Purchasing card rules for use
and administration
Issued pursuant to the Financial Management Act 1994
The Secretary
Department of Treasury and Finance
1 Treasury Place
Melbourne Victoria 3002
Australia
Telephone: +61 3 9651 5111
Facsimile: +61 3 9651 2062
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© State of Victoria 2015
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ISBN 978-0-9943637-8-7 (pdf)
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Contents
1.
Introduction .................................................................................................... 1
2.
Definitions ....................................................................................................... 2
3.
Scope of the Rules ........................................................................................... 3
4.
Role of agencies and cardholders .................................................................... 4
5.
Role of the Department of Treasury and Finance ............................................ 5
6.
Role of portfolio departments ......................................................................... 6
7.
Unauthorised use ............................................................................................ 7
8.
Determination and reporting of significant unauthorised use ......................... 8
9.
Rules ............................................................................................................... 9
Appendix A - 4.5.3 Purchasing Card (Extract from Standing Directions of
the Minister for Finance under the Financial Management Act 1994) ..................... 18
Appendix B – Undertaking by the cardholder ........................................................... 20
Appendix C – Template letter for reporting of significant instances of
unauthorised use to the Minister for Finance and audit committee ........................ 22
Appendix D – Template letter for reporting annually to the Minister for
Finance all instances of unauthorised use of its purchasing card for the
period ending 30 June .............................................................................................. 24
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
i
1.
Introduction
Part of the mandate of the Minister for Finance is to assist the Government in meeting its
obligations under the Financial Management Package by prescribing the financial
management requirements to be met by the Government. This is an extension of the
Minister’s responsibility with respect to financial management, as inadequate management
of risks and controls may have an impact on the State’s financial position.
As a result, the Minister has endorsed the Financial Management Compliance Framework as
a means of managing and addressing the risks arising from financial management
compliance, including purchasing card monitoring and reporting requirements. This is
achieved through the annual Financial Management Compliance Framework process of
certification against a set of Direction Requirements which have been derived from the
Standing Directions of the Minister for Finance pursuant to the Financial Management Act
1994. Direction 4.5.3 of the Standing Directions of the Minister for Finance specifically deals
with the use of purchasing cards.
Agencies who operate purchasing cards, and cardholders responsible for using these cards
are bound by the requirements contained within Direction 4.5.3. This Direction is
supplemented by the Purchasing Card Rules for Use and Administration (the Rules), which
have been developed to assist cardholders and agencies in the interpretation and
application of the legislative requirements.
The use of purchasing cards, including a general government purchasing card, as a payment
mechanism can be of considerable benefit to the Government, taxpayers, and the various
individuals and organisations that supply goods and services to the public sector. The
benefits are in the form of efficient procurement and reduced administration costs.
Accordingly, agencies are encouraged to administer procurement via a purchasing card
where such benefits are attainable.
Responsible financial management requires a strict, transparent and sound control
environment. The Rules aim to ensure agencies administer procurement using purchasing
cards within a controlled environment of strict procedures and guidelines, with clear
consequences for public servants or statutory officers who misuse cards.
The Rules set out in this document reflect government policy and the following key
principles in relation to the conduct of persons involved in the use and administration of
purchasing cards.
 Cardholders must always act in the interests of the State, as opposed to their own
personal interests or convenience; and
 Cardholders must perform their duties honestly, with skill and care.
The liability for any charges on purchasing cards rests with the State and not the individual
cardholder. For this reason, the Rules must be strictly adhered to as a means of limiting the
financial exposure of the State.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
1
2.
Definitions
Defined words are highlighted in italics throughout these Rules. Where a conflict occurs
between the words defined in the Rules and the words used in any rules or policies issued
by agencies, or the words used in the terms and conditions issued by the card provider, the
definitions in the Rules prevail.
In the Direction and Rules:
 accountable officer has the same meaning as in section 3 of the Financial Management
Act 1994.
 agency/agencies has the same meaning as Public Sector Agency in the Standing
Directions of the Minister for Finance under the Financial Management Act 1994.
 authorised signatory/authorised signatories means persons nominated by the
accountable officer with specific responsibility for:
– reviewing and approving transactions appearing on the cardholder’s statements; and
– approving payment of incurred expenses for specified cardholders.
 cardholder means a person who has been issued with a purchasing card.
 card provider means the approved supplier of the purchasing card facility account.
 employee means a person who is employed by an agency. This includes persons
employed on a ‘fixed term’ contract basis who are on the agency’s payroll.
 facility account means the individual purchasing and settlement facility between the card
provider and the agency.
 Minister means the Minister for Finance.
 official purposes means purposes that are in direct connection with, or a direct
consequence of, the cardholder’s functions and duties within an agency.
 program administrator means the person nominated by the accountable officer with
responsibility for administration of purchasing cards in a particular agency.
 purchasing card means any type of purchasing card used within the Victorian Public
Sector (ie. general government purchasing card, corporate card, credit card, purchasing
card facility). For example, a purchasing card falling within the scope of these rules could
be issued by an agency to the employee in the name of the agency. Debit cards are
specifically excluded from these Rules.
 relevant Minister has the same meaning as in section 3 of the Financial Management Act
1994.
 significant has the meaning referred to in Section 8 ‘Determination of significant
unauthorised use’.
 unauthorised use means any instance of non-compliance with the Direction and Rules,
whether by the cardholder or by someone else. Refer to Section 7 for further information
on unauthorised use.
2
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
3.
Scope of the Rules
All agencies operating a purchasing card are required to comply with the Purchasing Card
Rules for Use and Administration (the Rules). The Rules derive their authority from the
Standing Directions of the Minister for Finance under the Financial Management Act 1994
(Direction 4.5.3).
The Rules contained in this document enhance Direction 4.5.3 by setting out the principles
to be applied, and the procedures to be followed in relation to the use and administration of
a purchasing card.
In applying these Rules, agencies (other than universities and local government agencies but
including TAFE divisions of universities) must have in place rules covering the use and
administration of cards, which are at least equivalent in effect as the rules outlined in this
document. More detailed rules, guidelines or policies that relate to the use and
administration of the purchasing cards may be issued by agencies to supplement those
contained within the Rules, however these must be consistent with the requirements as set
out in this document.
The Rules should be observed in conjunction with all policy statements issued by the
Victorian Government (for example, Code of Conduct for the Victorian Public Sector, Official
Hospitality Guidance etc.).
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
3
4.
Role of agencies and cardholders
The Rules apply to all cardholders (and employees) of agencies, and agencies are required to
ensure that cardholders use the purchasing card in accordance with these Rules. Instances
of unauthorised use are to be reviewed by the accountable officer, reported to the Minister
and if necessary, referred to the police for investigation and action (please refer to
unauthorised use below).
The program administrator in each agency must ensure that the following procedures are
followed in relation to intended cardholders:
 The employee reads the card provider’s terms and conditions provided with the card;
 The employee reads and signs the ‘Undertaking by the cardholder’ as set out in Appendix
B;
 The employee is appropriately trained on the operation and use of purchasing cards;
 The employee signs the purchasing card immediately; and
 any revised Rules or agency policies issued are circulated to cardholders in a timely
manner.
It must always be remembered that purchasing cards are a purchasing facility, not a
convenient alternative for employees who might otherwise have to seek reimbursement for
minor work-related expenses. This principle is reflected within the structure of the Rules.
Accountable officers and program administrators within agencies are also responsible for
providing administrative support to enable the relevant Minister to assure him/herself that
rigorous controls are in place in relation to the use and administration of purchasing cards
issued.
4
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
5.
Role of the Department of Treasury and Finance
The Department of Treasury and Finance undertakes the role of adviser to the Minister in
respect to the use and administration of purchasing cards within the Victorian Public Sector.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
5
6.
Role of portfolio departments
Portfolio departments advise relevant Ministers in respect to portfolio agencies compliance
with the Financial Management Compliance Framework and these Rules. This involves:
 formulation and implementation of strategies to promote compliance throughout
portfolios;
 dissemination of whole of Government knowledge and issues management;
 provision of portfolio specific knowledge and issues management;
 provision of briefings to relevant Ministers; and
 monitoring of portfolio compliance with these Rules.
For further information on the role of Portfolio Departments, please refer to the Financial
Management Compliance Framework.
6
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
7.
Unauthorised use
Unauthorised use means any instance of non-compliance with the Direction and Rules,
whether by the cardholder or by someone else and can involve:
 unauthorised or inappropriate transactions made on a purchasing card; or
 any other non-compliance with the Direction and Rules.
The accountable officer of an agency is responsible for investigating all instances of
unauthorised use and for reporting such instances to the Minister.
In the event a cardholder knows or suspects that unauthorised transactions have been made
using the cardholder's purchasing card, the cardholder must immediately notify the card
provider and the program administrator. The program administrator must promptly refer all
cases of unauthorised use or non-compliance with the Rules (e.g. an individual exceeding
their individual transaction limits) to the accountable officer, who in turn must advise the
Team Leader, Frameworks Team of the Department of Treasury and Finance.
The accountable officer must provide a written report on significant instances of
unauthorised use to the agency's audit committee and the Minister as soon as the
accountable officer has completed an inquiry into the unauthorised use. This report must
provide details of any police or disciplinary action taken.
The unauthorised use of a purchasing card may constitute a criminal offence. The
accountable officer of an agency is responsible for determining whether a breach of the
Direction and Rules is significant and requires referral to police for immediate investigation
and action.
Where the accountable officer has determined that a significant breach has occurred but
does not warrant police involvement, he/she must either refer the matter for disciplinary
action or, if he/she is the responsible officer, initiate disciplinary action. Disciplinary action is
to conform with the agency's disciplinary or misconduct policy/code. The accountable
officer has a discretion not to proceed with disciplinary action if he/she is satisfied that the
unauthorised use was accidental, and it was not part of a pattern of unauthorised use
(accidental or not).
In addition to referral for disciplinary action, should three separate breaches have occurred,
irrespective of the dollar amount, consideration should be given to withdrawing the
purchasing card immediately. The purchasing card must be withdrawn if any one breach
involves $1 000 and above.
Cases involving $1 000 and above, or any repeated unauthorised use may result in a finding
of misconduct which could lead to the employee's employment being terminated.
Any other instances of unauthorised use must be reported to the Minister in accordance
with the Rules in section 9.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
7
8.
Determination and reporting of significant
unauthorised use
The timing of the reporting of unauthorised use of a purchasing card is determined by
whether the unauthorised use is classified as ‘significant’.
Significant unauthorised use of a purchasing card must be reported to the Minister for
Finance and the public sector agency’s audit committee as soon as an inquiry into the
unauthorised use has been completed (Direction 4.5.3 Procedure (b)). Reports should also
be sent to the relevant minister using the template provided in Appendix C.
All instances of unauthorised use of purchasing cards, including unauthorised use that does
not fall within the ‘significant unauthorised use’ category, must be reported annually to the
Minister for Finance (Direction 4.5.3 Procedure (c)). Reports should also be sent to the audit
committee and the relevant minister using the template provided in Appendix D.
Whether an instance of unauthorised use of a purchasing card is ‘significant’ can be
determined by considering the following factors:
a) whether the transaction involves a sum of $1 000 or greater; or
b) whether the nature or circumstances of the unauthorised use from the perspective of
public interest has the potential to cause reputational risk; or
c) whether the transaction is revealed to be one of many highlighting a pattern of
unauthorised use.
Genuine cases of accidental or inadvertent use, where the cardholder has repaid the funds
immediately, should not be considered significant, though these instances should be
reported as part of the annual report required by the Rules.
8
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
9.
Rules
Public Sector Agencies operating a Purchasing Card (Card) must:
4.5.3
Procedure (a)
Dot point 1
Establish their own facility account, including a maximum
monthly account limit, directly with the card provider
Facility accounts
Each agency using purchasing cards will establish its own facility account with
the card provider and will deal directly with the card provider on a day-to-day
basis. The accountable officer is required to authorise the opening of the
facility account with the card provider on behalf of the agency.
Contract
arrangements
with the card
provider
A summary of the contract arrangements with the Victorian General
Government Purchasing Card card provider(s) is available on the internet at:
www.vgpb.vic.gov.au/contracts/.
Agencies are encouraged to adopt the General Government Purchasing Card
card provider(s) to enhance the internal efficiencies and costs savings in
operating purchasing cards.
Details to be
provided by the
agency to the card
provider
Agencies must provide the following details to the card provider:
 number of purchasing cards required;
 agency and cardholder credit limits involved;
 facility account limit required;
 bank account for direct debiting of monthly billing statement; and
 reporting structure for tiered reporting.
These details should be updated as required.
Additional facility
accounts
The accountable officer must not arrange for any additional facility account
for his or her agency without the prior approval of the Minister.
Maximum facility
account limits
Each agency is required to set a maximum monthly facility account limit with
the card provider.
4.5.3
Procedure (a)
Dot point 2
Ensure only one Card is issued to each employee approved as a
cardholder
Who is eligible to
be a cardholder?
Only an employee of an agency can be a cardholder. This includes persons
employed on a ‘fixed term’ contract and registered on the payroll of an
agency. Other persons associated with an agency, such as independent
contractors, are not eligible to exercise financial delegations or hold a
purchasing card.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
9
Ministers
Ministers and their staff are not eligible to be cardholders.
Statutory Office
Holders
Statutory office holders may require access to purchasing card services.
These potential cardholders are not, technically, employees of public bodies.
The Auditor-General, Electoral Commissioner and Ombudsman are examples
of such officers. The Minister has authorised the provision of purchasing
cards to persons occupying these offices, subject to the cardholders adhering
to a control regime which is at least equivalent in its standards to that
applying to employees of agencies. The Minister may provide advice from
time to time to assist the relevant Minister’s or Parliamentary officer’s
oversight of the use and administration of purchasing cards outside the direct
control of accountable officers within their portfolio.
Conditions for
issue to
employees
A purchasing card may be issued to an employee whose functions and duties
relating to official purposes within an agency would be enhanced through the
efficiencies that arise from use of the Card. Purchasing cards should not be
issued to employees on the basis of their seniority in an agency. A purchasing
card approved for the use of a specific cardholder must only be used by the
person whose signature appears on the Card.
Card register
A register of all purchasing cards issued within the agency must be developed
and maintained.
4.5.3
Procedure (a)
Dot point 3
Ensure cardholders use the Card for official business and that
purchases of goods and services are for Government purposes
Liability for the
Card
The liability for any charges on purchasing cards rests with the State and not
the individual cardholder. For this reason, the Rules must be strictly adhered
to as a means of limiting the financial exposure of the State.
Official Purposes
The purchasing card is to be used for official purposes only. This means that
the card is to be used for purposes that are in direct connection with, or as a
direct consequence of, the cardholder’s functions and duties within an
agency. Therefore, prior to making a purchase, consideration must be given as
to whether the public expenditure is in line with the expectations of the
community and government in that it will stand up to public scrutiny.
This applies regardless of:
 the amount of the transaction involved; and
 the type of transaction made using a purchasing card. For example,
whether the card is used to pay for goods or services which are bought
directly from a merchant, or by mail or telephone order, or through
electronic means.
The process to be taken in the event of unauthorised use of the purchasing
card is detailed in Section 7 ‘Unauthorised Use’.
Private Expenses
10
On occasions a cardholder may incur coincidental official and private
expenditure recorded on a single billing system. For example, a cardholder
may make private telephone calls or purchase goods for private consumption
that are subsequently charged to a hotel account. Cardholders must settle all
such private expenses prior to charging the balance on the purchasing card.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Determination of
‘official purposes’
Judgements about the nature and legitimacy of particular transactions must
be made having regard to all policy statements issued by the Victorian
Government.
The determination of whether an expense is for official purposes must not
differ between one purchasing method and another. In other words, the tests
applied by cardholders to determine whether a purchase can legitimately be
paid for using purchasing cards must be the same as if the transaction was
being managed through mainstream procurement and payment systems.
Cardholders who are in doubt as to the private or official nature of a particular
transaction, for example the purchase of gifts or flowers for staff who are
leaving the organisation or are ill, must take advice from their authorised
signatory prior to the expenditure being incurred.
Purchases by
other means
A cardholder must not use a purchasing card to pay for expenses, which,
under the rules issued by an agency, must be paid for by means other than
purchasing cards. For example, an agency may impose additional restrictions
on the types of goods or services for which the cardholder may use the
purchasing card, such as restrictions on expenses incurred in relation to
domestic and overseas travel, hospitality or entertainment.
Cash
A cardholder must not use a purchasing card to obtain cash.
Other card
purchasing
arrangements
A cardholder must not use a purchasing card for purchases covered by other
existing contracts to which the Government is a signatory, for example, fuel
cards.
Reimbursement
A cardholder must not use a purchasing card to pay for an expense where
reimbursement has been made (or will be made) to the cardholder in respect
of that same expense from any allowance, which exists in an agency. For
example, accommodation expenses must only be claimed once; either
through the use of a card or through reimbursement of payments made by
the cardholder personally.
Tipping and
gratuities
A purchasing card is not permitted to be used for the payment of tips or
gratuities in any circumstance. Tipping or gratuities are generally not
permitted at an agency’s expense. However, in circumstances where it is
justified, payment must be made at the cardholder’s own expense and
reimbursement sought from the agency through alternative reimbursement
processes. If payment of a tip or gratuity is required, payment should not
exceed 10 per cent of the total bill amount, and should not be paid where the
bill includes a service charge.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
11
4.5.3
Procedure (a)
Dot point 4
Require cardholders to provide supporting documentation for all
transactions and ensure that monthly statements are reviewed
and approved by the appropriate financial delegate, and that any
discrepancies identified with the cardholder or provider are
resolved in a timely manner
Supporting
Documentation
The authorised signatories in each agency must ensure that all transactions
made using purchasing cards are supported by sufficient supporting
documentation.
A cardholder must obtain sufficient supporting documentation in relation to
each and all transactions made using the purchasing card. There are no
materiality thresholds in relation to this requirement.
Accordingly transactions:
 made directly with a merchant must be supported by appropriate
documentation; and
 made by telephone, mail or electronic means must be supported by an
invoice or receipt which the cardholder must request be sent at the time of
making the order.
The requirement for sufficient supporting documentation applies –
 irrespective of the form of the transaction, such as transactions conducted
directly with a merchant, or by telephone or mail order, or transactions
made using electronic means; and
 irrespective of the amount of the transaction made using the purchasing
card.
Supporting documentation consists of, but not limited to receipts, tax invoices
and merchant records (airplane boarding passes etc).
Where supporting documentation is not obtainable, copies of such
documentation can be provided in its place, when it has been endorsed
(signed) by the cardholder stating why original documentation was not
available.
What if
appropriate
supporting
documentation is
unable to be
obtained?
In exceptional circumstances where appropriate supporting documentation
cannot be obtained, alternate certification may be acceptable. In these cases,
the advice of the authorised signatory and/or appropriate agency personnel
should be sought before a monthly statement is verified.
All supporting documentation must be sufficiently detailed to adequately
support the payment processes.
To avoid any doubt as to the level of documentation required in respect of
various transactions, agencies may wish to determine thresholds and
matching substantiation requirements.
Tax invoices
Where GST input tax credits are being claimed, a valid tax invoice is required
for supplies greater than $82.50 (GST inclusive). The ATO has ruled that the
card provider statement itself may be considered a valid tax invoice for
claiming input tax credits.
Transactions made using purchasing cards must also comply with other
requirements such as the Fringe Benefits Tax legislation.
12
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Electronic
procurement
Agencies that have advanced to electronic procurement must issue specific
rules to ensure that the requirements for signatories and sufficient supporting
documentation are met in an adequate electronic form that can be audited.
Payments directly A cardholder must not make any payments directly to the card provider in
to card provider
respect of expenses the cardholder incurred using the purchasing card.
Authorisation
A cardholder’s expenses must be authorised by an employee who is senior to
the cardholder. In the case of expenses incurred by accountable officers who
are cardholders, arrangements should be made for cardholder statements to
be authorised by the chairman of the relevant Audit Committee. In the case
of statutory office holders and those operating in an environment where
there is no audit committee, arrangements must be made through the
relevant departmental audit committee to gain authorisation.
Review of monthly A cardholder must ensure that the monthly statement issued by the card
provider is reviewed for completeness and accuracy and transactions
statement
appearing on the statement are matched to supporting documentation.
The monthly statement provided by the card provider must be signed by the
cardholder to verify that transactions appearing on the statement have been
made for official purposes. The signed monthly statement (with attached
supporting documentation) is then forwarded to the authorised signatory for
approval.
The approval of the authorised signatory must be evidenced on the card
provider’s statement. The approved statement is then forwarded to the
program administrator for processing.
Procedures to be
followed
The cardholder must ensure that the following procedures are also followed:
 reconciliations must be performed on a timely basis upon receipt of the
monthly statement;
 discrepancies on the statement are to be followed up with the card
provider and promptly advised to the program administrator;
 goods or services paid for using the card are actually delivered or provided;
 credits on the card are raised where, for example, a good or service is not
delivered or not provided in accordance with original expectations;
 each transaction appearing on the card provider’s statement is
appropriately coded for accounting purposes; and
 sufficient supporting documentation for each transaction is attached to the
card provider’s statement when statements are provided by the cardholder
to the authorised signatory for approval.
4.5.3
Procedure (a)
Dot point 5
Ensure cardholders hold a financial delegation and their
individual transaction limits do not exceed this delegation
Limits
The following limits must be set for each cardholder:
 maximum limits for each monthly billing period;
 maximum limits on the amount of any individual transaction which can be
made using a purchasing card; and
 where applicable, restrictions on the types of goods or services for which
the cardholder may use the card, for example, restrictions on domestic and
overseas travel, hospitality and entertainment.
The limits also apply to purchasing cards issued on a temporary basis.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
13
Financial
Delegations
Cardholders must hold a financial delegation and their purchasing card
individual transaction limits must not exceed this delegation. The Cardholder
Agreement which outlines the terms and conditions for each cardholder is
signed by the cardholder on receipt of their card and serves then as the
instrument of delegation. Expenditure incurred and commitments on the
card must be taken into account when monitoring delegation limits expended
by cardholders. Agencies should install preventative and monitoring controls
that prevent and detect:
 misuse of purchasing cards;
 purchasing cards being issued to employees who have not signed a
Cardholder Agreement; and
 expenditure and commitments incurred on a purchasing card, and from
other sources, exceeding a cardholder’s maximum:
 individual transaction limit;
 monthly card limit; and
 financial delegation limit.
Cardholders must not purchase items using a ‘stringing’ arrangement, that is,
splitting one transaction into many to avoid exceeding card limits.
4.5.3
Procedure (a)
Dot point 6
Ensure that all individual Card limits do not exceed $25 000,
unless approved by the Minister for Finance
A cardholder must not exceed the overall maximum limit set for the
cardholder’s purchasing card.
The limits placed on a cardholders overall card limit may vary depending on an
individual cardholder’s financial delegation, however this limit must not
exceed $25 000 unless it is approved by the Minister.
14
4.5.3
Procedure (a)
Dot point 7
Ensure adequate monitoring and security procedures are in place
The agency must
ensure that
appropriate
internal controls
are in place and
maintained
An agency must ensure that the following controls are in place and
maintained:
 appropriate training is given to employees before they are issued with a
purchasing card;
 appropriate purchasing card limits are set and reviewed in line with the
cardholder’s actual usage;
 sufficient documentation is obtained and maintained covering the
authorisation and identification of transactions, including merchant records
and approved and reconciled statements;
 the allocation of transactions to expenditure types is made in the same
manner as other agency expenditure;
 purchasing cards are withdrawn and immediately cancelled:
 On the termination, or notification of resignation of the cardholder’s
employment within an agency;
 Where the card has been lost, stolen or misused;
 Where the card is no longer relevant to the performance of the
cardholder’s functions and duties within an agency; or
 If the cardholder’s account is inactive.
 monthly reports are monitored by the program administrator.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Transactions must To ensure that purchasing cards are used in accordance with the Rules and
be subject to
any agency rules, transactions must be subject to the following controls:
controls
 regular audits by the agency’s internal auditors;
 reports by managers on card usage within their areas, based on regular
checks of samples of transactions;
 random checks carried out by the program administrator;
 regular review of monthly reports on card usage issued by the card
provider; and
 regular review to ascertain whether cardholders have an ongoing or
changed requirement for the card.
The agency must
ensure adequate
security
procedures are in
place.
Each agency must ensure that adequate procedures are in place to:
 provide for the secure delivery of purchasing cards from the card provider
to the agency, and from the program administrator to each cardholder;
 ensure the recovery of all unused cards and their destruction in accordance
with the card provider’s requirements; and
 recover cards from cardholders leaving the employment of the agency or
cardholder’s who have been requested to return their card.
The agency must reconcile payment of the purchasing card liability to their
bank account, general ledger and other supporting records
Loss or theft of
card
A cardholder must also immediately report the loss or theft of the
cardholder’s purchasing card to the program administrator and the card
provider. Notification must be made using the 24 hour emergency number
provided by the card provider. A cardholder must retain any notification
number or other acknowledgment provided by the card provider as evidence
of the date and time of the notification.
Where the cardholder changes position within an agency, it is the
responsibility of the program administrator within that agency to assess the
requirement for ongoing issue of the card to the current cardholder, as well as
the limits and types of expenses for which the card can continue to be used by
the cardholder.
Cardholder may
be personally
liable for any
unauthorised use
of the card
The cardholder may be held to be personally liable for any unauthorised use of
the purchasing card unless the unauthorised use is the result of the card being
lost or stolen (provided the cardholder took adequate measures to prevent
the card from being lost or stolen) or is otherwise the result of fraud on the
part of some third party such as a merchant.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
15
4.5.3
Procedure (a)
Dot point 8
Include in the internal audit program a review of the card
scheme and the use of cards issued
The objective of any set of rules is to assist in the management of risk. As a
consequence agencies should consider the following as part of a broader risk
management strategy overseen by its audit committee. Adherence to the
Rules is, therefore, more than a compliance exercise.
Agencies should perform a number of roles in relation to the administration
of purchasing cards. Agencies should:
 appoint relevant administrative personnel (e.g. authorised signatories,
program administrator) to ensure the efficient and effective administration
of the facility account within that agency. Persons appointed to such
positions should be at a level appropriate to the responsibilities of that
position;
 assess the costs and benefits of using purchasing cards;
 develop adequate internal controls, security measures and reporting
procedures to implement and control the operation of the purchasing
cards;
 determine their own internal rules or policies in relation to the use and
administration of the purchasing card, particularly in respect of electronic
commerce, which supplement the rules in this document;
 administer and monitor the operation of purchasing cards on a day-to-day
basis in compliance with these Rules and any rules or policies issued by the
agency. Service issues should first be raised with the card provider;
 ensure cardholders are appropriately briefed before they are issued with a
card;
 authorise and process the relevant documentation for the operation of
purchasing cards;
 maintain all documents, statements and reconciliations required to be kept
in relation to the use and administration in accordance with Direction 4.5.3
of the Minister’s Directions under the Financial Management Act 1994; and
 provide administrative support to relevant Ministers for the management
of purchasing cards as it applies to relevant statutory office holders. This
function includes nominating a program administrator in respect of these
cardholders.
16
4.5.3
Procedure (a)
Dot point 9
Certify annually that they have followed this Purchasing Card
procedure
Annual Assurance
The annual assurance process provides a level of assurance to the Minister
that the Rules or equivalent standards have been complied with by agencies
operating a purchasing card.
Certification
Each agency is required to certify annually against their compliance with
Procedure (a) of the Direction (the requirements of which are consistent with
these Rules).
This is to be completed as part of the Financial Management Compliance
Framework certification process and such certification is to take place via the
Compliance Monitoring System website.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Reporting of
unauthorised use
In accordance with Direction 4.5.3, Procedure (b) of the Direction, in the event
of a significant instance of unauthorised use of the card occurring throughout
the reporting period, the accountable officer must provide a written report to
the Minister for Finance and the agency’s audit committee, as soon as an
inquiry into the unauthorised use has been completed. Reporting should be
made using the template contained in Appendix C.
In accordance with Direction 4.5.3, Procedure (c) of the Direction, all instances
of unauthorised use (including any significant instances reported throughout
the year), for the period ending 30 June, are required to be reported annually
by an agency to the Minister for Finance. Reports should also be sent to the
audit committee and the relevant minister using the template provided in
Appendix D.
Refer to Section 7 ‘Unauthorised Use’ and Section 8 ‘Determination and
reporting of significant unauthorised use’ for further details.
The sample letters of assurance are located in Appendices C and D.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
17
Appendix A - 4.5.3 Purchasing Card (Extract from
Standing Directions of the Minister for Finance
under the Financial Management Act 1994)
Direction
Public Sector Agencies that operate a purchasing card must comply with the following
Purchasing Card procedure.
Procedure
a) Public Sector Agencies which operate a Purchasing Card (‘Card’) must:
 Establish their own facility account, including a maximum monthly account limit,
directly with the Card provider;
 Ensure only one Card is issued to each employee approved as a cardholder;
 Ensure cardholders use the Card for official business and that purchases of goods
and services are for Government purposes;
 Require cardholders to provide supporting documentation for all transactions and
ensure that monthly statements are reviewed and approved by the appropriate
financial delegate, and that any discrepancies identified with the cardholder or
provider are resolved in a timely manner;
 Ensure cardholders hold a financial delegation and their individual transaction
limits do not exceed this delegation;
 Ensure that all individual Card limits do not exceed $25,000, unless approved by
the Minister for Finance;
 Ensure adequate monitoring and security procedures are in place;
 Include in the internal audit program a review of the Card scheme and the use of
cards issued; and
 Certify annually that they have followed this Purchasing Card procedure.
See Guidelines 1, 2 and 3 below
b) The accountable officer must provide a written report to the Minister for Finance and
the public sector agency’s audit committee in the event of a significant instance of
unauthorised use of a purchasing card, as soon as an inquiry into the unauthorised
use has been completed.
See Guidelines 1 and 3 below
c) Each public sector agency to report annually to the Minister for Finance all instances
of unauthorised use of its purchasing cards for the period ending 30 June.
See Guidelines 1 and 3 below
18
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Guidelines
Guideline 1
Public Sector Agencies are required to report annually on their compliance with Procedure
(a), as part of their annual compliance with the Directions generally. This is monitored
through the Financial Management Compliance Framework.
All instances of unauthorised use (as defined by the Purchasing Card Rules for Use and
Administration (the Rules)) must be reported annually to the Minister for Finance, in
accordance with Procedure (c).
In addition to the requirements above, in the event of a significant instance of unauthorised
use of a purchasing card, in accordance with Procedure (b), the accountable officer must
provide a written report to the Minister for Finance and the Public Sector Agency’s audit
committee as soon as an inquiry into the unauthorised use has been completed. A copy of
this report should also be provided to the relevant Minister.
Guideline 2
When implementing the necessary internal controls for the Card, Public Sector Agencies and
cardholders are encouraged to apply the principles set out in the Rules, issued by the
Department of Treasury and Finance.
The Rules outline guiding principles and procedures that should be followed in relation to
the use and administration of the Card. More detailed guidelines or policies, relating to the
use and administration of the Card may also be issued by Public Sector Agencies subject to
them being consistent with the Rules.
For more information on the Rules, refer to the Department of Treasury and Finance
website at http://dtf.vic.gov.au.
Guideline 3
A significant instance of unauthorised use should be determined by reference to Section 8 of
the Rules Determination and reporting of significant unauthorised use.
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
19
Appendix B – Undertaking by the cardholder
Purchasing card cardholder agreement
Cardholder name:
Position:
Branch:
Division:
Agency:
Accountable officer:
Authorised signatory:
Program administrator:
I understand and agree that the Purchasing Card is issued to me on the express
understanding that I will, at all times, comply with the following conditions:
Use
1. The purchasing card is the property of (specify provider) and is in my possession and
under my strict control.
2. I will not permit the purchasing card to be used by any person other than myself.
3. I will only use the purchasing card for official purposes.
4. I will immediately report any suspected or known unauthorised use of the purchasing
card to the card provider and the program administrator.
5. I will not use the purchasing card to pay for expenses that have already been claimed
(or will be claimed) by any form of allowance.
6. I will not use the purchasing card to pay for tips or gratuities.
7. I will not use the purchasing card for cash withdrawals.
8. I can use the purchasing card to a maximum limit of $
in any one transaction and
to a maximum monthly limit of $
. My use of the purchasing card is subject to the
following restrictions on transaction types (specify):
9. I will not split transactions on the purchasing card to avoid exceeding purchasing card
transaction limits.
10. I hold a financial delegation that is at least equivalent in value to the transaction limit in
8 above.
11. In the case of General Government purchasing cards, I understand that purchasing
information may be periodically reviewed by the Department of Treasury and Finance.
20
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
Transaction/monthly reconciliation
12. I will be issued with a monthly statement by the card provider. I will ensure that all
transactions that appear on the monthly statement are verified by me and that
sufficient supporting documentation is attached to the monthly statement when it is
submitted for approval. I will ensure that goods or services paid for using the
purchasing card are actually delivered or provided. I will ensure that each transaction
appearing on the card provider’s statement is appropriately coded for accounting
purposes.
13.
I will sign the monthly statement provided by the card provider to indicate that the
transactions being paid by the State have been made only for official purposes.
14. I will ensure that credits are requested in relation to transactions made using the
purchasing card as soon as I become aware of the need for a credit, for example, where
a good or service is not delivered or not provided in accordance with original
expectations.
Change in cardholder details
15. I will immediately advise the program administrator of any change in my name or
contact details.
Upon resignation or transfer
16. I will immediately return my purchasing card to the program administrator if I resign or
retire, or if my services as an employee of the agency or statutory office holder are
otherwise terminated, or if I take up a position in another agency, or if I am instructed to
do so by the accountable officer or the program administrator.
Lost or stolen cards
17. I will immediately report the loss or theft of my purchasing card to the card provider
(24 hour  service) and the program administrator.
Declaration
18. I confirm that I have access to only one purchasing card.
19. I acknowledge receipt of the Purchasing Card Rules for Use and Administration.
20. I have been briefed on all aspects of the operation and use of the purchasing card.
..............................................................
.......................................................................
Signature of cardholder
Signature of agency program administrator
..............................................................
.......................................................................
Name of cardholder
Name of agency program administrator
..............................................................
.......................................................................
Date
Date
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
21
Appendix C – Template letter for reporting of
significant instances of unauthorised use to the
Minister for Finance and audit committee
Date
The Hon Robin Scott MP
Minister for Finance
Level 5, 1 Macarthur Street
EAST MELBOURNE VIC 3002
Dear Minister
Purchasing cards – Reporting of a significant instance of unauthorised use
In accordance with Procedure (b) of Direction 4.5.3 of the Standing Directions of the
Minister for Finance issued pursuant to the Financial Management Act 1994, the following
significant instance of unauthorised use of a purchasing card operated within [insert Public
Sector Agency name] is hereby reported.
This significant instance of unauthorised use of the purchasing card arose from the failure to
comply with the following requirement of both Procedure (a) of Direction 4.5.3 and the
Purchasing Card Rules for Use and Administration. In particular [insert Public Sector Agency
name] failed to: [Please delete as necessary from the below list of requirements and
provide full report as to the particulars of the significant unauthorised use – either as part
of this letter or as a separate attachment].
 [Establish their own facility account, including a maximum monthly account limit, directly
with the Card provider.
 Ensure only one Card was issued to each employee approved as a cardholder.
 Ensure cardholders use of the Card was for official business and that purchases of goods
and services were for Government purposes.
 Require cardholders to provide supporting documentation for all transactions and ensure
that expenditure was approved by the most appropriate financial delegate prior to
settling the monthly account with the Card provider.
 Ensure cardholders held a financial delegation and that their individual transaction limits
did not exceed this delegation.
 Ensure that all individual Card limits did not exceed $25,000, unless approved by the
Minister for Finance.
22
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
 Ensure adequate monitoring and security procedures were in place.
 Include in the internal audit program a review of the Card scheme and the use of cards
issued.]
An inquiry into the authorised use has now been completed. The following action in
accordance with the Purchasing Card Rules for Use and Administration has been taken
[please provide full details as to the particulars of action taken].
If you require any further information, please contact [insert relevant individual’s contact
details].
Yours sincerely
<insert chief executive officer details>
Cc:
Chief Finance and Accounting Officer
Public Sector Agency Audit Committee Chairperson
Relevant Minister
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
23
Appendix D – Template letter for reporting
annually to the Minister for Finance all instances of
unauthorised use of its purchasing card for the
period ending 30 June
Date
The Hon Robin Scott MP
Minister for Finance
Level 5, 1 Macarthur Street
EAST MELBOURNE VIC 3002
Dear Minister
Purchasing Cards – Annual reporting of all instances of unauthorised use for the
period ending 30 June [insert year]
In accordance with Procedure (c) of Direction 4.5.3 of the Standing Directions of the
Minister for Finance issued pursuant to the Financial Management Act 1994, all instances of
unauthorised use in respect to the use and administration of purchasing cards operated
within [insert Public Sector Agency name] for the period ending [insert period ending date]
are hereby reported.
The unauthorised use of the purchasing card arose from the failure to comply with the
requirements of both Procedure (a) of Direction 4.5.3 and the Purchasing Card Rules for Use
and Administration. In particular [insert Public Sector Agency name] failed to: [Please
delete as necessary from the below list of requirements and provide full particulars of the
unauthorised use – either as part of this letter or as separate attachment].
 [Establish their own facility account, including a maximum monthly account limit, directly
with the Card provider.
 Ensure only one Card was issued to each employee approved as a cardholder.
 Ensure cardholders use of the Card was for official business and that purchases of goods
and services were for Government purposes.
 Require cardholders to provide supporting documentation for all transactions and ensure
that expenditure was approved by the most appropriate financial delegate prior to
settling the monthly account with the Card provider.
 Ensure cardholders held a financial delegation and that their individual transaction limits
did not exceed this delegation.
24
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
 Ensure that all individual Card limits did not exceed $25,000, unless approved by the
Minister for Finance.
 Ensure adequate monitoring and security procedures were in place.
 Include in the internal audit program a review of the Card scheme and the use of cards
issued.
 Certify annually that they have followed the Purchasing Card requirements as contained
within the Standing Directions]
[Insert Public Sector Agency name] provides reasonable assurance that in respect to the
above reported instances the following action [has been/will be] taken to ensure that
further incidences of unauthorised use are prevented. [Please provide details as to any
action taken by the Public Sector Agency to address the above reported instances of
unauthorised use].
All instances of unauthorised use [listed as part of this letter or as separate attachment]
identified and investigated by the [insert Public Sector Agency], including those that have
previously been reported to the Minister are enclosed.
If you require any further information, please contact [insert relevant individual’s contact
details]
Yours sincerely
<insert chief executive officer details>
Cc:
Chief Finance and Accounting Officer
Public Sector Agency Audit Committee Chairperson
Relevant Minister
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,
25
www.dtf.vic.gov.au
26
Purchasing card rules for use and administration
Issued pursuant to the Financial Management Act 1994,