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					Comptroller’s manual

Accounts Payable

1. Introduction

   This section encompasses the policies and procedures for AUB accounts payable,
   including inquiry, invoicing, payments, and control.

2. Policies

   A. Payments

       The Purchasing Department will establish the procedures necessary to ensure
       prompt payment to the suppliers, in accordance with provisions of the purchase
       order, for performing in compliance with the AUB order.
       1. Local P. O.:
          Upon the delivery of goods, vendors submit their invoices to the vendor’s
          (accounts payable section) section in the Comptrollers Office for payment.
          The P.O. number should be indicated by the vendor on the invoice. In case
          of discrepancies between the invoice and the eligible amount to be paid,
          invoices are passed to purchasing for investigation and approval.

       2. Foreign P.O.:
          Payment in settlement of foreign P.O.'s is processed in accordance to the
          policy of the supplier according to the following methods:
          a. Payment by bank transfer in advance.
          b. Payment by bank transfer upon the receipt of goods and invoice.
          c. Payment by sight draft against shipping documents through the bank.

       3. US P.O.:
          Payments to suppliers in the US in settlement of their invoices are made by
          our US purchasing agent on behalf of AUB. In return, monthly payments are
          made to the US purchasing agent on the basis of supporting P.O.’s issued.

   B. Types of Payments

       1. Vendor Payment

          All vendor payments must be made against an approved purchase order and
          only after verification of receipt of goods or performance of services (three-
          way matching).

       2. Employee Travel Advances
Comptroller’s manual

          An employee is paid a travel advance based on an approved travel advance
          request and an approved purchase order initiated by either the budget control
          section for unrestricted funds or by the GGCP section for restricted funds.

      3. Low Value Orders

          University departments are delegated the authority to make purchases from
          approved suppliers when the value of the purchase is $300/LL 450,000.

      4. Small Payments to Employees ($250 or Less)

          a. Departments send payment vouchers to the Office of the Comptroller
             with required details in the usual manner, but including employee’s
             payroll number.

          b. Payment vouchers will be distributed to the appropriate section of the
             Office of the Comptroller for budget checking.

          c. If payment voucher receives budget approval, vouchers are forwarded to
             the Payables Section, sorting according to amounts and checking of
             accuracy of voucher information.

          d. Payments to employees of amounts equivalent to $250 or less are
             forwarded to the Accounts Receivable Section for processing.

          e. The Accounts Receivable Section check for on-payroll staff and credits
             the amounts to the employees’ accounts and debits accounts as approved
             by the Budget Section.

          f. Employees’ credit balances will be paid with their payroll at the end of
             the month or will offset debit balances in their accounts, if any.

      5. Student Work scholarships or Refunds

          Payments to students are made based on an approved scholarship. They will
          be direct paid without a PO.

      6. Petty Cash

          The custodian is paid a petty cash advance based on an approval petty cash
          advance request and an approved purchase order initiated by either the
          budget control section for unrestricted funds or by the GGCP section for
          restricted funds.

   C. Matching Invoices

      1. Supplier invoices may be received either on paper or electronically. All
         invoices must reference the appropriate purchase order or blanket purchase
         order and release number. Any invoice that does not include the appropriate
Comptroller’s manual

          reference number will be returned to the supplier for proper identification
          unless it is an authorized direct purchase by the department.
      2. The accounts payable section will match all invoices to purchase orders and
         receiving (three-way match) before processing for payment. If there are
         discrepancies, an automatic system HOLD will be placed on the invoice
         until resolution. The receiving department will collaborate with the supplier
         and the Purchasing Department to resolve any variance and complete the
         appropriate transactions.
      3. All purchase order related invoices that are will be matched to a purchase
         order only (two-way match). The accounts payable section will pay the
         amount due upon receipt of the invoice. No match to Receiving is required.
         The receiving department has 30 days from the invoice date to report any
         discrepancies to the accounts payable section. The accounts payable section
         will put the invoice on hold until the receiving department has resolved the
      4. For goods and services received by the departments directly, departments
         are required to record verification of receipt in the university financial

   D. Invoice Holds

      1. Accounts payable section will place a system hold on invoices under certain
         circumstances. These circumstances include but are not limited to:
          a. Quantity Variance:
             i. An invoice is placed on hold if the quantity billed exceeds the
                quantity ordered and/or received.
             ii. A system generated alert is sent to the requesting department and the
                 Purchasing Department notifying them of the hold.
             iii. The purchasing department is responsible for resolving the variance
                  with the supplier. The purchasing department may amend the
                  purchase order, if necessary.
          b. Supplier Performance: All invoices from a particular supplier may be
             placed on hold pending resolution of issues relating to Supplier
             Performance. The Purchasing department will be responsible for
             resolving issues and authorizing releasing hold.
             Authorization: An invoice will be placed on hold pending appropriate
             authorization and approvals (refer Authorization and Approval Levels
             policy). The department will be responsible for ensuring that all invoices
             have proper authorizations and approvals. The following are approval
             levels for financial transactions at the university:
Comptroller’s manual

             Amount                                Authorized Persons

             Low value orders to $300              Section heads or delegated authority.

             $301 to $4,999                        Manager, chairperson, or department

             $5000 to $49,999                      Director, dean, or controller

             $50,000 to $99,999                    Provost or vice president

             $100,000 and Up                       President

             In addition, all reimbursement for personal expenses should be approved
             by the employees’ supervisor. No authorized person should approve a
             transaction that they are personally involved in, even if that transaction
             is within their authorized approval range. In all such cases approval
             should be made by the employees’ immediate supervisor.
      2. Invoice hold on any one invoice from a supplier will not preclude the
         accounts payable section from processing other outstanding invoices from
         the same supplier unless the invoice hold is due to supplier performance.

   E. Payment Distribution
      Acceptable methods of payments are: checks, electronic funds transfer (e.g.,
      direct deposit). Accounts payable will determine the appropriate method of
      payment. Payments to employees for reimbursements will be made through
      checks or direct deposits.
      At AUB, checks are not mailed. Beneficiaries come to AUB and receive their
      checks. If a check issued by the University is lost or stolen, the payee or the
      department should contact accounts payable to request a stop payment.
      1. Checks to replace lost or stolen checks are issued after the University places
         a stop payment and receives confirmation from its bank that the original
         check has not cleared the University's bank account.
      2. Payees should return damaged checks to the accounts payable for voiding
         and issuance of replacement check.
      3. Invoices to purchases made in compliance with the University's purchasing
         policy will be paid 30 days after the invoice date unless there are favorable
         discount terms offered to the University. Invoices for food purchases are
         made 21 days after the date of the invoice. Invoices to travel agents and
         contractors are paid seven days after the date of the invoice.
      4. The University will apply supplier credit memorandum, issued for returns or
         over-billed invoices, against future open invoices.
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      5. Original receipts are required for all reimbursement expenses over $25.
      6. If a request for a reimbursement does not conform to stated university
         policies, or if a receipt is lost or missing, an "exception" memorandum,
         approved by an authorized signatory should be sent to accounts payable
         explaining why this exception is warranted, and, if necessary, describing
         missing documentation. However, every effort must first be made to obtain
         a copy of the lost or missing receipt.
      7. Within the guidelines of university policy, minor expenses, will be paid out
         of petty cash whenever possible.
      8. Departments must make use of the University's tax-exempt status. The
         accounts payable section will not pay any taxes from which the University is

      9. Please refer to the travel policy for policies governing travel and personal
         expense reimbursements.

   F. Payments to Non-Resident Aliens

      1. All non-employee related payments made to or on behalf of a non-resident
         supplier are covered by this policy. Payments include, but are not limited to:
         a. Honoraria
         b. Consulting fees
         c. Speaker fees
         d. Travel and living allowances
         e. Awards and prizes
         f. Scholarships, fellowships, and stipends
         g. Contract fees

      2. A non-resident Lebanese tax (7.5 percent) must be withheld on all payments
         made to or on behalf of a non-resident supplier, unless he/she declares his
         own taxes as self-employed.

      3. The Comptroller's Office must determine and inform payroll and accounts
         payable of the percentage of taxes to be withheld.

   G. VAT

      Accounts payable recalculates VAT owed by AUB on every invoice and
      ensures accuracy and compliance to VAT rules and exemptions.

   H. Travel

      See travel policies on AUB web site.

   I. Petty Cash
Comptroller’s manual

      1. All new petty cash funds and increases in existing petty cash funds must be
         approved by the University Comptroller's Office. Requesting department
         must use a petty cash form for submitting the request.

      2. Establishing or increasing a petty cash fund:
          a.   A department head may request the University Comptroller's Office to
               establish a petty cash fund if:
               i. There is an on-going need to reimburse employees for small, out-of-
                  pocket non store expenses;
               ii. There is no petty cash fund in close proximity that can be used by
                   the department;
               iii. The department has the capability to safeguard the petty cash funds.
          b.   The size of the petty cash fund must be small enough to require
               replenishment at least once monthly, and large enough to require no
               more than three replenishments per month.
          c.   The individual amount allowed for each petty cash fund will be
               determined by the Comptroller's Office on the basis of the department
          d.   If the need of the department changes to require more than three
               replenishments per month then the department head should submit a
               written request to the Comptroller's Office justifying an increase in
               petty cash fund. Special circumstances require prior approval by the
               Comptroller's Office.
          e.   Petty cash funds will be limited to one per department. Departments
               that have different sections that are separate can have one petty cash per
      3. The department head must appoint an individual to be a custodian of the
         department's petty cash fund. The custodian is directly responsible for the
         safekeeping, disbursement, reconciliation and replenishment of the fund.

      4. Segregation of duties between the custodian and the reimbursement
         approver is required. The person approving the vouchers should not be the
         custodian of the Petty cash fund. Moreover cash custody has to be with the
         custodian at all times.
      5. Managing a petty cash fund:
          a.   Expenditures reimbursed from petty cash fund must be made for the
               purposes for which the fund was established and must be supported by
               receipts. A petty cash receipt should be prepared for all expenditures.
          b.   An individual who has signature authority for the department/account
               being charged must approve all expenses.
Comptroller’s manual

          c.   The individual being reimbursed must sign the petty cash receipt slip.
          d.   Petty cash funds must be kept in a securely locked compartment not
               accessible to anyone other than the fund custodian.
          e.   The custodian is responsible for balancing the petty cash fund. At any
               time, the total cash on hand plus the total receipts should equal the
               original amount of the petty cash fund. The reason for any differences
               should be immediately determined. The head of the department has to
               perform twice a year count and control on the petty cash amount.
          f.   Custodians are requested to get official VAT invoices from registered
               VAT suppliers.
          g.   Petty cash purchases should not exceed the Petty cash advance, thus
               splitting of orders over several invoices is not allowed. Purchases in
               excess of the fund should be made via other than Petty cash.
          h.   Irreconcilable differences are classified as losses due to error or losses
               due to theft. The custodian should immediately report losses to the
               department head, internal audit, Comptroller's Office. In addition, for
               losses due to theft, the Protection Department should also be notified.
          i.   If losses were caused by custodian's carelessness, the department head
               will determine whether to replace the custodian.
          j.   All losses are the department's responsibility and will be charged to the
          k.   Replenishment requests must be supported by receipts and should be
               sent by the custodian to the Budget control and GGCP sections.
          l.   All petty cash funds are subject to unannounced audits by the internal
               audit department.
          m. A department head may transfer the petty cash fund to a new custodian
             after notifying the Comptroller's Office in writing.
      6. Terminating and decreasing a petty cash fund:
          a. Funds can be terminated by:
               i. The department head, if the department determines there is no longer
                  a need for a petty cash fund;
               ii. The Comptroller's Office, if the fund is not operated in accordance
                   with the university policies or if the fund has not been used for a
               iii. Purchasing, if procurement cards will suffice as replacement for
                    petty cash.
Comptroller’s manual

          b. If the needs of the department changes to require less than one
             replenishment per month then the department head must notify the
             University Comptroller's Office to decrease the petty cash fund.

3. Flows and Narratives

   Click on the process to see the flow and narrative.

    Supplier Entry Process
    Supplier Maintenance Process
    PO Matching Invoice Entry Process
    Invoice Approval Process
    Automatic Payment Process
    Direct Invoice Entry Process
    Prepayment Application Process
    Prepayment Process
    Manual Payment Process
    Invoice Hold Release Process
    Invoice Adjustment Process
    Void Payment process
    Credit Memo
    Cancel Payment Process
    Expense Report Process
    Status Inquiry Process
    Transfer to General Ledger
    Period Close Process