How to reduce charges to the company's credit card account
Many companies in Hawaii allow their employees to use corporate credit cards. When too many employees are granted corporate credit card privileges, this greatly increases the risk of unauthorized charges.
Other problems include employees failing to submit credit card receipts and other supporting documentation in a timely manner, submitting incomplete information, or not submitting the required documentation at all.
An alternative to using corporate credits cards is to implement an expense-reimburse- ment policy, which requires that employees use their own credit cards to charge corporate expenses.
An argument against this idea is that employees are forced to advance their own funds to pay corporate expenses. However, if employees submit the expense reimbursement forms in a timely manner, they can be reimbursed before their credit card payment is due. In addition, many credit cards offer incentives such as frequent-flier point programs which can be an additional benefit to employees using their own cards.
However, if corporate credit cards are utilized, companies should consider the following recommendations to enhance internal controls and procedures over their usage:
» Limit usage to senior management, and closely monitor that usage.
Many credit card companies provide real-time, detailed, credit card transactions on their Web sites. A review of these transactions should be performed online rather than waiting for the printed monthly credit card statement to arrive.
» A written policy regarding the use of corporate credit cards should be developed.
The policy should state that credit cards should not be used for personal charges. The policy should also require that credit card receipts and other documentation be submitted in a timely manner. Corporate credit card privileges should be revoked for multiple violations of these policies.
» Board members should review the corporate expenditures of the chief executive officer. Often times, this should be the board chairperson or audit committee chairperson.
» Corporate credit cards should not allow employees check-writing privileges or the ability to take cash advances. In addition, some credit cards can restrict the usage or spending amount of corporate credit cards with certain vendors.
» Corporate travel charges should be paid through a travel agency that can notify the company potential personal trips.
If close oversight of and strict controls over credit card usage are maintained, companies can reduce the risk of unauthorized charges and demonstrate to its stakeholders its commitment to effective corporate governance.
Dwayne Takeno is an assurance senior manager in the Honolulu office of Grant Thornton LLP. He can be reached at firstname.lastname@example.org