FIN-038: Receiving Goods and Services and Timely Disbursements of University Funds
Academic Division and the College at Wise.
- Timely Payments to Vendors
- Receipt of Goods and Services
- Separation of Duties
- Exemption from Sales Tax
- Authorization for Payment
- Requirements for Processing an Invoice
- Document Retention
- Compliance with Policy
The University is committed to sound fiscal stewardship of University funds. This policy provides guidelines for the timely payment of goods and services, internal controls, and required documentation in order to comply with state and federal laws.
Tangible property for sale, lease, or rental (i.e., merchandise, commodity, etc.).
Form used in the Integrated System for preparing demand payments.
Method for processing transactions when a purchase order or a requisition is not required.
The five-segment account structure to which expenses are charged that allows for enhanced reporting. [P = Project, T = Task, A = Award, E = Expenditure, O = Organization.]
Purchase Order (PO):
A commercial document issued by the University to a vendor, indicating types, quantities, terms and agreed prices for products or services that the vendor will provide to the University.
The process of documenting the receipt of all goods and services by signing and dating a packing slip or receipt.
An activity in which labor is the major factor and not merely incidental to the production, acquisition, and/or delivery of a good.
All funds appropriated, generated, awarded, donated or otherwise received by the University regardless of their source. The term University Funds does not include Agency Funds that the University maintains for legally separate external student organizations or other entities.
University Purchasing Card:
A credit card issued to an authorized individual to make official purchases of small dollar goods and services (that do not require competitive bidding) quickly and directly. (Also referred to as the “P-Card,” the “Procurement Card.”)
Any entity that supplies goods or services.
All expenditures of University funds must be necessary, reasonable, and directly related to the goals and mission of the University. All persons authorizing expenditures must be mindful that expenditures are subject to scrutiny by state authorities, sponsors, auditors, and other interested parties. All payments for goods and services must comply with University policies and procedures and state and federal laws.
State law stipulates that all goods and services purchased by the University along with the source of funds used for each purchase be identified properly. Departments must document all expenditures. Receiving is required for all goods and services purchased with University funds, regardless of purchasing/payment method or source of funds. Payments issued by the University for goods and services may not be sent to a University departmental address. Invoices for goods and services not obtained in accordance with these rules will not be processed.
- Timely Payments to Vendors:
Unless otherwise established in a contract for a specific purchase, the Commonwealth of Virginia’s Prompt Pay law stipulates that payment must be made to the vendor within 30 days of the receipt of an original invoice by Procurement and Diversity Supplier Services (Procurement Services) – Accounts Payable, or 30 days after the receipt of goods and services in the department placing the order, whichever is later. The date of the postmark on the envelope in which the check is mailed or the system payment date (for electronic fund payments) is deemed to be the date payment is made.
If Procurement Services is unable to process an invoice for payment on time, the vendor may bill for interest at the prevailing 90-day U.S. Treasury Bill rate. Any interest penalty must be paid out of existing local departmental funds.
The payment performance of individual departments affects the University’s overall compliance with the Commonwealth’s Prompt Pay law. In addition, the payment performance of an individual department may compromise the ability of all other University departments to do business with the same vendor(s). For example, vendors may refuse to accept orders from one University department because of another department’s delinquent account.
Receipt of Goods and Services:
Receiving reports document the satisfactory receipt of goods, materials, equipment, supplies, services, etc. Receiving reports provide an auditable source of verification that goods or services were received in a manner acceptable to the conditions and requirements of the contract or purchase order prior to the authorization of invoices for payment.
Departments are responsible for promptly checking:
- Received goods to verify the correct items, in acceptable condition (i.e., free of defects), and the agreed upon quantity, were delivered in accordance with the terms of the order/contract. Warranties and returns may be affected by any delay.
- Rendered services have actually been delivered in accordance with the terms of the order/contract.
Departments are responsible for recording on-line in the Integrated System (i.e., system receive) for all purchases $10,000 or greater. System receiving is not required for the purchase of restricted items less than $10,000.
Receiving documentation must include at a minimum:
- Date received;
- Quantity and description of items received;
- Vendor name;
- Purchase order, if applicable; and
- Signature verifying the items were received in good condition and that payment is authorized.
- Separation of Duties:
Good business practice separates the duties of purchasing, receiving, authorizing payment for goods and services, and reconciling of the departmental account among two or more people. The person documenting the receipt of goods and services should not be the same individual who authorized the order or the payment to the vendor.
Departments that cannot meet this requirement due to small staff size must implement compensating controls. Temporary staffing changes, such as vacation or illness, must have compensating controls documented in departmental paperwork such as the monthly reconciliation. General questions on compensating controls should be directed to the University Comptroller.
Exemption from Sales Tax:
As an agency of the Commonwealth, the University is exempt from Virginia sales and use tax on all goods and services except for purchases of lodging if: (i) the goods and services further the mission of the University; (ii) payment comes directly from the University rather than from an individual reimbursed by the University; and (iii) for meals only, the University determines the place, time and recipients of the meal. Also, University purchases are not subject to many Federal excise, Communications (e.g., wireless and cellular phone services), and transportation taxes. If a vendor requires proof of exemption, the Commonwealth of Virginia Sales and Use Tax Exemption Form and Communications Sales and Use Tax Certificate of Exemption Form are located on the Procurement and Supplier Diversity Services' website. For tax exceptions with other states, see the State Tax Exemption Certificate database on the University Controller’s website to determine the University’s exemption status. It is the department's responsibility to claim these exemptions when submitting a purchase order to a vendor.
Authorization for Payment:
In most situations, a departmental manager’s or supervisor's approval is sufficient to authorize the processing of a transaction, however, the University Comptroller and the Director of Procurement Services have ultimate responsibility for expenditure transaction processing and may, as required by other University policies, require additional approvals. For academic units (schools and departments), additional approval if needed would be sought from the Executive Vice President and Provost. For administrative units, additional approval if needed would be sought from the Executive Vice President and Chief Operating Officer. In the case of other units, the approval of the President may be required.
For those persons deemed "self-approvers," refer to policy FIN-004: Travel, Meals, and Entertainment Expenses Incurred on Behalf of the University.
Requirements for Processing an Invoice:
All invoices must include the Purchase Order number. If an invoice is sent without a PO number, it will not be processed. Procurement Services will return the invoice to the vendor who will have to provide a new invoice with the PO number.
Vendors must send all invoices to the Accounts Payable division of Procurement Services, not to the department making the purchase. If a vendor sends an invoice to a department, the department must forward the invoice to Accounts Payable immediately.
In general, departments must record the Purchase Order number and receipt date on the packing slip or other shipping documents of all received goods. Departments must retain these documents in their files as specified by the Records Management policy. Goods and services purchased with a Payment Voucher or the University Purchasing Card, however, have separate requirements which must be followed.
Departments are responsible for:
- Assigning responsibilities to individuals and ensuring they are aware of their responsibilities in the process and are properly trained;
- monitoring budgets and ensuring in advance that department financial resources are sufficient to pay for any goods or services ordered;
- ensuring that all eligible discounts are earned by timely processing of payment voucher invoices and receiving so the University can benefit from payment discounts;
- forwarding invoices sent directly by the vendor to the department to Accounts Payable for processing; and
- staying informed about current processes and procedures applicable to the purchase and payment of goods and services.
Procurement Services is responsible for:
- promptly processing (as defined by the negotiated vendor terms) all valid invoices upon receipt to avoid assessment of late fees;
- placing a hold in the Integrated System in cases where an invoice cannot be processed for payment because the associated PO in the Integrated System is not complete, approved, and valid for the invoice.
- processing a payment, charging the transaction to the originating department’s suspense PTAEO when a department fails to resolve the invoice hold within prescribed time lines;
- providing reports as necessary to enable departments to determine when an invoice has been has been placed on hold and instructions for resolving the hold; and
- promptly removing a hold upon notification by a department that a replacement PO has been entered into the system.
Compliance with Policy:
A University employee or student who makes an unauthorized purchase may have his/her purchasing responsibilities suspended or revoked and may be held personally liable for any charges incurred. Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.
Questions about this policy should be directed to Procurement and Supplier Diversity Services.