Purchasing Card Operating System Procedure

Purpose statement

The Town of Oakville (town) uses purchasing cards for departmental procurement and payment of goods and services where it is efficient, economical and operationally advantageous to do so.

All procurement activity must be compliant with the current Purchasing Card Operating System (PCOS) Procedure, the Purchasing By-law and any applicable corporate policies and procedures.

Scope

This procedure applies to managers, directors and all employees authorized to use purchasing cards for town business.

Procedure

Purchasing Card Administration as approved by the Purchasing By-law is to be used as a guideline for purchasing card reconciliation and compliance with this procedure.

This procedure authorizes managers and directors to empower approved employees within their departments or areas of responsibilities to use purchasing cards for purchases within specified limits.

1. Purchasing card usage

The purchasing card is a credit card that is owned by the town. An employee in receipt of a purchasing card has the delegated authority to purchase goods and services on behalf of the town, up to their designated transaction limits and in adherence of this procedure.

The cardholder is responsible to ensure there is no misuse or abuse and that all purchases are in adherence to this procedure or any other Corporate policies and procedures.

Upon payment of goods or services at a vendor location, the purchasing card must be provided to the vendor. The vendor will swipe the card or insert it into the machine on which you will enter your PIN for US Bank verification and authorization to proceed with the transaction. The cardholder will be required to authorize the transaction. A copy of the transaction slip and a receipt itemizing the goods/service purchased must be retained by the cardholder for reconciliation (see section 5 “How to Reconcile”). The transaction slip (“chit”) is not enough on its own and must be accompanied by a proper receipt.

The purchasing card may be used for the following purchases relating to town business subject to the cardholders transaction limits:

• In-store purchases, mail-orders, internet orders, phone and fax orders. The cardholder is responsible to obtain itemized receipts, packing slips, and any other documentation required to reconcile their transactions.
• For any bid or contracted products and/or services.

2. Purchasing card administration

How to apply for a purchasing card:

• The Purchasing Card Application Form (Form PC-01) must be completed by the employee and authorized by the employee’s manager/director who will also select the spending category and blocking template. The completed form must be forwarded to the Purchasing Card Coordinator (PCC), Purchasing & Risk Management, Finance department for processing. The PCC will then process the application with the US Bank.
• The employee must review and sign the Purchasing Card Cardholder Agreement (Form PC-02) indicating complete understanding and agreement to the guidelines established for the Town of Oakville Purchasing Card program.

Lost or stolen cards:

If the card is lost or stolen, the cardholder must immediately contact the following:

• US Bank at 1-800-588-8067.
• The Purchasing Card Co-ordinator (PCC), Purchasing and Risk Management

Card modifications:

• When modifications to the existing card are required (e.g. employee moves to another department, transaction limit changes, etc.), the cardholder is responsible for completing the Maintenance Form (Form PC-03). This form must be reviewed and authorized by the manager/director and submitted to the PCC for processing.
• The card is not transferable among employees.
• The purchasing card follows the employee in the event of an internal job transfer, if required, in the new position. If it is not required for the new position the card will be cancelled.

Card cancellation:

• An employee or manager/director requesting card cancellation can do so by submitting a completed Maintenance Form (Form PC-03) and the purchasing card to the PCC.
• The PCC will notify the bank of the cancellation and destroy the card.
• t is the responsibility of the employee and/or the manager/director to reconcile any charges that may be outstanding on the card.

Card renewal:

All purchasing cards have an expiry date. The PCC will arrange for the distribution of replacement/renewal cards as provided by the US Bank.

Disputed charges:

Charges that appear on the transaction list that do not accurately reflect transactions made by the cardholder must be identified immediately.

• The employee will contact the vendor to resolve the issue and take the appropriate action.
• If the issue cannot be resolved with the vendor, the cardholder must forward documentation and information regarding the purchase to the PCC.
• The PCC will contact the US Bank and dispute the charge(s). This must be completed within sixty (60) days from date of transaction.

Records:

All original records of purchases made with purchasing cards will be kept in Accounts Payable in accordance with the Records Retention By-law, as applicable.

Training:

Mandatory training will be arranged with the cardholder once they have made purchases on their card and have transactions to be reconciled. The training session shall provide the steps necessary to complete the reconciliation process and prepare the monthly Account Activity package.

Cardholders will be provided updated training by PCC if required.

Reconciliation:

Cardholders will be responsible for:

• The monthly, on-line reconciling of transactions, as applicable and/or available. (on or around the 25th of each month)
• Matching the Account Activity Statement with applicable invoices/receipts checking for appropriate tax calculation, assigning appropriate account number and sub-ledger where applicable, comments on the purpose of expense are also required
  • Printing the Account Activity Statement, on completion of the above reconciliation, and forwarding it to manager/director for approval.
  • Sending the approved Account Activity Statement Packages to Accounts Payable (A/P) by the First (1st) day of the following month.

Payment Function:

Accounts Payable (A/P) will :

• Date stamp the packages and review them for completeness
  • Receipts which are not attached will not be eligible for the HST rebate
  • Purchases which raise concern will be documented on the statement and discussed with management
• Confirm information received (e.g. general ledger account valid and used appropriately, taxes correct in order to maximize HST rebates, description entered and backup documentation is correct) and update departmental accounts in CIS prior to month end reporting.
• Ensure compliance with other related expense policies. i.e. verification of names on chit of who attended, a meeting, function or other.
• Ensure original detailed receipt submitted for all expenses.
• Report to Purchasing cardholders who are non-compliant.

3. Control

Cardholders must attend a training session prior to completing the first reconciliation of their purchasing card.

The PCC will maintain a master file of all purchasing cards, limits and blocking templates.

Each purchasing card will have a unique number and will be issued in the name of the Town of Oakville and the employee who has been authorized to use the card.

Cards are not transferable among employees.

No single transaction can exceed the prescribed transaction limit (in Canadian funds) nor can the monthly credit limit be exceeded. If a cardholder attempts to process a transaction that is in excess of the transaction limit or the monthly limit, the US Bank will refuse to process the transaction.

The town has standard Blocking Templates which control which Merchant Control Codes (MCC) each cardholder has access to. These templates are designed to prohibit the use of the purchasing card within specified vendor’s groups. If a cardholder attempts to process a transaction for which they do not have clearance, the transaction will be declined. These blocking templates are listed on the Purchasing Card Application Form (Form PC-01).

It is incumbent on those reviewing and approving reconciled cardholder Account Activity Statements (manager/director, the Purchasing Card Administrator (PCA), and/or Accounts Payable) to watch for personal purchases and split transactions and report such actions immediately to the PCA for investigation and action.

Reports detailing cardholder transactions are generated on a monthly basis and are reviewed by the PCA.

The transaction limit per card is tiered dependent upon the employee’s purchasing responsibility. The following Spending Categories and Blocking Templates are to be selected by the employee’s manager/director.

Purchasing card limits:

Spending Categories can be viewed on the Purchasing Card Application Form (Form PC-01)

Purchasing blocking templates:

The Blocking Templates can be viewed on the Purchasing Card Application Form (Form PC-01).

Cash advances are not permitted at any time under any circumstance.

Requests for temporary changes to limits and template blocking, shall be submitted on the Maintenance Form (Form PC-03) along with details of why the request is being made, and be approved by the cardholder’s manager/director. The request will be processed and put in place for a maximum of one cycle month at which point the original limits and/or template blocking will be restored by the PCC.

4. How to use a purchasing card

Single transactions shall not exceed the Single Transaction Limit (STL) including taxes. Larger purchases will not be permitted to be broken into smaller purchases in order to meet transaction limits.

Purchases must be within the stipulated total Monthly Transaction Limit (MTL).

The cardholder may use the purchasing card for payment at a vendor location. The purchasing card will be swiped at the vendor location (like a personal credit card) or inserted requiring your confidential PIN number and the US Bank will:

• provide the vendor with authorization of the purchase;
• deny the card if either the single transaction or monthly limit is exceeded; or
• deny if there is a Merchant Control Code (MCC) restriction.

Cardholders are responsible for ensuring that the vendor returns their purchasing card and a copy of the itemized transaction slip is obtained. If a vendor rejects the purchasing card, the vendor may be blocked by a MCC. If the decline is questionable, the cardholder shall contact the US Bank using the phone number on the back of the purchasing card to determine if the transaction was declined because of a MCC restriction or if it exceeded the per transaction limit or the monthly limit. If the MCC code or the purchasing card limit requires temporary alteration, Maintenance Form (Form PC-03) must be completed in full and submitted to the PCC.

Pin numbers:

Neither PCC or PCA have access to your PIN, if this is forgotten, you must contact the bank directly using the number on the back of your card for assistance.

Purchasing is not able to assist you with this as it is a Personal Identification Number between cardholder and the US Bank only.

If the purchasing card information is provided to the vendor by telephone, the cardholder must request that the itemized transaction receipt be delivered with the goods or a copy of the itemized transaction slip be faxed to the cardholder.

The purchasing card can be used for internet purchases. It is recommended that the cardholder call the company before making an online purchase to ensure the purchase is being made from a legitimate business. The cardholder shall be responsible for printing and retaining the order confirmation number and any other relevant information after the purchase has been made. As the invoice is not always shipped with the merchandise, the cardholder shall maintain all documents relative to the order until the invoice is received for reconciliation purposes.

The cardholder shall retain all itemized transaction receipts, packing slips, etc. for their monthly transaction reconciliations.

If a purchased item needs to be returned, the cardholder is responsible for obtaining and maintaining a copy of the credit voucher from the vendor itemizing: the product(s) returned for credit; quantity returned, unit price, extended price including applicable taxes. The cardholder will not accept cash or cheque for any returned items. The applicable total cost associated with the credit must be applied back to the credit card for which the initial charge was allocated.

5. How to reconcile

Each cardholder will receive information in their transaction list when in Access Online, detailing the vendor name, subtotal, taxes and total for each transaction accrued for the previous month.

Cardholders will be trained in the process for itemization of the reconciliation process.

6. Compliance

All purchasing card activity/purchases will be monitored by managers/director and PCA to ensure that the use of the card is in compliance with this procedure and the employee Code of Conduct.

Non-compliance activities include, but are not limited to:

• Late submission of the monthly purchasing card reconciliation package to Accounts Payable (A/P).
  NOTE: All Account Activity statements and accompanying receipts are to be submitted to Accounts Payable by the end of day on the 1st of the following month.
• Failure to submit the appropriate supporting paper documentation for the monthly reconciliation (ie: invoices, transaction slips, register receipts, credit vouchers).
• No authorization approval signature on the monthly reconciliation.
• Loan/transfer of the purchasing card to another employee.
• Personal purchases of any nature.
• Acceptance of cash or a cheque from a vendor who is making a refund for a transaction previously charged to a purchasing card account.
• A lost or misplaced purchasing card which has not been reported by the cardholder to the US Bank and to the PCC.
• Splitting a transaction to avoid the Single Transaction Limit (STL).
• The duplication of payment of a transaction (payment of a transaction via the purchasing card in addition to a purchase order, or some other form of payment).
• Non-compliance with Town of Oakville policies and procedures.
• Utilized for historical invoices to avoid creating OU’s after the fact.
• Non compliance with Business Expense, Conference, Skills Improvements Policies.

Action to be taken with occurrence of non compliance incidents:

• 1st Incident- Notification by Purchasing Card Administrator of incident to cardholder, their manager/director and Accounts Payable. Offer a refresher training session on the Purchasing Card Program.
• 2nd incident- Notification by Purchasing Card Administrator of incident to cardholder, their manager/director and Accounts Payable. Mandatory that the cardholder obtain additional training on the Purchasing Card Program.
• 3rd incident- Suspension of the purchasing card for a 12 month period by the Purchasing Card Administrator, and notification by Purchasing Card Administrator to cardholder, their manager/director, Accounts Payable, Human Resources and Deputy Treasurer and Director of Financial Operations that the third incident has occurred and the purchasing card of the cardholder has been suspended. The notification will be filed in the employee’s personnel file with further disciplinary action taken as required.

Three (3) incidents of non-compliance for the same cardholder will result in that cardholder losing their privilege of having a purchasing card and the card will be suspended. Incidents of non-compliance may also be subject to other disciplinary action.

If the purchasing card is suspended it can only be re-issued to the cardholder with the written authority of the respective manager/director, and the PCA, after a twelve (12) month period following the third non-compliance incident.

Definitions

Account activity statement: the monthly transaction statement issued by the US Bank electronically for each cardholder. The account activity statement is a tool used to reconcile all transaction slips and related documentation.

Back up documentation: transaction slips, credit vouchers, packing slips, etc. that provide the necessary information related to the actual purchase and will be used to match to the Account Activity Statement monthly.

Blocking templates: the variations of templates available which control the MCC codes that a cardholder has access too, or is blocked from.

Cardholder: a town employee that has authority to use a purchasing card for the purchase of goods and/or services in accordance with this procedure.

Credit return receipt: a receipt provided by a vendor when an item originally purchased using the purchasing card is returned to the vendor and the applicable transaction fee is returned and applied against the purchasing card account.

Foreign purchase: a purchase made that is not in Canadian funds.

Itemized transaction receipt: a detailed receipt provided by the vendor detailing individual products and services purchased by product description, unit price, subtotal, taxes and extended total.

Merchant Control Code (MCC): codes that are placed on all purchasing cards restricting the location and type of purchase.

Monthly Transaction Limit (MTL): the collective total of all transactions to a stipulated maximum dollar value on a monthly basis including all taxes.

Personal usage: using the purchasing card to purchase goods/services that are not relevant to work requirements and are of no benefit to the Town.

Purchasing card: a credit card provided by the US Bank imprinted with the cardholder’s name, Town of Oakville, credit card number and validity period.

Purchasing Card Administrator (PCA): the Manager of Purchasing & Risk Management or individual designated by the Manager acting as the primary controller of the purchasing card program in its entirety.

Purchasing Card Co-ordinator(s) (PCC): the purchasing card co-ordinators in Purchasing & Risk Management, who act as the primary contacts for the purchasing card program with respect to day to day functionality.

Purchasing Card Operating System (PCOS): the purchasing card program as a whole.

Reconciliation (reconcile): the process of matching transaction receipts and documentation to the Transaction list ensuring all charges, taxes and account allocation is documented and correct.

Single Transaction Limit (STL): the stipulated maximum dollar value that can be applied to the purchasing card on a per transaction basis.

Spending categories: the categories that the monthly and single
transaction limits fall under.

Transaction: the total extended purchase price including all applicable taxes.

Vendor: any person or enterprise supplying goods or services to the Town of Oakville.

Responsibilities

The following describes individual roles and responsibilities of those involved in the purchasing card process.

Purchasing Card Administrator (PCA)

The PCA acts as the primary controller for the town’s purchasing card program and shall be responsible for:

• Administrative contact with the US Bank providing the purchasing cards.
• Developing and distributing program literature and materials.
• Working with vendors as needed.
• Administering Purchasing Card Compliance as outlined in this procedure and suspend any employee purchasing card on the third incident of misuse, on a temporary or permanent basis.
• Compiling and reporting pertinent purchasing card data for Financial Services as requested.
• Reviewing the conduct of all purchasing card activity on a regular monthly basis to ensure purchasing policy adherence and to gather statistical information on purchasing practices.

Purchasing Card Co-ordinator(s) (PCC)

The PCC manages account requirements and functionality on a daily basis and shall be responsible for:

• Main contact for the US Bank.
• Processing requests for new purchasing cards, card changes (e.g. credit limits) and cancellation of cards.
• Notifying the bank of any unresolved issues on cardholder’s Transaction List if not able to solve through the vendor.
• Developing and distributing program literature and materials.
• Developing and providing cardholder and reconciler orientation/training.
• Working with vendors as needed.
• Maintain a log of all card numbers, cardholder’s names and signatures, spending categories and blacking templates.
• Providing reports to PCA as requested.

Cardholder

The cardholder shall be responsible for:

• Adhering to all conditions and restrictions imposed by the US Bank and the Town of Oakville.
• Signing the Cardholder Agreement (Form PC-02) indicating complete understanding and agreement to the guidelines established for the Town of Oakville Purchasing Card Operating System.
• Signing and storing the purchasing card in a secure place.
• Maintaining all transaction receipts, sales slips and credit vouchers to facilitate reconciliation of their Account Activity Statement and identify the proper G/L allocation.
• Reconciliation of monthly Transactions.
• Obtaining all required Material Safety Data Sheets (MSDS) for all WHMIS controlled products purchased with purchasing cards.
• Ensuring that vendors performing service work have the required comprehensive general liability insurance, Workplace Insurance, Compensation coverage and comply with Health and Safety requirements, as applicable.
• Ensuring that there are no inappropriate purchases.
• Complying with all Town of Oakville policies and procedures.
• Returning the purchasing card to manager/director upon leaving the employment of the town.

Managers/Directors

Manager and directors shall be responsible for:

• Assessing the need for purchasing cards based on operational requirements.
• Completing a Purchasing Card Application Form (Form PC-01) by providing their signature of approval for the card, selecting spending category, selecting blocking template and forwarding to the PCC.
• Detailed review and approving purchasing card expenditures within their areas for the Town.
• Ensuring cardholders are complying with corporate policy and procedures.
• Ensuring that cardholders receive the required training, procedure manuals and are informed of their responsibility regarding the use of the purchasing card.
• Act/report on non compliance issues.
• Collecting the purchasing card upon the end of employment of the cardholder with the town.

Accounts Payable (A/P)

Accounts payable shall be responsible for:

• Adding new account numbers to cardholders division for reconciliation purposes, ensuring that the account exists in CIS.
• Receiving and reviewing all reconciled statements for proper documentation, correct GL account is utilized, tax allocation and signatures.
• Uploading the Access Direct file into the general ledger within 9 working days of month end.
• Performing audit function to ensure all corporate policies are adhered to.
• Filing of all statements and receipts for audit purposes.

Card Suspension Authorities

• The PCA and/or managers/directors have the authority to suspend the use of a purchasing card on a temporary or permanent basis resulting in the purchasing card being cancelled.
• If there is a dispute between the cardholder, manager or director regarding the temporary or permanent purchasing card suspension or cancellation, the PCA and Commissioner shall make the final decision.
• For the purpose of this procedure, the purchasing card is the property of the town and an employee shall return the card to the PCC for cancellation or suspension when directed to do so.
• Any misuse or misappropriation of the card will be reported using the Purchasing Card Compliance form (Form PC-04). Any abuse may result in a temporary or permanent suspension of purchasing card usage as provided for in this procedure and further disciplinary action may result upon review of the non-compliance issue.