Audit spotlights shady purchases made with city-issued cards

A scathing internal audit has uncovered questionable and prohibited purchases made by Fort Lauderdale employees using city-issued credit cards.

The credit cards, known as P-cards, help streamline government small-dollar purchases by allowing authorized employees to pay for approved business purchases and travel expenses directly. Personal purchases are strictly prohibited.

Among the more glaring instances discovered by City Auditor Pat Reilly and his team: One credit card was used to buy $10,250 in Florida Panthers hockey tickets along with catered food and event parking. The purchases were gifts for certain airport tenants as a show of appreciation but should have been caught and questioned, the audit report says. Instead, they went undetected.

The following two purchases were also flagged by the audit: $3,100 in gifts to certain airport lessees as travel-related expenses to attend a Las Vegas conference for marketing purposes; and $1,800 in leather luggage purchased as gifts for members of the city’s Airport Advisory Board.

In another case, a third party racked up $20,000 in charges after an employee failed to report a compromised credit card. The expenditures stopped only after being discovered and reported by the audit, according to Reilly’s report.

The case involved “continued use of a compromised P-card that had incurred $20,000 of third-party fraud, which was known to the P-cardholder but went unreported for months until discovered by the audit,” the report states.

“Regarding the unreported fraud, Finance cancelled the P-card and coached the P-cardholder on how to properly report third-party fraud going forward,” the report says. “All third-party fraud charges were reversed by the city’s card-issuing bank.”

Other prohibited purchases listed in the report include: $180,000 of vehicle repairs and modifications; $55,000 of food transactions that exceeded allowable limits; $30,000 of non-travel items purchased with travel cards; $30,000 of telephone/telecommunications expenses; $3,500 for a duplicate payment; $1,500 of retirement gifts in excess of allowable limits; and $1,500 for a computer purchased without pre-approval by Information Technology Services.

No one has been disciplined as a result of the audit as of this week, but City Hall is now reviewing the findings to determine accountability and any necessary action, according to a Fort Lauderdale spokeswoman.

City Manager Rickelle Williams provided the following statement to the South Florida Sun Sentinel: “I appreciate the work of the City Auditor’s Office and take its recommendations seriously. While the audit reviewed activity from October 2023 to December 2024, a period before my tenure as city manager, it identifies opportunities to further strengthen our processes and controls.”

Williams says she has already made changes as a result of the audit.

“Since joining the city and following the presentation of this audit, I have implemented a number of measures to strengthen internal controls and provide enhanced oversight on spending,” Williams said. “Efforts include improved inventory tracking, stronger monitoring programs, additional training and oversight, investments in new technology and a study of our internal controls. Importantly, many of the recommendations identified in the audit are already underway or have been implemented since the conclusion of the audit period. We remain committed to transparency and the responsible stewardship of public resources.”

As Williams noted, the audit looked at P-card purchases made between October 2023 and December 2024. During that time frame, the city recorded $63 million in P-card transactions. Of that, $12 million was spent by employees using a physical P-card.

The last time Fort Lauderdale conducted an audit on the P-card program was in 2019.

Now one commissioner is recommending the city should not wait so long to do the next audit.

“It’s very concerning, this report,” Commissioner Steve Glassman told Reilly during a City Hall meeting in late May. “That last audit was 2019, and then we had this. I think we should immediately start looking at January 2025 through today. I don’t think we should wait a long time until we do this again.”

Fort Lauderdale is working on tightening its internal controls over the P-card program, the city manager told the commission.

“We have been putting certain elements into place to strengthen our controls and our processes,” Williams said. “Our IT department has implemented an inventory tracking system. Our Parks and Rec Department is using a new work order system. Our P-card audit program has received more funding and so we’re going to be strengthening that as well.”

Assistant City Manager Yvette Matthew told the commission the finance team is already investigating a tool that will allow the city to do more real-time audits of its P-card program.

Internal controls lacking

Fort Lauderdale’s program is primarily administered by a P-card program administrator, who is supervised by the finance director.

The City Auditor’s Office found that internal controls relating to the P-card program were not adequately improved and maintained since a prior audit conducted in 2019.

The audit report states that the city’s Finance Department was not fully compliant with laws and regulations relating to property internal controls relevant to P-card transactions, P-card administration internal controls, and P-card recordkeeping and supervisory approval internal controls.

“These issues collectively create a persistent vulnerability to fraud, waste and operational efficiency,” Reilly told the commission during a May 19 meeting in which he presented a summary of his findings.

Local governments are required to establish and maintain internal controls designed to detect and prevent fraud and safeguard assets under Section 218.33 of the Florida Statutes.

During the 15-month time frame reviewed by his office, Reilly said his findings indicated the city had not been in compliance with that section of state law.

Reilly made that clear in his report, prompting pushback from the Finance Department and the City Manager’s Office.

In an April 15 memo, the city manager takes issue with Reilly’s assertion that the city had not complied with the requirements of state law.

“During the audit period, no instances of fraud were identified, reflecting the progress staff have made in establishing a system of controls to ensure purchases are properly reviewed and validated,” Williams wrote.

The memo says management concurs with the findings outlined in the audit report and has already begun taking steps to implement Reilly’s recommendations.

During the May 19 meeting, Reilly told the commission he was concerned by the memo’s statement that the city had complied with the requirements of state law.

“We just have to disagree with that,” Reilly said. “It gives (the) assurance that everything is correct. But I think some corrections need to be made.”

Difference of opinion

Mayor Dean Trantalis questioned the city manager about that difference of opinion.

Williams noted that the memo was part of management’s response and asked the finance director to clarify.

“Finance sees fraud in a different way,” Finance Director Linda Short told the commission. “I think of it as someone trying to defraud the government. All the time someone’s card gets stolen and someone tries to take money from the city. And we fight and dispute the information and get the money back.”

Short insisted that no city employee committed fraud or stole money from the city.

“What we did have, which we have all the time, is someone somehow getting the city’s card number, making charges and we review the charges and dispute them and get the money back,” she said. “Which is what happened in this case. Someone used somebody’s card. And the person didn’t report it to us timely. We found out about it. Contacted the vendor. Got all our money back.”

Short added: “It was a fraudulent actor who got ahold of one of the city’s account numbers and tried to take money from the city. But it wasn’t someone from the city initiating fraud.”

Trantalis told Short: “Well I think when it comes to definitions, we need to be less subjective about what we think it is as opposed to what it is.”

Audit findings

Reilly’s audit listed four findings.

A finding results from a failure to comply with policies and procedures, rules, regulations, contracts and fundamental internal control practices.

FINDING 1: Finance was not fully compliant with laws and regulations related to property internal controls relevant to P-card transactions.
FINDING 2: Finance was not fully compliant with laws and regulations relating to P-card administration internal controls.
FINDING 3: Finance was not fully compliant with laws and regulations relating to P-card recordkeeping and supervisory approval internal controls.
FINDING 4: Prohibited and questionable P-card purchases occurred, representing non-compliance with the P-card Policy and Standards Manual.

Susannah Bryan can be reached at sbryan@sunsentinel.com. Follow me on X @Susannah_Bryan