H. B. 3013
(By Mr. Speaker, Mr. Kiss)
[Introduced
February 14, 2003
; referred to the
Committee on Government Organization then Finance.]
A BILL to amend and reenact sections ten-a, ten-b, ten-c, ten-d and
ten-e, article three, chapter twelve of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
and to further amend said article by adding thereto a new
section, designated section ten-g, all relating to the payment
card program; providing for additional monitoring; requiring
training; requiring administrative penalties including card
suspension in certain circumstances; clarifying transactions
for which payment cards may not be used; requiring
documentation; authorizing emergency rules; amending criminal
penalties; authorizing special transaction fees; requiring
post audits; requiring reports; expanding the payment card
advisory committee; centralizing control in the auditor's
office; changing the name of the program and setting effective dates.
Be it enacted by the Legislature of West Virginia:
That sections ten-a, ten-b, ten-c, ten-d and ten-e, article
three, chapter twelve of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted; and
that said article be further amended by adding thereto a new
section, designated section ten-g, all to read as follows:
ARTICLE 3. APPROPRIATIONS, EXPENDITURES AND DEDUCTIONS.
§12-3-10a. Payment card program.
(a) Notwithstanding the provisions of section ten of this
article, payment of claims may be made through the use of the state
purchasing card program,
hereinafter designated and to be known as
the state payment card program, authorized by the provisions of
this section.
Any reference in this code to the purchasing card
program shall be considered a reference to the payment card
program. The auditor
in cooperation with the secretary of the
department of administration, may establish a shall continue the
state
purchasing payment card program for the purpose of
authorizing all spending units of state government to use a
purchasing payment card as an alternative payment method when
making small
dollar purchases. The
purchasing payment card program
shall be conducted so that procedures and controls for the
procurement and payment of goods and services are made more efficient. The program shall permit spending units to use a
purchase payment charge card to purchase goods and services.
When
a payment card is used, the purchase must be made in compliance
with all applicable statutes, rules, policies and procedures
governing the purchase.
The auditor shall biennially review the
levels of use and the practices of cardholders and shall establish
criteria for termination of those payment cards not efficiently
used. The auditor shall also biennially analyze the number of
payment cards held by each agency and establish limits on that
number when appropriate and shall provide a written report to the
Legislature's joint committee on government and finance no later
than the fifteenth day of November, two thousand three, regarding
the progress of the review. The amount of any one purchase made
with the purchase payment charge card shall not exceed the amount
contained in the jointly proposed rules of the auditor and the
purchasing division of the department of administration proposed
applicable legislative rule approved in accordance with the
provisions of article three, chapter twenty-nine-a of this code:
Provided, That purchasing payment cards may not be utilized used
for the purpose of obtaining cash advances, whether the advances
are made in cash or by other negotiable instrument. Purchases of
Goods and services must be received either in advance of or
simultaneously with the use of a state purchasing payment card for
payment for those goods or services. The auditor, by legislative rule, may eliminate the requirement for vendor invoices and provide
a procedure for consolidating multiple vendor payments into one
monthly payment to a charge card vendor. Selection of a charge
card vendor to provide state purchase payment cards shall must be
accomplished by competitive bid. The purchasing division of the
department of administration auditor shall contract with the
successful bidder for provision of state purchase payment charge
cards. Purchase Payment charge cards issued under the program
shall be used for official state purchases only. The auditor and
the director of the purchasing division of the department of
administration shall jointly propose rules for promulgation in
accordance with the provisions of article three, chapter
twenty-nine-a of this code to govern the implementation of the
purchase payment card program.
(b) For purposes of the payment card program, "spending unit"
means any department, agency, board, commission, officer,
authority, subdivision or institution of state government for or to
which an appropriation has been made or is to be made by the
Legislature. The head of each spending unit participating in the
payment card program or his or her designee shall designate one or
more payment card coordinators and one or more payment card
reconciliation officers to serve the spending unit or subdivisions
of the spending unit: Provided, That upon approval by the auditor
a spending unit or subdivision thereof with thirty or fewer employees and no more than ten cardholders may designate one or
more employees to fulfill the roles of both payment card
coordinator and payment card reconciliation officer: Provided
however, That the auditor may waive the requirement of a
reconciliation officer when the auditor considers it appropriate to
do so based on the circumstances related to the agency and the
internal controls therein. The appointees shall attend annual
training consisting of not less than six classroom hours conducted
by the auditor. It is the duty of payment card coordinators and
reconciliation officers to assure that cardholders comply with all
relevant statutes, rules and procedures. No payment card may be
issued to or used by a payment card coordinator or reconciliation
officer.
(c) Each payment card coordinator must hold a position of
knowledge and experience within the purchasing cycle of the
respective spending unit or subdivision of the spending unit. The
head of a spending unit or designee shall appoint payment card
coordinators in a sufficient number to allow thorough and timely
performance of their responsibilities. Payment card coordinators
shall, to the extent possible, occupy a position that promotes a
level of independence from the cardholders subject to the
coordinator's oversight authority. Authority to approve payment
card monthly master invoices resides with the payment card
coordinator.
(d) The head of a spending unit or designee shall appoint
payment card reconciliation officers in a sufficient number to
allow thorough and timely performance of their responsibilities.
Each payment card reconciliation officer must possess accounting
expertise consistent with the size of the respective spending unit
or subdivision thereof and the aggregate amount of payment card
transactions to be reconciled each month. A payment card
reconciliation officer shall reconcile all transactions which
appear on the officer's spending unit's monthly master invoice as
received from the payment card provider. The officer shall insure
that all the transactions were accomplished in compliance with
existing policies and procedures related to the payment card
program. Upon completion of the reconciliation process, the
reconciliation officer shall report results to the payment card
coordinator. With the exception of agencies exempted herein, no
agency may allow a payment card reconciliation officer to approve
a monthly master invoice for payment or assume any of the duties of
the payment card coordinator.
(e) Before an employee may be issued a payment card, the
employee must have successfully completed a training session
specifically designed for new cardholders. All cardholders are
required to complete three hours of training biennially which may
be conducted by the auditor, or by the agency's designated payment
card coordinator: Provided, That at least one hour of training every two years shall relate to ethics and may be conducted by the
auditor, the commission on special investigations, the ethics
commission or by the agency's designated payment card coordinator.
All training shall be in a format approved by the auditor.
(f) (1) The auditor shall impose by rule penalties, including,
but not limited to, suspension or termination of card privileges,
and fines for violation of any of the provisions of this article,
related rules or established purchasing policies or procedures
involving the use of a payment card. These rules must set forth
graduated penalties for misuse. These penalties shall include, but
not be limited to, the following: The auditor shall impose a
thirty-calendar day suspension of payment card authority of a
spending unit or subdivision thereof upon the auditor's
determination that the head of the spending unit has failed or
refused to take corrective action as recommended by the auditor,
or that the spending unit has a continuous ongoing practice of
misusing the payment card by engaging in unlawful conduct related
to the payment card, or that the spending unit has engaged in a
prohibited practice related to the use of the payment card.
Prohibited practices include, but are not limited to, the
following:
(A) Stringing transactions or splitting transactions, which
means the intentional manipulation of the ordering, billing or
payment process in order to circumvent the transaction limit including splitting an invoice for more than the individual
transaction limit into more than one transaction or colluding with
a vendor to split an order into separate invoices;
(B) Paying for 1099 reportable transactions without generating
the appropriate 1099 form;
(C) Failing to properly document and reconcile payment card
transactions;
(D) Purchasing goods or services the acquisition of which with
a payment card is prohibited by law. Prohibited purchases include,
but are not limited to, payment for the following:
(i) Alcoholic beverages;
(ii) Cash advances;
(iii) Legal services;
(iv) Firearms and ammunition, except when purchased by
law-enforcement personnel;
(v) Insurance premiums;
(vi) Travel related gasoline;
(vii) Travel related expenses; and
(viii) Building leases.
(E) Permitting cardholders to acquire goods or services for
personal benefit, or to accept bribes, gratuities or kickbacks from
vendors.
(2) In those instances in which a spending unit consists of
two or more identifiable subdivisions, the auditor may limit the suspension to one or more subdivisions of the spending unit in the
event the abuse of payment card authority is clearly shown to be
limited to one or more subdivisions, as opposed to the spending
unit as a whole.
(3) If the authority of a spending unit or subdivision to
participate in the payment card program is reinstated subsequent to
an initial thirty-calendar day suspension, and the spending unit or
subdivision is found by the auditor to be eligible for suspension
a second time within a period of six months following the date of
reinstatement, the auditor shall impose a second suspension for the
remainder of the month of notification of the violation and six
calendar months thereafter.
(4) If the authority of a spending unit or subdivision thereof
to participate in the payment card program is reinstated subsequent
to a second suspension, and the spending unit or subdivision is
found by the auditor to have committed acts within six months
following the date of reinstatement which would again require
suspension, the auditor shall impose a suspension for the remainder
of the month of notification of the violation and for twelve
calendar months thereafter.
(g) No payment card vendor may provide a bribe, gratuity, or
kickback to a payment cardholder or a state spending unit.
(h) The auditor has the authority to suspend the privilege of
a vendor to participate in the payment card program when the auditor has reason to believe that such vendor has violated any of
the statutes, rules, policies or procedures concerning the payment
card. Every vendor whose privilege to participate has been so
suspended shall be notified thereof in writing by certified mail.
(i) Any vendor whose privilege to participate in the payment
card program has been suspended under the authority provided in the
preceding subsection may submit to the auditor a written request
for review. Upon receipt of the request for review, the auditor
shall provide for an independent review by an individual appointed
by the auditor and vested with authority to set aside the
suspension.
(j) The auditor shall report twice each year to the commission
on special investigations and the purchasing division any material
payment card audit findings encountered with individual spending
units and with the payment card program as a whole, any suspensions
occurring within the preceding six months, and the total dollar
amount and number of violations as set forth in this section,
including violations by vendors. The reports must cover six-month
periods beginning the first day of July and the first day of
January of each year, and are due thirty calendar days following
the end of the period covered by the report. The report must
include any existing plan or any actions taken by the auditor to
address the violations.
(k) The auditor has the authority to prohibit uses of the state payment card, consistent with the best interests of the
state.
(l) The auditor is responsible for reviewing documentation
required of spending units as well as the spending unit's internal
operating procedures related to the unit's participation in the
purchasing card program. The director of the purchasing division
shall regularly notify the auditor of any payment card transactions
that are in violation of purchasing statutes, rules, policies and
procedures. Payment card documentation must be in compliance with
the following minimum criteria:
(1) Each payment card transaction must be documented on a log
sheet and accompanied by a detailed itemized receipt;
(2) Each log sheet must set forth the date the order is
placed, the name of the vendor, the name and address of the
spending unit or sub-spending unit, the name of the individual
responsible for the transaction, an itemized list of each commodity
or service being purchased and the object code for each
expenditure;
(3) Any shipping charges must be listed separately from the
itemized costs and the total of all costs for the transaction on
the detailed itemized receipt;
(4) Log sheets may be generated by electronic means or a
permanent paper copy either of which must be signed by the
responsible payment card holder;
(5) If the permanent paper copy of the log sheet contains the
required information, it may also be used to fulfill the
requirements of section ten-f of this article pertaining to
receiving reports.
(m) In accordance with article three, chapter twenty-nine-a of
this code, the auditor may propose for legislative approval rules
establishing special criteria for the use of a payment card during
a period of officially declared emergencies or disasters.
§12-3-10b. Fraudulent or unauthorized use of payment card
prohibited; criminal penalties; restitution; set
off of pension benefits and potential disciplinary
action.
It is unlawful for any person to use a state purchase payment
card, issued in accordance with the provisions of section ten-a of
this article, to make any purchase of payment for goods or services
in a manner which is contrary to the provisions of section ten-a of
this article, of article three, chapter five-a of this code, of any
other provision of this code governing the purchase of goods or
services or the rules promulgated pursuant to that section those
provisions. Any person who violates the provisions of this section
article or applicable rules is guilty of a felony, misdemeanor and,
upon conviction thereof, shall be confined in the penitentiary not
less than one nor more than five years, or fined no more than five
thousand dollars fined no more than two thousand dollars or confined in the county or regional jail no more than one year, or
both fined and imprisoned: Provided, That a person who violates
provisions of section ten-a of this article and thereby receives
goods or services for personal use or benefit in an amount in
excess of one thousand dollars is guilty of a felony and, upon
conviction thereof, shall be fined not more than ten thousand
dollars or imprisoned in a state correctional facility not less
than one nor more than ten years, or both fined and imprisoned.
Any person who violates section ten-a or applicable rules and who
thereby receives goods or services for personal use or benefit must
pay restitution to the state in the amount of the cost of the goods
or services. Notwithstanding any other provision to the contrary,
upon determination by the state auditor that a person has received
goods or services for personal use, the employer has the right of
set off and attachment of the person's pension benefits. Employers
shall consider an employee's violation of this article or the rules
promulgated thereunder and take appropriate disciplinary action.
§12-3-10c. Transaction fees; special fees; disposition of fees.
(a) In order to promote and enhance the use of the state
purchasing payment card program established by the provisions of
section ten-a of this article and in order to maintain and develop
the fiscal operations and accounting systems of the state, the
auditor and the treasurer may assess a joint transaction fees fee
for all each financial documents document that will be processed on the central accounting system. Such transaction fees The
transactions shall be prescribed by legislative rule proposed in
accordance with article three, chapter twenty-nine-a of this code
and may include the following:
(2) (1) A transaction fee not to exceed one dollar per
transaction to be assessed against spending units of state
government for every transaction received, electronically or
otherwise, by the auditor from the centralized accounting system;
and
(1) (2) A penalty fee not to exceed five times the transaction
fee to be assessed against spending units of state government who
submit claims for payment of goods and services when those claims
are authorized to be paid by use of a state purchasing payment card
and the spending unit has failed to utilize use the state
purchasing payment card.
(b) All fees collected under this section shall be deposited
into the "Technology Support and Acquisition Fund" which is hereby
created in the state treasury to be administered by the auditor.
The auditor and treasurer shall use moneys deposited in the fund to
maintain and develop the state purchasing payment card program,
support the fiscal operations of the state, including the state
centralized accounting system, and to acquire and improve the
technology required to support these functions. If revenues
accruing to the technology support and acquisition fund are not adequate to cover the cost associated with this mandate, those
funds in the payment card administration fund, accrued pursuant to
section ten-d of this article, may also be used for this purpose:
Provided, That expenditures from the fund are authorized from
collections and are to be made only in accordance with an
appropriation by the Legislature and in accordance with the
provision of article three of this chapter and upon fulfillment of
the provisions set forth in article two, chapter five-a of this
code: Provided, however, That for the fiscal year ending the
thirtieth day of June, one thousand nine hundred ninety-eight,
expenditures from the fund may be made from collections: Provided
further, That the Legislature is exempt from any fees imposed under
this section.
(c) Notwithstanding any provision of this article or
legislative rule to the contrary, in the event the authority of a
spending unit or subdivision thereof to use the state payment card
is suspended pursuant to guidelines set forth by legislative rule,
the auditor shall assess a special suspension fee equal to the
amount of up to five times the maximum penalty fee. The auditor
shall impose the suspension fee upon each transaction of the
spending unit or subdivision thereof for the duration of the
suspension. Special suspension fees must be deposited into the
payment card administration fund created pursuant to section ten-d
of this article.
§12-3-10d. Payment card fund created; expenditures; post audit
responsibilities.
(a) All money received by the state pursuant to any agreement
with vendors providing purchasing payment charge cards, and any
interest or other return earned on the money, shall must be
deposited in a special revenue revolving fund designated the
"Purchasing Payment Card Administration Fund," in the state
treasury to be administered by the auditor. All expenses by the
auditor in the implementation, and operation, and ongoing
monitoring of the purchasing payment card program, or arising from
the auditor's post audit responsibilities, shall be paid from the
fund. If revenues accruing to the payment card administration fund
are not adequate to cover the costs associated with this mandate,
those funds in the technology support and acquisition fund accrued
pursuant to section ten-c of this article, may also be used for
this purpose. Expenditures from the fund funds shall be made in
accordance with appropriations by the Legislature pursuant to the
provisions of article three, chapter twelve of this code and upon
fulfillment of the provisions of article two, chapter five-a of
this code.
(b) The auditor shall regularly cause a post audit of every
spending unit exercising the payment card authority granted
pursuant to this article and shall quarterly provide the
legislative auditor's office with the proposed audit schedule. The auditor shall examine for compliance with appropriate accounting
practices including, but not limited to, all applicable statutes,
rules, policies and procedures. Payment card post audits must be
conducted by individuals having a degree in accounting and
knowledge in the field of auditing for compliance: Provided, That
employees of the auditor's office employed for these purposes on
the effective date of this article are exempt from the degree
requirement. Upon completion the audits will be reviewed and
approved by a certified public accountant duly licensed by the
state of West Virginia and employed by the West Virginia state
auditor's office.
§12-3-10e. Payment card advisory committee created; purpose;
membership; expenses.
There is created continued a purchasing card advisory
committee, hereafter to be known as the payment card advisory
committee, to enhance the development and implementation of the
purchasing payment card program. The committee shall solicit input
from state agencies and make recommendations to improve the
performance of the purchasing payment card program. The committee
consists of eleven twelve members to be appointed as follows:
(1) The auditor shall serve as chairperson of the committee
and shall appoint three members from the state college system of
West Virginia and the university system of West Virginia, one
member from the department of health and human resources, and one member from the division of highways, and one member to be selected
by the secretary of military affairs and public safety;
(2) The secretary of the department of administration shall
appoint one member from the information services and communications
division, one member from the financial accounting and reporting
section, and one member from the purchasing division;
(3) The secretary of the department of tax and revenue shall
appoint one member from the department of tax and revenue; and
(4) The state treasurer shall appoint one member from that
office.
Committee members shall be appointed for a term of one year,
commencing on the first day of July, one thousand nine hundred
ninety-eight. Committee members shall receive reimbursement for
expenses actually incurred in the performance of their duties on
the committee.
§12-3-10g. Effective date; emergency rules.
The amendments to sections ten-a, ten-b, ten-c and ten-d of
this article passed in the year two thousand three are effective
the first day of July, two thousand three. The state auditor shall
implement these changes by promulgating emergency rules to become
effective the thirtieth day of June, two thousand three.
NOTE: The purpose of this bill is to provide for additional
internal controls and procedures for the purchase card program and
to rename it the payment card program.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
Section 12-3-10g is new; therefore, strike-throughs and
underscoring have been omitted.
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