Executive Summary

Issue Area 1: The Purchasing Division has Provided the State Auditor Adequate Cooperation to Make the West Virginia State Purchasing Card Program "A Leader" in the United States.

In 1995, the West Virginia State Auditor conducted a survey to analyze purchasing transactions for FY 1995. The State Auditor found there had been 954,701 invoice transactions and that 81% were for purchases under $500. In 1996, following a national bid process, the State selected a financial institution to issue a purchasing card for "small dollar amounts". It is estimated that the Purchasing Card program has saved over $47 million in cost avoidance from the beginning of the program four years ago, because the cost of processing invoices for payment has been substantially reduced. The Purchasing Card program has grown rapidly since its inception, and has 100% participation of eligible state agencies. The rapid development, and broad participation of the state's agencies has made the Purchasing Card program a leader in the United States.

The Purchasing Card program is established as a cooperative arrangement between the State Auditor's Office and the Purchasing Division, with the State Auditor responsible for most daily operational functions. The Purchasing Division has provided adequate cooperation with the State Auditor to effectively develop and implement this program. The Purchasing Division was involved in the initial development of the program, and has played an active role on the Purchase Card Advisory Committee. The Purchasing Division has responsibilities which provide "checks and balances" to the program.

Issue Area 2: The Purchasing Division Should Consider Developing a Method to Address Purchasing Violations Identified in the Use of the Purchasing Card.

The Purchasing Division receives copies of all post audits of agency transactions using the Purchasing Card. Since post audits were initiated in September 1999, certain frequent and common violations of Policy and Procedure have been identified. Purchasing violations have also been identified. Since the Purchasing Division by rule has the authority to review spending unit's records, and ensure the proper use of the purchasing card, the Purchasing Division may want to consider developing a method to address purchasing violations.

Issue Area 3: Use of the Legislative Appropriation to the Purchasing Division for the Purchasing Card Program is not clear.

Legislative appropriations to the Purchasing Division for the Purchasing Card Program total $332,349 to date. Although Purchasing is involved in training state employees on the use of the purchasing card, and provides administrative assistance to the State Auditor, the Legislative Auditor's concern is whether the appropriation is in excess of what the Purchasing Division needs to assist the State Auditor in this program. The Legislature should consider evaluating whether there is a need to change the appropriation amount.