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HomeMy WebLinkAboutPROCUREMENT CARD PROGRAM E City of %Q rth u r Texas Procurement Card Program Policies and Procedures Manual January, 2010 TABLE OF CONTENTS Procurement Card Program — Policies and Procedures Manual POLICIES 4 OVERVIEW 4 DUTIES AND RESPONSIBILITIES 5 Program Administrator Department Liaison Cardholder Department Director PROCEDURES 6 MAKING APPLICATION 6 CARD ISSUANCE 6 CARD ACTIVATION 6 PROCUREMENT CARD PURCHASES 6 PROCUREMENT CARD CONTROLS 7 Credit Limits Transaction Limits Restricted Vendors, Materials, or Services MAKING PURCHASES 8 BUY PORT ARTHUR 8 Receiving Supplies and Services Returns Credits Disputed Charges Sales Tax Declined Transactions MAINTAINING THE PROCUREMENT CARD 11 Procurement Card Transaction Log Receipts Inter - Departmental Transactions Card Reconciliation Payment of Monthly Statement SECURITY OF THE PROCUREMENT CARD 13 Lost or Stolen Cards Misuse of the Procurement Card CANCELING THE PROCUREMENT CARD 14 Employee Transfer Employee Termination CUSTOMER SERVICE 14 CONTACT INFORMATION 15 Program Administrator JP Morgan Chase Bank Procurement Card Policies and Procedures Manual Page 12 APPENDIX A MISCELLANEOUS FORMS EMPLOYEE APPLICATION EXHIBIT A CARDHOLDER AGREEMENT EXHIBIT B CHANGE OF CREDIT /TRANSACTION LIMIT EXHIBIT C STATEMENT OF DISPUTED ITEMS EXHIBIT D TRANSACTION LOG EXHIBIT E LOST /STOLEN CARD REPORT EXHIBIT F INTER - DEPARTMENTAL TRANSACTION APPROVAL EXHIBIT G PROCEDURES FLOW CHART EXHIBIT H APPENDIX B PROCESSING TRANSACTIONS TO A SINGLE ACCOUNT PROCESSING TRANSACTIONS TO MULTIPLE ACCOUNTS APPROVING TRANSACTIONS Procurement Card Policies and Procedures Manual Page 1 3 CITY OF PORT ARTHUR PROCUREMENT CARD PROGRAM POLICIES AND PROCEDURES POLICIES OVERVIEW Welcome to the City of Port Arthur's Procurement Card (P -Card) Program. The purpose of the City of Port Arthur Procurement Card program is to establish an efficient, cost - effective method of purchasing and paying for low- dollar transactions made at the department level. The card will be primarily used in place of petty cash, small regular purchase orders, field orders, and all other credit cards. This card will also be used for travel expenses (i.e. hotel booking, etc.). If used to its potential, the program will result in a significant reduction in the volume of purchase orders and related documentation including invoices and checks. The Procurement Card can be used with any supplier that accepts MasterCard as a form of payment. The success of the Procurement Card Program and its continuing use depends on the participation and cooperation of all City employees that will be issued P- Cards. This card policy is not intended to replace, but rather supplement existing purchasing policies. Please read and follow the program guidelines as specified in this manual. This P -Card Manual provides the general guidelines for using the Procurement Card. Please read it carefully. Your signature on the Cardholder Agreement shows that you understand the intent of the program and agree to follow the established guidelines. The following important points should be reviewed before using the Procurement Card: 1. Your Procurement Card is issued in the name of a specific individual. All purchases made on the Card are the responsibility of the individual. You are responsible for the security of the Procurement Card and the transactions made with it. Inappropriate use of a Procurement Card may be cause for disciplinary action to be taken against the cardholder. 2. The Procurement Card may be used at any vendor or service provider that accepts MasterCard, is participating in the program and is not on the restricted list. It may be used for in -store purchases, mail, on -line and telephone or fax orders. 3. The Procurement Card may be used to purchase supplies and services less than the Single Transaction Limit that was established. 4. Use of the card must not exceed the credit limit assigned to the Procurement Card in a given month. 5. Each cardholder must reconcile the statement received from JP Morgan Chase Bank to ensure all charges are accurate. Statement reconciliation needs to be completed within five (5) days of receipt of your statement. 6. The Procurement Card is not intended to be used to avoid or bypass appropriate purchasing or payment procedures. This program compliments the existing processes available. 7. The Procurement Card is not for personal use. 8. The Procurement Card must be returned to the Program Administrator upon an employee's transfer or termination of employment. The employee's final paycheck will be withheld until the Procurement Card is returned to the Program Administrator. Procurement Card Policies and Procedures Manual Page 1 4 DUTIES AND RESPONSIBILITIES Program Administrator A Program Administrator will be designated by the Finance Department for questions, issues and administration of the program. This person will be knowledgeable in every aspect of the program and as such shall be responsible for the proper training of all Department Liaisons and Cardholders in understanding and utilizing the reports, statement, and reconciliations. All Procurement Card requests to the Procurement card vendor must go through the Program Administrator. The Purchasing Manager will act as the Program Administrator for The City of Port Arthur, TX. Department Liaison Each department shall assign one (1) Department Liaison. This liaison shall be responsible for administering the Procurement Card Program at the department level. They (liaison) shall keep all documentation for the Procurement Card activities within their department, reconcile monthly statements between the cardholder(s) and Finance Department and assign account codes to transactions. The Liaison shall be completely knowledgeable about the program and are to help with the Procurement Card changes (i.e. credit limits, restrictions, codes, etc.). If questions or problems should arise about the program, the Department Liaison shall be the first person that cardholders shall make contact with. The Department Liaison shall then answer the question(s), correct the problem or, if necessary, refer the question or potential problem to the Procurement Card Program Administrator. Cardholder The cardholder is the person designated by the City to utilize the Procurement Card. The cardholder is responsible for following the guidelines provided by the City regarding purchases, selection of vendors, and security of card. Department Directors The Department Director is responsible for designating Department Liaisons and cardholders and approving monthly Procurement Card transactions of cardholders to ensure they are within City purchasing guidelines. Procurement Card Policies and Procedures Manual Page 5 PROCEDURES MAKING APPLICATION Any employee requesting a City Procurement Card must first submit an application form (Exhibit A) for approval. There are three (3) approval levels required before the Program Administrator is allowed to issue a card. The approval levels are the employee's Supervisor, the employee's Department Director and the Program Administrator. An application form (Exhibit A) is available in the Purchasing office or on the Z drive in the City Forms folder. This form should be filled out and submitted to the appropriate levels of approval. CARD ISSUANCE Procurement Cards will be distributed via the Program Administrator. When a new card is issued, the credit card vendor will send it to the Program Administrator for distribution to the cardholder. A card will be issued to a City employee only after completing the application, attending training, reviewing the Cardholder Agreement with the Program Administrator and signing a Cardholder Agreement Form. (Exhibit B) Each employee issued a card must read the entire policy and procedure manual carefully. It will explain appropriate card use, merchant participation, record keeping and reconciliation procedures. The card cannot be transferred from one employee to another as each card is assigned to an individual employee. CARD ACTIVATION Once the P -Card is received, the account can be activated by calling the toll -free number printed on the card. For verification purposes, the cardholder will have to provide information provided to the cardholder by the Program Administrator. Although the card will be issued in the employee's name, the cardholder's personal credit history will not affect their ability to obtain a card. The City is responsible for payment of all authorized purchases. PROCUREMENT CARD PURCHASES The only person authorized to use the Procurement Card is the cardholder. The card is to be used for business purposes only. Under no circumstances should an employee give their card to another employee or person to make a purchase. Unauthorized use of the Procurement Card can result in disciplinary action, including termination. The procurement card program does not circumvent the City's purchasing policies and procedures. Instead, it is designed to streamline smaller purchases that are made directly with the vendors in person or via telephone, fax, internet or mail. Procurement Card Policies and Procedures Manual Page 1 6 PROCUREMENT CARD CONTROLS Credit Limits All Procurement Cards have monthly cardholder spending limits. Limits may vary for each cardholder and will be established and approved by the Program Administrator. Each cardholder will be given information on the limits of his /her card upon signing the Cardholder Agreement. In order to change limits on any card, the Department Director must submit a Change of Credit Limit form (Exhibit C) to the Program Administrator. If required, the Program Administrator will obtain any additional approvals and then forward the request to the credit card vendor for processing. * Processing will take at least one (1) week. Transaction Limits The single transaction limit is the amount available on the Procurement Card for a single purchase. A transaction includes the purchase price, plus tax (if any) and freight. Cardholders should not attempt to make a purchase greater than his /her approved amount or split transactions in order to circumvent the single transaction limit. Any purchase above $1,000.00 requires quotations in order to receive the best price for goods and services. Card purchases will be audited to identify repetitive transactions. Changes to the transaction limit must be processed through the Program Administrator. (See Exhibit C) Restricted Vendors, Materials, or Services The Procurement Card program may be restricted from use with certain types of suppliers and merchants or materials and services. If the Procurement Card is presented for payment to these vendors or for the materials or services, the authorization request will be declined. The following are a few examples of restricted purchases. This list is not representative of all restrictions, and may change without notice. It is included for illustrative purposes only: • Alcoholic beverages • Cash advances /travelers checks • Refunds or Gift Cards • Personal items • Multiple, sequential purchases of less than $5,000 from a single vendor for similar purchases adding up to more than $5,000 • Items available through established annual contracts, price agreements or Blanket POs • Fuel, fluids and repair for personal vehicles • Sales tax except in cases where State law does not exempt Local governments • Entertainment of any kind, including the patronage of drinking establishments • Purchases that are split to stay within card transaction limits • Weapons, Firearms, Ammunition • Animals • Consulting Services • Prescription drugs or over the counter medications /drugs • Other purchases specifically excluded in other City policies or by law Questions regarding a Restricted Commodity should be directed to the Program Administrator. Procurement Card Policies and Procedures Manual Page 7 MAKING PURCHASES With the authority to purchase specific goods and services comes the responsibility to maintain adequate documentation at the source of the transaction. Documentation must support the legitimate business purpose of all transactions made with the procurement card. In addition to sales receipts, other examples of supporting documentation are: packing slips, copies of order forms or applications, or cash register receipts. All cardholders must follow the procedures below when using the Procurement Card: 1. Determine if the transaction is an acceptable use of the card, and if it is within the cardholder's spending limit. 2. Identify the supplier, call, and fax or visit the supplier to place your order. 3. If the order is by mail, specify the cardholder name, company name, department name and shipping instructions. Also, specify the Procurement Card number, expiration date and name as it appears on the card. 4. Indicate that the City is tax exempt* from sales tax and send or deliver a tax - exempt form (if required). 5. Verify pricing, tax and freight. 6. Request that a hard copy of the pricing, tax and freight be faxed to the cardholder and /or included in the shipment of supplies. 7. Request that the supplier show your name and the words "P- Card" appear on all packing lists and box labels. *Note: In some special cases (such as hotel taxes) the city is required to pay some forms of tax. If you have any doubts about the tax or if the vendor requires that tax be paid contact either Purchasing or Accounting for additional instructions. BUY PORT ARTHUR Cardholders should promote and encourage positive interactions with suppliers and attempt to use Port Arthur vendors where possible. A list of approved vendors can be obtained from Purchasing. Receiving Supplies and Services A copy of the charge slip, sales receipt or any other information related to the purchase must be kept in the receipt envelope. A vendor's entry system usually prints an automatic invoice with the processed order. Instruct the vendor not to send the invoice to the Accounts Payable Department but directly to the individual cardholder making the purchase (this will prevent duplicate payments to vendors). If a purchase is made via mail or telephone, ask the vendor to include the receipt with the goods when shipping the product. The receipt is the only original documentation specifying tax paid on the purchase. Faxed or Xerox documents cannot be accepted. If an invoice or sales slip is lost the cardholder will be responsible for obtaining a replacement original which has noted on it that it is to replace the previous invoice and identifying the invoice number and date of issuance. Procurement Card Policies and Procedures Manual Page 8 Returns Should a problem arise with a purchased item, service or charges, the cardholder should make every attempt to first resolve the issue directly with the supplier. Review of future statements is vital to ensure the account is properly credited for returns, credits and disputed charges. The cardholder should note all returned, credited or disputed items. If an item needs to return to a supplier, the cardholder will contact the supplier and obtain instructions for the return. Note that some suppliers may charge a restocking or handling fee for returns. All returns should be noted along with a notation of any restocking or handling fees. Credits If the item is accepted as returned by the supplier, a credit for this item should appear on the following month's statement. Disputed Charges The Cardholder is responsible for following up with a vendor for any erroneous charges, disputed items, or returns. The Cardholder should contact the vendor first to resolve any outstanding issues. However, a Cardholder may dispute a charge that appears on their account statement. Disputed charges can result from failure to receive goods or services, fraud or misuse, altered charges, defective merchandise, incorrect amounts, duplicate charges, credits not processed, etc. If a cardholder cannot resolve a disputed item directly with the vendor, the cardholder should obtain a Dispute Item(s) Form (Exhibit D) from Purchasing. The cardholder may use this form to dispute any transaction that appears on their Cardholder Memo Statement. If the documentation appears to be in order, the transaction will be re- posted to the account and the dispute considered closed. If the charge is suspected to be fraudulent, the card will be immediately blocked, continue to have a provisional credit (if given) and an investigation of the charge will continue. A new card will then be re- issued to the cardholder, if appropriate. If the charge appears legitimate, the transaction will then post to the new account. Sales Tax The City of Port Arthur is tax exempt from most sales and use tax as allowed by law. Your card is pre - programmed to not pay sales tax. If tax is accidentally included on the sale CHASE BANK CANNOT DELETE IT FROM YOUR STATEMENT. IT WILL BE UP TO EACH CITY EMPLOYEE TO GO BACK TO THE VENDOR AND REQUEST THAT THE TAX IS CREDITED BACK TO THE CITY. In some special cases (such as hotel taxes) the city is required to pay some forms of tax. If you have any doubts about the tax or if the vendor requires that tax be paid, contact either Purchasing or Accounting for additional instructions. Procurement Card Policies and Procedures Manual Page 9 Declined Transactions If a merchant receives a "decline" response from the Bank after attempting to process a Procurement Card transaction, Cardholders must contact the Program Administrator. The following information is needed for resolution: • Account number • Business where decline occurred • Total transaction amount declined • Date the decline occurred After determining the reason for the decline, the Program Administrator may change the Cardholder's control limits, temporarily or permanently, to process the transaction. I I Procurement Card Policies and Procedures Manual Page 1 10 MAINTAINING THE PROCUREMENT CARD Procurement Card Transaction Log The Transaction Log (Exhibit E) is intended to provide an additional method for expenditure tracking while using the Procurement Card. Each cardholder will use a new log for each week's purchases and make a record in the log each time a purchase is made. The log must be submitted to the department liaison along with a detailed description of the item(s) to recognize the purchase as an authorized one. The log will be used for audit purposes to verify that all purchases and documentation were received. Receipts Always obtain a receipt when using the Procurement Card. It is every cardholder's responsibility to ensure there is a receipt for each purchase. The receipts should be kept in a receipt envelope, with the transaction log secured to the outside. This envelope should be forwarded to the Department Liaison at the end of each day. In instances where the receipt is lost, the Cardholder must obtain a copy at their own expense from the vendor. Inter - Departmental Transactions On some occasions the need may arise for a cardholder to purchase an item(s) for an outside department. The receipt must be attached to the Inter - Departmental Transaction Approval form (Exhibit G) and forwarded to the outside Department Director for approval. The Department Director must initial the receipt, include the proper account number(s), sign the form and return it to the initial cardholders Department Liaison for processing. The Approval form must be attached to the cardholder's statement and forwarded to accounting along with all the cardholder's receipts for that month. Card Reconciliation At the end of each billing cycle, every cardholder will receive a Cardholder Memo Statement, which lists purchases made to the department account(s). Upon receipt of this statement, the cardholder should reconcile the statement with their Procurement Card Transaction Log(s) for accuracy and to ensure that all the goods and services have been received for which there is a charge. All documentation must be attached to the transaction log(s) and original statement, as well as any Inter - Departmental Transaction Approval forms and any additional information pertinent to the purchase noted before forwarding to the Department Director for verification. If Cardholders wish to keep a copy of their statements, they must keep them secure. Each week, the Department Liaison will receive an email notification that transactions are in the AS /400. Each charge will reflect the transaction date, posting date, supplier or merchant name and the total amount of the purchase. The Department Liaison must code transactions to the appropriate general ledger account code in the Procurement Card module in the AS /400. At this point, the Department Director will approve all transactions in the AS /400. Departments have five (5) working days at the end of the monthly billing cycle to have all transactions reviewed, coded, approved by the Department Director and all documentation forwarded to Accounting for processing. Although documentation is forwarded once a month, the Department Liaison may code transactions at any time up to this point. These procedures must be completed in a timely manner in order to ensure accurate and up -to -date account balances. Timely submission of paperwork is important. Delayed submission of paperwork will cause the card to be terminated. Procurement Card Policies and Procedures Manual Page 111 Payment of Monthly Statement The Accounting Division is responsible for paying the P -Card Program statement each month. Each cardholder is not responsible for the actual payment of their individual transactions or account balance; however, each Department Director is responsible for approving the purchases of each cardholder within the department. P -Card Procedures Flow Chart Need arises for commodity. Cardholder uses P -Card for purchase in person, over the phone or internet. Daily: Cardholder submits sales receipt(s) to Department Liaison. Weekly: Department Director reviews transactions and initials receipts for approval and issues appropriate account number and project or work order numbers, if applicable. Weekly: Department Liaison must code transactions to the appropriate general ledger account code in the Procurement Card module in the AS /400. Department Director will then approve all transactions in the AS /400. Monthly: (End of billing cycle) Cardholder will receive a Cardholder Memo Statement that lists purchases made for the month. Upon receipt of the statement, cardholder should reconcile the statement with their Transaction Logs (Exhibit E) for accuracy. All receipts and transaction logs for the month must be attached to the Cardholder Memo Statement. Monthly: Department Liaison has five (5) working days at the end of the monthly billing cycle to have all transactions reviewed, coded, approved by the Department Director and all documentation forwarded to Accounting for processing. (Note: Although documentation is forwarded to Accounting once a month, the Department Liaison may code transactions at any time up to this point.) Procurement Card Policies and Procedures Manual Page 12 SECURITY OF THE PROCUREMENT CARD Each cardholder is responsible for the security of his /her card. This card should be treated with the same level of care, as the cardholder would use with his /her own personal charge cards. Guard the Procurement Card account number carefully. It should not be posted in a work area, or left in a conspicuous place. It should be kept in an accessible, but secure location. Lost or Stolen Cards If a Procurement Card is lost or stolen, immediately contact the JP Morgan Chase Customer Service at 1 - 800 - 890 - 0669. In addition, the Cardholder must also notify the Procurement Card Program Administrator of the loss and then complete a Procurement Card Lost/Stolen Card Form (Exhibit F) and forward it to the Program Administrator. Prompt action can reduce the City's liability for fraudulent activity. It is imperative to cancel the card immediately. The City is liable for all charges until the card is reported lost or stolen. Thus, the Cardholder may be responsible for all charges made against the Procurement Card from the time it is lost or stolen until the time the Bank is notified, if the Cardholder fails to immediately notify the Bank upon discovering the loss or fails to discover the loss within a reasonable amount of time. Misuse of the Procurement Card The procurement card reflects the City's trust in the employee and his /her empowerment as a responsible employee of the City of Port Arthur to safeguard and protect its assets. As a Cardholder, each employee assumes the responsibility for the protection and proper use of the card, including timely reconciliation. The following are a few examples of `misuse' of the P -Card; this list is not exhaustive, and is included for illustrative purposes only: 1.) Personal Misuse • Purchases using the card for the sole benefit of the employee; clothing and food not authorized by the employee's department • Assignment, transfer, or `loaning' of an individual card to another employee or person • Failure to submit receipts for all purchases on a daily basis • Use of a P -Card by a suspended or terminated employee 2.) Administrative Misuse • Lack of proper and timely reconciliation of individual Cardholder account • Card use in direct violation of acquisition goals (use of P -Card for commodities available through annual contracts) • Failure to comply with State code to notify Historically Underutilized Businesses Allegations of misuse of the P -Card, with evidence of a procedure or policy violation, will be investigated promptly by the Program Administrator. That information will be referred to the appropriate authority for investigation and /or disciplinary action. Termination of employment and forfeiture of the P -Card are potential disciplinary actions for improper use of the card. In those cases where there is evidence of negligent use of the P -Card, but no fraudulent acts have been committed, the Cardholder will be required to surrender the Procurement Card with all further privileges revoked. Procurement Card Policies and Procedures Manual Page 113 CANCELING THE PROCUREMENT CARD The Procurement Card is issued to an employee for the City's convenience and may be terminated at any time by the City's Program Administrator. P -Card privileges may be cancelled for non - compliance with City policies and procedures. A Division Manager or Department Director may cancel a P -Card at any time by submitting a written request to the Program Administrator, cutting the card in half and delivering it to the Program Administrator in a sealed envelope. Employee Transfer Department Directors are responsible for immediately reporting transferring or terminated cardholders to the Program Administrator. All transferring cardholders will have their account temporarily disabled until an approved cardholder application is received from the new Department Director and the appropriate changes are made to the Cardholder's profile by the Program Administrator. Employee Termination The Procurement Card must be returned to the Program Administrator upon the cardholder's termination. The responsibility to insure that cards of terminated employees are returned to the Program Administrator rests solely with the Department Head from which the employee was terminated. The employee's final paycheck will be withheld until the Procurement Card is returned to the Program Administrator. CUSTOMER SERVICE The Procurement Card program is serviced through a Customer Service Center. This center is available 24 hours a day, 7 days a week to assist the cardholder with general questions about the Procurement Card account. If a Procurement Card is lost or stolen, Customer Service should be notified immediately. The current customer service number is: 1 - 800 - 890 - 0669 Procurement Card Policies and Procedures Manual Page 14 CONTACT INFORMATION PROGRAM ADMINISTRATORS Shawna Tubbs, Purchasing Manager Julie Saunders, Accounting Manager 409.983.8162 409.983.8163 Tammy Jacobs, Comptroller Deborah Echols, Finance Director 409.983.8106 409.983.8174 JP MORGAN CHASE BANK CONTACT INFORMATION Customer Service — 800.890.0669 The Procurement Card program is serviced through a Customer Service Center. This center is available 24 hours a day, 7 days a week to assist the cardholder with general questions about the Procurement Card account. Card Activation — 800.890.0746 The toll -free number for cardholders is also printed on the back of the card. Lost or Stolen Cards — 800 - 890 -0669 If a Procurement Card is lost or stolen, immediately contact the JP Morgan Chase Customer Service. JPMorgan Chase is responsible for all transactions made after the card has been reported lost /stolen. The City of Port Arthur is liable for all charges prior to that. The Cardholder must also notify the Procurement Card Program Administrator of the loss and then complete a Procurement Card Lost/Stolen Card Form (Exhibit F) and forward it to the Program Administrator. Procurement Card Policies and Procedures Manual Page 1 15