Audit committee flags recurring P‑card compliance gaps; members urge clearer rules and firmer enforcement

The Anchorage municipal audit committee on July 22 reviewed the 2024 purchasing‑card audit and discussed steps to reduce recurring policy breaches while balancing operational efficiency.

Chair Aaron Baldwin Day said the audit showed "the number of problematic transactions with our purchasing cards was actually relatively small," but urged the committee to address persistent compliance issues and consider whether transaction limits set years ago still make sense in 2026. He asked the committee to investigate split transactions clustered near card limits and whether more enforcement is needed.

Internal auditor Thurn summarized eight recurring findings, including disallowed purchases, excessive item choices, confusion in a fire‑department contract allowance, seat upgrades and sponsorship payments charged to cards, gratuities beyond the 15% policy, failure to use standing supply contracts, and split purchases that can be used to circumvent limits. "We end up basically having people who buy things that technically are not allowed," Thurn said, and noted flagged transactions totaled roughly $130,000 across 51 incidents in the audit sample.

Administration representative Paulsey said the municipality has long enforced that "municipal funds cannot be used for purchases that do not serve the public interest." He described revisions to policy language and additional JPMorgan paymentnet documentation intended to clarify ambiguous cases — for example, allowing a director to authorize certain regulated purchases and documenting that approval in the payments system.

Several assembly members asked detailed questions. Member Gurkirk pressed whether problems were concentrated among repeat offenders or dispersed across departments; auditors said most incidents appear to stem from knowledge gaps, turnover, or procedural ambiguity rather than deliberate fraud. Member Donald Hanlon asked how supervisors and purchasing staff act after a flagged transaction; auditors and managers said supervisors receive JPMorgan notifications, a review and dialogue typically follow, and policy allows recovery of funds from employees but that recovery has been rare in practice.

Chair Baldwin Day highlighted a cluster of December 2024 purchases by the police department—about $37,000 in drone equipment across multiple cardholders and transactions—that he said "looks really sus" because purchases were timed and sized close to limits. Paulsey acknowledged split‑purchase patterns that merit further review and said some clusters may represent legitimate separate purchases while others may indicate a need for stronger signals or thresholds.

Deputy purchasing director Ryan Marquis said the purchasing division is rewriting the P‑card policy and manual to define split transactions more clearly and to improve proactive JPMorgan reporting flags. Marquis described administrative practices that can include notifying cardholders to upload receipts and, in collaboration with department directors, temporarily suspending cards when necessary.

Audit staff said they are exploring more automated monitoring, including better JPMorgan flags and possible analytic tools, though Thurn cautioned that AI is not yet a turnkey solution for exception detection. "I've been trying to identify if AI might be an opportunity to use a tool," he said, but added it remains a work in progress.

The committee did not take a formal vote. Members directed staff and administration to pursue clearer policy language, finish the P‑card manual and training rollout, improve JPMorgan documentation of director approvals, and report back with more detail on clustered purchases and any recommended enforcement actions. Several members urged that suspending card privileges be used more proactively as an enforcement tool when evidence shows intentional circumvention rather than relying solely on training responses.

The committee also scheduled follow‑up work: auditors will provide more granular analysis of split transactions and clustered purchases (including the APD drone purchases), purchasing will deliver a timeline for implementing updated P‑card guidance and exception reporting, and the internal audit team will incorporate those changes into future audits.

The chair closed the P‑card discussion and moved to other audit updates and public testimony.