09 - 104 Purchasing Card Violations and Consequences

The difference between misuse and fraud is intent. Misuse implies a violation occurred without foreknowledge that the action was incorrect or inappropriate, while fraud involves an awareness of the impropriety and a conscious decision to proceed.

The Purchasing Card represents the institution's trust in the Cardholder and an empowerment of that Cardholder as a responsible employee or active student of the institution. As such, each Cardholder is required to safeguard and protect his/her institution's assets, including the Purchasing Card.

It is against the law to use any governmental funds for personal use. USNH and its member institutions are funded in part by state appropriations. In addition, many areas are funded through state and federal funds as grants and contracts. As a result, any personal use of institutional funds may be construed as a criminal act and subject to prosecution. These statutes apply not only to purchases made on the Purchasing Card, but to any purchases made using institutional funds and regardless of the intent to reimburse.

Any person aware of any misuse of USNH funds or instances of non-compliance with this policy is encouraged to report their concerns to the campus PCard Administrator, or one's supervisor or to the person or office responsible for investigating and responding to the specific situations.  Situations may arise, however, when an individual discovers or reasonably suspects unethical or illegal behavior and yet may be reluctant to report it for fear of reprisal or retaliation. In such situations, you are encouraged to use the USNH Ethics and Compliance Hotline link or by phone system at 844-592-8455. These venues are monitored by a third party entity to preserve confidentiality and all reports are reviewed for follow up actions.

Violations must be documented through a “Letter of Violation” by the responsible PCard Manager or campus finance office which must be filed with the transaction supporting documentation. A Letter of Violation should be addressed to the Cardholder and copied to the Cardholder supervisor (or Principal Investigator if the charge is on a Sponsored Program) and to the campus and USNH PCard Administrator.

USNH will recoup any expenses deemed personal from the Cardholder by seeking direct reimbursement. If full repayment is not received from the Cardholder, the employee will no longer be eligible for a card. USNH retains the right to collect any remaining funds by other means necessary (e.g., a civil suit or criminal prosecution as appropriate under the circumstances). In addition, disciplinary action may be taken under campus Human Resources policies or other appropriate internal policies.

In cases when a Cardholder disagrees with the decision of the PCard Manager, the Cardholder may refer the case to the campus CFO or designee who will have the final decision on these matters.

The consequences outlined below are not all inclusive. The severity of the violation may lead to additional consequences.  As outlined in the USNH personnel policy, cases of fraud can result in immediate dismissal and/or criminal prosecution. Violations are tracked over the span of having a card, and do not reset every fiscal year. Patterns of misuse may result in more severe consequences.

A. Violation Categories

There are 6 general PCard violation categories. Refer to Procedure 9-103, Using an USNH PCard for descriptions of what is allowable, and Procedure 9-110, Documentation and Record Retention for a full description of the documentation required. The following are a few examples of Purchasing Card misuse:

1. Personal Purchases

a) Definition: A personal purchase is any purchase that is not for use and ownership by the institution regardless of the intent to reimburse, or a purchase that lacks an appropriate business purpose. This includes using your PCard as the method of payment on a non-business related purchase even if the card is never actually charged.  Cardholders should not be holding funds intended for business use for a non-business related activity.   In cases where personal travel is mixed with a business trip, all the costs must be charged to a personal credit card. Once the trip is completed the Cardholder may seek reimbursement for the business portion of the trip as outlined in USNH’s Travel Policies.

Note that traffic violation or parking fines associated with rental cars may be directly charged by the rental company to a USNH PCard without Cardholder involvement. In these cases, the charges do not constitute a violation as long as the Cardholder reimburses USNH for the costs as soon as he/she returns from the business trip (i.e. when submitting receipts to their account manager)

b) Violation: It is a Cardholder violation to make ANY personal purchase or settle any personal debt with the Purchasing Card or any other purchasing method. It is against the law to use government funds, whether state or federal, to purchase items for personal use. Even though the Cardholder may repay the institution or intend to repay the institution for the amount of the purchase, it may still be considered a fraudulent act. 

c) Remedy:

i. The Cardholder should seek a credit from the merchant for the total of the improper purchase(s) and have the amounts charged to his/her personal credit card. 

ii. If the credit is not obtained from the merchant, the Cardholder must reimburse USNH immediately via check or cash.

iii. The Cardholder’s PCard Manager will notify the Cardholder in writing of the violation and the action needed to reimburse the university. 

iv. If the violation is for repeated personal purchases, the PCard Manager will request a cancellation of the card. A PCard cannot be reinstated when cancelled for repeated personal purchases and the employee will no longer be eligible for a card.

2. Lack of Documentation

a) Definition: Detailed descriptions of required documentation, reconciliations and record retention are contained in Procedure 9-110, Documentation and Record Retention. This includes recommended types of documentation and a listing of the requirements any documentation must meet.

b) Violation: Lack of adequate supporting documentation for any purchase is considered a Cardholder violation. Transactions where the merchant does not provide documentation is not considered a violation if there is sufficient supporting evidence to meet the requirements for substantiation outlined in Procedure 9-110, Documentation and Record Retention. In unusual cases, substitute documentation may be used. Also note that lack of receipt for purchases of $25 or less is not a violation as long as the Cardholder provides an adequate business purpose.

c) Remedy: 

i. The Cardholder should attempt to obtain a duplicate receipt from the merchant.

ii. In the rare case that a duplicate receipt is not available, the Cardholder should complete a Lost Receipt form. This form is meant to be used on an exception basis and not as a regular means of documentation. Pattern of abuse may be construed as a lack of adequate documentation. 

iii. In cases where a Cardholder does not provide a receipt or Lost Receipt form, the Cardholder’s PCard Manager will issue a Letter of Violation via e-mail to Cardholder outlining the violation and request a suspension of the card until receipts are received.

iv. If receipts are not received before the transaction sweep date, which is the 24th of the month following the transaction date, the purchase may be considered a personal purchase and the remedy steps outlined in section A.1.c above should be followed.

3. Assignment or Transfer of an Individual Card

a) Definition: Allowing an unauthorized person to make a purchase on a PCard not issued for that person is a Cardholder violation. If a Cardholder continues to use a PCard after the Cardholder has terminated/separated from the institution, then that is a Cardholder violation. Continued use of a PCard after an authorized person has requested the card's surrender is also a Cardholder violation. The Cardholder is the only authorized individual to use his/her card.

b) Violation: Allowing use of a PCard by someone other than the authorized Cardholder is a Cardholder violation. Refusal to surrender a PCard upon termination, separation or request of the PCard Manager is also a Cardholder violation.

c) Remedy: If the Cardholder allows someone else to use their PCard the following actions will be taken:

i. For a first time offense, the Cardholder’s PCard Manager issues a warning letter outlining the violation and directing the Cardholder to review PCard policy.

ii. In the case of a second offense, the PCard Manager will request cancellation of the PCard.

iii. If the Cardholder is no longer employed at the institution and the PCard has not already been cancelled, the PCard will be immediately cancelled, and any charges made subsequent to the termination/separation must be reviewed for appropriateness. Any inappropriate purchases may be construed as a criminal act and subject the former Cardholder to prosecution.

4. Transactions Not Allowed on USNH PCards

a) Definition: Appropriate purchases are listed under the Authorized Purchases in Procedure 9-103, Using an USNH PCard. Any other uses of the Purchasing Card, including cash, cash advances, and gift card purchases, except as specifically approved by the Campus CFO or designee, are considered inappropriate, an accordingly are not allowed. In addition, when used for a grant or contract, the appropriateness of the purchase may be further restricted by the terms of the grant or contract.

b) Violation: Purchase of any item or services prohibited under sections C and D of Procedure 9-103, Using an USNH PCard, except where prior approval was obtained from the campus CFO or designee, is a Cardholder violation.

c) Remedy:  For a first offense, the Cardholder’s PCard Manager will issue a warning letter outlining the violation and directing the Cardholder to review the PCard policy.  For a second offense, the PCard Manager will request the cancellation of the PCard.

5. Splitting Transactions or "Pyramiding"

a) Definition: Split transactions or "pyramiding" are defined as single items costing more than the Cardholder's single purchase limit which are split among multiple transactions to circumvent the Cardholder's defined maximum single purchase limit.

b) Violation: Any transaction which is split over more than one transaction and in total exceeds the Cardholder's limit and/or the limit established by USNH, whichever is lower, is a Cardholder violation.

c) Remedy:

i. For a first time offense, the Cardholder’s PCard Manager issues a warning letter outlining the violation and directing the Cardholder to review PCard policy.

ii. For a second offense, the PCard Manager requests the cancellation of the card.

6. Improper Allocation of Merchant Credit

a) Definition: A merchant credit must be refunded to the original credit card for any items that have been returned. A Cardholder must not accept cash or a store credit in lieu of the refund to their PCard.

b) Violation: Allowing any method of reimbursement other than a credit to the original PCard by the merchant for item(s) returned for any reason is considered a Cardholder violation.

c) Remedy: 

i. For a first time offense, the Cardholder’s PCard Manager issues a warning letter outlining the violation and directing the Cardholder to review PCard policy.

ii. For a second offense, the PCard Manager requests the cancellation of the card.

B. PCard Manager Responsibilities

Each violation will require the PCard Manager in consultation with the PCard Manager’s supervisor to determine what action is appropriate for each event based on this policy. Once the appropriate action has been determined, the Cardholder should be notified by his/her PCard Manager at least seven business days before his/her card is suspended or canceled unless the violation is such that it needs immediate suspension of the card to protect USNH assets.

1. Consultation with the Cardholder upon initial suspicion:. If the suspicion is substantiated, determine if a warning, suspension or cancellation of the card is warranted according to this policy.

2. Warning: For violations that require a warning, the PCard Manager issues a letter of Violation (e-mail) to the Cardholder describing the violation and warning that the PCard may be suspended pending further investigation or continued misuse. The PCard Manager should notify the Cardholder's immediate supervisor, and campus and USNH PCard Administrators of the offense.

3. Suspension: For violations that require suspension, the PCard Manager issues a written notice to the Cardholder seeking the remedies as outlined above and notifies the Cardholder of the date the card suspension will take effect and how long it will remain in effect which is minimum 30 days or until the issue is remediated whichever is later. The PCard Manager also notifies the Cardholder's immediate supervisor, campus and USNH PCard Administrator, and campus finance office.

4. Cancellation: For violations that require a cancellation, the PCard Manager issues a written notice to the Cardholder seeking the remedies as outlined above and notifies the Cardholder of the date the card cancellation will take effect.  The PCard Manager notifies the campus PCard Administrator who will cancel the card. The PCard Manager also notifies the Cardholder's immediate supervisor, USNH PCard Administrator, and campus finance office.

5. Reinstatement:  When a notice of suspension or cancellation has been issued, all supporting documentation must be received and reviewed by the PCard Manager prior to reinstatement, and the Cardholder may be required to retake PCard training.

C. Campus PCard Administrator Responsibilities

1. Suspend or Cancel a PCard after receiving notification from the PCard Manager - Note that cancellation of a PCard due to repeated personal use is permanent.  This applies even when an employee leaves the institution and comes back or transfers to another department or another USNH institution.

2. Review issues reported by PCard Managers and work with the USNH PCard Administrator to get them resolved

D. USNH PCard Administrator Responsibilities

1. Monitor submitted lost receipts forms for a pattern of abuse and cancel card(s) of Cardholders who continuously fail to submit receipts

2. Perform post audit reviews to ensure compliance with program guidelines

3. Annually report a summary of all incidents of non-compliance of the PCard to the USNH Controller, and campus finance offices


The official version of this information will only be maintained in an on-line web format. Any and all printed copies of this material are dated as of the print date. Please make certain to review the material on-line prior to placing reliance on a dated printed version. 

This page last updated Tuesday, December 10, 2019. For information on the adoption and effective dates of policies please see explanation on the OLPM Main Menu.