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Company Credit Card Problems Can Take You by Surprise

by John Cohen

Company credit card purchases are more often than not potentially serious problems which fall under the radar in most organizations. Virtually every case of embezzlement includes some type of credit card abuse. However, the issue of controls over company credit cards is much broader, and the problems created may not actually be part of an effort to defraud.

The best way to avoid company credit card problems is not to issue any. The employee uses his/her credit card and submits a request for reimbursement which is reviewed, approved, and processed in much the same way any purchase/payment is processed. The company reimbursement can be made before the employee’s payment to the credit card company is due.

However, companies which have decided they have need for company credit cards all too often abandon their internal control mind-set. At one of our clients, the organization used the controller’s personal credit card as the company credit card. Each month, the controller analyzed his bill, prepared and authorized the reimbursement, and maintained the credit card invoice file. At another company, at least one employee thought that by giving him a company credit card, the company was authorizing him to buy “company goodwill” lunches, flowers, etc. at his own discretion. The purchases/payments were not individually reviewed and approved, because the management incorrectly believed it would catch any problems by line item budget versus actual reviews. Unauthorized purchases reached $30,000 before the problem came to light.

Policies and procedures necessary to appropriately control credit card purchases vary from organization to organization. It is one of the first processes we review for our clients, and we are very adept at customizing “best practices” to individual situations. If you have questions about any of your organization’s policies and procedures, give us a call.

NPA Consultants are interim CFO/Controllers and Process Improvement Specialists in Policies, Procedures, Internal Controls, and Financial Reporting.  We help accounting departments run “better, faster, cheaper,” and Boards of Directors/senior managements fulfill their fiduciary duties at the highest possible level.  We are happy to answer any questions.  Contact us at info@NPAccountants.org or 617 694 4600.

 

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