Cities monitor employee spending in different ways

Correction: The city of Suffolk's response to questions about its policy on employee credit cards was misstated in a story ("Cities monitor employee spending in different ways") on Page 1 of Wednesday's Hampton Roads section. The story said the city had not answered most of the questions on the policy. It responded to four of six questions.

A Chesapeake employee with a city-issued card couldn't get away with charging a watch or an air conditioner on the public's dime. The transactions would be blocked.

The city is phasing in procurement cards, or P-cards, rather than credit cards for employee use. Portsmouth does the same.

P-cards are paid off in full every month and give cities tighter control over employee spending while limiting purchases to "small items," said Nancy Tracy, Chesapeake's finance director.

The procurement cards are relatively new to Chesapeake. The city rolled out the first wave of P-cards in September, Tracy said.

In Norfolk, a city auditor is investigating whether Commissioner of Revenue Sharon McDonald improperly used a city credit card when she spent thousands of taxpayer dollars on hotels and restaurants while lobbying the General Assembly. In reaction to the investigation, eight employees currently hold city cards, down from 440.

The Virginian-Pilot asked other cities in South Hampton Roads how they monitored credit purchases. Virginia Beach, like Norfolk and Suffolk, uses credit cards. The Beach has 575 credit cards in employees' hands with limits ranging from $500 to $5,000. The last Virginia Beach audit was in 2008.

"We have good policies and procedures in place," City Auditor Lyndon Remias said, adding that credit cards require constant monitoring and his office plans another audit this year.

Earlier this year, a parks and recreation employee was fired after city officials discovered that she paid for child care with a city credit card.

The cards help departments make on line purchases and manage their travel expenses, said Patricia Phillips, the city's finance director, who manages the cards. The finance department has one employee who spends half her work time monitoring credit- card purchases or internal misuse and outside fraud, Phillips said.

Lavera Tolentino, the P-card administrator in Chesapeake, said she monitors charges online two to three times a day. Since the implementation, she hasn't seen any charges that would signal misuse, she said.

"The employees are aware there is an electronic connection," Tracy said. "Our goal is to monitor the transaction from multiple standpoints like a three-legged stool of control."

Purchases are monitored electronically blocking stores unrelated to city needs, by individual department and by the card administrator. In Portsmouth and Chesapeake, employees must sign a policy agreeing to use the cards for city purposes. Constitutional officers sign the same document if requesting use of a P-card.

Suffolk responded to four of six written questions about the city's credit card policy. The city's finance department performs monthly audits on credit card bills, spokeswoman Debbie George wrote in an e-mail. In September 2009, a Suffolk employee was fired on embezzlement charges.

Pilot reporters Dave For ster and Deirdre Fernandes contributed to this article.

Marjon Rostami, (757) 222-5563, marjon.rostami@pilotonline.com