1. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Credit Cards: Internal Controls, Minimizing Risk and Fraud

2. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Speakers: Holly Wallace; Member Relations Specialist, Illinois ASBO Janet Fisher; Purchasing/School Nutrition, Comm. Cons. Sch. Dist. 59 Betsy Allen; Audit Senior Manager, Miller, Cooper & Co., Ltd.

3. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Session Overview Different kinds of Credit Cards What is fraud? How to manage fraud Developing a procedure manual to prevent fraud Audit Perspective

4. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 A Credit Card? Why would I want to use a credit card in my school district?!!?

5. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 But WAIT!  I need approvals!  I need POs!  I need controls!

6. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Credit Cards should ENHANCE your current best practices – Not replace

7. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Different Kinds of Credit Cards Traditional Credit Cards P-Cards Department Store Cards Revolving Accounts

8. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Card Fraud Trends  Traditionally, card numbers were recorded at the point of sale manually or by illegal swiping devices  Today, Hackers install illegal software to capture card data without the physical card  60% of organizations were exposed to actual or attempted payments fraud.  27% of financial professionals that experienced payments fraud in 2013 report fraud incidents increased from 2012  43% of survey respondents from organizations exposed to fraud attacks, report credit or debit cards were targeted.  U.S Fraud Losses $16 Billion

9. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Types of Credit Card Fraud Phishing An email posing as a bank or company asks someone to verify their account information Vishing Similar technique using an email or phone call to direct someone to a phone number where they are asked to provide card information

10. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 What are banks doing to protect you from credit card fraud? Investment in analytical capabilities Investment in fraud detection systems Chip technology Evolve processes and capabilities to minimize customer disruption

11. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Protecting Yourself Sign your corporate card upon receipt Never divulge your credit card information over the phone, unless you initiate the call Make sure your credit card company has your up to date information Pay attention to your surroundings at all times when making transactions using your card Contact your credit card company immediately if your card has been lost or stolen Check your credit card receipts every month against your statement Always use a bookmark or URL to contact a financial institution.

12. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Best Practices / Valuable Tips Be proactive Impose transaction limits Spyware detection Clear your cache Do NOT let websites store passwords Perform regular system checks Restrict access Disable services not in use

13. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Are We On the Same Page? YouTube video: “Frog Protection - Discover it card commercial, Published April 2014.

14. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 The Procedure Manual: A Fraud Deterrent Develop procedures that provide fiscal control and purchasing accountability

15. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 gsdgfs Recommends use of purchasing cards to improve efficiency Need to maintain appropriate controls Controls to include written policies and procedures for cardholders

16. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Code of Conduct Designed to provide the cardholder a general philosophy and set of guidelines to follow when using the card.

17. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Allowable Purchases General supplies Subscriptions, Periodicals Membership dues Conferences/workshops/meeting expenses Travel Catering

18. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Prohibited Purchases Personal items Cash advances Capital Equipment Rental and Leases Consulting Services Hazardous Materials Alcohol/Gaming/Parking Violations/Donations

19. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Cardholder Spending Limits Transaction limit Daily dollar volume limit Monthly limit Merchant category Stipulate how the card can be used Statement of Authority Form

20. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15

21. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Recordkeeping and Reconciliation Requirements Maintain original receipts and compare to monthly account statement Provide purpose for each purchase Account number for each expense Sign and date statement Submit to supervisor for approval

22. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Billing and Payment Schedule Key Dates When does the billing cycle end? When is the monthly statement available? When must the signed statement with all documentation be submitted to Accounts Payable?

23. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Disputed Transactions and Returned Merchandise Cardholder to seek immediate resolution Ensure appropriate credits appear on subsequent statements Statement Dispute Form

24. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15

25. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Lost or Stolen Cards Include security tips Report immediately Contact Bank Contact Card Administrator

26. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Account Maintenance Credit limit Cardholder name change Cardholder location change Report/document lost or stolen card Cancel cardholder account Suspend cardholder account Account Maintenance Form

27. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15

28. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Internal Audits Unauthorized purchases Purchase of prohibited products Intent to circumvent credit limits Personal use of card Allowing an unauthorized person to use card Consistently delinquent submissions

29. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Agreement Form Acknowledge receiving manual and training Acknowledge understanding of responsibilities Agree to comply and abide by all terms and conditions Acknowledge that unauthorized use can result in loss of cardholder privileges, and discipline up to and including termination

30. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15

31. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Critical Elements to Ensure “You are on the same page”! AVOID FRAUD AND ENSURE SUCCESS 1.Purchasing Manual/Required Training 2.Signed agreement 3.Regular random audits

32. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Audit Perspective Audit Risks Sample Selection and Sample Size Testing and Related Attributes Common Findings Best Practices

33. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Audit Risks Misuse of District funds Unauthorized use Reputational risk Verification that goods purchased were received at the District

34. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Sample Selection and Sample Size Not always based on materiality Amount of usage of different types of cards will impact sample size (volume of transactions) Board or staff concerns could impact the sample selection or sample size Level of review Errors identified in prior year(s) Corrective action Errors found in the selected sample size can lead to an increased sample

35. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Testing and Related Attributes Purpose: To ensure the District is following their policy and procedures Does the District have a policy in place? Is the policy reviewed annually? Security of cards How are the cards maintained at the District if there are a limited number of cards used by District personnel? Procedures: Review the District’s policy and procedures to determine attributes to be tested

36. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Testing and Related Attributes Common attributes to be tested: Supporting documentation Proper approvals Business purpose/reasonableness of expenditures Account coding (especially with P-cards)

37. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Common Findings Approvals District policy has a process in place, but may lead to an employee approving their own expenses Lack of documented approvals Complacency in review Interest/Late Fees District personnel do not turn in supporting documentation timely Lack of proper support (invoices/receipts) Sales tax paid on a transaction

38. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 Best Practices Written policy and procedures Strict enforcement Annual review Keep the number of credit cards to a minimum Be aware and review the credit limits on cards

39. 64 th ILLINOIS ASBO CONFERENCE AND EXHIBITIONS APRIL 29 – MAY 1, 2015 @IllinoisASBO #iasboAC15 QUESTIONS