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New Credit Card Practice Under Scrutiny

[Jul 31, 2007.]


Some universities have been trying to cut costs by issuing university business credit cards to their employees. The practice can be less expensive than other means of trying to pay school bills. However, Arizona universities have run into a stumbling block in their effort to promote cost efficiency: financial abuse.

The Arizona Republic newspaper has found that a number of campus employees are abusing the privilege of purchasing cards, or "p-cards." Instead of using the charge cards for their intended purpose, some employees are using the cards to buy gas, download songs from the Web, finance their vacations or buy furniture for their homes.

Credit card use at three Arizona state universities has increased more than 3 fold in the past 4 years, with some 5,725 cards in circulation. Total charges on the cards amounted to $147 million last year.

Amazingly enough, a University of Arizona worker was alleged to have charged more than $80,000 worth of personal expenses on a college credit card in 2006. Nearly all the workers caught for making private purchases on university charge accounts were dismissed or have voluntarily left their jobs. Since the year 2000, 13 employees have been caught making inappropriate purchases totaling more than $100,000.

The Arizona Board of Regents is going to be considering a plan to have performance reviews of university employees include an "internal controls" section which would include P-card usage.

Some of the more outrageous P-card purchases include CDs, video games, toys, clothing, holsters for personal guns, living room and dining room furniture, and an espresso machine.

However, it should be pointed out that university officials believe only a small fraction of employees have misused their P-cards. They add that the money saved in paperwork expenses makes the cards worthwhile, despite the risk of misuse. University officials also point out that each school conducts random audits, and that a given university can always ask for an employee's receipts in order to verify the worthiness of purchases.

Julie Ann Amos
July 31st 2007
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