Audits of FlexCard purchases may be conducted at several levels: your department, FlexCard Administration, Audit & Advisory Services, and various external auditors.

Department

Your department should conduct two types of audits:

1. Transaction Pending Allocation Self-Audit

As noted in the section on the FlexCard Purchasing Process, the Cardholder should audit each new transaction in order to verify that they made the purchase: this self-audit is the first line of defense against fraudulent misuse of the FlexCard.

2 . Departmental Self-Audits

Your department should conduct periodic self-audits of its FlexCard purchasing. It should review a sample of transactions to ensure that all necessary documentation has been assembled and retained for each purchase: generally, a request for delivery/order approval (if appropriate) and a dated and initialed itemized packing slip/pro forma invoice/cash register receipt. Each transaction should be reconciled to the General Ledger.

FlexCard Administration

FlexCard Administration conducts a Monthly audit.

FlexCard Administration emails the department a request to audit one or more transactions from the previous month. The department provides the documentation to FlexCard Administration via email. The official results are emailed to the Department Administrator after the audit has been completed.
 
The number of times that a department is audited each year varies according to the volume of transactions and the number that trigger audit parameters. FlexCard Administration strives not to be burdensome. By policy, each department must be audited at least once each year, no matter how few or how innocuous its transactions.

Audit Selection Criteria

  1. are placed by new Cardholders, during their first several months with FlexCard
  2. are placed with Merchants from whom restricted commodities may be purchased (food and beverages, services and rentals, etc.) or which seem out of place given the Cardholder's department
  3. indicate possible gift card purchases, or membership payments
  4. are over the Cardholder's per transaction limit when use tax has been added (unless authorized by a purchase order)
  5. appear to have been split (including between Cardholders) to evade the per transaction limit
  6. have questionable use tax modification, or for which Reason Code 0 has been entered
  7. have been paid on Federal Funds for more than $3,000 (price reasonableness form required)

Audit & Advisory Services

FlexCard purchases, like all other purchases and financial transactions, are subject to audit by UCSB Audit & Advisory Services as part of their routine audits of campus departments.

External (Non-UC) Auditors

All University financial transactions (FlexCard purchases included) are regularly audited by several external agencies:

1. State Board of Equalization

The California State Board of Equalization conducts a rigorous annual Sales and Use Tax Audit. Any FlexCard purchase is subject to audit and, as the Office of Record, your department must be able to produce complete documentation if one or more of its purchases is selected. All requests for FlexCard purchase documentation related to a Sales and Use Tax Audit will be relayed to your department by Accounting Services & Controls, the campus liaison for the State Board of Equalization.

2. University of California External Auditors

The University of California contracts with an external audit service (currently PriceWaterhouseCoopers) to conduct annual audits of all aspects of its financial systems and transactions. The FlexCard program is included as part of the review process and your department may be requested to produce purchase documentation. All requests for FlexCard purchase documentation related to a PWC Audit will be relayed to your department by Accounting Services & Controls.

3. Federal Contract Compliance Audits

All Federal contracts, grants and cooperative agreements are subject to audit as part of Federal Contract Compliance Audits. Any FlexCard purchase made with Federal funds could be selected for review during an audit by a Federal agency. All requests for FlexCard purchase documentation related to a University of California External Audit will be relayed to your department by the Extramural Funds unit of Accounting Services & Controls.

The purpose of all audits is not to punish your department or any individual but rather to assist you in the operation of a departmental FlexCard program that maintains all mandated controls and retains all necessary documentation, in order to minimize your department’s (and the University’s) exposure to risk and loss.