Copedia Purchasing Manual

8/3/2019 Copedia Purchasing Manual

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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.


ID: Purch-200 Purchase Orders Purchasing



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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.



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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



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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



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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.

Documents

Copedia Purchasing Manual