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HomeMy WebLinkAboutAccounts Payable Policy July 2016Page 1 Administrative Policies and Procedures Title: Financial Policies Resolution No.: Section: Accounts Payable Policy Date of Version: March 2017 SECTION I - POLICIES A. The preferred method for processing invoices is that they are delivered directly from the vendors to the Accounting division at City Hall. Departments may receive invoices directly from the vendor; however, the Department will be responsible for lost or late payments of invoices. B. All payments will be required to be approved using the following limits: 1. The Finance Director reviews all capital outlay and capital project payments over $5,000 2. Supervisors can approve up to $2,500 3. Division heads can approve up to $5,000 4. Between $5,000 and $25,000 will be approved by Department Heads 5. Greater than $25,000 need City Manager approval The City Controller & Purchasing Agent will review all payments over $10,000 C. All applicable documents must be properly entered into the Munis financial system in a timely manner and processed expeditiously. D. Vendor payments are processed weekly and payments are mailed or delivered each Friday. Requests for payment not received prior to Tuesday will be held until the next processing date unless the Finance Department has time available to process the paperwork. Farmers Market payments and Housing Authority voucher and utility reimbursement payments are due on Monday for weekly processing. E. No purchase made by an employee shall bind the City to receive and/or pay for the goods or services procured, unless authorized by the purchasing methods described in the Purchasing Manual. Page 2 F. The City does not, as a general rule, prepay for goods or services or utilize prepaid devices such as gift cards. If a vendor requires prepayment for goods or services, authorization from the Finance Department is required. G. All employee travel and training reimbursements must use the Travel & Training Forms and all employee reimbursements must use the Employee Expense Reimbursement Form. These will not be entered as accounts payable but should be forwarded to the Account Clerk-Accounting for processing. Employee reimbursements will be processed through payroll and will be paid to the employee on the next scheduled payroll date. H. Failure to comply with these policies and procedures could result in disciplinary action up to and including termination. SECTION II - PROCEDURES A. Department Paperwork Processing 1. Verifying Receipt of Goods and Services – proof of receipt/acceptance a. Goods purchased over the counter or that are ordered and delivered – processing of store receipt or invoice in Munis indicates goods have been received and are acceptable. Any deficiencies in the order must be noted and any changes to the amount owed should be corrected prior to processing. b. Services and/or equipment contracted or ordered – (purchase order or contract) – The individual receiving the goods or services must sign the packing slip, progress payment summary, a copy of the Munis purchase order, or a copy of Munis contract form, whichever applies. This is the receiving report and verifies that goods have been received and are acceptable, and that the shipment received matches the order. Any deficiencies must be noted on the receiving report. c. Maintenance agreements, ongoing service contracts, rents and leases, subscription renewals, real estate purchase contracts, or annual dues – (no purchase order or contract) – appropriate signatures on monthly, quarterly, or annual statements/invoices indicate the acceptance, completion, or continuance of services. d. Public improvement contracts through the Engineering division – (informal or formal bid) – formal construction/contract progress reports must be completed and signed by the City employee or engineer overseeing the contract verifying quantities and level of completion. Final payments and retention releases for public improvement contracts also require a copy of the City Council authorizing resolution. Page 3 e. The receiving report and similar receiving documents should be included in paperwork entered into Munis for processing and authorization. 2. Processing invoice and authorizing payment a. The Account Clerk-Accounting will stamp and date invoices received from the vendor unless the received date is clearly identifiable such as from a fax or e-mail marking. The invoices will then be sent to the department making the purchase for processing. If the department receives the invoice directly from the vendor, the individual receiving the invoice will stamp and date the invoice on the day it is received. If there is not a vendor invoice for the payment, a check request form shall be completed by the department in its place. Vendor statements or letters are not sufficient documentation for payment. b. The Housing Authority will submit its voucher payments via electronic file to the Account Clerk-Accounting. c. The following documents should be attached to the invoice if they are applicable: 1. Receiving Report 2. Construction/contract progress report 3. Other documentation available such as City Council resolution, contracts, correspondence, bid summaries, statements, etc. d. The above documents should be assembled and scanned into Munis. e. The Munis accounts payable data entry screen should be filled out in its entirety and should clearly indicate the purchase order number, contract number, and org/object/project (strings). For payments to the prior fiscal year, they must be processed in separate batches from payments for the current fiscal year. f. Invoices and all other payment types must be reviewed in Munis by the department’s staff for correct quantities, rates, product numbers, terms, specifications, etc., and compared to the receiving documents and purchase order or contract. At this step, any deficiencies to the original purchase order or contract, including vendor information, quantity, price, etc., should be noted and appropriately documented on a copy of the purchase order, contract, or the receiving documents. Page 4 g. The Senior Accounts Payable Clerk will review accounts payable entries to determine if entries are complete and the coding is correct. The Senior Accountant-Accounting will review accounts payable entries at year-end to ensure that accruals are recorded properly and in the correct fiscal year. h. Approvals and reviews will be completed in the Munis system workflow. Approval in Munis indicates that all goods and services have been received and are acceptable, that any necessary changes or corrections to amounts owed have been made, and that the City should remit the amount owed to the vendor. B. Check/ACH Issuance 1. Payment Issuance a. The Senior Accounts Payable Clerk will review and process the approved requests for payment in Munis weekly. Farmers Market vendor payments will be processed each Tuesday; Housing Authority voucher and utility reimbursement checks and accounts payable checks will be processed each Wednesday. The Senior Accounts Payable Clerk will notify the Customer Service Representative in the Revenue division when the checks are ready to be printed and provide them with the batch number, batch total, beginning check number, the check date, and the type of payment (ACH or check). b. The Customer Service Representative in the Revenue division will print the checks and create the ACH file. The MICR toner cartridge will be secured in the Revenue division vault, and the check signature key will be secured by the Finance Secretary in a locked cabinet when checks are not being processed. c. Following the process by the Customer Service Representative: 1. If Check – the checks that have remittances or other information to be sent with the check will be forwarded to the Account Clerk- Accounting to have the documents inserted into the accounts payable envelopes. These payments will then be sent back to the Customer Service Representative in the Revenue division for safekeeping. The checks will be held in the vault in the Revenue division until Friday. The Customer Service Representative will then deliver the checks or mail the checks to the vendors. If a vendor representative wishes to pick up a check in person, their identity and eligibility must be verified by the Customer Service Representative. Page 5 2. If ACH – the Senior Accountant-Revenue will process the Munis ACH file through the City’s online banking. d. All checks, ACH transfers, and wire transfers will be signed in accordance with the City’s Banking Policy. The computer will sign the checks with digital signatures that are password protected. Actual signatures will be used only in situations where the digital signatures are unavailable. e. City Controller or designee posts the accounts payable cash disbursements journal to the general ledger in Munis. f. A list summarizing all payments to vendors during the previous month will be prepared. The list will be published in the local newspaper as prescribed by law and will also be provided to the City Council for approval. The City Controller will review all claims lists. 2. Manual checks are payments that are processed outside of the normal check processing schedule. Manual checks may be permitted for the following reasons: a. In order to meet vendor due dates b. Emergencies c. Real estate closings or legal settlements d. As approved by the City Manager or the Finance Director, or their designee Unless listed above, all payments must be processed at regularly scheduled dates. 3. Lost or stolen checks (void and re-issuance) a. Payee must wait 30 calendar days for replacement of a check. b. A stop order is only required where the check is for an amount over the bank stop payment fee. c. Replacement checks may only be requested by the payee listed on the original check. d. The Senior Accountant-Revenue division will initiate stop-payment- orders with the bank which will be signed by the Finance Director. The Senior Accountant-Revenue will submit the request to the Account Clerk-Accounting to process a replacement check. 4. Outstanding checks a. If a check has been outstanding for over six months, the check is considered void. Page 6 b. For outstanding accounts payable checks over 2 years old and security deposit checks over 1 year old, the Senior Accountant-Revenue will send a letter to the payee notifying them of the outstanding check. The payee will be given 10 business days to respond to the letter. 1. If the payee responds, the old check will be voided and a new check issued to the payee, if necessary. 2. If the payee does not respond, the old check will be voided. No stop payment order is necessary. c. Amounts owed to vendors from Iowa for outstanding and voided checks will be turned over to the Treasurer of the State of Iowa as prescribed by law. The Senior Accountant-Revenue will process these filings annually. C. Vendor Management 1. All vendors must be approved through the Finance Department. The Finance Department must receive a completed W-9 form from a vendor prior to approval. Payments to a vendor will not be released prior to the vendor being approved by the Finance Department. 2. Vendors should use the preferred billing address when invoicing the City: City of Iowa City – Accounting division 410 E. Washington Street Iowa City, IA 52240-1826 3. New vendor information including the W-9 must be forwarded to the Senior Accounts Payable Clerk in Accounting. The Senior Accounts Payable Clerk will set up new vendors and provide the new vendor number to the department/division. 4. Vendors applying for ACH payments must submit a signed ACH form and include a voided check. 5. Vendor credit applications should be forwarded to the Purchasing division in the Finance Department. The City does not complete vendor credit applications, but the Purchasing division will work with the vendor to provide them with the information they need. 6. For vendors contracted through the Purchasing division, all contract issues must go through the Purchasing division. This does not include the ordering of goods and services. 7. 1099s will be processed annually as required by law by the Senior Accounts Payable Clerk and the City Controller.