Consent Item 8
Staff Report Item 8
TO: East Bay Community Energy Board of Directors
FROM: Jason Bartlett, Senior Finance Manager
SUBJECT: Credit Card Use and Limit Policy Update
DATE: November 16, 2022
__________________________________________________________________ Recommendation
Approve the Resolution authorizing the adoption of the Amended and Restated Policy that governs EBCE credit card use and the recommended increase in limits.
Background and Discussion
On October 17, 2018, the Board approved a policy governing protocols and controls on how the two American Express corporate credit cards are used. This policy set spending limits on the account at a total of $20,000 per month, established governing controls on authorizations and limiting use to business purposes only, outlined safeguards, reporting, accounting, and payment protocols, as well as enforcement approaches.
The use of these cards has been instrumental to allow administration and functional areas to complete their work on a monthly basis. Administrative, travel, and other small budget expenses occur regularly throughout the course of business on a daily matter. These cards have allowed staff to use the products and services from vendors who do not allow for bank account payments, issue invoices, or accept checks--many on a recurring subscription basis.
Current Controls
EBCE has two processes by which the credit card account is used:
• Executive cardholders are allowed to use the card for business related needs with monthly review of charges at time of payment
Consent Item 8
• Employees can request the operational use of the cards through a two-level authorization process with a no-touch final payment (employees never see the card numbers)
All charges are monitored with monthly reviews and independent annual audits.
Finance employs a practice of 100% receipt accounting, which means all receipts must be collected, logged, and retained for the monthly reviews. All monthly reports are reviewed and an annual report is delivered to the independent auditors for review.
Additional controls require executive charges to be reviewed independently from operational charges. Safeguards are established to ensure the security of the cards in case of misplacement, loss, or external fraud. Accounting and reporting programs are also maintained to support the afore-mentioned security and review controls.
Current Demand
At the time the current policy was established, there were 18 employees at EBCE.
Today, there are 56 on payroll with a target for 64 by the end of the fiscal year. With the growth of employees, there comes an increase in demand for operational use on the cards.
More than one-third of the monthly limit on the credit cards is now recurring subscription charges for necessary software, data sources, marketing processes, position advertising, and other technological needs; and in 3 out of 4 months the cards are at capacity before the billing cycle ends. This creates two problems with card management:
• First, it makes it challenging to keep the capacity necessary for Executive officer use, especially with expanding travel and use demands as COVID-19 lockdowns ease up
• Second, this co-mingles many charges on specific cards with subscriptions, small purchases, and other administrative needs with Executive required use, and requires additional efforts to maintain accounting separation as use increases.
Amendment Requests
To correct the growing problems described above, staff requests two amendments to the existing policy:
• The issuance of a third card to be held specifically by the Finance Lead and used solely for internal administrative use to manage subscriptions and operating purchases separately from the executive use
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• Increase the account limit from $20,000 to a maximum of $60,000 per month, or on average from $10,000 to $20,000 per card per month.
These two amendments would allow capacity to be available for necessary executive use and resolve the co-mingling maintenance with cost accounting. Additionally, these updates do not seek to change any of the existing controls or protocols which are proven effective to date.
Staff is also recommending a third amendment of additional control process to the Finance Lead held card by requiring operational charges made on this card have an additional layer of approval with functional leads, and an executive level monthly review of these charges.
These amendments have been reviewed, and given approval, by our independent auditors.
Fiscal Impact
The change in this policy will have no impact on costs and budgets.
Committee Recommendation
Finance, Administrative, and Procurement Subcommittee has reviewed these suggested changes to the policy on November 4, 2022, and their recommendations have been incorporated into the proposed policy amendments.
Attachments
A. Resolution approving the amendments to credit card policy B. Amended Credit Card Policy
Attachment Consent Item 8A
RESOLUTION NO.
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE EAST BAY COMMUNITY ENERGY AUTHORITY APPROVING AMENDMENTS TO
THE CREDIT CARD USE AND CONTROLS POLICY
WHEREAS The East Bay Community Energy Authority (“EBCE”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of EBCE and parties to the JPA in March of 2020.
WHEREAS EBCE adopted a Credit Card Use and Control Policy to govern card responsibilities on October 17, 2018,
WHEREAS This adopted Policy established the issuance of two cards—one to the CEO and one to the COO/Treasurer,
WHEREAS This adopted policy established spending limits of not more than $20,000 per month,
WHEREAS There are two uses for the cards—Executive and operational—and each have effective controls that ensure safeguards and securities against misuse and fraud,
WHEREAS EBCE staff has grown from 18 to 68 positions and recurring costs have consumed more than one-third of the total card capacity, and officer travel is becoming more common with the ending of COVID 19 lockdown polices, spending capacity limits on the card are becoming constraining to normal orders of business, WHEREAS Co-mingling of operational use and Executive use occurs on specific cards that creates additional efforts to maintain accounting separation as card use increases and a need has been shown for a third card to devote to operational use and for an increase in the credit limit.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE EAST BAY COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. Amend the Policy to allow for a third card to be issued and controlled by the Senior Finance Manager, with all controls, responsibilities, and usage rules applied to this card as it is with other cards.
Section 2. Amend the policy for additional controls on the Senior Finance Manager card for functional lead level approval prior to any transaction and Executive review of charges post-transaction.
Attachment Consent Item 8A
Section 3. Amend the Policy to allow for card account limit to be increased to $60,000 maximum per month.
ADOPTED AND APPROVED this 16th day of November, 2022.
Dianne Martinez, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Attachment Consent Item 8B
CREDIT CARD USE AND CONTROLS POLICY, FIRST AMENDMENT
Policy Number: 16.1
Approval Date: 11/16/2022
Agenda Item: XX
Approved by Resolution:
1. PURPOSE:
The purpose of this Policy is to set guidelines for the usage and payment of business expenditures from the Corporate Credit Cards (Cards). This Policy is not intended to override the Administrative Procurement Policies and use of the Cards shall be in accordance with these policies.
2. RESPONSIBLE PARTIES:
The COO/Treasurer is responsible for ensuring uniform policies and procedures are followed for EBCE’s Credit Card Policy.
3. SCOPE
The Policy applies to all the Corporate Credit Cardholders of East Bay Community Energy (EBCE).
4. CONTROLS OVER CARD
1. Cards will be issued only to the CEO, the COO/Treasurer, and the Senior Finance Manager.
2. At least one card controlling member will review and approve the monthly statements before the cards are paid irrespective of the account balance.
3. The use of the card shall only be used for business-related expenditures and shall not be used for personal expenses or cash withdrawals.
4. The account will have a standard monthly credit limit of $60,000.
5. A lost or stolen card must be reported as soon as it is discovered as missing.
Attachment Consent Item 8B
2 5. CARD USAGE
The proper name of the cardholder will be embossed on the card along with “East Bay Community Energy”. The card is valuable property which requires proper treatment by the cardholder to protect it from misuse by unauthorized parties. The cardholder is required to activate (as per instructions received with the card) and sign the card immediately upon receipt. The card may be used upon activation. When a new card is issued to the cardholder, it is the cardholder's responsibility to destroy the previous card (cut it in pieces) and discard. If the cardholder's employment is terminated for any reason, the card will be immediately cancelled upon notice of termination. Senior Finance Manager
Eligible uses of the card include:
1. Refreshments and meals for outreach events and meetings
2. Conference registration
3. Travel arrangements (ex: airfare, car rental, train fare and hotels)
4. Certain marketing and social media expenses
5. Recurring payment of data or industry news subscriptions
6. Urgent office supplies and maintenance
7. Cell phone purchases and monthly cell phones service All expenses must be in accordance with the Board approved expenses established in the approved budget.
The card may not be transferred to, assigned to, or used by anyone other than the designated cardholder. Amex or EBCE may, at any time, suspend or cancel the cardholder's privileges for any reason and the cardholder will surrender the credit card to the CEO, COO/Treasurer, or Senior Finance Manager upon request. The cardholders should attempt to keep the use of the card to a minimum.
Employees are NOT permitted to use the card for personal expenses. Any rewards earned on card will belong to EBCE and will be used to buy down the balance of the account periodically or be used to reduce cost of qualifying new purchases as permittable.
Attachment Consent Item 8B
3 6. SAFEGUARD OF CARD
1. The cardholder is required to ensure proper safeguard of the card by:
Securely keeping the card in his/her possession, signing the back of the card, and destroying an expired or replaced card
2. Ensuring that only the last four digits of the card number appear on any printed document
7. EXPENSES ACCOUNTING, REPORTING AND PAYMENT
1. The cardholder is required to obtain and submit the original invoices/receipts for all purchases. Missing receipts will require a formal review and notice process. In addition to receipts, the employee requesting use for an approved purchase shall provide prior to the transaction:
i. A description of the business purpose
ii. In the case of meals or conferences, who was in attendance iii. In the case of travel, travel dates
2. Any transaction with missing documentation requires a written explanation for the missing documentation, and must include the vendor name, date, description of purchase, and reason for the missing documentation.
3. The cardholder is responsible for submitting the invoices/receipts of all transactions to COO/Treasurer and the Senior Finance Manager within 5 business days of incurring the transaction or receiving the invoice/receipt.
4. The Senior Finance Manager is responsible for downloading the monthly statement for all the cards, matching the invoices/receipts to the charges in the statement, ensuring the accounting of every charge in the appropriate period, and the making payment by the statement due date.
5. The Senior Finance Manager will review monthly statements and documentation for completeness and process payment approval from direct supervisor and Treasurer. In the case of the Senior Finance Manager’s expenses, the Treasurer or CEO will review and sign off on such expenses. In the case of the Treasurer’s expenses, the CEO will review and sign off on such expenses. In the case of the CEO’s Attachment Consent Item 8B
4 expenses, the expenses will be provided to the Chair of the Board for review and approval. However, EBCE will not await approval to make payment of credit card expenses.
8. POLICY ENFORCEMENT
1. Employees are NOT permitted to use the card for personal expenses for any reason. Failure to abide by this provision could result in disciplinary actions, up to and including termination of employment.
2. Any willful intent to disregard the policy will result in revocation of the card and could result in disciplinary actions, up to and including termination of employment.