Internal Controls for Procurements and Expenditures

Risks: Personal Charges, Fraud, Kickbacks, Policy Violations, Duplicate Charges, Misappropriations

 

General Expenditures

Disbursements should be handled in a manner that ensures proper use of funds and appropriate accounts charged. The disbursement should be properly authorized and in compliance with applicable policy, law or regulations.

  • Purchases should be coordinated through the Purchasing Office to obtain competitive bidding which ensures best pricing and products.
  • Use vendors with whom the University has discount agreements or are recommended by Purchasing.
  • Ensure approvals are from an appropriate level and are someone of higher authority and other than the preparer.
  • Separate authorization and reconciliation duties.
  • Ensure the person responsible for account reviews reconciles the transactions to supporting documentation.
  • Internal resources are to be used (i.e. catering, printing).
  • 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 the JPMC University credit card for ease of processing transactions.

Related SU Policies/Procedures:

Conflict of Interest
Purchasing, Competitive Bidding
Expenditure of University Funds
Purchasing, Procurement Agreements 
Purchasing of Classified Advertising
Sustainable Purchasing
Expenses, Reimbursement of

 

 

Sponsored Program Non-Payroll Expenditures

  • Sponsored program purchases should be in compliance with agreements and submitted to the Office of Sponsored Accounting for review.
  • Certain types of expenditures are not allowable under federally sponsored programs as outlined in the Unallowable Costs policy.

Related SU Policies/Procedures:

Unallowable Costs

 

JPMC Credit Card Purchases

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 across 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. Cards are to be used by individuals and not groups.
  • 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 an authorized account signer. The approver should be at a higher level of authority than the cardholder.
  • The pre-set per transaction spending limits ($1,000 procurement, $9,999 travel) may not be exceeded under any circumstances. Do not split transactions to avoid this limit or your card could be revoked.
  • Cardholders are responsible to obtain itemized transaction receipts for ALL transactions.
  • Card users are responsible to make certain sales tax is not charged. Tax exempt forms can be obtained from the Manager of the Credit Card Program at x1957.
  • Report lost or stolen cards immediately.
  • Cardholders may not use the cards for personal use.
  • Procedures should be in place to disable cards immediately upon termination or separation of employment, including notifying the Manager of the Credit Card Program at x1957.

Related SU Policies/Procedures:

University Credit Card Policy

 

Travel

The policy and procedures surrounding travel are discussed in detail in the administrative policy manual. This policy was revised in 2014 and now ALL expenses are required to have supporting documentation including itemized receipts outlining the date, place, amount, specific business purpose, and attendees and their relationship to the university. 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.
  • Spouse/guest travel is generally unallowable unless paid for separately.
  • SU does not currently allow per diem rates.

Related SU Policies/Procedures:

Travel Overview, Policy and Procedures
Travel Policy

 

Interdepartmental Billings

Before a department can charge another for services or materials, the arrangement must be approved. See policy below. Additional considerations:

  • 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

 

Petty Cash Funds

The University credit card can be used to purchase many of the items a petty cash fund was traditionally used for. If 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. This means the funds need to be established through the Comptroller’s Office and 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 comingle 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 of the business purpose 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

 

Special Considerations

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

Expenses Charged to Restricted Accounts – Non-Sponsored

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 within the Comptroller’s 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 in Advancement and External Affairs. The Development Officer is typically in the best position to communicate the intent of the gift.
  • If the restrictions are such that the funds cannot be spent, Advancement and External Affairs should be notified and attempts made to contact the donor. If living, the agreement can be modified to meet the needs of both the institution and the donor’s intent.       If deceased, “cy pres” (as close to the donor’s intent) litigation will need to be sought to release the restrictions. This involves presenting the circumstances to the Attorney General.       The Treasurer’s Office can assist in facilitating this process.

Deans Discretionary Accounts

Occasionally a small or one time gift is received with donor restrictions in addition to the “Dean’s discretion”, however, these gifts are still housed in the discretionary account. As a result the discretionary funds are commingled with unrestricted and restricted funds. In these instances it is imperative that an effective method be developed to track expenditures 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 reduced accordingly.
  • Reconcile the sub-ledger balance monthly to the general ledger balance if not using “my code”.