WASBO AP Manual, January 2015 1

Presented by Holly Burlingame, CSBA WASBO Instructor WASBO AP Manual, January 2015 2

Background: The WASBO Accounts Payable Manual was the brainchild of Cory Plager and Denise Wolff. First introduced as a concept and a rough draft at the WASBO Accounts Payable Conference in August 2014. Holly Burlingame, CSBA, was instrumental in compiling and preparing the manual. WASBO AP Manual, January 2015 3

Others who contributed information, review, and approval were: Clark Fletcher, IRS Government Specialist Scott Matheson, King County Cash Management Carmen Smith, WA ST Department of Revenue Kathie Collins, WA ST Dept. of Enterprise Services Larry Bona, WA ST Dept. of Retirement Systems WASBO AP Manual, January 2015 4

Special thanks to Becky Montgomery for adding the small schools perspective. Special thanks to DeAnn Wagoner for her editing skills. WASBO AP Manual, January 2015 5

GOALS: Provide users with an understanding of school accounts payable beyond data entry. Provide a training tool for new employees responsible for accounts payable functions. Include essential information and resources specific to accounts payable from RCW, WAC, the Accounting Manual, IRS regulations, state agency rules and regulations. WASBO AP Manual, January 2015 6

GOALS continued: Provide 21 st Century solutions for school accounts payable processing. Bring together the best practices in both small and large school districts. Be a companion to the WASBO Purchasing and Warehouse Handbook. WASBO AP Manual, January 2015 7

Completed version can now be accessed on WASBO s web site. Located under Resources/Publications Or follow the link below: http://c.ymcdn.com/sites/waasbo.site-ym.com/resource/resmgr/abc_committee/accounts_payable_manual.pdf WASBO AP Manual, January 2015 8

Contents Overview WASBO AP Manual, January 2015 9

Each section contains: 1. Definitions and legal references. 2. Business process options and recommendations. 3. Minimum requirements for claim forms, invoices, etc. 4. Accounts payable responsibilities. 5. Checklists for accounts payable review. WASBO AP Manual, January 2015 11

Table of Contents Vendor Payments 6 Paperless Invoice Process 12 Imprest Accounts and Petty Cash Funds...13 Charge Cards and Procurement Cards.15 Employee Travel and Expense Claims..17 Expense Claims for Reimbursable Items..18 WASBO AP Manual, January 2015 12

Table of Contents (continued) Expense Claims for Meals 20 Overnight Travel 21 Travel Advances and Travel Charge Cards....24 Refunds of Revenue...25 WASBO AP Manual, January 2015 13

Table of Contents (continued) From Invoice to Payment.26 Warrant Certification and Approval.28 Warrants, Wire Transfers, and Other Payment Methods..31 WASBO AP Manual, January 2015 14

These three sections are about completing the payment cycle. Internal controls such as batch totals, warrants run totals. Legal requirements. Board certification and approval. District policy and procedures. County Treasurer role. WASBO AP Manual, January 2015 15

Table of Contents (continued) Sales Tax......33 Use Tax....35 Federal Excise Tax Exemption...36 Public Works and Retainage 37 Internal Controls.40 Independent Contractor versus Employee.42 WASBO AP Manual, January 2015 18

Table of Contents (continued) IRS 1099 Reporting.......46 The Accounting and Budgeting Connection...49 Inventories and Prepaid Items....52 Year End Accruals.. 53 Resources/References..55 WASBO AP Manual, January 2015 19

Vendor Payment Section WASBO AP Manual, January 2015 20

Sections: 1. Definition of a Vendor W9, UBI numbers, etc. Employees as vendors (or not) 2. New Vendors Internal controls over new vendors Maintaining your vendor data base Tips WASBO AP Manual, January 2015 21

Vendor Invoice Section: 1. Defines what a vendor invoice is (original, copy, fax, electronic image, data file, etc.) 2. Minimum requirements of any invoice: description, detailed pricing, sales tax, freight, etc. 3. Three-way match: PO to invoice to receiving document in the traditional purchase to pay cycle. WASBO AP Manual, January 2015 23

Accounts Payable vendor invoice audits checklist: Three-way match complete Invoice is not a duplicate Total is correct Shipping and handling are correct Sales tax added at the correct rate Is this a public works contract requiring retainage to be held? WASBO AP Manual, January 2015 24

Accounts Payable checklist continued: Current charges with no brought-forward balances. Purchase order encumbrance sufficient to cover the current invoice or within the district s allowed variance (example: ten percent over encumbrance). Invoice pricing matches quote or bid. WASBO AP Manual, January 2015 25

Accounts Payable checklist continued: Account code is correct per the district chart-ofaccounts and state account code requirements of program, activity, and object. Determine the fiscal year for processing. WASBO AP Manual, January 2015 26

Exceptions/alternatives to the three-way match: 1. Direct payments such as small purchases without a PO. 2. Prepayments for registration fees and deposits. Examples: sporting event entrance fees and deposits for event facility. WASBO AP Manual, January 2015 27

Prompt Payments Section on how to calculate a prompt payment discount such as 2/10, net 30. Tools for determining whether a discount makes economic sense. Late Payments Maximum allowed is 1% per month under Washington State law. How to calculate late payments. WASBO AP Manual, January 2015 28

Correcting vendor invoices. Managing and taking vendor credits. WASBO AP Manual, January 2015 29

Paperless Invoice Processing WASBO AP Manual, January 2015 30

This section answers the following questions: Original invoice? What is an original invoice? Who can tell the difference between an original and a copy? Why do we care? What is acceptable as a source document in the 21 st century? WASBO AP Manual, January 2015 31

Invoices are received in your district by the following methods: 1. Vendor emails an image of an invoice (KCDA). 2. Vendor uploads an invoice to a district s vendor portal (new technology developing). 3. Vendor provides a district with a customer portable to upload invoices (FSA, Fisher Scientific, Pitney Bowes) WASBO AP Manual, January 2015 32

Rather than images, you may also be receiving your invoices by software data files: 1. Upload from purchasing card software. 2. Upload from utility management systems. Districts may already be receiving up to 50% of their invoices in an electronic format. WASBO AP Manual, January 2015 33

Still getting paper invoices in the US Mail? Here s an example of adopting a paperless accounts payable process for those invoices: 1. Scan invoice on a desktop scanner. 2. Image is named and filed on desktop or service. 3. Image is routed to user for receipt verification. 4. On-line receiving is verified. WASBO AP Manual, January 2015 34

5. Invoice image is viewed on one computer monitor and second monitor is used to enter invoice data into accounts payable data entry screens. 6. The scanned invoice image is then attached to the accounts payable record within the district s software. 7. The invoice image is viewed by a drill-down of the transaction on fiscal reports run to the screen. WASBO AP Manual, January 2015 35

Technology is available today. Need to complete a DAD application with the Secretary of State (details in AP Manual). Paper invoices are thrown away! Scanned images of invoices are your source document. When your auditor selects an accounts payable transaction for audit, print a copy or email the scanned image. FYI SAO is already paperless! WASBO AP Manual, January 2015 36

Charge Cards and Purchasing Cards WASBO AP Manual, January 2015 37

This section garnered a lot of interest from many who previewed the manual. Defines purchasing cards, credit cards, travel and fuel cards. Legal references. Best practices. Some duplication with the Purchasing Handbook. Focuses on payment processing and auditing side in Accounts Payable. WASBO AP Manual, January 2015 38

Best Practices to mitigate risk and alleviate workload in AP: Upload the district s chart-of-accounts into the bank software. Assign default account codes for each cardholder. Utilize the on-line approval process available in bank software. Upload monthly spending activity into the district s software. Upload monthly spending activity in detail, including merchant s name. WASBO AP Manual, January 2015 39

Accounts Payable checklist: Verify that all cardholders with current transactions have submitted the required reconciliations. Verify all appropriate signatures or on-line approvals are included. Verify the account codes are correct per the district s chart-of-accounts, person responsible, and state account code requirements of program, activity and object. WASBO AP Manual, January 2015 40

Accounts Payable checklist continued: Verify that original, itemized receipts are attached for every transaction. Verify that the items purchased have a clear district purpose. Verify that any merchandise shipments went to a district location. Verify that sales tax has been paid, if due, and add use tax if not. WASBO AP Manual, January 2015 41

Accounts Payable checklist continued: Verify that federal excise tax has not been charged on gas credit cards. Determine the fiscal year for processing. WASBO AP Manual, January 2015 42

Future Training and Updates WASBO AP Manual, January 2015 43

Future Trainings and Presentations WASBO Annual Conference, May 2015 Overview presentation WASBO Accounts Payable Conference Tentative date is August 5, 2015 In depth training on various sections of the manual Presentations from content experts from state agencies Update sections prior to each year s AP Conference WASBO AP Manual, January 2015 44

Available for your use now. Use for training new staff. Use as a handy reference for experienced staff. Use in conjunction with your own district procedures. Use to create your own district procedures. Send suggestions, additional information, or concerns in writing to the WASBO office at: admin@wasbo.org WASBO AP Manual, January 2015 45

Questions? WASBO AP Manual, January 2015 46