A Card Program Best Practice: Reviewing for Policy Compliance

Policies and Procedure as pieces of a puzzle

Commercial card programs are ever-evolving. One area that is important to note when these changes occur is the policies and procedures. The policies and procedures of any card program are essential for the success of that specific card program. These policies were written to ensure that only the proper transactions are permissible and that cardholders are aware of such rules. Cardholders might find it difficult to stay up-to-date with the changes that occur to the policies and procedures. Nonetheless, after extensive time and effort are spent on developing a clear and detailed policy, it is imperative to check whether employees are compliant with the new policy changes. However, it can often be difficult at times to decide on what to specifically engage in when reviewing for policy compliance.

The success of any card program depends greatly on the strength and compliance of the policies themselves. In our article, “A Card Program Best Practice: Aligning Policy with Card Program“, we introduced our best practice series with challenges to card usage and finding the right controls to a policy that will work best for your card program. The following article focuses on the best practices to exercise when checking for policy compliance. Since these policies are ever-changing, the provided insights into reviewing policy compliance will help to guide cardholders to keep up the pace with the policy, for your review team to maintain a well-managed program, and create an opportunity for your business to reach program goals.

Actively review all transactions

One of the most crucial steps when checking for policy compliance is reviewing all of the transactions. Though it might be difficult, it is imperative that every transaction is thoroughly reviewed. Not reviewing all transactions can become an internal control issue. The 2018 ACFE Report to the Nations emphasizes that almost half of internal fraud cases occur due to weak controls. Many instances of noncompliance can go unnoticed if all transactions are not reviewed. Such instances of noncompliance can include duplicate payments, using the wrong suppliers, personal purchases, and over-ordering inventory. By thoroughly reviewing all transactions, any instance of noncompliance will be evident. Read more about the risk associated with not reviewing every transaction and the benefits of doing so: Take hints from “Clean Your Refrigerator Day” to spruce up your expense review process.

Quickly communicate review findings to cardholders — whether those findings are positive or negative

Just as the review of such transactions should be in a timely manner, the communication of the findings of those reviews to cardholders must also be prompt. If cardholders are not informed within a relevant time frame, this allows time for the possibility of additional violations. In some situations, employees might not know that their transaction was wrong. By alerting them quickly, you can prevent the possibility of additional violations on their cards. Quick communication also reminds employees that their transactions are being monitored. When employees know that their card usage is checked then purchasing behavior can change. Cardholders will start to think twice or consult their cardholder policy before they make a purchase that they are unsure about. More importantly, timely communication about findings illustrates to employees that there are quick and clear consequences for those who violate cardholder policy. Read more about the different types of fraud that can hide across payment methods, especially when not all transactions are reviewed: 4 Types of Employee Fraud That Could Hide in Your Corporate Expenses and Across Payment Methods.

Notify cardholders of findings close to their submission date

In addition to a timely follow-up about the discoveries, it is also imperative to let cardholders know about the findings within 15 days of their submission for approval. If individuals decide to wait too long to notify cardholders, the issues might become too far away in the past to still possess relevance.

Consider the benefits of reviewing for policy compliance with third-party review mechanisms

Let’s face it, program management teams are already very busy with their work. Reviewing every single monthly transaction in full detail is then put on the backburner. Implementing third-party reviews can bring an additional power source to your review process. Since other staff members might be burdened with other tasks, third-party review mechanisms benefit the team by lessening the workload and offering a complete, thorough, and consistent review of all transactions. This review process will not have to balance other tasks as your staff does. These third-party review systems will focus solely on monitoring all expenses promptly. This will ensure that your expense review gets the attention it needs and will find any instance of noncompliance. Among the many things it can accomplish, a third-party review mechanism can help prevent overspending. Read more to discover the “Six Ways your company might be overspending“.

Notify both the cardholder and manager

This seems straightforward but sometimes these individuals can be left out of the initial conversations when a violation is found. It is important for both the violator and his or her manager to understand what happened and when it happened. In addition, make sure to include a letter to their HR file regarding the policy violation. This is important since the letter will be a formal documentation of the incident. In addition, a record on hand will allow reviewers to have a guide as to how the cardholder has behaved in the past.

Holding the cardholder’s manager responsible for any misuse (when the manager approved the transaction)

Many individuals are very busy today and might skip or quickly review the transactions. Skipping or haphazardly reviewing transactions can increase the possibility that inappropriate transactions are approved. Such inappropriate transactions can include duplicate payments, overspending, personal purchases, and over-ordering inventory. The cardholder’s manager must then be held accountable for any misuse that they approved. It is important for the manager to know that they will also face consequences if they approved the inappropriate transactions in order to prevent this from occurring again.

How to maximize policy compliance

When consistent reviews of policy compliance do not exist, disastrous results can occur to your card program. Such results include fraud, misuse, and overspending, among many other things. Card Integrity’s Data-Wise service offers a monthly thorough review of every transaction. Card Integrity’s unique Data-Wise service can ensure that all cardholder expenses are in-line with your most current policies and procedures. Another effective control to protect policy compliance is training. Card Integrity’s cardholder training program can create effective training courses based on your particular policies and procedures. This will allow cardholders to clearly understand what the cardholder policy entails. Call us today at 630-501-1507 or click HERE to contact us via our online form to find out more information on how our services can help you achieve policy compliance for your card program.

For more best practices to apply to your card program, download the Card Integrity Guide to P-Card Program Best Practices.

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