Dronfield Henry Fanshawe School Policy No:F8 Revision No: Date Issued: 1 Feb 2015 Committee: Resources Debit Card Procurement Protocol and Procedure Author: Date Adopted: R Barker Feb 2015 Minute No: 14/43 Review Date: Feb 2016 Procurement Card Protocol and Procedure PROCEDURES AND GUIDANCE FOR THE USE AND OPERATION OF PROCUREMENT CARDS OR BUSINESS CHARGE CARDS 1. Introduction and Background Procurement cards are now widely used by many public and private sector organisations and provide an easy-to-use system that can improve the efficiency of the order/payment process. When used properly, procurement cards can reduce internal costs, allow goods to be obtained more quickly, improve spending and provide timely and accurate expenditure information for managers. Procurement cards are not simply school credit cards although they do operate in a very similar way to personal credit cards. The main difference is that when a procurement card is used on behalf of a school (and therefore the Local Authority), there are restrictions placed upon the cardholder and category of product and services allowed to be purchased. The school, via the LA, will also be able to reclaim any VAT paid on transactions. It is important to always remember that public funds are being spent each time a procurement card is used. Users should be able to clearly demonstrate value for money at all times and it is the school s responsibility to ensure that a clear audit trail exists for each and every transaction that is made. The school takes on all risks of any occurrence of fraudulent transactions. It is expected that the use of the card will be limited only to those purchases where value for money can be transparently evidenced. This procedure is a source of reference and outlines the common rules agreed by Audit Services that must be adhered to. It must be read in conjunction with both the school s and the LA s Financial Regulations. 2. Value Added Tax (VAT) As a public body, Derbyshire County Council can reclaim from HM Revenue and Customs the VAT it incurs on expenditure. The school claims reimbursement of VAT through DCC and must keep evidence to support any reclaim for VAT. Where a purchase is made using the card, the information may be transmitted directly to the card company, with a VAT invoice and other reports being issued to the purchaser at regular intervals. The school, as a matter of good practice, will always request a VAT invoice, electronically or
by post, to support any transactions. It will also follow the guidance issued by DCC for the recording, evidencing and reimbursement of VAT. All card purchases will be logged on the School financial system and reconciled to the monthly statement within five days of receipt. Copy VAT invoices will be attached to the back of the monthly statement to evidence any VAT reclaim. 3. Procurement and Business Charge Card General Information Dronfield Henry Fanshawe School is a bank account school. Applications for a procurement or business charge card will be made following approval by the Governors Resources Committee. Financial policies and procedures will also reflect the use and restriction to use of the card. The nominated individuals will be as follows: 1. Business Manager 2. Support Staff Manager 3. Finance Manager Security Cardholders must take all reasonable precautions to prevent loss or misuse of the procurement or charge card or any of the details on it. The following precautions are required by the cardholders: Ensure that the card is signed immediately upon receipt Activate the card with the bank complete the card receipt form (appendix B) do not allow any other person to use the card treat it like cash never leave it unattended keep the card number, the card security code, PIN number and security details as secure as possible, securing or destroying any paperwork containing card numbers or security information (except invoices) Never give card details over the telephone. Cards are to be retained by the cardholder in person or kept in the safe on the premises. The card must not be used for personal transactions, but if the cardholder uses the card for a personal transaction inadvertently, then the cardholder should inform the Headteacher immediately the error becomes apparent and make arrangements to promptly reimburse the school. In the event that a cardholder ceases to be a cardholder, on the last day of use, the card must be cut in half and returned to the card administrator, who will immediately cancel the card at the bank, making it invalid for further transactions. Misuse of the Card Use of the card will be subject to regular and comprehensive monitoring and any deliberate misuse will result in the card being withdrawn. Deliberate misuse will be deemed to be a disciplinary offence. Misuse will include providing the card, or card numbers, to another person who is not authorised to use the card, or using another person s card or card number without authorisation. In addition, such misuse may include, but is not limited to, the following: Purchase of goods for non-business use Using the card for personal purchases Lost or Stolen Cards
If it is discovered that a card has been lost, stolen or compromised (i.e. cloned) by the number becoming known to a third party who may use it fraudulently, the cardholder must immediately contact the card provider. The cardholder will be given the emergency contact details of the card provider at the time the card is issued. The cardholder must also inform, no later than the next working day, the card administrator, who will arrange for a replacement card to be issued. If a previously reported lost or stolen card is subsequently found, it must be cut and half and returned to the card administrator. Damaged Cards If a card becomes damaged, the cardholder must inform the card administrator, who will then order a replacement. Continuation Cards The card provider will issue a replacement card every two to three years to the cardholder, approximately three weeks in advance of the card s expiry date. The card will be issued with the same account number as the original. On receipt of the new card, the cardholder must immediately sign it on the reverse and also arrange to sign the Card Receipts and Changes Form. When the old card expires, it must be cut in half and return to the card administrator. Spending Categories The card must not be used to purchase any other items other than the merchant categories for products and services authorised by the card administrator. Categories of spend which will be restricted or blocked at the card application stage are cash withdrawals, fuel purchases and staff temporary recruitment. Spending Limits Each cardholder will have a single transaction limit and overall monthly credit limit, both of which will be set by the card administrator. The LA has identified a monthly credit limit of 5,000 ( 4,167 plus vat) for secondary schools. We believe this limit to be more than sufficient, as we view the use of the cards to be when absolutely necessary, i.e If it is clear that the best price is only available from an online company, or Where items are only available from abroad (e.g particular software) If speed is of the essence and an online transaction will help expedite delivery We will have three cards, with limits of 2,500, 1250 and 1250. It would be possible if required to temporarily transfer the limit from one card to another, in order to increase the amount available. If a transaction fails to be accepted (i.e. declined) and the cardholder believes the transaction should have been accepted, the cardholder should contact the card provider. 3. Procedures for using a Procurement Card Card Use i)the card can only be used after full order procedures have taken place:- Written order request from relevant budget holder, which will contain the full price. Order entered onto the financial system Order approved by Finance Manager and order number generated
ii)cardholders must not allow any other person to use their card or quote is number when ordering. Transactions can only be agreed by the Cardholder and the supplier. The supplier must obtain the Cardholder s authorisation before charging any amount to the account. All transactions made by the Cardholder must be recorded in the transaction log at the time the purchase occurs. Ordering over the Internet CNP (cardholder not present) is the name given to any transaction where the Cardholder is not present in person at the supplier s premises and is a common term applied to Internet purchases. Cardholders may be asked for the following information when conducting a CNP transaction: Cardholder name Card Number Card Expiry Date Delivery Address (this must always be the school address) Card Security Check (CSC) (this must only be quoted if the supplier asks for it) Address Verification System (AVS) The details given will be used as part of the Bank s authorisation process and so they must be accurate, or the transaction may be declined. The PIN should never be divulged to any third party under any circumstances. 4. Reconciling Procurement Card Transactions Statements All purchases must be logged against a purchase order number. All purchases must be preauthorised prior to any purchase being made. The school recognises the importance of reconciling all purchases against the monthly statement within seven days of its receipt. Any discrepancies will be investigated immediately and any erroneous entries on the statement will be reported to the bank without delay. Procurement card and charge card balances will be paid in fully by direct debit seven days after the statement date, the money being debited directly from the school s bank account. Statements and receipts will be retained for a period of six years. Where receipts or invoices are missing, the relevant vendor will be contacted for copies, necessary for both audit and VAT purposes. Disputes and Errors If there are any incorrect entries on the statement, the supplier should be contacted. Where a credit is required, the vendor should be instructed to credit the Card. If there is any dispute over a transaction, the Card Administrator should be contacted for advice. Signing off the Reconciled Statement The statement will be reconciled by the Finance Manager and passed to the Business Manager, who will check and sign the statement to verify that the reconciliation has been carried out and that the goods and/or services are legitimate and fall within the school s procedures and Financial Regulations. The statement will be compared against a report from the financial management system, of the goods ordered on the bank procurement /business card purchases account. As a further check, the statement will also be countersigned by one other bank account signatory.
Documents will be kept for six years and will be subject to normal Audit Service s scrutiny. Responsibilities of Employees The cardholders responsibilities are to: Read, be familiar with, and follow the procedure for the Procurement and Business Charge Card User Guide Keep the card secure at all times Only use the card to purchase authorised products and services Ensure that relevant spending limits are adhered to Ensure that VAT evidence is obtained Ensure that all papers, documents etc are readily available for visits from HM Revenue and Customs, and internal Audit Keep the certified statement and supporting documents securely on file for six years Seek help from the Card Administrator in dealing with problems or queries as necessary Ensure that any appropriate documentation is completed and sent to the card administrator Reconcile the postings on the School s finance system to the statement The Finance Manager s responsibilities are to: Read, be familiar with and follow the procedure in the Guide. Reconcile and balance the statement as soon as possible after receiving the card statement, and no later than seven days after its receipt. The Business Manager must: Read, be familiar and follow the procedure in the Guide Check and sign the statements to verify that the appropriate reconciliation has been performed by the Finance Manager and that the goods and/or services are legitimate and in keeping with the cardholders duties and responsibilities Check and sign that the orders on the Financial System have been reconciled to the statement Other Bank Account Signatories: Read, be familiar and follow the procedure in the Guide Countersign the statement, as necessary, to confirm that procedures have been followed.