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PATRICIA ANDERSON STATE AUDITOR STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR SUITE 500 525 PARK STREET SAINT PAUL, MN 55103 -2139 Statement of Position Credit Card Use and Policies (651) 296 -2551 (Voice) (651) 296 -4755 (Fax) state.auditor(castate.mn.us (E- mail) 1- 800 - 627 -3529 (Relay Service) December 2004 Counties, cities and towns have authority to make purchases using credit cards.' Before implementing the use of credit cards, a comprehensive credit card policy should be adopted that implements statutory requirements, as well as good management practices and minimum internal control procedures. The statutes authorizing credit card use by counties, cities and towns restrict the use of credit cards to purchases for the county, city or town. By statute, the credit cards should only be used by those employees and officers otherwise authorized to make purchases. No personal use of the credit card is permitted. If the county board, city council or town board does not authorize the credit card purchase, the officer or employee who made the purchase becomes personally liable for the amount of purchase. Purchases made with the credit card must be consistent with other state law. For example, under Minnesota law, claims presented for payment must be in writing and itemized. Bills received from a credit card company lack sufficient detail to comply with these statutory requirements. As a result, entities using credit cards must have the invoices and receipts needed to support the items charged in the bill from the credit card company. Similarly, listing only the credit card company on a claims list would merely identify the method of payment. It would not identify the vendors providing the goods and services. The credit card statutes were not intended to be another method for creating debt for the public entity. The statutes governing the issuance of debt by a public entity have a number of restrictions attached to the issuance of any obligation. Instead, the credit card statutes simply authorize another type of payment. Therefore, the County or Board must adopt a policy of paying off the credit card charges on a monthly basis. The authority to use credit cards does not authorize the creation of a new form of debt for the public entity. We urge the adoption of a comprehensive credit card policy that provides the following safeguards: 1 Minn. Stat. § 471.382 applies to cities and towns; Minn Stat. § 375.171 applies to counties. 2 Minn. Stat. §.471.38, subd. 1. —121—