, The Port of Anchorage and ML&P all use p-cards to purchase premium satellite television subscriptions at a combined monthly rate of $309.
APD spokesperson Nora Morse wrote in an email to KTVA Tuesday, the department pays a monthly rate of $119 ($1,428 annually) for a Direct TV Office package. According to Morse, the subscription was first purchased in 2001 and is used "to follow local and national news and follow public safety issues on 360 North".
The Port of Anchorage spends $83.53 per month on a Dish Business Advantage Commercial plan. External Affairs Director Jim Jager says the subscription is used to monitor legislative proceedings in Juneau and Washington D.C., but unlike APD, Jager says the service is not paid for using taxpayer dollars, rather revenue the Port generates itself as an enterprise department within the Municipality.
ML&P has been paying for Dish Network since 2003, and is currently paying $124 each month for the service. Spokesperson Louis Velasco says the TV service is for staffers to follow local and national news in case of emergencies and other public safety issues.
The Port is also responsible for the flagged purchases of "artwork for a Christmas card," and "Christmas cards." Jager explained those purchases also did not come from taxpayer dollars, and the mailer was a "holiday" card sent primarily to lawmakers with the intent of creatively lobbying for funding for the Port, ahead of the legislative session.
The audit shows AFD spent roughly $4,600 on flu shots for firefighters in 2016, a flagged purchase Chadwick says Assembly members didn't seem to find out of the ordinary, but, he points out, they have health insurance coverage.
Wednesday, AFD Deputy Chief Jodie Hettrick told KTVA she was surprised the purchase was flagged, as the department has provided flu shots for firefighters for years. She says Alaska state statute requires immunizations be provided for health care workers, and it’s also part of the department’s internal infection control policy. Hettrick also added that she doesn’t remember flu shots being that expensive, and another purchase might have been included in the amount referenced in the audit.
Chadwick said several various departments purchased food items for employees, a "disallowed" purchase under the Muni's p-card policy.
Appliance purchases amounting to roughly $840 include the purchase of a tea pot by the Equal Rights Commission, and a microwave and coffee maker for AWWU.
All in all, Chadwick says compared to the number of compliant transactions, the number of questionable and split purchases can be fairly characterized as a "drop in the bucket."
"Most employees are following the rules. There were about 48,000 transactions made last year -- about $18 million worth of transactions -- and most of those purchases that were made followed the procurement card rules," he said.
He says because new p-cards were issued this summer with chips in them, and instructions were given to employees at that time on the appropriate use of the cards, the purchasing department hopes the issues the audit identified are already solved.