Reading’s purchasing card program is generally functioning as intended but still shows several recurring policy violations, the city’s auditor said.
City Auditor Maria Rodriguez said policy violations include missing receipts, unnecessary sales tax payments and purchases exceeding spending limits.
Rodriguez presented the findings to City Council during its regular meeting Monday, outlining the results of her office’s review of third-quarter 2025 purchasing card, or P-card, activity.
The review covered July through September, she said, and examined the use of 26 city purchasing cards issued to departments for routine purchases.
Rodriguez said 403 transactions with expenditures totaling $102,261 were examined.
The city’s purchasing card program allows employees to make smaller purchases directly by credit card rather than through the traditional purchase order and check process, she noted.
“This P-card program appears to be effectively achieving its primary objective of reducing administrative workload,” she said.
However, she added, “There is a need for the city purchasing card policy to be reviewed or updated.”
The current policy has not been revised since 2013, she said.
One recurring issue identified in the audit, Rodriguez said, was the payment of sales tax on purchases even though the city is tax-exempt.
Rodriguez said the review found $697 in sales tax paid during the quarter, including $227 in hotel tax and $112 in fuel tax.
“According to the city purchasing card policies, cardholders are responsible for notifying vendors that the city has tax-exempt status at the time of the purchases,” she said.
Rodriguez said her office recommends the purchasing department remind employees to use tax-exemption forms when making purchases.
The audit also identified 17 transactions totaling $594 that lacked receipts.
City policy requires cardholders to retain receipts or provide written explanations if documentation is missing.
“If a detailed receipt is missing, the cardholder must provide written explanation describing the item purchased and listing the date and the amount,” she said.
Food purchases were another area of concern. Rodriguez said $1,740 was spent on meals, refreshments and groceries during the quarter.
While such purchases are allowed for travel and certain events, city policy limits tips to 15% of the meal cost. The audit found five transactions exceeding that limit, including one tip of about 38%.
Rodriguez said the unusually high tip appeared to result from a duplicate entry. The employee likely did not realize the tip was included, she noted.
The audit also found 51 transactions exceeding the city’s $500 single-purchase limit on the cards.
Rodriguez said at least one of those purchases had been approved in advance by a department.
“I think that’s the way it should go for every transaction that goes over the $500 limit,” she said.
Her office recommended creating a formal authorization process for such purchases.
Another observation involved the use of purchasing cards to pay utility bills, something Rodriguez said should be avoided for internal control purposes.
City Managing Director Jack Gombach told council that the administration is already making changes that should address many of the issues raised in the audit.
Council approved a transition late last year to a new purchasing card provider and management system with US Bank.
“Their management system offers far more controls and monitoring, so we’ll be able to sort of tamp down on some of these last little instances here that we keep finding,” Gombach said.
As part of that transition, the city is also rewriting its purchasing card policies, he said.
“We’re updating our P-card policy to better reflect the different management controls that we now have,” Gombach said.
Rodriguez said her office plans to work with the administration as those updates move forward. She expects to present the next audit report after reviewing the final quarter of 2025 transactions.