copedia purchasing manual
TRANSCRIPT
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PURCHASING and RECEIVIENG________________________________________________
Commitment to Authorized Purchases and Expenses
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Purchasing Table of Contents
Copedia License Agreement using the content means you agree andaccept the terms of the license.
Manual Cover Page
Table of Contents
Overview
Purchasing .. Purch
Purchasing Accounting Manual Cover PagePurch-001
Purchasing Manual Table of ContentsPurch-010
Purchasing Policy Purch-100
Purchasing Flowchart Purch-150
Purchase Order Policy Purch-200
P Card Policies Purch-300
Procurement Policy Purch-400
Internal Controls for Purchasing Purch-500
Receiving
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Receiving Flowchart Receive-100
Receiving Internal Controls
Receive-500
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Purchasing Policy
Purpose
The purpose of this document is to describe how you buy goods, services, andassets at our organization.
Overview
Purchasing means the act of buying or obtaining goods, services, or assets onbehalf of the company for a price or its equivalent. All purchasing must complywith the following policies and procedures:
Purchasing is authorized by the Delegated Authority Policy.
Purchasing is implemented by the Accounts Payable Procedures, DisbursementApproval Procedure, P-Card Policies, Purchase Order Policy and Procedures,and the Procurement Policy and Procedures.
Policy
General Purchasing Policies
All purchases over $100 require the use of a purchase order.
Verbal Quotes and Awards must be documented.
Purchasing amounts between $1,000 and $5,000 require at least three pricequotes.
Purchases between $5,001 and $24,999 require written quotes be submitted
from 3 qualified vendors for approval by the purchasers supervisor.
Purchases of $25,000 or more must comply with the procurement procedures.
All real estate leases and transactions must comply with the procurementprocedures regardless of amount and without exception.
ID: Purch-100 Purchasing Policy Purchasing
Effective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 2
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The company uses p-cards to increase purchasing efficiency and reduceaccounting costs. Company P-Card Employees are authorized to use their p-cards according to the p-card policies and procedures
Division of Duties
All inventory purchasing activities should be separate from the associatedreceiving activity.
P-Card purchasing and receiving activities should not be separated but should beindependently verified by use of a log.
All purchasing activities must be separate from accounting activities.
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Purchasing Flowchart
Purchasing Flowchart6
Start
Requisition
Purchasingreceivesapproved
requisition fromdepartment
Purchasingidentifiesbest price
and vendor
PurchaseOrder Issued
Vendor Copy
DepartmentCopy
ReceivingDepartment
Copy
AccountsPayable Copy
Off PageConnectorDepartmentPurchasing
Off PageConnectorReceiving
Off PageConnector
Accounts Payable
Purchasing
DepartmentCopy
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Purchase Order Policy and Procedures
Purchase Order Authority Policy
Purchases
Only supervisory personnel are permitted to make purchases on the company behalf. Allpurchases over $100.00 require a Company Purchase Order. The controller issues Purchaseorder books.
Purchase Orders and Approval
Supervisory personnel may sign purchase orders up to $1,000.00. A member of managementmust authorize any purchase over $1,000.00 and under $10,000.00. A Company officer mustsign all purchase orders over $ 10,000.00. All purchases over $25,000 are subject to the
company procurement procedures. All information required on the Purchase Order Form mustbe completed including the proper coding. Once the purchase order is completed, one copy isgiven to the vendor and the other copy is turned in with the employees paperwork.
Small Tools
Tools Rental
Supervisors may rent small tools as needed and in accordance with the purchasing policy.
Purchasing Small Tools
Project Managers are authorized to purchase small tools in accordance with the purchasingpolicy. Small tools shall be charged directly to the job.
Purchasing Flowchart7
ID: Purch-200 Purchase Orders Purchasing
Effective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 2
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Equipment Rental Policy
This policy provides direction to those who need to rent equipment and defines how theequipment cost will be accounted for by the Company. The objective of this policy is to controland efficiently utilize rental equipment. All equipment rentals shall be closely monitored. TheCompany differentiates between short and long term rentals.
Short Term Rentals
Short-term rentals are those rentals less than 1 month in duration. Project Managers areauthorized to rent short-term rentals. All costs for short-term rentals shall be charged directlyto the job. Do not place equipment numbers on the machine.
Long Term Rentals
Long term rentals are those rentals that will exceed 1 month. Only the equipment managerand any vice president are authorized to rent long term rentals. Equipment numbers arerequired on all long term rentals. All equipment costs will be charged to the equipment and arate shall be charged to the job using the equipment.
Purchasing Flowchart8
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Purchasing Card Policies and Procedures
Overview
Purchasing Cards, or P-Cards, are credit cards issued to authorized employeesto make purchases for the company. The proper use of P-Cards helps ourbusiness operate more efficiently and reduce costs.
This document describes the proper use of P-Cards.
Definitions
Cardholder
Cardholder means the name of the employee that appears on the P-Card.
Policies
Purchasing Cards may be used for small purchases up to 2,500.
Purchasing Cards may not be used to purchase temporary or contract laborwhich requires 1099 reporting.
Authorized Card Use
Only Cardholders are authorized to use P-Cards.
P-Card authority can not be delegated.
Cardholders are responsible for all use of their P-Card.
All purchases must comply with the purchasing, purchase order, travel, andaccounts payable, and procurement policies and procedures
Un-Authorized Use
Cash Advances of any type are prohibited.
ID: Purch-300 Purchasing Cards PurchasingEffective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 3
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Charges for meals must be supported by an approved travel itinerary.
P-Cards shall not be used for personal purchases or identification
Cardholder Recordkeeping
All Cardholders shall keep a Purchasing Log.
Cardholders are responsible for retaining the documentation necessary for proofof purchase. This includes the invoice, shipping documents, and CustomerCopy of the charge receipt.
Purchase Orders
Purchase Order must be issued according to the Purchasing Policy, so we cantrack and process commitments and payments. Purchase Order numbers shallbe posted on to your Purchasing Log.
Procedures
Monthly Statement Review
All Cardholders must check each transaction against the purchasing log andsupporting documentation. The original documents shall be attached to themonthly statement. A copy of the purchase log reconciliations shall also be
attached to the monthly statement.
Any transaction with missing documentation requires a written explanation for themissing documentation. Include the vendor name, date, description of purchase,and reason for the missing documentation.
The monthly statement, original supporting documentation, and reconciliationshall be turned in to the appropriate supervisor for approval.
The approving supervisor shall review the documentation, purchasing log, andverify all merchandise receipts. The approving supervisor shall sign the monthly
statement and submit the package to accounts payable.
Returns
Returns are the responsibility of the Cardholder. Returns must be noted on theP-Card log and shipping documentation attached to the monthly statementreview.
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Disputes
Disputes must be noted on the P-Card log. A Dispute form must be attached tothe monthly statement review.
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Procurement Policy
Purpose
The purpose of this document is to describe the organizations policy regardingpurchases in excess of those covered by the purchasing policy. This includeslarge and capital purchases in excess of $25,000.
Policy
It is our policy that all purchases over $25,000 for a specific project or purposerequire competitive procurement. This includes the aggregate of purchases for aparticular project or purpose. Competitive procurement includes procurement bycompetitive bidding, negotiation, and the use of independent appraisals to helpus ensure fair value is received.
The following contract categories are governed by this policy without exception:
AdvertisingDesign and Engineering services
Construction and Project Management servicesAccounting, Legal, and Consulting servicesLease AgreementsInsurance Agreementsetc.
ID: Purch-400 Procurement Policy Purchasing
Effective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 4
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Board Approval
The following types of contracts and documents require the prior approval of theBoard:
All contracts for the acquisition, sale, or conveyance of real estate.
Contracts for the lease of real estate which have an annual cost of $25,000 orgreater, or which have a term of three years or greater
The acquisition of goods or services when the projected cost is $25,000 orgreater, or transactions of $10,000 or more
Capital outlay projects or change orders having a total projected cost of $25,000or greater
Authority
Procurement and Purchasing is authorized by the Delegated Authority Policy.
All contracts shall be awarded as specified by the Delegated Authority Policy.
Purchasing is implemented by the Accounts Payable Procedures, DisbursementApproval Procedure, P-Card Policies, Purchase Order Policy and Procedures,and the Procurement Policy and Procedures.
Code of Conduct and Business Ethics
All employees and Directors are expected to comply with our Code.
Responsibilities
Officers and senior managers of the organization are responsible for:
Executing contract documents in accordance with the Delegated Authority Policy
The VP Operations and Financial Controller shall maintain a list of approvedcontractors and vendors.
The Procurement Agent is responsible for:
Ensuring the technical specifications sufficiently describe the required quality toallow for fair competition.
Providing adequate terms for delivery, inspection, acceptance, payment,warranty, etc
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Planning, scheduling, and implementing the procurement to ensure the processis smooth and effective.
Managing contracts and Issuing contract awards, issuing purchases orders,notices to proceed, and stop notices, etc
Managing the purchase and ensuring the quality at delivery meets the contractspecifications.
Documenting vendor performance
The Project Manager is responsible for proper execution and completion of theproject according to the Project Management Polices and Procedures.
Methods of Procurement
Independent Appraisals
All real estate purchases and purchases of a one of a kind item require anindependent appraisal.
Sole Brand
The organization may approve sole brand purchasing if the brand selection isjustified and not simply to purchase a favored product. For example, the ITdepartment may want all laptops or cell phones to be of the same brand andconfiguration for support purposes. Or the Equipment Division may want
standardization in the fleet for inventory and maintenance reason.
If you need to implement sole brand purchasing, you must submit a Sole BrandJustification Form for approval by the Financial Controller.
Sole Source
In instances when only one source is available, document the situation. Approvalfor sole source purchasing must be obtained by submission of a Sole SourceJustification Form to the Financial Controller.
Competitive Bidding
Competitive Bidding from three qualified vendors is required for all projects inexcess of $25,000. No contract, other than the lowest bid, shall be awardedwithout the approval of the VP Operations or Financial Controller. Rational for allcontract awards shall be documented.
Negotiating with the Lowest Responsible Bidders
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Sometimes it is in the best interest of the organization to negotiate with thelowest bidders. Examples include Insurance and Design Build type contracts.You must submit for approval by the Financial Controller a Negotiated BidderJustification Form prior to contract award.
Competitive Negotiation
Professional Services shall be retained on a competitively negotiated basis.
Purchase Orders
Regardless of the Procurement Method used to make a purchase, a PurchaseOrder must be issued so we can track and process commitments and payments.Attach bid results or approved justification forms to the purchase order to supportyour purchasing determinations.
Requirements
Retainage
All construction contracts shall include a provision for the withholding of a 10%Retainage until final project acceptance. Retainage shall be paid with finalpayment.
Bid Bonds
All bids and proposals for construction contracts in excess of $25,000 shall beaccompanied by a bid bond for 5% of the bid amount to ensure the bidder willenter into a contract for the work bid.
Performance bonds
Performance bonds ensure the work will be completed according to the contractand specifications. The organization requires Performance bonds in the amountof the contract for all bid work.
Payment Bonds
Payment bonds help ensure that prime contractors pay all material, subcontract,labor, and equipment suppliers furnishing work on the contract. Payment bondsin the amount of the contract are required for all contracted construction work.
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Internal Control Purchasing
Overview
This document provides a checklist to review internal control over purchasing.
Division of Duties
Purchasing and receiving functions are separate from invoice processing,accounts payable and general ledger functions.
Disbursement approval is separate from general ledger entry.
Approval
There is a delegated authority policy which authorizes specific individuals toauthorize purchases and requisitions.
All expenditures are approved in accordance with the company written AccountsPayable and Purchasing Polices and Procedures.
A policy and procedure for competitive bidding is in place for purchases over aspecified amount.
Sole Source purchasing is justified by notation on Purchase Orders, Contracts,and Requisitions for purchases over a certain amount.
General Controls
Purchases are reviewed and tested for reasonableness of derived benefit.
If Purchase Orders are used, they are issued sequentially with numbers.
It is company policy that all Purchase Orders are priced, signed, and coded.
Purchase Orders and Requisitions are actually reviewed to ensure the coding iscorrect.
Vendor invoices are received and reviewed by the accounting department first.
ID: Purch-500 Purchasing Controls PurchasingEffective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 2
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The accounting department compares the invoice to the purchase order andreceiving documentation.
Bonds and retainage are used to ensure completion of construction contracts.
The project manager reviews and signs all purchase orders.
Duplicate copies of invoices are destroyed to prevent duplicate payments.Vendor invoices are received at a central location.
Someone periodically reviews and compares signatures on purchasingdocuments.A procedure is in place to review backorders and prevent duplicate purchases.
If Blanket Purchase Orders are used, proper review procedures are in place toprevent abuse.
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Receiving Flowchart
Flowchart Name18
ID: Receive-100 ReceivingFlowchart
Purchasing
Effective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 2
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Flowchart Name19
Start
PurchaseOrderFrompurchasing withquantitiesempty orblacked out
Goodsreceived
andcounted
ReceivingReports
Prepare Reports
To Departmentthat issuedrequisition
To Purchasing
To AccountsPayable
Off PageConnector
Inventory Control
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Internal Control Receiving and Warehousing
Purpose
This document provides and internal control checklist for the receiving andwarehousing functions.
Checklist
Asset Protection and Division of Duties
The Company has written Inventory Management and Control Procedures.
Receiving of materials and supplies is assigned to individuals.
One person is not responsible for receiving, disbursement and preparation oftransaction documentation.
There are adequate controls to ensure that an individual cannot initiate apurchase and authorize payment without detection.
Someone monitors the receiving and warehousing functions.
The staff assigned to monitor the receiving and warehousing functions has therequisite knowledge to adequately monitor the functions.
Receiving documentation is prepared for all deliveries.
There are inventory records that accurately account for items received and
disbursed.
Deliveries of materials and supplies are accepted only at secure locations.
There are separate areas for receiving, storing, staging, and shipping ofinventories.
Delivery areas do not create traffic or safety hazards.
ID: Receive-500 Receiving Controls PurchasingEffective Date: 01/01/10 Last Revision: 01/01/10 Version: 10.0 Total Pages: 3
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After hour access to storerooms is limited.
The Company does not receive personal materials for employees.
Receiving of Goods
The receiving area is properly equipped to receive material.
Carrier information is logged, quantities of packages noted, and bill of ladingsigned.
Damaged Goods
Exterior: Packages are visibly checked for damage.
Interior: The warehouse personnel are responsible for the immediate inspectionof the material.
A damage claims procedure exists to notify accounting, the vendor, shippingcarrier and the insurance carrier if necessary.
Items not Conforming to Specifications
Material received is checked for quality and conformance with any specifications.
Special Receipts
Procedures exist for the receipt of any hazardous, live, and perishable materials.
Back orders and Partial Deliveries
There are follow-up procedures for back orders and partial shipments to assurereceipt of proper quantities?
Acceptance of items delivered is required by noting what and how many itemswere received on the copy of the receiving report. The receiving report copy issent to Accounts Payable.
Returns
A procedure exists to notify accounting of returned items to ensure proper creditor prevent inaccurate payment.
Previously transferred/shipped and unused materials and supplies are returnedto the warehouse inventory.
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Items that are inactive for twelve months are considered for disposal.
Systems and Processing
Inventory receipts are entered into a computerized system.
There are automatic reorder points for stock replenishment?
Inventory items are actually being ordered in the right quantities and at the righttimes/intervals to control the amount of inventory on hand without experiencingout of stock conditions.
Inventory transfers are properly coded and recorded.
Purchase orders and receiving documentation is verified for received material to
ensure proper payment of invoices?
Physical Inventories are actually taken.
Physical inventory adjustments are reviewed and approved by persons who donot maintain custody of inventories.