Report 2017-030 Recommendation 6 Responses

Report 2017-030: The State Bar of California: It Needs Additional Revisions to Its Expense Policies to Ensure That It Uses Funds Prudently (Release Date: June 2017)

Recommendation #6 To: Bar of California, State

To assign purchasing cards only to appropriate staff, ensure that the State Bar's records of employees' credit limits reflect those established with the bank, and to verify that staff use purchasing cards only for allowable and necessary expenses, the State Bar should immediately develop a policy that requires justification of the business needs for employees to receive purchasing cards, and use this policy to limit the number of staff issued a purchasing card.

Annual Follow-Up Agency Response From October 2022

A new purchasing card policy was incorporated in Section 6.0 of the State Bar's Procurement Manual as of 2/5/2018, then confirmed in February 2020.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The State Bar revised its policies to require justification of the business need for employees to receive purchasing cards and to include an annual review of the business justification for those purchasing cards. The revised policies also increased controls of credit limits greater than $5,000.

Annual Follow-Up Agency Response From September 2020

Purchasing Card enrollment requires documentation of the business need. The list of cardholders and credit limits is reviewed annually. A copy of the Purchasing Card enrollment form and Procurement Policy Manual have been provided to the Auditor.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

State Bar's revised policies provide increased controls of credit limits more than $5,000. However, State Bar policy 6.02 still allows staff to use the purchasing card for "Meeting rooms and related catering services" and not bill vendors for payment for these purchases, which is the same issue that we had during the audit. State Bar confirmed that it did not see a need to change policy regarding the use of purchasing cards for catered onsite meals.

Annual Follow-Up Agency Response From October 2019

Purchasing limits over $5,000 are currently permitted only for certain expenses related to administration of the California Bar Examination, or for expenses related to facilities management or other support operations. These higher limits are assigned only to specific individuals with responsibility for specific operational areas. As of August 2019, only five (5) cardholders have single purchase limits over $5,000. We are, however, reviewing all Procurement and Finance procedures as we plan the ERP system upgrade, which is scheduled to go live in January 2020. We plan to fully implement the $5,000 limit for all purchases as part of this process.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From August 2019

Purchasing limits over $5,000 are permitted only for certain expenses related to administration of the California Bar Examination, or for expenses related to facilities management or other support operations. These higher limits are assigned only to specific individuals with responsibility for specific operational areas. As of August 2019, only five (5) cardholders have single purchase limits over $5,000. We are, however, reviewing all Procurement and Finance procedures as we plan the ERP system upgrade, which is scheduled to go live in January 2020. Changes and additional restrictions related to purchasing cards may be implemented as part of this process.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

State Bar revised its policy to require justification of the business need for employees to receive purchasing cards and now conducts an annual review of the business justification for those purchasing cards. Although these actions have reduced the number of employees with purchasing authority over $5,000, the State Bar continues to allow some employees to maintain purchasing card limits greater than $5,000 -- including one employee with a limit of $75,000 (monthly) and $25,000 (single purchase). Generally, purchases of this size are not small and recurring expenses, but rather larger purchases that the State Bar should make through the regular procurement process. Moreover, altogether 115 State Bar employees continue to possess purchasing cards, which does not indicate that the State Bar is limiting the number of purchasing card it issues to staff.

Annual Follow-Up Agency Response From October 2018

Fourteen (14) cardholders have monthly limits greater than $5,000; of these, nine (9) have single purchase limits over $5,000. These limits are permitted for expenses related to administration of the California Bar Examination, or for expenses related to facilities management or other support operations, such as our monthly Lexis and Westlaw subscriptions, monthly employee parking charges, monthly off-site storage charges, copier supplies, miscellaneous IT equipment, and group training registrations. They are assigned only to specific individuals with responsibility for specific operational areas. In some cases payment via invoice is not feasible; in others, payment via invoice would be less efficient. The cardholder who had a $95,000 monthly limit has been reduced to $75,000. We will perform our annual review of all cardholders in January 2019 and will further reduce the number of cardholders with limits over $5,000, where feasible.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

State Bar did revise its policy to require justification of the business need for employees to receive purchasing cards and to include an annual review of the business justification for those purchasing cards. However, State Bar continues to allow some State Bar employees to maintain purchasing card limits greater than $5,000 -- including one employee with a limit of $75,000 (monthly). Generally, purchases of this size are not small and recurring expenses, but rather larger purchases that the State Bar should make through the regular procurement process.

1-Year Agency Response

New purchasing card policies have been incorporated in Section 6.0 of the State Bar's Procurement Manual as of 2/5/2018.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

State Bar did revise its policy to require justification of the business need for employees to receive purchasing cards and to include an annual review of the business justification for those purchasing cards. However, State Bar continues to allow some State Bar employees to maintain purchasing card limits greater than $5,000 -- including one employee with a limit of $95,000 (monthly) and $30,000 (single purchase). Generally, purchases of this size are not small and recurring expenses, but rather larger purchases that the State Bar should make through the regular procurement process.

6-Month Agency Response

The State Bar is reviewing its purchasing card policies and will implement this recommendation by January 2018.

California State Auditor's Assessment of 6-Month Status: Pending

We look forward to the State Bar providing a more complete description of its actions to implement our recommendations, as well as evidence of those actions, at its one-year response in June 2018.

60-Day Agency Response

The State Bar is reviewing its purchasing card policies and will implement this recommendation by January 2018.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2017-030

Agency responses received are posted verbatim.