Purchasing Card - Procedure 026

  1. PURPOSE:

    To establish procedures for a purchasing card program.

     

  2. SCOPE:

    These procedures apply to all transactions under $750.00 made with the purchasing card.

     

  3. GENERAL:

    The City of Altamonte Springs Purchasing Card Program is designed to improve efficiency in processing small dollar purchases from any vendor that accepts the Visa credit card.

    This program will allow the cardholder to purchase approved commodities and services directly from our vendors. Each purchasing card is issued to a named individual, and the City of Altamonte Springs is clearly shown on the card as the governmental buyer of the goods/services.

    The Procurement Division will monitor the performance of the program. All questions or concerns should be directed to the Procurement Division Manager.

     

  4. OBJECTIVES:

     

    1. To provide efficient method of purchasing and paying for goods/services under $750.00 per purchase/transaction/job/project.

       

    2. To reduce the use of petty cash, blanket purchase orders and Field Purchase Orders (FPO's).

       

    3. To ensure purchasing card purchases are in accordance with the City's policies and procedures.

       

    4. To reduce the time spent by the Procurement Division and Accounts Payable personnel processing small dollar transactions.

       

    5. To ensure that the City bears no legal liability from inappropriate use of purchasing cards.

       

    6. To provide for disciplinary action if the purchasing cards are misused. The procedures provided herein are minimum standards for departments. Departments may establish additional controls if necessary or desired.

       

  5. AUTHORIZATION:

    The purchasing card system simplifies the procurement/disbursement process. Procurement responsibility is delegated to the ordering department enabling an authorized cardholder to place an order directly with the vendor.

    When a purchase authorization is requested by the supplier at the point of sale, the purchasing card system validates the transaction against preset limits established by the employee's department and approved by the Purchasing Card Administrator. All transactions are approved or declined (electronically) based on the purchasing card authorization criteria established. The authorization criteria may be adjusted periodically as needed and may include, but are not limited to, the following:

     

    1. Number of transactions.

       

    2. Number of transactions allowed per month.

       

    3. Single purchase limit (not to exceed $749.99).

       

    4. Monthly spending limit (not to exceed $2,500.00).

       

    5. Approved merchant category codes.

    The authorization process occurs through the electronic system that supports the purchasing card processing services under the agreement established between the City of Altamonte Springs and the financial services provider.

     

  6. RESPONSIBILITIES:

    The following is a summation of the responsibilities of the individuals and organizations involved in the purchasing card system:

     

    1. Cardholder:

       

      1. Hold and secure purchasing cards.

         

      2. Order materials and services.

         

      3. Collect and save all sales receipts

         

      4. Log phone orders and request receipts.

         

      5. Match receipts with monthly card statement.

         

      6. Forward and review monthly charges with Department Purchasing Card Representative, within the time frame established by the Department Purchasing Card Representative.

         

      7. Identify disputed charges.

       

    2. Department Purchasing Card Representative (designated by department head)

       

      1. Review monthly statement with cardholder.

         

      2. Assign and/or verify the appropriateness of accounting codes.

         

      3. Assist department cardholders with disputed items.

         

      4. Review monthly statement and sign authorizing the charges.

         

      5. Obtain department head's signature.

         

      6. Forward, at least four (4) working days prior to payment due date, to Account Payable, the statement(s) and supporting receipts.

         

      7. Collect cards from cardholders who end or transfer employment.

         

      8. Notify, immediately, the Purchasing Card Administrator of terminated cards.

       

    3. Department Head

       

      1. Request purchasing cards for designated employees.

         

      2. Set departmental and cardholder spending limits within established guidelines.

         

      3. Designate Department Purchasing Card Representatives.

       

    4. Purchasing Card Administrator

       

      1. Approve requests for purchasing cards submitted by Department Head

         

      2. Coordinate issuance and cancellation of cards.

         

      3. Provide training to all new cardholders and periodic, as needed, refresher training classes.

         

      4. Coordinate program policy issues.

         

      5. Participate in ongoing program reviews.

         

      6. Participate in resolving billing disputes.

         

      7. Coordinate and maintain internal controls.

         

      8. Maintain procedures and cardholder guides/manuals.

         

      9. Target new cardholders and expanded use of card.

         

      10. Establish and monitor bench marking objectives.

       

    5. Accounts Payable Division

       

      1. Receive approved monthly statements from all cardholders.

         

      2. Receive consolidated statement from purchasing card user.

         

      3. Confirm that all charges are authorized by department head.

         

      4. Notify departments when approved monthly statements are not received.

         

      5. Pay all monthly charges from consolidated statement.

         

      6. Process accounting data.

         

      7. File and store statements, receipts, etc.

         

      8. Administer 1099 reporting.

       

    6. Procurement Division

       

      1. Pursue supplier discount opportunities

         

      2. Evaluate purchasing card feedback from suppliers and cardholders.

       

    7. Auditor

      Conduct periodic operational and compliance audits.

  7. PROCEDURES:

    1. Assignment and Control of the Purchasing Card

       

      1. Requests for and issuance of purchasing cards

         

        1. Purchasing cards will be issued to individual employees who frequently purchase goods/services in single purchase amounts of less than $750.00. Generally, these will be the employees who, before the purchasing card program, often used petty cash, Annual Blanket Purchase Orders or FPO's for small dollar amounts.

           

        2. The purchasing card will have the employee's name, the City's name, the City's tax exemption number, and the expiration date. The purchasing card issuing company will not have individual cardholder information other than the cardholder's work address. No credit records, social security numbers, etc., of the cardholder will be maintained.

           

        3. All requests for purchasing cards must be made by the Department Director by using the Purchasing Card Request/Certification/Receipt form (FORM.\PROC-14).

           

        4. All requests for new cardholders or for changes to current cardholders will be made by completing the top portion of and submitting a Purchasing Card Request/Certification/Receipt form (FORM.\PROC-14) to the Purchasing Card Administrator signed by the Department Director.

           

        5. When the Purchasing Card Administrator receives a purchasing card from the issuing card company for a cardholder, the cardholder will be required to personally take receipt of the card and sign the Purchasing Card Request/Certification/Receipt form (FORM.\PROC-14) and an Agreement To Accept the Procurement Card form(FORM.\PROC-13). The cardholder will be given a copy of the Purchasing Card Procedures Guide and training by the Purchasing Card Administrator.

           

        6. The Purchasing Card Administrator will notify the requesting department and the Accounting Division upon the issuance of all purchasing cards.

           

      2. Lost or Stolen Purchasing Cards

         

        1. If a purchasing card is lost or stolen, the cardholder or department representative must immediately notify the financial service provider and the Purchasing Card Administrator.

           

        2. The cardholder will be responsible for reporting all information necessary to reduce the liability to the City for a lost or stolen card.

         

      3. Termination or Transfer of Cardholder

           

        1. When an employee ends employment or is transferred to another department, the Department Director must collect the purchasing card, cut it in half, and submit the purchasing card to the Purchasing Card Administrator.

           

        2. If the department is unable to collect the purchasing card when an employee terminates, the Department Director must immediately notify the Purchasing Card Administrator. The Purchasing Card Administrator will ensure that the card is canceled.

         

    2. Limitation on Use of Purchasing Cards

       

      1. Cardholder Use Only

        The purchasing card may be used only by the employee whose name is embossed on the card. No other person is authorized to use the card.

         

      2. City Purchases Only

        The purchasing card is to be used for City-authorized purchases only.

        The purchasing card cannot be used for any personal use. Any such use will require immediate reimbursement and may result in disciplinary action which may include dismissal.

         

      3. Dollar Limitations

         

        1. The Department Director approving the assignment of a purchasing card will set two limits for each cardholder; a single purchase limit and a 30-day limit. The maximum limits shall be $749.99 for a single purchase and $2,500.00 during the 30-day billing cycle. Requests for spending limit changes must be initialed and authorized by the Department Director.

           

        2. A purchase may be made of multiple items, but the invoice cannot exceed $749.99 or the cardholder's limit if less than $749.99. Payment for purchases shall not be split to stay within the single purchase limit.

           

      4. Other Conditions

         

        1. Sales tax may not be charged by the vendor. If necessary, provide the vendor with a sales tax exemption certificate (Exhibit 016-A).

           

        2. All items purchased over-the-counter must be immediately available. No back ordering is allowed.

           

        3. All items purchased during one telephone transaction must be delivered in a single delivery. If an item is not immediately available, no back ordering is allowed.

           

        4. All items purchased by telephone must be delivered by the vendor within the 30-day billing cycle. The order should not be placed without this assurance.

           

        5. Check with the vendor when ordering by phone or check the catalog from which you are ordering to make sure shipping is included in the price quoted. If the price exceeds $749.99 with shipping added, you may NOT use the purchasing card.

         

      5. Prohibited Uses of Purchasing Cards

         

        1. Gasoline or oil
        2. Vehicle repairs
        3. Travel expenses such as hotels, food and airline tickets
        4. Training expenditures requiring a travel authorization form
        5. Cash advances
        6. Inventory stock items
        7. Food/Restaurants
        8. When department annual needs for like items/services exceed $750.00 annually. (Example: pager service, film developing, sod)
        9. Any additional goods/services specifically restricted by the Procurement Division or the department.

       

    3. Procedures for Making and Paying for Purchases

       

      1. Telephone Orders

         

        1. When placing a telephone order, the cardholder must confirm that the vendor will charge the purchasing card when shipment is made so that receipt of the supplies may be certified on the monthly Statement of Account.

           

        2. The cardholder shall request the customer's copy of the charge slip be sent with the order. Packing slips are not sufficient documentation and will only be permitted in instances where the cardholder documents unsuccessful attempts to obtain a receipt.

           

        3. Charge slips should identify the merchandise purchased. If the merchandise is not sufficiently identified on the charge slip provided by the merchant, the cardholder should describe the merchandise sufficiently enough for the Department Director to determine that the purchase was for City purposes.

           

        4. The charge slip will be retained either by the cardholder or by the department representative until forwarded to Accounts Payable with the monthly statement.

         

      2. (Blank)

         

      3. Missing Documentation

        If for some reason the cardholder does not have documentation of the transaction to send with the statement, description of the purchase must be attached. Continued incidents of missing documentation may result in the cancellation of the employee's purchasing card and/or disciplinary action.

         

      4. Payment and Invoice Procedures

         

        1. The purchasing card company will mail an individual billing statement to the cardholder and one consolidated statement for all cardholders to the Accounts Payable Division. This Statement of Account will list all transactions processed during the previous 30 days. If no purchases were made on the purchasing card during the billing cycle, no Statement of Account will be generated unless adjustments for previously billed transactions have been processed during that cycle.

           

        2. The cardholder must review the statement and note any errors. Card charge slips/receipts of all items listed on the statement should be attached to the statement and enclosed in a Purchasing Card Payment Request envelope (one statement per envelope)(FORM.\PROC-11). Account numbers and total dollar amounts for each account number will be written on the Purchasing Card Payment Request envelope (FORM.\PROC-11). The Department Director or designee must review the statement and will then sign the envelope unless the Department Director designates another individual. By signing the envelope, the Department Director is certifying that all charges are appropriate and authorized and that all charges are confirmed by attached receipts. Once the department has reviewed and signed the envelope, the statement and supporting documents are to be forwarded in a Purchasing Card Payment Request envelope (FORM.\PROC-11) to Accounts Payable. All statements must be forwarded to Accounts Payable at least four (4) working days prior to payment due date.
    4. Disputes

       

      1. If items purchased with the purchasing card are defective, the cardholder must return the item(s) to the vendor for replacement or credit. If the service paid for with a purchasing card is faulty, the vendor must be notified and asked to correct the situation or provide a credit. If the vendor refuses to replace or correct the faulty item or service, the purchase will be considered in dispute.

         

      2. A Cardholder Statement of Disputed Item Form (FORM.\PROC-15) must be completed by the cardholder and sent or faxed to the financial service provider. A copy of the Cardholder Statement Disputed Item Form (FORM.\PROC-15) should be sent to the Purchasing Card Administrator and included with the cardholder's statement of account before the Purchasing Card Payment Request envelope (FORM.\PROC-11) is forwarded to Accounts Payable.

       

    5. Review of Purchases by Departments

         

      1. Because of their knowledge of the job responsibilities and requirements, Department Director or designees are required to review each purchasing card expenditure (item purchased, amount and vendor) to ensure the goods/services were necessary and for official use.

         

      2. When the Department Director is not satisfied that the purchase was necessary and for official use, the cardholder must provide either a credit voucher proving the item(s) were returned for credit or a personal check for the full amount of the purchase. Checks must be sent to Accounts Payable with an explanation and account number to credit. A copy of the check and explanation must be forwarded to the Purchasing Card Administrator.

         

      3. Serious or repeated misuse of the purchasing card will result in the revocation of the card. Employees incorrectly using their purchasing card will be disciplined by the Department Director/division manager as necessary.

         

      4. To help the departments in their reviews, management reports will be available from the Purchasing Card Administrator.

    6. Abuse/Violations

      1. Participation is the City of Altamonte Springs' Purchasing Card Program is a convenience that carries responsibilities along with it. Although the card is issued in a cardholders name, it is City property and should be used with good judgement. Improper use of the card can be considered misappropriation of City funds which may result in disciplinary action, up to and including termination. Cardholders are expected to comply with internal control procedures in order to protect City assets. This included keeping receipts, reconciling Purchasing Card monthly statements and following proper card security measures.

         

      2. The Department Purchasing Card Representatives and Department Directors should notify the Purchasing Card Administrator if a cardholder abuses the program or violates the procedures.

         

      3. The Purchasing Card Administrator conduct operational and compliance audits to determine if the program is being abused or procedures are being violated.

         

      4. If an abuse or violation has occurred, the Purchasing Card Administrator, should notify the cardholder by using a Purchasing Card Abuse Notification form (FORM.\PROC-12).

         

      5. Misuse of the Purchasing card may result in disciplinary or other appropriate action. Repeated misuse and violations will result in revocation of Purchasing Card privileges and may result in termination of employment for cause.

      6. Abuse, misuse, and violations, include but not necessarily limited to the following:

        1. Purchase over $749.99.
        2. Purchase of unauthorized or prohibited items/services (See VII. B. 5 above).
        3. Multiple transactions to circumvent Purchasing procedures.
        4. Failure to provide proper documentation, receipts, invoices, monthly statements, etc.
        5. Purchase of Capital Outlay items.
        6. Purchase from vendors which create a conflict of interest.
        7. Personal charges.
        8. Allowing another person, other than the cardholder, to use the card.
        9. Failure to report a lost or stolen card in a timely manner.