Purchasing Card (PCard)

Best Practices

 

                      Information complied and prepared by: Brenda Harrell Finance and Accounting [email protected] 352-392-1321 x627

 

Last updated on 12/4/2008 at 11:43:31 AM 

 

 

Table of Contents   Introduction

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Are the duties for ordering and purchasing products and departmental reconciliation separated between two or more employees

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Recommended Separation of Fiscal Duties

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Separation of Duties Related to the PCard

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Do department procedures ensure that the best combination of quality, total price, and delivery are evaluated when acquiring goods or services?

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Are vendor invoices processed timely?

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Do invoices receive appropriate supervisory approval before payment?

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Are returned purchases controlled in such a manner that the department receives the credit or refund due the department?

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Does the Dean, Director, or Department Head approve (by signature) the issuance of PCards?

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Does the department generate “Monthly Paid Charges” reports for each cardholder; obtain supporting receipts; and obtain the cardholder’s signature?

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Are PCard transactions authorized by an Approver, reconciled timely, and signed by the cardholder?

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Does the department management periodically review a list of departmental cardholders and their limits to determine if changes need to be made?

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Is there a place that has PCard frequently asked questions & answers?

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Is there a place that lists allowable purchases for the PCard?

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Who should be an approver of the PCard transactions?

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How do I approve a PCard transaction?

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How do I dispute a PCard transaction?

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Can a student obtain a PCard?

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Why do I need to reconcile my department’s PCard transactions monthly?

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How do I reconcile my PCard transactions monthly?

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Are there restrictions on which funds that can be used for PCard purchases?

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If my budgeting cost center allows the purchase of foods, what kind can I buy on a PCard (coffee, luncheon goods, break room equipment, & supplies)?

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Does my PCard expire?

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What do I do if a receipt is lost?

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What happens if I cannot resolve the PCard charge on the current aging report?

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What is the difference between the billing address and the shipping address?

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How do I select the appropriate Category Code and GL account to use for my PCard charges?

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Can I make a purchase from other UF departments with the PCard?

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Can another person use my PCard?

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How can I be sure that I have enough budget for the purchase?

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How do I identify any PCard budget errors?

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How do I correct the different types of budget errors?

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How do I minimize the risk of fraud when using the PCard?

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Appendices

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Appendix A – Special Criteria for Expenses Per Fund

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    Introduction All PCard purchases must have a clear business purpose and be permitted by the funding source. Remember all PCard transactions are subject to review by the PCard Team. The information contained in this manual is to help the Departmental Administrator approve, review, and reconcile PCard transactions as well as help to answer questions.  

 

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  The following nine questions are included in the Purchasing and Disbursements section of the Internal Control Checklist (from Internal Control Class, PRO303). The checklist can be found on the Office of Audit and Compliance Review website at http://oacr.ufl.edu/interal_control.html.

1. Are the duties for ordering and purchasing products and departmental reconciliation separated between two or more employees? ***See the following flow chart of recommended separation of duties. ***

 

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Initiate Requisitions

Receive Purchased Items

Processing of Invoices for Payment

Reconciliation of Departmental Ledgers

It is recommended that there be four separate people performing these duties when purchasing items.

Initiate Requisitions, Receive Purchased Items, & Processing of Invoice for Payment

Reconciliation of Departmental Ledgers

However, some departments can not separate all duties due to staffing issues. Above is the minimum required separation of fiscal duties.

 

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Separation of Duties Related to PCard

Cardholder Decides to Make Purchase.

Cardholder verifies there is budget Available. Cardholder verifies that the purchase is Allowable.

Cardholder Makes a Purchase

Cardholder gives invoice to Approver

Approver Receives Charge and Reviews Invoice and System Amount

What if the approver is a PCard holder as well?

If an employee is a PCard holder and a PCard approver, that person can not approve his or her own PCard charges. This must be completed by a different approver in the department.

Pcard Holder gives invoice to supervisor

The PCard Holder/ Approver makes a purchase.

Another department person must become an approver to review the charge and amount

       

 

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2. Do department procedures ensure that the best combination of quality, total price, and delivery are evaluated when acquiring goods or services? Procedures for the unit must be adjusted to ensure that this best combination is evaluated so that the University can obtain the best quality and total price available. 3. Are vendor invoices processed timely? PCard holders MUST give receipts to the verifiers/approvers within 3 business days from the PCard holders. PCard transactions must be approved by the department within 8 calendar days.

4. Do invoices receive appropriate supervisory approval before payment? All invoices from PCard purchases must be approved electronically in the myUFL system before the payment can be processed. 5. Are returned purchases controlled in such a manner that the department receives the credit or refund due the department? If an item that has been purchased by the PCard is returned to the vendor, the PCard holder must notify his or her approver. The approver is then required to verify that the credit of the purchased item is posted in the system. 6. Does the Dean, Director, or Department Head approve (by signature) the issuance of PCards? A PCard can only be issued to an individual UF employee after the Dean, Director or Department Chair authorization of the request. 7. Does the department generate “Monthly Paid Charges” reports for each cardholder; obtain supporting receipts; and obtain the cardholder’s signature? The Monthly Paid Charges report must be run every month to verify the transactions that have occurred on an individual PCard. These transactions must be reconciled to the report.

 

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  8. Are PCard transactions authorized by an Approver, reconciled timely, and signed by the cardholder? PCard transactions, or purchases, must be authorized by an Approver, reconciled timely during your departmental reconciliation and all receipts from the purchases must be signed by the PCard holder. 9. Does the department management periodically review a list of departmental cardholders and their limits to determine if changes need to be made? Department management is required to annually review a list of cardholders for the entire department to determine if there are any cardholders that have been terminated, cardholders that no longer need a PCard, or cardholders that may need a purchasing limit increase or decrease.

 

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Is there a place that has PCard frequently asked questions & answers?

Yes, many questions are answered on the PCard website: http://purchasing.ufl.edu/main_purchasingcards-faq5-1-06.asp.

Is there a place that lists allowable purchases for the PCard?

There is list of items available on the purchasing website at http://www.purchasing.ufl.edu/PCD_WBT/allowable5-9-06.asp.

Who should be an approver of the PCard transactions?

Best business practices at the University of Florida call for at least two employees to be involved in every transaction. Generally, one employee initiates the transaction and a second employee approves it. However, the PCard Team believes in order to discourage intentional abuse or misuse of resources that it is better to have three people involved in every transaction – the employee who initiates the transaction (cardholder), a reconciler (or verifier) typically the person who enters the description and chartfield, and the approver. This increases the likelihood that errors will be identified and corrected in a timely basis. The approver of a department can be determined by reviewing the following document http://www.erp.ufl.edu/training/docs/TheApproverRoleInstructionGuide.pdf.  

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How do I approve a PCard transaction?

The tutorial found at http://www.purchasing.ufl.edu/Reconciler%20Trng%20Verification_files/PS_Rec_Trn/index. htm provides detailed information on how to approve a PCard transaction.

How do I dispute a PCard transaction?

The tutorial found at http://www.purchasing.ufl.edu/pcd_wbt/disputes.asp provides detailed information on how to dispute a PCard transaction.

Can a student obtain a PCard?

PCards are normally not issued to students. However, if a student is a University employee and the department deems it necessary for the student to have a PCard, then the student may be issued one.

 

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Why do I need to reconcile my department’s PCard transactions monthly?

PCard transactions need to be reconciled monthly because cardholders and departments are responsible for inappropriate use of the card. Additionally, departments need to ensure that the charges have been paid from the proper funds. Monthly reconciliation ensures that all the charges paid actually belong to your department and demonstrates to outside auditors that your department has good internal controls.

How do I reconcile my PCard transactions monthly?

        The first step is to run the PCard Monthly Report.

 

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Sign on to myUFL and click on Enterprise Reporting and then Access Reporting.

     

 

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Click on Financial Information:

   

 

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Then click on the Purchasing Hyperlink:

       

 

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Select the PCard Paid Charges Aging Report:

     

 

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Select the month for which you want to run the report the fiscal year, and the Business Unit. Note: the Business Unit in this case is the first four digits of your department ID.    

   

 

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This is what the selection will look like when finding your information. You can select one cardholder or you can choose the Select all link to run the report for all cardholders in your business unit.  

   

 

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If you generate the report for all cardholders in your department, select all cardholders names and click finish. It will generate a full report with a break for each cardholder for your department. At the top of the report there are arrows to be able to scroll through the report pages. For this example there are 34 pages.  

    Each cardholder report must be verified with the actual invoices that have been turned into the approver and reconciled. For example, the Mr. Paper charge for 3492 Copy paper for $210.16 must be matched to a Mr. Paper invoice for that exact amount and sent to fax imaging with the voucher number if this has not already been done.

 

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Each packet is then signed by the cardholder and the reconciler/approver. Even though it is not required to print the entire document, the signature page must be printed for each cardholder and must be maintained in the department with the signatures verifying this process.  

        Are there restrictions on which funds can be used for PCard purchases?

As with all purchases there are restrictions on what charges can be applied to a departmental cost center. See Appendix A for a definition of restrictions by fund code and to find more information, please attend PRO302 Color of Money: A Guide to How UF Moneys May be spent at UF.  

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If my budgetary cost center allows the purchase of foods, what kind can I buy on a PCard (e.g. coffee, luncheon goods, break room equipment & supplies)?

It has less to do with what and more to do with why. The purchase of anything on the PCard must have a clear business purpose that benefits the university and supports the mission of your business unit. The question becomes "How does the purchase of coffee, luncheon goods, break room equipment & supplies directly benefit UF and my department?" The PCard cannot be used for any meal purchases with DOCE (Department of Continuing Education) funds being the only exception. The PCard cannot be used for meal purchases while traveling. If using non-DOCE funds, a list of all participants for an event must be provided and it can only be for snack foods and not meals. State appropriation funds can never be used for food purchases.

Does my PCard expire?  

Yes a PCard will expire. Like all credit cards there is an expiration date on the card. A new PCard will be issued to you before the expiration date so that you will be able to continue your purchases.

 

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What do I do if a receipt is lost?  

Every attempt should be made to recover a receipt that has been lost. Often companies will be able to send you a copy of a receipt that has been lost, even if it is for a hotel. If all avenues have been exhausted, a replacement receipt form must be completed and signed by both the cardholder and the supervisor. This form should be used rarely and must be filled out COMPLETELY. The form is located at http://purchasing.ufl.edu/main_purchasingcards.asp.             What happens if I cannot resolve the PCard charge on the current aging report?

PCard charges are required to be reconciled at least monthly. However, a department can view their aging reports before month-end to check for erroneous charges at any time. If you can not resolve the charge by contacting the vendor directly within a month (the University has 60 days to file a dispute), a dispute form must be completed. This may be found at http://purchasing.ufl.edu/main_purchasingcards.asp. Every effort must be exhausted before completing this form. If additional assistance is required from the card issuer, you must complete the dispute form. Be sure to record all actions taken to correct the erroneous charge.

 

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What is the difference between the billing address and the shipping address?

For most cardholders the billing address for the PCard is the address from which the PCard was issued, not your department’s address. The billing address is: 109 Elmore Hall P.O. Box 115250 Gainesville, FL 32611-5250 Telephone Number: 352-392-1331 This is because the actual charge will go directly to purchasing to be paid and not your department. A way to think of this is to compare with your own credit card process. When a charge is made the billing address provided is where the billing statement will be mailed. Technically, Purchasing Services is the receiver of the statement to “pay the bill.” The information online is your ability to approve “the bill” before it is paid by Purchasing. The ship to address is your department’s address which indicates where the merchandise is sent.

How do I select the appropriate Category Code and GL account to use for my PCard charges?

A list of purchasing category code and their associated GL Account is located on the Purchasing website. There is an Excel Spreadsheet – Category/Account reference Spreadsheet for PCard Verifiers/Approvers at the PCard website http://purchasing.ufl.edu/main_purchasingcards.asp#category. GL Account definitions are located at http://fa.ufl.edu/ga.

 

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Can I make purchases from other UF departments with the PCard?

Yes. If the charging department accepts credit cards as a payment method, the UF PCard is available to use.

Can another person use my PCard?

Absolutely not. You must treat your PCard as if it were your own credit card and not share it with others. This card is assigned to you and you are responsible for all transactions.

How can I be sure that I have enough budget for the purchase?

There is a class titled PST050 Budget and Commitment Control which explains how to look up available budget for your departmental cost center. If you need to make the purchase immediately, contact your college business officer. If he or she is not available, contact General Accounting at [email protected] to speak with someone who will guide you through the process of checking your budget. Once the chartfield information is input into the system, there is an overnight process where the charge is budget checked to be either valid or come back as an error.

 

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How do I identify any PCard budget errors?

The query UF_AP_BUDGET_ERROR can be used to identify PCard related budget errors.

 

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  Go to PeopleSoft > Financial PeopleTools

 

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Reporting Tools

 

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  Query Viewer

 

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  Copy and paste the name of the query in the “begins with” box and click on search, then click on the hyperlink to run the Excel version..

 

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  Type in: a. Set ID = UFLOR b. Dept ID = Your Department ID, example 60150000

 

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This brings up a list of all types of budget errors for your department. This includes both regular vouchers and PCard vouchers that are in error.

Note: For additional information on Commitment Control review the MyUFL ToolKit at http://hr.ufl.edu/training/myUFL/toolkits/budget.asp or attend the PST050 Budget and Commitment Control class.

 

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How do I correct the different types of budget errors?

a. If the message is “Exceeds Budget Tolerance” • You must either get more budget by submitting a request, moving budget to the appropriate category, if available; or bringing in more cash into your fund; or change the chartfield string to a different combination. b. If the message is “No Budget Exists”: • Then you have input the incorrect chartfield. You must change the chartfield string. c. If the message is “Budget Date Out of Bounds” or “Budget Closed” • The grant or project that you have input into the chartfield string has ended and the project can no longer be charged. If you have requested an extension and that extension has not been input yet, contact your C&G office if you have any questions. If you have any questions please contact Purchasing at [email protected].

How do I minimize the risk of fraud when using the PCard?

Proper PCard security is an important factor in preventing fraud. The following are a few best practices to minimize this risk: a. Notify the PCard Team when a PCard is no longer needed. When a cardholder is terminated, changes jobs, or their card is otherwise no loner needed, send an email to [email protected] requesting that the account be closed. It is possible to transfer the card to the new department with the permission of the new department. Cancelled cards do not need to be returned to the PCard Team, but should be destroyed and disposed of. b. Notify the PCard Team when your reconciler/approvers are terminated or transfers departments so that the person’s access to processing transactions can be deleted. c. Notify the PCard Team if you will not be using your PCard for an extended period of time so that the card may be temporarily suspended. This does not close the account; it only prevents charges from being made. When the time comes to use  

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  your card again, send an email to [email protected] asking that the suspension be lifted. d. Do NOT allow anyone else to use your PCard.

e. When placing orders online, use only secure web addresses. Look for the URL addresses that start with https://, for pop-ups that indicate that you are being redirected to a secure connection, for the locked padlock symbol, and for SSL Certifications such as VeriSign and DigiCert. Also never email or fax your PCard information. f.

 

Ensure that PCard limits are appropriate for the cardholder’s spending pattern. If the cardholder has a $2,000 single transaction limit and normally make charges that are $1,000 or less, request to have the limit lowered to $1,000. The same would apply to monthly limits if the cardholder regularly does not utilize their entire monthly limit. In order to request a reduction to a cardholder’s spending limits, email the request to [email protected].

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Appendices

 

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Appendix A

Specific Criteria for Expenses by Fund Suggestion – Attend Color of Money Class, PRO302 to understand the sources of funds for the Fund codes. Fund 101, 102 and 103: State Appropriations According to the University Directives and Procedures, state appropriations must be expended in accordance with State Guidelines found at http://www.fldfs.com/aadir/reference_guide/reference_guide.htm. Generally these funds can be spent for a variety of relevant operating expenses – salaries, office supplies, travel, etc. No purchases can be made for the personal convenience of employees. A clear business purpose must exist. Fund 201 – 209, 211 - 212: Sponsored Projects The funds 201 – 209 are generally more restrictive in that the expenditures must meet specific sponsor guidelines. Expenses that would normally not allowed in state appropriated funds, such as food purchases, and may be allowed if the research requires such purchases to be made. Expenditures in fund 201 should also be in compliance with Cost Accounting Standards (CAS). For more information, please visit http://fa.ufl.edu/costanalysis/accounts-not-charged.asp that lists accounts that are not to be direct charged to federal awards. Funds 211 – 212 are cash based funds. 211 funds are indirect costs returns and 212 fund residuals are funds that were not needed to fully execute the requirements of the sponsored project. These funds are restricted and may be used only to support research. Fund 221 – 222: IFAS Federal Funds The Institute of Food and Agriculture Sciences also receives federal appropriations that are much like state appropriations. These funds are allocated by the appropriate dean within IFAS. The use of these federal funds must comply with federal guidelines. You must contact the appropriate IFAS Dean Office for more information on these funds. Fund 141 – 163: Auxiliary Funds Auxiliaries’ money is generated by sales and services of an approved business type activity of the University. Auxiliary funds can be used for any goods and services necessary to fulfill the programmatic mission of the auxiliary. However, there are some funds that are restricted to certain purchases as identified in the funds title. Fund 162 – This fund is used to deposit revenue from the material and supply fee established and charged on select courses. Departments will expend these revenues for the sole purpose of material and supplies specific to the courses charged.

 

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Fund 163 – This fund is used to deposit revenue from the equipment use fee established and charged on select courses. Departments will expend these revenues for the sole purpose of equipment purchase, replacements, and repairs for equipment specific to the courses charged. There are those items that may not be purchased with any of these funds, such as alcohol, congratulatory telegrams, entertainment for visiting dignitaries, first class travel, and flowers and/or telegraphic condolences.

Fund 171: Component Unit What is a component unit? A component unit is also known as a direct support organization or an affiliated organization. This is an entity organized and operated exclusively to receive, hold, invest and administer property and to make expenditures to or for the benefit of the University. These organizations cannot exist by themselves without the University. The expenditures in these funds are guided by a Memorandum of Understanding and donorspecific restrictions as to how the funds can be used. All expenditures must have a written justification that reflects purpose and benefit. Generally, expenditures need to be reasonable and benefit the University and its mission.

Funds 179 – 186: Miscellaneous/Incidental Fund code 179 is other miscellaneous. This is a cash-based fund that does not have a standard funding source. Use of these moneys should follow the same guidelines as appropriations and must be expended in accordance with the State guidelines established in the UF Directives and Procedures. If the revenue is donated use, it must comply with any donor-specific restrictions.

Fund Codes 181 and 182 are IFAS incidental funds. These are for revenues made from sales of certain goods and services. Research related revenues would be in fund 181 and extension related revenues would be in fund 182. These funds are for IFAS only. Fund Codes 185 and 186 are Health Science Center Trust Funds. These are also used for revenues collected from the sales of certain goods and services. Fund Code 185 is used by all six colleges in the Health Science Center and Fund code 186 is reserved for only the Vet Med Teaching Hospital’s use. The spending rules that apply to these funds are those of auxiliary spending.

Fund 279: Restricted Incidental Fund  

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This fund is used when the donor/grantor provides the funds for a specific purpose and the transactions need to be recorded as restricted.

Fund 910: AEF This fund will no longer be used after June 30, 2009 and transactions will be in Fund 171. The source of funds beginning with HSC will have the same restrictions as below. Academic enrichment funds from the faculty practice plans are the fees charged for services delivered by the Health Science Center clinics in the various colleges. They can only be expended for purposes consistent with and supportive of the objectives of the respective college, the Health Science Center, and UF and in accordance with the approved faculty practice plans. Items that should not be paid from AEF include: personal or other expenses not having a direct business purpose associated with the mission of the college and University; expenses or reimbursement for faculty or staff parties, luncheons, or gifts over a certain value or gift certificates for any purpose. Please be aware that some colleges have additional restrictions or guidelines governing how these funds may be used. Please visit http://www.med.ufl.edu/finance/help/docs/general/aef_expenditure_policy_032105.pdf for more information.

 

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