VIII. Supplies and Operating Expenses

  1. PURCHASING PROCEDURES

    Purchasing procedures establish the authority and mechanics required in purchasing for the subrecipient’s operation. The purpose is to establish guidelines and regulations governing the purchase of supplies, equipment, contractual services, and other items, to ensure that funds are expended in accordance with an approved budget and management’s wishes, with consideration of the availability of funds to pay for such purchases, and in compliance with contractual provisions and relevant laws and regulations.

    Written purchasing policies and procedures must encompass, but are not limited to, the following items and policies.

    1. Initiation of Purchase: Any staff member authorized by the Project Director or designee may initiate a purchase. When a purchase is initiated, a standard requisition, or a memorandum describing the type of item and quantity desired, is prepared and signed by the staff member initiating the purchase.
    2. Authorization of Purchase: Staff members must make direct purchases of items when the total cost does not exceed a prescribed limit. When items may cost more than the prescribed limit, the Project Director or designee must give advance approval of the acquisition. All requisitions, regardless of amount, should be submitted to the Project Director or designee. Orders totaling less than the prescribed limit may be submitted after the order is placed.
    3. Qualification of Vendor: All vendors providing supplies, equipment, or services should be reputable firms having demonstrated capacity to produce or provide supplies, equipment, services, and other items within a reasonable time or within specific time limits established by the purchaser. Vendors should be subject to disqualification if they misrepresent quality, quantity, or price of what is being purchased. Vendors that exceed reasonable time limits should also be disqualified.
    4. Selection of Vendors: Whenever possible, select vendors on the basis of three price quotations or competitive bids. Secure competitive bids for all items exceeding a prescribed limit in unit cost and for aggregate orders exceeding a prescribed limit. Solicit price quotations from qualified vendors for items for which unit costs exceed a prescribed limit. Under certain circumstances supplies, equipment, services, or other items may be purchased without bids or quotations. Quotations may not be necessary if a qualified vendor is the sole source of the items to be purchased, or, in case of emergency, when immediate delivery is necessary for the entity’s continued provision of adequate services.

      All sole-source purchases should be reviewed by the Project Director or designee. In any event, the Project Director should be apprised of any sole-source purchase as soon as possible. A written memorandum explaining all emergency purchases and all other sole-source purchases exceeding an amount determined by management should be attached to the file copy of the purchase order.
    5. Purchase Orders: Make all purchase orders (except when specific exceptions are permitted) by submitting consecutively numbered purchase order forms to vendors. The exceptions include contracts for professional services where the contracts serve as detailed documentation), bills for utilities and office rental, and emergency telephone orders. Prepare requisitions or memorandums for emergency orders, travel claims, books, subscriptions, postage, proprietary fees and permits, and similar expenses. They should be approved in advance by the Project Director or designee. After approval, the telephone order or emergency purchase should be made by a person authorized by the Project Director to make emergency telephone orders or purchases.

      Complete all purchase orders in triplicate. They must include the date, vendor name, type, quantity, price of supplies and equipment, and other items to be purchased. A staff member officially designated to sign purchase orders should sign each order and submit the original to the vendor. File the first copy numerically; it constitutes an official authorization for disbursement after the order has been satisfactorily filled.
      1. Receipt of supplies and equipment should be certified by a staff member who has been assigned responsibility for receipt of all purchased items.  Deliveries should be compared against the second copy of the purchase order and packing slip or invoice and should be examined for conformance to specifications in the order.  The packing slip or invoice and the second copy of the purchase order should be signed if the delivery conforms to the purchase order.  (If the invoice does not accompany the delivery of goods, the signed packing slip should be compared to the invoice prior to the invoice being approved for payment.)  The invoice, requisition, and second copy of the purchase order should be filed in invoice date order, alphabetically by vendor name.
      2. Match billings with the signed invoice, purchase order or requisition.  Examine the billing to ensure that the amount requested for payment matches cost, types, and quantities shown on the signed invoice(s).
      3. The Project Director or designee should review the invoice, purchase order, requisition, and billing, and certify as to qualification for payment.  No invoice or bill should be paid without such certification.
      4. Purchase orders are not required for utility services (telephone, gas, electricity) or for rental payments.  Bills for these services should be reviewed by the appropriate official and paid in accordance with standard procedures for disbursement of funds.  However, retain copies of all bills received for rent and utilities and file them chronologically, by vendor, or by expense category for no less than three years.
    6. Disbursement of Funds: Upon proper certification of invoices and bills, make disbursements in accordance with standard grant procedures for the issuance of checks and vouchers.

  2. SUPPORTING DOCUMENTATION

    Present supporting documentation to justify each journal entry. In most cases, staff members should use preprinted sequentially numbered forms, and written policies concerning the use of the forms should be established.

    1. The following are examples of supporting documentation:
      1. All journals and ledgers
      2. Annual financial reports with working papers
      3. Annual program reports, including statistics, with working papers
      4. Bank reconciliation
      5. Bank statements
      6. Checks/Warrants
      7. Contracts
      8. Correspondence
      9. Deposit slips
      10. Fixed assets inventory listings
      11. Inventory count sheets
      12. Invoices
      13. Journal vouchers
      14. Leave requests
      15. Petty cash count sheets
      16. Petty cash receipts
      17. Petty cash reimbursement receipts
      18. Pre-numbered cash receipt
      19. Purchase orders
      20. Support for sole-source-decisions
      21. Telephone logs
      22. Time sheets
      23. Travel claims
      24. Written policies
    2. Maintain a current roster of grant or contract agreements. Include the following information for each grant:
      1. Grantor
      2. Grant number
      3. Title of grant
      4. Catalog of Federal Domestic Assistance
      5. Period Covered
      6. Approved budget (latest revision)
      7. Grantor share
      8. Match Requirements
      9. Purpose of grant
    3. Maintain a file on each grant. The file should contain at least the following items:
      1. Grant agreement, including grant budget
      2. All grant agreement amendments
      3. Copy of periodic financial reports
      4. Other pertinent information (e.g., correspondence, monitoring reports)
    4. Maintain information on in-kind contributions and matching requirements by grant in separate file folders, as necessary.

This Page Last Updated: December 1, 2017 at 2:50 PM