1.METHODS OF ACQUISITION

1.1. The employees designated to control purchasing and payments for a unit have the responsibility to determine how the acquisition of goods and services should be made. The following methods are available depending upon the dollar value and, in some cases, the nature of the acquisition – Purchase Order, Direct Pays, Procurement Card and Petty Cash.

1.2. Purchase Orders (POs)

1.2.1.Purchase Orders (POs) are to be used for all purchases other than those made by Petty Cash or small, dollar value items purchased on Procurement Card. Direct Pay Forms may be used ONLY when no other means to purchase is available for the purposes outlined below.

1.2.2. When contracts or open call for bid documents are the controlling document, a purchase order is to be assigned to the document, with the purchase order number as a control point for all correspondence and payments related to the contract or open call. This is required in order to record the commitment in the Banner Finance system and to permit more effective budgeting.

1.2.3.It is the responsibility of the unit issuing a purchase order to determine if the particular supplier will grant the University credit. This is done via the purchase order itself rather than formal application for credit. The only employees who may issue purchase orders for goods and services are persons authorized by the Dean, Director, Grant holder or Associate Vice-President as applicable.

1.2.4.Emergency Purchasing

1.2.4.1.An emergency situation will meet one of the following conditions:

•A life-threatening hazard exists.
•There is an interruption to an essential service.
•University property needs to be secured against imminent damage or hazard.

1.2.4.2. Generally, emergency purchasing procedures will not be used unless such procurement practices would be offset by a corresponding or greater loss to the unit as a result of the delay. Failure to anticipate a need is not, of itself, considered a bona fide emergency.

1.2.4.3. When emergency work has to be carried out, the following procedures will apply:

•The employee(s) in charge will make all necessary arrangements so that the work will be done immediately.
•The purchase order may be created after the fact and a statement must appear on the requisition indicating the nature of the emergency.
•Requisition must be accompanied by an Open Call for Bids Exemption (OCBE) Form if the cost of the good is >$25,000
•The employee arranging the emergency purchase should ensure that the supplier has a purchase order number to attach to the invoices for the purchase.

1.2.5.Creating a Purchase Order

1.2.5.1.The process of creating a purchase order starts with the preparation of a requisition for goods and/or services. This requisition is completed by the employee requiring the goods and/or services. Refer to Procedure for Unit Requisitions.

1.2.5.2. When the employee designated to control purchasing within a unit receives a requisition which requires the issuing of a purchase order, he/she is required to:

•Ensure that funds are available for the purchase or expenditure as per the unit's approved budget or the terms of the particular grant. A purchase order cannot be issued without having funds available to meet the expenditure.
•Ensure that the requisition is approved for purchase of goods and/or services by the appropriate unit authorities.
•Determine the method of acquiring the goods and/or services requisitioned (i.e. external purchase or internal purchase).
If the goods and/or services can be obtained internally within the University, the requisition should be forwarded to the appropriate unit, unless prior arrangements have been made with these units to permit external purchasing. Consult the Departments of Facilities Management; Technical Services; Printing Services, Financial and Administrative Services; Information Technology Services; and the Faculty of Science for details on policy and procedure for their respective areas.
If the goods and/or services have to be obtained externally, the employee designated to control purchasing should determine if his/her unit has the appropriate approval authority for the particular purchase. If the items on the requisition are as described in the Special Purchase Approvals List, the requisition will require the approval of the appropriate University office.

1.2.5.3.When the requisition has been approved, the purchase may be processed.

1.2.6.Pricing of Purchase Orders

1.2.6.1.It is the responsibility of the unit, in consideration of the specifications for the goods and services set out on the requisition, to select the supplier and to establish the price to be paid in accordance with these guidelines.

1.2.6.2.It is the responsibility of the employee designated to control purchasing within a unit to ensure that the prices quoted are current prices. The Department of Financial and Administrative Services will request additional approvals if the supplier invoice is not in agreement with the applicable purchase order within specified limits.

1.2.6.3.On-line pricing from an on-line source is acceptable practice.

1.2.7.Freight
All purchase orders should indicate whether a shipment is to be sent freight collect or prepaid. To reduce freights costs, require prepaid freight wherever possible.

Shipping terms are important in identifying when ownership of the purchase takes place, reducing associated trade and customs risks, and defining the transportation arrangements. In most situations the terms should specify that the vendor will retain ownership and liability for the purchase, and pay the shipping cost until the University has physically received it.

Use of the correct shipping term is critical to ensuring the University's shipping requirements are met. Incoterms are internationally accepted commercial terms that determine the roles and responsibilities of the buyer and seller in the sale of goods. The shipping terms DAP (delivered at place) or DDP (delivered duty paid) should be used in most situations.

DAP and DDP means that the seller is responsible for all costs associated with making goods available to the buyer at a named place of destination, cleared for import, but not unloaded from vehicle. These terms can be used for any mode of transport.

1.2.8.Insurance

If the University is assuming ownership of the purchase at the point of shipping, consideration should be given to insuring the shipment. This is important as some carriers have limited liability and, should the shipment be damaged in transit, the University may only receive token recovery and the unit will be required to withstand the loss.

1.2.9.Issuing of Purchase Order

1.2.9.1.The unit, having complied with the provisions of these procedures, will issue the purchase order, representing the contract for the goods or services, and will record required delivery, sales tax, freight, and delivery location.

1.2.9.2.It is very important that the unit complete all applicable information as to the date required, shipment method and terms, billing terms, payment discount, unit, building including room number, and insurance coverage.

1.2.9.3.For commitment purposes the unit must estimate the freight charge involved, as well as the Harmonized Sales Tax.

1.2.9.4.Units should not issue several purchase orders for identical items to the same supplier. When the total requirement is known, a purchase order should be issued for that requirement with more than one delivery date given.

1.2.10.Other Considerations

The employee responsible for issuing the purchase order must ensure legal and risk implications have been considered and addressed. Such implications include, but are not limited to:

•Appropriate insurance coverage, especially where the work involves hazardous material.
•Indemnification and liability considerations.
•Privacy and confidentiality schedule if applicable.
•Non-performance considerations, such as performance bonds, labour bonds, materials and labour bonds, bid bonds, hold back mechanisms, Mechanic Liens Act. etc.
•Legislative requirements such as the Public Procurement Act, Occupational Health and Safety Act, etc.
•Provisions for extra work.
•Confirmation of standing with the Workplace Health and Safety Compensation Commission.
•Termination considerations such as an opt-out clause - a clause which will maintain the right of the University to review the contract and withdraw under appropriate circumstances.

1.2.11.Contracts

The issuance of a purchase order results in a legally binding contract. However, it may be advisable to develop a separate contract document in addition to a purchase order depending on the complexity of the purchase. See the Contract Administration policy.

1.2.12.Supplier Invoices

1.2.12.1.All supplier invoices are to be sent directly to the Department of Financial and Administrative Services for processing. Exceptions to this procedure should be arranged with the Director of Financial and Administrative Services prior to placing the order. Payment cannot be generated without the original invoice and receiving completed on the purchase order.

1.2.12.2.The supplier's invoice must show all particulars of the transaction. Monthly statements are not acceptable as invoices.

1.2.12.3.When an invoice is handwritten, it must bear the signature of the supplier as follows:

•"This is my bill - John Doe".
•Invoices on printed billheads do not require signatures.

1.2.12.4.Some expenditures require the Department of Financial and Administrative Services to check, verify and process the invoice prior to obtaining unit approval. These include:

•Customs, i.e., duty, sales tax, brokerage, special clearance charges.
•Freight charges.
•Photocopier maintenance and copy charges.
•Vehicle repairs and gasoline.
•Electronic Feeds (telephone, office supplies, etc.)

1.2.12.5.Internal invoices for requisitions within the University will be processed on receipt by the Department of Financial and Administrative Services. If an invoice appears to be incorrect, contact the unit from which the charge originated and arrange for an adjustment.

1.2.13.Standing Purchase Order

In situations where supplies and services are required on a recurring basis throughout the year, a standing purchase order can be issued. This purchase order will state the estimated yearly cost to be incurred and the contract should be awarded in accordance with the Purchasing policy and procedures. All standing purchase orders will be for the fiscal year only. For each purchase on a standing purchase order, complete the receiving for each order received and forward the invoice to Financial and Administrative Services - Accounts Payable in order to reduce the outstanding commitment.

1.2.14.Bulk Purchasing

A unit which is the major user of items needed on a recurring basis may be requested to purchase for the consolidated University requirements. Units requiring these materials should submit their requisition, once it is approved within their unit office, to the unit responsible for the central supply. An interdepartmental billing will be processed by the issuing unit for reimbursement of funds.

1.3.Direct Pays

1.3.1.Purchase orders are to be used in all purchasing situations. If the option to use a purchase order is not provided by the supplier, then a direct pay form may be used for the types of authorized purchases outlined below. All other purchases of goods and services must be made by petty cash, procurement card or purchase order. The procedures for obtaining quotations still apply to acquisitions by direct pay.

1.3.2.Items authorized for direct pay acquisition:

Advance payments as required for purchases from government agencies.
Employee reimbursements.
Human Resources remittances.
Payment of scholarships, refunds, loans and allowances.
Registration fees for approved courses, conferences, symposiums, etc.
Vendor Refunds.
Other items as approved by the Director of Financial and Administrative Services.

1.3.3.The supplier invoice is required for preparation and processing of the Direct Pay.

1.3.4.Where an order and/or application form is required, the form must be completed by the appropriate unit and then forwarded to the Department of Financial and Administrative Services with the original copy of the direct pay form for the amount required. The Department of Financial and Administrative Services will issue payment and mail it with the application form.

1.4.Procurement Card

1.4.1.All items that are eligible to be purchased via petty cash or direct pay reimbursements should be purchased using the University's Procurement Card when possible. Certain expenditures, such as travel, hosting, and tangible capital assets are not eligible.

1.4.2.Where there are recurring payments, charge accounts or where open call for bids are involved, a purchase order must be used (instead of the Procurement Card) for control and commitment purposes.

1.4.3.All expenditures made using the Procurement Card must follow the Purchasing Policy.

1.4.4.When using the Procurement Card as a method of acquisition, the purchaser must ensure all relevant University policies are followed, including the obtaining of quotes, as outlined in the Purchasing Policy.

1.4.5.The Procurement Card Program is based on the purchasing card, MasterCard. Purchases made with the Card are to follow University Policy and are not intended as a means of bypassing appropriate procedures or sound purchasing practices. The program incorporates controls over certain types of expenditures including travel, hosting and tangible capital assets. Contact the Department of Financial and Administrative Services for further details.

1.4.6.The purpose of the program is to establish a more efficient, cost effective method of purchasing and payment for small dollar transactions. The Procurement Card is intended to replace the bulk of purchases made using petty cash or submitted as reimbursement on Direct Pays. The Procurement Card does not replace the American Express or BMO Diners Club MasterCard for travel.

1.4.7.All Procurement Cards are issued at the request of the Unit Head. The Cardholder must be the only person using the card, and is responsible for its use. The card is subject to audit by the Department of Financial and Administrative Services at any time. The card must not be used for personal purchases, or inter-University purchases.

1.4.8.An application to apply for a card can be obtained by contacting the Department of Financial and Administrative Services. The application must be approved by the immediate Supervisor who has signing authority on the default FOAPAL for the card. The Supervisor must specify a monthly credit limit and single transaction limit (options include $1,000 or $2,500).

1.4.9.The card will take approximately two (2) weeks to process. When the card arrives, the Cardholder must complete a waiver form at the Department of Financial and Administrative Services before picking up the card; ensure all information on the card is correct; sign it immediately and call the (800) number provided on the card to activate it.

1.4.10.The program carries a corporate liability. The Cardholder's MasterCard bill is paid by the Department of Financial and Administrative Services.

1.4.11.Reconciliation Process

1.4.11.1.On the 27th of each month, the MasterCard transactions for the previous month are made available to the Cardholders by accessing the BMO Spend Dynamics Website.

1.4.11.2.Cardholders are given a time frame of approximately 10-14 days from the time the files are made available in which to complete their reconciliation. The adjusted transactions will then be uploaded to Banner Finance. Once reconciliations are completed, the Cardholder will review the statement, forward it (along with all supporting receipts) to his/her supervisor who will in turn review and approve it and redirect the package to the Department of Financial and Administrative Services.

1.4.11.3.FOAPAL reallocations and tax reconciliations must be completed on the BMO Spend Dynamics site.  Individual Cardholders will be provided with a user ID and password to access the site. Cardholders will also be provided with a copy of the Procurement Card Guide which outlines the complete Procurement Card system for Memorial University. If further assistance is needed, or if a Cardholder experiences difficulties accessing the site, please contact the Procurement Card Administrator, Department of Financial and Administrative Services.

1.4.11.4.The Department of Financial and Administrative Services will place the Procurement Card on a financial hold if approved reconciliations with supporting documents are not received on a timely basis.

1.4.12.Disputing Transactions

1.4.12.1.The Cardholder's first recourse is to contact the vendor involved to try and resolve the dispute. If the vendor agrees, a credit will be applied to the account.

1.4.12.2.If the vendor does not agree that an error was made, contact the BMO Customer Service at 1-800-844-6445 and/or the P-Card Administrator at Department of Financial and Administrative Services. The Cardholder must give all pertinent details and state that he/she would like to dispute a charge on the card. This must be done within 30 days of the statement date. Disputes will then be resolved by the BMO within 90 days.

1.5.Petty Cash

1.5.1.University orders by faculty/staff charged to their personal credit card are not to be permitted, except for purchases of $75 or less (including taxes).

1.5.2.Expenditures greater than $75 require the use of a Direct Pay, Procurement Card or Purchase Order, in accordance with policy guidelines.

1.5.3.When the volume of petty cash transactions is sufficiently high, the Director of Financial and Administrative Services, when requested, may provide a unit with its own petty cash float. The unit’s petty cash float is used to reimburse the unit’s employees for expenses incurred on behalf of the University. When such a float is provided, reimbursements require:

•The original itemized invoice from the vendor.
•Accounting information.
•An authorized signing authority for the account being charged.

1.5.4.When presented with an invoice for reimbursement through the unit petty cash, a Petty Cash Voucher must be completed. The petty cash voucher, with invoice/receipt attached, will be prepared by the custodian and the appropriate approval obtained prior to reimbursement. Credit card receipts are not considered acceptable receipts for purposes of this policy. The petty cash voucher must be signed by the employee being reimbursed as proof of receipt of funds.

1.5.5.The employee responsible to approve all petty cash reimbursements will not be the custodian of the float, and will be an authorized signatory on the account being charged.

1.5.6.On a bi-monthly basis or as required, the petty cash float is to be replenished by the Department of Financial and Administrative Services. The vouchers are to be summarized on the Petty Cash Summary Sheet.  The total of the summary must agree with the total of the petty cash vouchers. Total vouchers as per the summary, plus remaining cash float, must equal the float issued.

1.5.7.Safeguarding of Petty Cash

1.5.7.1.The custodian is responsible for safeguarding petty cash and must ensure that the petty cash box is locked in a filing cabinet or safe when not in use.

1.5.7.2.Keys allowing access to the petty cash fund are the sole responsibility of the custodian. Thefts of petty cash funds are to be reported to the Campus Enforcement and Patrol, Office of the Chief Risk Officer, and the Department of Financial and Administrative Services immediately. The custodian is personally responsible for all losses attributed to negligence on his/her part.

1.5.7.3.As expenditures are made, place the receipts in a cash box or locked drawer to replace the money expended. The receipts and the cash on hand must always equal the total amount of the imprest fund for control purposes. Receipts should be kept separately from the cash.

1.5.8.Payments Not Allowed

The employee responsible for the petty cash is encouraged to seek advice from the campus financial administrator prior to making questionable payments which are not specifically addressed in the Schedule of Purchasing Authority and Approvals or Special Purchase Approvals. The following types of payments are not permitted from petty cash:

•Personal items of expenditure, such as childcare, business bags, kitchen supplies, thesis costs, seminar or course fees, gratuities, etc.
•Reimbursement of coffee supplies is strictly prohibited with the exception of supplies required by the Unit Head for hosting.
•Christmas trees, decorations, cards, flowers or gifts for staff members, their families or other dependents.
•Travel expenses, entertainment expenses and car allowances will be settled by cheque issued from the Department of Financial and Administrative Services in accordance with the appropriate policy, unless other arrangements have been made.
•Casual help, overtime and special payments for employees.
•Parking violations or any traffic offenses whether incurred by University owned, leased or private vehicles.
•Cashing of personal cheques, making loans or advances.

1.5.9.Reimbursement from the central petty cash floats

1.5.9.1.Central petty cash floats are maintained in Financial and Administrative Services on the St. John’s Campus and in the Bursar’s Office at Grenfell Campus.

1.5.9.2.Each unit of the University should have a supply of Petty Cash Vouchers.

1.5.9.3.The completed and approved Petty Cash Voucher, plus the original vendor invoice/receipt for the expenditure, should be within a week of making the expenditure.

1.5.9.4.Employees are not permitted to authorize reimbursement of expenditures to themselves.