Internal Controls for Purchases and Payables

I) PURCHASING

Basic Principle: Disbursements should be handled in a manner to ensure that the proper funds and accounts are charged, the disbursement is properly authorized and in compliance with applicable policy, law or regulations.

Purchases should be coordinated through the Purchasing Department to obtain competitive bidding.
Use vendors with whom the university has discount agreements with or are recommended by Purchasing.
Ensure approvals are appropriate and are someone other than the preparer.
Comply with the Conflict of Interest policy.
Personal items should not be purchased even if the employee will reimburse.
Sales tax should not be paid.
Use a University credit card for ease of processing transactions.
Discourage personal reimbursements for purchases.

II) CREDIT CARDS

Basic Principle: The use of credit cards is encouraged due to the convenience and enhancement of operational efficiency. The use of credit cards has also shifted a degree of purchasing authority from central Purchasing to the many departments and units that comprise the University community. At Syracuse University, departments and cardholders have been assigned some basic responsibilities to control, monitor, and manage the use of the cards, as follows:

Cardholders are responsible for the safekeeping of the cards, and cards should not be used by anyone other than the designated cardholder.
User departments are responsible for the maintenance of accurate transaction receipts, and monitoring and reconciliation of cardholder activity. Monthly reconciliations should be performed to support the statements with receipts that clearly document the purpose of the expense. The distribution journals should be attached and filed for easy reference.
The person approving the expenditures should be someone other than the cardholder and be an authorized account signer. Ideally, the approver should be at a higher level of authority than the cardholder.
The pre-set per transaction spending limit ($500) may not be exceeded under any circumstances. Do not split transactions to avoid this limit.
Cardholders are responsible to obtain itemized transaction receipts each time the card is used.
User departments are responsible to make certain that sales tax is not charged to the card when appropriate.
Special policies are in effect for use with sponsored and restricted accounts. On federal awards no office supplies nor postage and other courier express services unless the award meets exception criteria. Additionally, no employee gifts, equipment/capital expenditures, lab research animals can be charged on procurement cards.
Report lost or stolen cards immediately.
Cardholders may not use the cards for personal use.

Related SU Policies/Procedures:
Credit Card Policy

Credit Card Procedures

III) TRAVEL

Basic Principle: The policy and procedures surrounding travel are discussed in detail in the administrative policy manual. There are a few additional considerations:

Consideration should be given to using the University credit card.
It is important to mention that the travel can be recognized by the IRS as compensation if certain criteria are not met. Most importantly receipts over $75 need to be itemized, clearly indicate the date, place, amount, business purpose, who was in attendance and their relationship to the university.
Expenses under $75 do not require receipts but do require a documented business purpose, however; it is best business practice to make it a habit to do so for all expenses. We will be looking for it during our audits.
Spouse/guest travel is generally unallowable unless paid for separately.
SU does not allow per diem rates.

Related SU Policies/Procedures:
Travel Overview, Policy and Procedures

IV) INTERDEPARTMENTAL BILLINGS

Basic Principle: Accuracy and proper authorization of transasctions.

ID’s should be processed timely.
These should be included in the monthly reconciliation process
Rates should be published and consistently charged.

Related SU Policies/Procedures:
Intra-University Charges For Service

V) PETTY CASH FUNDS

Basic Principle: The University credit card can be used to purchase many of the items a petty cash fund was traditionally used for. If you find there is still a need then keep the following in mind for good internal control practices:

Only one individual should have access and responsibility for the fund, with a back up designated on an as needed basis.
Funds should be on the books. Meaning that they are established through the Comptroller’s Office and are assigned an account number.
Someone other than the custodian should periodically count and verify the fund balance. The total of the cash plus the receipts plus outstanding reimbursements should equal the original amount of the fund.
Do not intermingle the petty cash with other receipts or copy/coffee funds.
Do not use the funds for personal business, including loans, expenses or the cashing of checks.
Ensure original receipts are maintained and the explanation documented for all expenditures.
Periodically (at least monthly) submit all receipts for reimbursement. The reimbursement should be reviewed by a supervisor for propriety prior to submission to the Comptroller’s Office.
Keep the fund physically secured at all times.
Consideration should be given to closing the petty cash fund if there is no longer a need for it. University credit cards can be used as an alternative.

Related SU Policies/Procedures:
Petty Cash Overview, Policy and Procedures

VI) SPECIAL CONSIDERATIONS:

There are a few expenditures to particular accounts that require special attention:

1. Expenses Charged to Restricted Accounts – Non-Sponsored

Basic Principle: Legally the University is obligated to expend funds in accordance with the accounts restrictions.

Ensure the authorized signers for these accounts are aware of the donor restrictions placed on them. A copy of the restrictions can be obtained by contacting Restricted Accounting under the Comptrollers Office.
If any financial aid is disseminated from these funds, ensure the distribution is in compliance with the restricted scholarship policy which establishes the Financial Aid Office as the sole authority for awarding student financial aid.
This process also involves establishing solid lines of communication with your Development Officer. The Development Officer is typically in the best position to communicate the intent of the gift.

2. Deans Discretionary Accounts

Basic Principle: Occasionally a gift is received that has donor restrictions in addition to the “Dean’s discretion” but they are either a small amount or one time gifts so they are commingled with funds in the discretionary account. In these instances it is imperative that an effective method be developed to ensure the funds are expended in accordance with the donor’s intentions.

Maintain a sub-ledger that identifies the portion of the discretionary account that is truly unrestricted and the portions that have additional restrictions. The FAB system "my code" can be used to easily address this.
As expenses are made, the restricted balances should be according reduced.
Reconcile the sub-ledger balance monthly to the general ledger balance if not using "my code".
This process also involves establishing solid lines of communication with your Development Officer. The Development Officer is typically in the best position to communicate the intent of the gift.

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