Los Angeles World Airports P-Card Purchasing Review

Background

Effective procurement practices are critical to ensure that public funds are spent efficiently and appropriately. LAWA Accounting Operations staff administer a Procurement Card (P-Card) Program that allows airport staff to directly purchase items and services to satisfy a variety of operational needs and administrative functions.

The Office of the City Controller conducts periodic reviews of P-Card expenditures at City departments to assess whether related funds are authorized, reasonable, and adequately supported.

Key Facts

Fact #1: LAWA staff spent $7 million through P-Card transactions over the past three years (2016 – 2018).

Fact #2: Thirty-four percent of LAWA P-Card transactions were made at Office Depot, Home Depot, and Amazon.

Fact #3: Office supplies, maintenance materials & parts, and IT peripherals were commonly purchased through LAWA’s P-Card program.

Fact #4: LAWA accounting staff manually reviewed over 16,000 P-Card transactions in three years (2016-2018).

Fact #5: LAWA accounting staff manually reviewed over 16,000 P-Card transactions in three years (2016-2018).

Review Results

During our review of P-Card purchases made from January 2016 through December 2018, significant policy and procedure updates were informally implemented by LAWA accounting staff. An updated policy manual was approved by LAWA management in March 2019; granting additional authority to accounting staff for the approval of temporary P-Card limit increases up to $20,000 and providing additional documentation and approval requirements for purchases of non-standard items such as food, gift cards, and promotional items.

Administrative flexibility in P-Card policy allowed LAWA facilities and maintenance staff to rely on P-Cards for operational needs when supply contracts expired. In addition, we noted significant use of P-Cards for online transactions. Finally, the current policy allowed staff to rely on PCards for special purchases that would have been prohibited unless individual exceptions were pre-approved by LAWA management.

Considering the unique business needs related to airport operations, our Review provides several recommendations for LAWA management to improve P-Card compliance and enhance department operations. Specifically, LAWA management should:

• Proactively monitor and assess contract expirations for all operationally critical supply contracts to ensure continuity of standard purchasing practices.
• Evaluate the business need for online transactions facilitated through P-Cards, and establish additional controls to monitor P-Card purchases facilitated through third-party payment processors such as PayPal, Square, and Intuit.
• Ensure exemption approvals of typically prohibited electronic and personal item purchases have the appropriate level of management level approval and are adequately safeguarded.
• Implement an automated system for processing and approval of PCard purchases and program applications.