SANDAG improperly used purchase cards, internal auditors find

Staff at the San Diego Association of Governments racked up hundreds of thousands of dollars in “improper” and “questionable” payments on taxpayer-funded purchase cards, an internal audit found, including nearly $70,000 at local restaurants and almost $250,000 in transactions on non-working days.

Despite the SANDAG’s Office of Independent Performance Auditor finding a series of violations, including exceeding purchase limits and missing documentation for transactions, its report said the agency has failed to enforce its policy and has “no documented consequences” for noncompliance.

Auditors flagged 34 charges that exceeded the policy’s $3,500 limit; the purchase of five $100 gift cards that did not have a complete explanation on transaction logs; and dozens of payments for utilities, memberships and other “unallowable” purchases. Several unexplained purchases from Amazon shopping were noted by auditors in their explanation to SANDAG board members Friday morning.

SANDAG’s policy on purchase cards lacked “basic elements” seen in other public agencies’ guidelines, the report said, and staff training to understand the rules was minimal. 

While other agencies prohibit the use of purchase cards to buy hardware and software, auditors found SANDAG used purchase cards to spend about $180,000 on laptops and devices in March 2020 as the COVID-19 pandemic shifted employees to remote work.

The report also said SANDAG shouldn’t have used taxpayer funds on a December 2019 staff retreat at a downtown San Diego hotel. How much was spent on that event was not included in the audit.

Auditors did not provide a total of charges that were considered improper. Independent Performance Auditor Mary Khoshmashrab told the SANDAG board that because documentation to support the purchases was lacking, it was difficult for officials to determine an amount.

Transactions on SANDAG’s purchase cards totaled nearly $2.5 million over the four-year period that auditors reviewed. The agency has nearly 400 employees, with as many as 20 cardholders active at any given time.

Officials are now reducing the number of cardholders to six.

Board members on Friday accepted the audit’s results, with several expressing concerns that the improper purchases previously went undetected. 

“Management, you really dropped the ball on this one,” said Carlsbad Mayor Matt Hall, who sits on the agency’s board. “Anytime you’re dealing with public funds and we find out that after a period of time this much money can’t be accounted for, that doesn’t say much for this establishment’s leadership.”

Auditors have recommended additional training on improper purchases and “strict enforcement” of the policy, including tracking noncompliance by employee and tallying all improper charges to seek reimbursement “from the responsible cardholder.”

Officials are set to return to the board next month with an updated purchase card policy. SANDAG CEO Hasan Ikhrata said administrators took no exception to the audit’s findings. 

“This is important for an agency like ours to have,” said Ikhrata, who joined the agency in 2018. “We are going to look at everything.”The review of the purchase card policies comes as SANDAG continues to make changes in response to a separate audit that in 2020 found the agency made improper severance and bonus payments totaling hundreds of thousands of dollars. Most actions have been completed in response to that audit, staff told the board Friday.