City employees likely misspent millions of Richmond taxpayer dollars, audit finds
VENN
RICHMOND, Va. (WRIC) -- At least five million in Richmond taxpayer dollars were spent on "questionable transactions" over a 5-year period. This is just one of several discrepancies identified during an audit of the city's employee purchasing card program, which was found to be poorly regulated and lacking in oversight.
In recent months, the city of Richmond has been working to overhaul its employee purchasing card (p-card) program to prevent future fraud, waste and abuse.
On Tuesday, June 24, the Office of the City Auditor (OCA) released a more than 60-page audit of the p-card system -- which was called for as part of this process.
City auditors found evidence of millions in potentially-mispent taxpayer dollars, a lack of administrative oversight, unclear or missing policies and more.
Five of the OCA's findings that 8News' Taking Action team identified as especially concerning include:
- Millions in "questionable transactions." Of the over $38 million spent between 2020 and 2024, at least $5 million in "questionable transactions" were identified.
- There's no clear spending policy in place. The city did not have clear policies and procedures in place to regulate spending, leading to confusion. The policies that did exist were inconsistently enforced.
- Cards were given to employees too freely. Many employees were approved for cards -- often ones with high credit limits -- when they didn't necessarily qualify to have one.
- Transactions were not properly reviewed. The legitimacy and necessity of transactions were not regularly checked, meaning unnecessary purchases were likely made. For example, over $2 million in transactions were not reviewed or approved by departments.
- Only one person was responsible for the entire process. One singular employee was responsible for "nearly every aspect of the p-card program," creating risk.
"The city’s p-card program and usage lacked effective internal controls to ensure the proper use of public funds," the OCA said. "The city’s transaction approval structure did not consistently function as an effective safeguard to ensure taxpayers’ dollars were spent appropriately."
Keep reading to learn more about the p-card program, the reasoning behind this audit and for a deeper dive into its findings.
Why was this audit performed?
Concerns about the p-card program were raised as early as 2024, when then-Mayor Levar Stoney was criticized following reports of possible improper p-card use.
“Today, I’m here to be very clear with you," Stoney said during a press conference on Aug. 14, 2024. "Ninety-nine percent of our p-card holders are in good standing."
Nearly a year later and under Mayor Danny Avula's administration, the p-card program is in the process of being fully reset and reinvented. Nearly 80% of p-cards were canceled and a p-card tracker was launched in an effort to offer transparency and accountability.
“We know that government accountability must be earned, every day,” Avula said in a June 16 press release. “That’s why we didn’t just pause the p-card program. We took a close look at what wasn’t working and chose to rebuild something stronger and more transparent that better serves our City. This tracker is our way of inviting the public into that process and showing, in real time, the work we’re doing to fix it.”
An overview of p-card system spending, records
City auditors combed through over 80,000 p-card transactions -- which, combined, are valued at more than $38 million -- that took place between fiscal year 2020 and fiscal year 2024.
The OCA found that spending increased over that 5-year period, with spending surpassing $10 million in both 2023 and 2024. The yearly breakdown is as follows:
- 2020: 8,429 transactions valued at $3,156,647
- 2021: 10,826 transactions valued at $5,090,029
- 2022: 16,328 transactions valued at $8,224,521
- 2023: 22,034 transactions valued at $10,679,048
- 2024: 23,352 transactions valued at $11,264,553
As of June 2024, a total of 348 active p-cards were assigned to 38 departments and entities, per the OCA.
City auditors pulled spending records from between July 1, 2022 and May 31, 2024 and compared spending at the department level. The biggest spender -- the city's Department of Parks & Recreation -- spent more than all of the other departments in the top five combined.
- Department of Parks & Recreation: $6,956,082 (32% of all spending)
- Department of Public Utilities (DPU): $2,424,673 (12% of all spending)
- Department of Fire and Emergency Services: $1,189,870 (6% of all spending)
- Department of Public Works (DPW): $929,707 (4% of all spending)
- Richmond Animal Care & Control (RACC): $853,253 (4% of all spending)
In that same period, the top vendors city employees made purchases from included Amazon, Enterprise Rent-A-Car and Lowes, among others.
OCA's findings: Millions in 'questionable' transactions
"The expenditure of public funds demands the highest standards of ethical conduct and public trust," the OCA said, adding that the city's Department of Public Services' (DPS) own p-card policy stressed employees must act "with the highest degree of integrity."
Despite this, city auditors found that Richmond did not have a well-functioning system in place to manage p-card system transactions, creating a risk of fraud, waste and abuse.
Questionable and unallowable purchases
At least $5 million in "questionable transactions" were identified -- including instances where there were potential conflicts of interest, altered invoices and other violations or discrepancies.
"In many cases, the OCA could not confirm whether the goods or services had been received," the OCA said.
Twenty-five purchases totalling more than $9,000 were confirmed as unallowable, per the OCA. This included employees spending money on personal items like clothing, expensive floral arrangements and more.
Additionally, the city overspent at least $26,000 on contracts -- specifically on noncontracted rates and fees.
Poor record-keeping complicated OCA's review
Nearly $200,000 in transactions lacked appropriate documentation -- meaning the OCA could not perform a proper review of this spending. Over $66,000 in transactions lacked "critical details" like item descriptions, quantities, names and more.
For example, among 75 problematic transactions totalling over $50,000, the OCA found multiple instances where receipts and invoices were outright missing. In some cases, the wrong receipt or even unrelated documents were attached, instead.
Additionally, multiple travel and business meal purchases were made without the appropriate forms.
City employees' heavy use of third-party payment platforms like Square, PayPal and Venmo also created problems, as these purchases are harder to track, the OCA said. More than $2.4 million in city transactions were performed via such platforms in 2023 and 2024.
Lacking controls for purchases under $50,000
The weaknesses in the city's purchasing policies were especially evident regarding "small purchases," which are defined by the city as those under $50,000, according to OCA.
Under DPS policy, city employees are only required to get a single quote on most goods or services sold for under $50,000 -- meaning they don't need to check competitors to see if they may offer a better rate. This is meant to "promote efficiency and improve procurement timelines."
The OCA found multiple issues with both this threshold and the purchases made under it. City auditors compared this $50,000 limit to other Virginia localities, which reportedly have thresholds between $5,000 to $10,000.
"Therefore, the City’s threshold of $50,000 is five to 10 times higher than those of peer governments and the Commonwealth of Virginia," the OCA said.
Furthermore, many of the $5 million in "questionable" purchases were found to be just below the $50,000 limit -- which was just raised from $10,000 in fiscal year 2024.
"After the City increased the single quote limit from $10,000 to $50,000, the OCA observed a pattern in which questionable transaction amounts increased," city auditors said.
Unclear, ineffective policies on spending
The OCA also discovered that the policies of the p-card system were unclear and inconsistently enforced.
"This made it difficult for employees to understand what purchases were allowable, leading to policy violations and inconsistent application across departments," city auditors said.
It's normal for governments to purchase things that, while not daily essentials, support employee "morale, outreach or engagement" -- but those purchases must be justified.
"However, the OCA found that the city does not have a clear spending policy," the OCA said.
In one example, nearly $79,000 in "questionable" food purchases were made due to this lack of clarity. Though neighboring counties like Henrico and Chesterfield clearly define what a "business meal" is within their employee spending policies, Richmond does not, the OCA said.
This included about $19,648 spent on food within the city's DPU -- primarily by one unidentified employee at the Wastewater Treatment Plant. Many of these purchases lacked the appropriate forms and pre-approvals.
"Some of these food purchases were for large quantities of both raw and prepared food, including ribs, turkey wings, ham, shrimp and salmon, from grocery stores and restaurants," the OCA said.
In one such instance, food enough to feed 40 people -- averaging $102 a plate -- was purchased for a training session attended by only 14 employees.
When interviewed, the employee "indicated they do not get pre-approvals for purchases as they are a supervisor and have the flexibility to purchase needed items."
8News continues to read through this more than 60-page audit. Updates will be made to this article throughout the evening.
