USE OF BUSINESS CARDS FOR PURCHASING

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1 POLICY STATEMENT USE OF BUSINESS CARDS FOR PURCHASING POLICY ADOPTED: 8 MARCH 2000 RATIONALE Considerable time and effort is expended in the processing of requisitions, purchase orders and invoices that account for only a small proportion of the organisation s total expenditure. Use of business cards have proven that efficiencies can be improved whilst still maintaining appropriate levels of security. Business Cards are seen to be effective for low value purchases in most areas of Council. DEFINITIONS Business Card: A plastic card, issued by a bank and which allows the authorised cardholder to charge the cost of goods and services (subject to pre-approved limits and vendor categories), directly to an account in the Council s name. Low Value Purchases: Typically purchases of goods and services below $1,000 per purchase. These purchases represent only a small percentage of the total annual purchases but a high percentage of the purchasing activity. OBJECTIVES To achieve significant improvements in purchase and accounts procedures for low value purchases; To save time, reduce processing and paperwork costs; To update the purchasing operation in line with recognised commercial processes; To improve business relations with suppliers. CONDITIONS Approval to use: the intended cardholder s Director should recommend the use of a business card. Final approval rests with the Director of Finance & Administration, who is deemed the Purchase Card system manager and the General Manager.

2 Business Card User Agreement: All business card users shall sign a written agreement that clarifies the entitlements and responsibilities of both the user and Council. Approved Expenditure: The card is only to be used for Council purposes and within appropriate limits agreed between the user and the user s Director. These limits shall be by $ value and will be specified in the Business Card User Agreement. Cash advances shall not be permitted. The cardholder s Director is responsible for the vetting of monthly bank statements to ensure expenditure is appropriate and within approved limits. Business cards are not to be used for the purchase of stores inventory items. Changes to Limits: Changes to transaction limits or other cardholder data must always be signed by the authorised signatory (General Manager or Director of Finance & Administration) prior to forwarding to the bank. Approved Users: Allocation of cards will be limited to those staff recommended by their Director and who are approved by the General Manager or Director of Finance & Administration. Goods and Services Tax (GST): Cardholders shall ensure that GST is charged where applicable and that exemptions are sought when appropriate. Cardholders and their managers are responsible to provide suppliers, such information as they need to ensure correct invoicing and a continuing good business relationship. The Director of Finance & Administration will provide advice in this regard. Register of Cardholders: A register of cardholders is to be maintained by the Director of Finance & Administration. Misuse of Card: A card is considered to be misused if: A cardholder is exceeding their credit or transaction limits. There is unauthorised or inappropriate use of the card. Reconciliation: Each cardholder must validate the legitimacy and correctness of transactions on the Bank Statement relating to the usage of their card. The cardholder should sign and date the Bank Statement to validate the transactions and as a record that can be audited. Accounts Receivable Responsibilities: Accounts staff will be responsible for the prompt payment of outstanding Bank Statements. They must also return unauthorised or incomplete transaction records to the cardholder s manager for rectification.

3 Return of the Card: The relevant Director must take possession of the card from the cardholder in the following instances: Resignation Retirement Transfer or promotion to another position that does not require the use of the card Dismissal Instruction to do so by the General Manager A card that is to be cancelled must be cut in half immediately its use is no longer required. Security: Lost or stolen cards must be reported as soon as practical to the Director of Finance & Administration. Penalties: Misuse of the Business Card shall result in disciplinary action against the cardholder. Persistent misuse of the card will result in the removal of the card from the cardholder; reevaluation of the position with possible dismissal and action in accordance with the Local Government Award.

4 BLAND SHIRE COUNCIL BUSINESS CREDIT CARD AGREEMENT AND ACKNOWLEDGEMENT BY CARDHOLDER Cardholder: Directorate: Employee No. Position: I UNDERSTAND AND AGREE THAT: 1. I am responsible, at all times, for the security and safeguarding of the card and all purchasing related documents. 2. I will sign the card and advise its number to the person who authorised its issue to me, immediately on receipt of the card. 3. I am permitted to use the purchasing business card only up to a limit of $3,000 in any one billing period (monthly). 4. I am permitted to use the purchasing business card to a maximum of $1,000 for any one transaction. 5. I will retain all documentation of all transactions created by the card to be attached to the payment requisition sheet for payment by Council. 6. I am permitted to use the purchasing business card only to purchase or pay for those supplies necessary in the course of my work and in accordance with the procedures and instructions issued to me. 7. I will not use the purchasing business card, nor permit it to be used, for other than official purposes. 8. I will not permit use of the purchasing business card by another person. 9. I will not use the purchasing business card for cash withdrawals. 10. I may use the purchasing business card for purchases by telephone providing the goods are in accordance with the guidelines issued by the Council. 11. If the purchasing business card is lost or stolen then I will report this to the Director of Finance & Administration immediately. 12. I understand that if I misuse the card (i.e. otherwise than in accordance with the instructions given to me) Council may institute disciplinary action against me in accordance with the Local Government Award. 13. I will return the card to the Director of Finance & Administration if I cease to be an employee of Bland Shire Council, if my position with Council changes or if called upon to do so. 14. I acknowledge that I have read and understood the guidelines and conditions set out above which govern the issue and use of the Bland Shire Council Business Card in my name and accept these conditions. Signature of Cardholder Director of Finance & Administration Date: Date:

5 BLAND SHIRE COUNCIL INSTRUCTIONS FOR PURCHASING BUSINESS CREDIT CARDHOLDERS 1. The card has a maximum limit of $1,000 per transaction/requisition. Requisitions may not be divided into smaller lots for the purpose of bringing each purchase below the transaction limit. 2. Transactions exceeding the limit are to be purchased using Council s normal purchasing procedures (i.e. use of an official Council order). 3. The card has a limit of $3,000 per month. 4. The card is not permitted to be used to obtain cash advances from any organisation (including bank, building society, supplier or other). 5. The card is not to be used to purchase items other than those for the cardholders responsibilities or function(s) and within budget. 6. When ordering goods back orders are to be avoided as much as possible. 7. If a back order is necessary it is the responsibility of the cardholder to ensure that the goods are collected and paid for. 8. If a delay in supply is foreseen then normal purchasing procedures will apply. (See No.2). 9. A payment requisition sheet is to be completed showing date, supplier, goods required, job and job number and duly signed by the cardholder. 10. All invoices/receipts must be attached to the purchase requisition sheet and returned to the Finance Section within ten working days of month end with the card statement. N.B. Please ensure that all dockets are attached. 11. A cardholder whose card is lost, stolen or destroyed must immediately notify the Director of Finance & Administration who, in turn, will arrange for a replacement card. Authorisation: Status Committee N/A Owner Manex EDRMS Doc. ID Superceded Policy Date of Adoption/ Amendment N/A Director Corporate Services Revision Number Minute Number 8 March /3/00 Review Date Related Council Policy / Procedure

6 PROCEDURE USE OF BUSINESS CARDS FOR PURCHASING PROCEDURE ADOPTED: 8 MARCH 2000 This procedure is to be used in conjunction with the Council Policy on the Use of Business Cards for Purchasing. Issue of New Business Cards The process for the issue of new cards starts when the proposed cardholder s Director recommends issue of a new Business Card to the Director of Finance& Administration (DFA). At this time, transaction limits, merchant category blocks and any other controls are agreed. The DFA then arranges with the bank for the card to be issued. Details of new cardholders are added to the Cardholder Register, developed and maintained by the DFA. Delivery of New Cards New cards are to be delivered to the DFA who shall ensure that all agreements are signed prior to the issue of the card. Record of Purchase Card Transactions All cardholders are to maintain a record of their card use in the form of a summary sheet (attachment 2.). The cardholder details the date of transaction, docket number, job number and value. Point of Sale Purchases The cardholder passes their card to the supplier who then manually or electronically produces a sales voucher. The cardholder checks the voucher for accuracy before authorising the transaction with their signature. The supplier then provides the cardholder with a hardcopy of the transaction details.

7 Transactions Made by Mail Order/Telephone/Fax Order The cardholder gives their card particulars on a mail order form for mail order transactions or over the telephone for telephone order transactions. A copy of the sales voucher or a similar receipt is sent to the cardholder (usually with the goods being purchased, if those goods are being delivered to the cardholder). Filing of Sales Vouchers Cardholders retain vouchers until receipt of the monthly statement from Council s Accounts Section. Monthly Statements Statements are mailed by the bank directly to the cardholders and to the Accounts Section monthly. Reconciliation Cardholders reconcile all transactions by reference to their Purchase Card Summary Sheet and either investigate discrepancies or authorise payment of the statement by signing and dating the bank statement. The cardholder also notes the appropriate General Ledger Job Number beside each statement line item. Discrepancies are raised by the cardholder with the bank or supplier as necessary. Disputed transactions are raised with the bank in writing. To ensure correct account payment, the outcome is noted on the statement with the cardholder s signature and date. The authorised statement is vetted by the cardholder s Director prior to return to the Accounts Section. Limit Changes Recommendations for changed limits are passed by the cardholder s Director to the DFA. Changes to be made are sent in writing to the bank by the DFA. Return of Cards (Resignation, Retirement, Cancellation, Etc.) The cardholder returns the Purchase Card directly and promptly to the DFA or their Director who then informs the DFA of the return. Where the card is to be cancelled, it is cut in half to prevent misuse, then forwarded to the DFA.

8 The bank, on receipt of the card, or DFAs written advice of its destruction, will then cancel the card. Authorisation: Status Committee N/A Owner EDRMS Doc. ID Superceded Procedure Date of Adoption/ Amendment Manex N/A Director Corporate Services <.. Contact Records..> Revision Number 8 March Minute Number Review Date Related Council Policy / Procedure