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HomeMy WebLinkAbout04.21.25 FCA AGENDA Brooklyn Center Financial Commission Monday, April 21, 2025 – 6:00 PM Council Commission Room (Main Level of City Hall) I. Call to Order II. Approval of Agenda III. Introductions/Financial Commission Background IV. Election of Commission Chairperson V. Election of Commission Vice-Chairperson VI. Purchasing Policy Discussion i. Credit Card Use Policy VII. Upcoming Meetings VIII. Adjournment FINANCIAL COMMISSION ITEM MEMORANDUM DATE: April 21, 2025 TO: Financial Commission FROM: Angela Holm, Finance Director SUBJECT: Credit Card Use Policy Background: Staff has reviewed the City’s existing Credit Card Policy, which is currently an Appendix to the existing Purchasing Policy. The policy needs updates to address the change from a credit card to a procurement card (P-Card). In addition, recent activities have demonstrated there needs to be additional guidance on P-Card usage, eligible expenses, and inactivation or removal of P-Card privileges. Several documents are included for your review prior to the meeting: 1. A general description of P-Cards. 2. The City’s current Purchasing Policy 3. Sample P-Card/Credit Card Policies from other government entities 4. Guidance regarding credit card usage from the League of Minnesota Cities website A separate document from the Office of the State Auditor regarding credit card use is also being sent. Budget Issues: The primary objective of the policy is to establish guidance for the use of procurement cards for City purchasing. Effective internal control of P-Cards will support an environment of effective financial stewardship of the City’s funds. Strategic Priorities: • Financial Stability The pros and cons of corporat e purchas ing cards (PCards) 23 SEPT 2021 · 6 MIN READ Home Resources Blog The pros and cons of corporate purchasing cards (PCards) Seven in 10 U.S. companies use corporate purchasing cards (p- cards) to pay for goods and services. While p-cards are an ecient alternative to the slow, traditional procurement proces s, they’re not a one-size-fit s-all solution for corporate purchasing. This guide will help you decide whet her or not p-cards are the best procurement tool for your business. What is a corporate purchasing card (p- card)? A corporate purchasing card (p- card) is a business charge card TABLE OF CONTENTS CATEGORIES Cost Conscious What is a corporate purchasing card (p-card)? How do corporate purchase cards work? What is the dierence bet ween a p-card and a corporate credit card? What are the benefit s of p-cards? The disadvantages of p-cards? FAQs Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/1/10 that employees use to buy things on behalf of the company. These cards are also known as purchasing cards, procurement cards, and charge cards. P-cards are primarily used for purchases that are too small to go through the purchase order (PO) procurement process. Purchasing cards are more ecient for smaller transactions because they allow employees to bypas s t he request and approval process, which can take days or weeks. P-cards are beneficial for companies that need to make small purchases but don’t have the ability, or desire, to give every employee their own card. They’re also handy for paying for business travel purchases, like flight and hotel bookings. How do corporate purchase cards work? While purchase cards could be issued to individual employees, this practice has not been embraced by the busines s community. About six in 10 companies report that they share cards among multiple employees. Seven in 10 say that at their companies, only executives have access to p- cards, or that there is only one card issued per department. Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/2/10 Depending on the is suer, corporate purchasing cards can come with various spend control features. The most typical one is a per-card spending limit. Some p-cards also let you set spending limit s per vendor, created through merchant category codes. P-card balance repayment is like a hybrid bet ween credit and debit card repayment. The card issuer bills the cardholder at the end of the month for all purchases made during that billing cycle. Unlike a credit card, the company can’t carry a balance over. Instead, it must pay all of the money owed at once. What is t he dierence bet ween a p-card and a corporat e credit card? The main dierence bet ween p- cards and corporate credit cards is that p-card balances must be paid o in full at the end of the billing cycle. With a corporate credit card, however, you can carry your balance into further billing cycles. Corporate cards, also known as commercial cards, are usually used for larger purchases, as they can be paid o over time, Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/3/10 while p-cards are often used for smaller purchases since money will have to be present in the corporate account to pay them o at the end of the month. Corporate card statements typically provide more detailed transaction information than p- cards. The former shows spending by category, which is helpful for generating spend analysis. What are t he benefit s of p-cards? Busines ses rely on corporate purchasing cards for several reasons. First, p-cards provide some control over company spend. Depending on the is suer, p-cards can let you place spend limit s per card and create a list of approved vendors. And, since most charge card companies have an online dashboard component, you get access to a digital paper trail of transactions. These cards also streamline the purchasing process. They enable cardholders to avoid the lengthy PO process for smaller purchases, which reduces purchasing cycle times. Employees are able to get what they need when they need it. Purchasing card use saves companies time and money on admin. A report published by Visa and Citi uncovered a 77% savings in admin cost s when companies switched from a Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/4/10 paper invoice system to a digital p-card system. While they don’t aord cardholders t he repayment luxuries of credit cards, p- cards provide longer payment terms than debit cards, which can help cash-flow reliant companies control their expense management. Finally, p-cards reduce the need for employee reimbursements, which benefits both the employer and employees. Employees don’t need to worry about fronting busines s expenses from their own funds, and finance team members save time and money on proces sing expense reports. The disadvanta ges of p- cards? Alas, p-cards aren’t a perfect solution for corporate purchasing. S haring cards reduces visibility into and control over spending and creates a bottleneck. P- cards are supposed to be a more ecient alternative to the PO process, but that concept doesn’t always work so well in practice. For example, if someone has to reach out to an administrator and wait for card information before booking a flight to a conference, t he fare might increase before the information is relayed. Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/5/10 While p-cards have some online reporting capabilities, they still only oer limited visibility into spending. Unlike credit cards, which typically show transactions on the company online dashboard as they’re being made, p-card transactions don’t appear until several days after they’ve happened. While this proces s may seem faster than the PO process, it’s lagging compared to what corporate credit cards oer. And because there’s a lag in bet ween when a charge is made and when it appears on a statement, there’s the potential for misuse. Out-of-policy spending may not be discovered until it’s too late to reverse the damage. Furthermore, p- card reconciliation incurs high admin costs. Most p-card systems don’t categorize spend or integrate with an accounting system. Finally, corporate purchasing cards oer an incomplete picture of spend data. Most p-cards don’t have reporting capabilities that show budget holders how much cardholders spent versus how much they had budgeted for, obscuring meaningful spend analysis. FAQs What is a corporate purchasing card? A charge card businesses use to make small purchases. How do p-cards work? These cards are typically shared among team members. They have some spend control Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/6/10 features, like spending limits and approved vendors. The company must pay the full balance at the end of the billing cycle. What’s the dierence between a p-card and a corporate credit card? A p-card’s balance must be paid o at the end of the billing cycle, while a corporate credit card’s balance can be carried over. What are the benefits of corporate purchasing cards? They provide some spend control features, streamline purchasing, save time and money on admin, and reduce ex pense report s. What are the disadvantages of p-cards? Cards are shared, which creates bottlenecks. Delays in transaction postings limit visibility and create a potential for misuse. Reconciliation admin cost s are expensive. A lack of sophisticated reporting means you don’t have the data to conduct a meaningful spend analysis. Star savi mon on bus trav for you com toda Product Solutions Customers Plans Book a demo Get started 4/18/25, 3:38 PM The Pros and Cons of Corporate Purchasing Cards (P-Cards) https://www.travelperk.com/blog/pros-cons-purchasing-cards/7/10 City of Brooklyn Center Minnesota Purchasing Policy Adopted: 5/1996 Updated: 7/2000, 8/2008, 4/25/2016, 12/2017, 8/2018, 4/2019, 10/2019 City of Brooklyn Center Purchasing Policy TABLE OF CONTENTS 1. PURPOSE 2. POLICY 3. PROCEDURES a. Authorization b. Federal Grants c. Invoices d. Accepting Delivery e. Payment of Bills f. Municipal Contracting Law g. Routine Transactions h. Splitting of Contracts i. Cooperative Purchasing Programs j. Bonds k. Capital Purchases l. Emergency Purchases m. Liquor Store n. Expense Reimbursement o. Budgetary Compliance p. General Office Supplies q. Technology Expenses r. Central Garage s. Billing Address t. Conflicts of Interest u. Sales Tax Exemptions v. Use of City Funds to Purchase Food, Beverages and Related Supplies 4. PURCHASE ORDERS APPENDIX A: AUTHORIZED EMPLOYEES APPENDIX B: PETTY CASH PROCEDURES APPENDIX C: CREDIT CARD POLICY 1. PURPOSE Assure that all purchases are made in accordance with the laws of the State of Minnesota, the City Charter, City ordinance, and other policies of the City of Brooklyn Center. The policy will provide uniform purchasing procedures within the City’s departments. Also to allow the City Manager adequate controls over purchasing functions which are well established and adhered to, and which also may be modified by the City Manager as needed for efficient operations within the organization. 2. POLICY Disbursements must be properly authorized, appropriately classified within the City’s chart of accounts, and accurately recorded in the financial system. 3. PROCEDURES a. Authorization Authorized employees for approving purchases are identified in Appendix A of this policy. Quick Reference – Authorization Thresholds < $1,000 May be approved by authorized purchaser $1,000 - $9,999 Department Head approval of invoice $10,000 - $24,999 Purchase order required with Department Head preapproval of purchases, 2 quotes required or purchased through a cooperative purchasing program, Department Head approval of invoice $25,000 - $174,999 Purchase order required with Department Head preapproval of purchase, 2 quotes required or purchased through a cooperative purchasing program, Department Head & City Manager approval of invoice > $175,000 Formal bidding process Purchases less than $1,000 Authorization: Invoices of $1,000 or less may be approved by any of the authorized employees as identified in Appendix A of this policy. Purchases between $1,000 and $9,999 Authorization: Invoices must be approved by the Department Head. If the amount of the purchase is estimated to be $10,000 or less, quotations are not required. However, if the purchase is made upon quotation, it will be based on at least two quotations which will be kept on file for a period of at least one year after their receipt. Purchases from a cooperative purchasing program do not require quotations. Purchases between $10,000 and $24,999 Authorization: Purchase orders are required for all purchases in excess of $10,000 prior to the placement of any order for goods, services, training, repairs, service calls, etc. It is acceptable to use an estimate of the cost of goods and services when filling out a purchase order. All purchases greater than $10,000 must be preapproved by the Department Head. Invoices in excess of $10,000 must be approved by the Department Head. Purchases between $10,000 and $24,999 may be made either upon sealed bids or by direct negotiation, by obtaining two or more quotations for the purchase when possible, unless it can be shown that the product or service is only available from one source, or purchased through a cooperative purchasing program. All quotations should be submitted to Finance with the purchase order, or when applicable retained by the department, and will be kept on file for a period of at least one year after receipt thereof. Purchases between $25,000 and $174,999 Authorization: Purchase orders are required for all purchases in excess of $25,000 prior to the placement of any order for goods, services, training, repairs, service call, etc. It is acceptable to use an estimate of the cost of goods and services when filling out a purchase order. All purchases greater than $25,000 must be preapproved by the Department Head and City Manager. Invoices in excess of $25,000 must be approved by the Department Head and City Manager. Purchases between $25,000 and $174,999 may be made either upon sealed bids or by direct negotiation, by obtaining two or more quotations for the purchase or sale when possible, unless it can be shown that the product or service is only available from one source, or purchased through a cooperative purchasing program. All quotations should be submitted to Finance with the purchase order, or when applicable retained by the department, and will be kept on file for a period of at least one year after receipt thereof. Contracts or purchases over $175,000 Authorization: Formal bidding process is required. Invoices over $175,000 must be approved by the Department Head and City Manager prior to payment. All purchases covered by the Uniform Municipal Contracting Law, over $175,000 require preparation of formal bids and specifications. Bids must be advertised in the City’s legal newspaper at least 10 days in advance of the last day for the submission for the bids. Advertising for bids must be coordinated with the City Clerk. The contract is awarded by Council resolution upon recommendation by City Manager. With limited exceptions, all contracts for the purchase of supplies, materials or equipment must be rewarded to the lowest responsible bidder. b. Federal Grants Under the Uniform Grant Guidance competitive quotations will be required for all federally funded purchases over $10,000. If competitive quotations do not occur, the purchaser must documents one of the following exceptions; the item is available only from a single source, an emergency will not allow a delay from competitive solicitation, or the federal awarding agency authorizes noncompetitive proposals in writing. The City will follow the requirements for allowable costs/cost principles that are contained in the A-102, OMB A-133 (2 CFR section 200.302(b)(7). The City will follow the requirements for cash management that are contained in the A-102, OMB Circular A-133 (2 CFR section 200.302(b)(6). c. Invoices Finance will forward original or electronic copy of original invoices received to the Department Head or authorized staff member for approval of final payment. Original invoice or electronic copy of original invoice with approval must be returned to the Finance Department. Departments will be responsible for the proper account coding and a short description of the invoice. d. Accepting Delivery Before accepting delivery, the department receiving the goods or services must determine that the purchase received reflects the order, that they are in a good, usable condition and that the correct quantity is present. If a receiving slip is included, it must be reviewed for these factors before it is signed. e. Payment of Bills Payment of all bills will be on a schedule and procedure established by the Finance Director. Currently invoices are required to be delivered to the Finance Department on Friday afternoon for processing with the payments made the following Thursday. Invoices must be processed and submitted to Finance in order to be paid within 35 days of the invoice date, in compliance with State Statutes, unless the invoice is in dispute. Departments should notify the Finance Department of any invoices in dispute and the dispute should be documented on the invoice or accompanying the invoice (this can be done through a notes field attached to an electronic copy of the invoice). Payments, prior to department approval, may be authorized by the Finance Director on a case by case basis, if it is determined to be advantageous to receive early payment discounts or to avoid late penalties. f. Municipal Contracting Law The City should follow Minnesota State Statute 471.345 Uniform Municipal Contracting Law when entering into any agreement for the sale or purchase of supplies, materials, equipment or the rental thereof, or the construction, alteration, repair or maintenance of real or personal property. For construction projects that are competitively bid, responsible contractor laws must be followed which require contractors to meet certain minimum criteria to be eligible to be awarded a construction contract. g. Routine Transactions Routine transactions, as defined by the Finance Director, such as utility bills and insurance payments will be processed and approved by the finance department. h. Splitting of Contracts Authorization and bidding requirements cannot, and shall not, be avoided by splitting a contract into several contracts, each of which is below the minimum amount requiring bids. For example, the City cannot purchase $250,000 of lumber in several transactions, each involving an expenditure of less than $175,000. If there are questions about whether a contract may be split into several contracts, the City Manager must be consulted. i. Cooperative Purchasing Programs A municipality may contract for the purchase of supplies, materials, or equipment without regard to the competitive bidding requirements of this section if the purchase is through a municipal association’s purchasing alliance or cooperative created by a joint powers agreement that purchases items from more than one source on the basis of competitive bids or competitive quotations. The City of Brooklyn Center encourages participation with the State of Minnesota, Hennepin County or other governmental agencies in cooperative purchasing where the result of the purchase is in the best interest of the City. j. Bonds The City will follow state law for contractors bonds which are required for projects as stated in MN Statutes 574.26. The City Manager may require performance bonds for purchase of equipment, where there is an extended length of time between the order and completion and delivery of the equipment. k. Capital Purchases Capital equipment and improvements should be included in the annual budget. Purchases of capital equipment and improvements that were not included in the budget or additional funds are needed that exceed $1,000 require approval by the City Manager prior to the purchase. It is recommended that this is completed through a signed purchase order. l. Emergency Purchases In the event of an emergency, where there are extenuating conditions that need to be addressed immediately, the City Manager must be informed, and will make the determination on how to proceed. m. Liquor Store The City will routinely purchase merchandise for resale in our off-sale liquor operations. Inventory purchases must be approved by the Liquor Operations Manager. Inventory levels will be reviewed on a monthly basis, with inventory minimum and maximum goals defined by the Liquor Operations Manager in accordance with market best practices. A listing of approved vendors will be maintained by BC Liquor, the vendor list shall be approved by the Liquor Operations Manager and Finance Director. n. Expense Reimbursement Employee expense reimbursements, including mileage and meals, are to be reimbursed by submitting forms specific to those expenses to the Finance Department. o. Budgetary Compliance All departments, divisions and operations of the City of Brooklyn Center must follow purchasing procedures. Purchases must be made in accordance with the adopted budget. Charges or expenditures which may be in excess of your division’s appropriated budget must have prior approval by the City Manager. It is recommended that this is completed through a signed purchase order. p. General Office Supplies General office supplies will be coordinated by the Finance Department. Supplies should be ordered through the designated supply vendor, unless a lower priced vendor is available, limitations will be made for each department. q. Technology Expenses Expenditures for Technology (computers, etc.), must be made in accordance with the City’s Information Technology Policy. Expenditures for technology not made by the Information Technology Department must be pre-approved by Information Technology Department. It is recommended that this is completed through a signed purchase order. Purchases and rentals of technology equipment for clients of the Earle Brown Heritage Center do not require prior approval from the Information Technology Department. r. Central Garage Expenditures for capital equipment (purchases, repairs & maintenance, etc.), that are not made by the Central Garage Department must be pre-approved by Central Garage Department. It is recommended that this is completed through a signed purchase order. s. Billing Address When the vendor ships the product, the vendor must invoice the City. You can inform the vendor that the shipping address is separate from the billing address so products are shipped to the proper location. The billing address for invoices is the City of Brooklyn Center attention Finance Department. Invoices may also be directly emailed to the Finance Department using the email address ap@ci.brooklyn-center.mn.us. Unless invoices are attached to products for delivery, all invoices must be directed to the Finance Department, not an individual office or person. t. Conflicts of Interest Employees are required to provide notice to the Finance Director of any conflicts of interest prior to entering into transactions on behalf of the City. No employee, officer, or agent must participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediately family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the City must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. u. Sales Tax Exemptions Most City purchases are exempt from State sales tax. Vendors should be notified of this exemption when making a purchase and each vendor should be provided a Certificate of Exemption (ST3 Form). v. Use of City Funds to Purchase Food, Beverages and Related Supplies Circumstances exist when the use of City funds for these items in connection with the conducting of official business of the City is justified. It is recognized that clear guidelines need to be established defining the types of purchases that are allowed. Food and beverages purchased from City Funds (that do not fall under the policy for personnel expense reimbursement related to travel) must be authorized by a Department Head, purchases over $500 must be authorized by the City Manager or Deputy City Manager in the City Manager’s absence. All purchases should be supported with an itemized receipt and sufficient description of the event. The following situations will be considered for approval: a. Coffee, refreshments, and modest snacks for meetings that are open to the public, for example, Neighborhood Meetings, Association of Responsible Management (ARM), etc. b. When staff are required to arrive before or stay beyond their regular working time to respond to unusual or emergency events. c. When training sessions continue through meal times and cannot be scheduled at an alternative time d. City sponsored recognition or events e. Support and promote grant programs, and which are paid for from grant funds f. Any other expenditure for coffee, refreshments, or related supplies that the City Manager has issued prior approval The following will not be considered for approval and would be considered unauthorized purchases: a. Any alcoholic beverage of any kind b. Coffee, food, or refreshments purchased in the course of normal daily employee business c. Coffee, food, or refreshments purchased for any departmental or division meetings Public Purpose Expenditures For an expenditure of public funds to qualify as a lawful expenditure a public purpose must exist. Specific or implied authority for the expenditures must arise out of a statute or from the city’s charter. This chart sets forth criteria to help determine the validity of a public expenditure, an expenditure that does not affirmatively meet all the following questions may not represent a proper public expenditure: 4. Purchases of food, beverages, and related supplies that are not authorized by this policy must be reimbursed to the City by the employee who made the purchase.PURCHASE ORDERS Purchase orders may be used for any purchase, but are required for all purchases in excess of $10,000. It is recommended that purchase orders are used for any purchase which requires documented pre-approval. When used the following procedures are recommended: a. Information which must be completed on the purchase order is the date; company where goods will be purchased; program (five digit activity) number; account number (four digit); quantity; general description of purchase; and cost or estimated cost of purchase. All purchase orders must be completed and signed by authorized personnel in each department (please see Section 5 of this policy). b. The white copy of the purchase order goes to the vendor when necessary. Purchase orders are forwarded to the Finance Department. c. The Public Works Garage and EBHC divisions have the option of holding their purchase orders until invoices are received at their divisions. The Public Works Garage and EBHC will then attach purchase orders to the proper invoice, code and forward to Finance for bill payment. APPENDIX A: AUTHORIZED EMPLOYEES The following is a list of positions that are authorized by the City Manager to purchase goods or services for the City within the requirements of the Purchasing Policy. Administration *City Manager *Assistant City Manager Information Technology Manager Human Resources Director City Clerk Human Resources Specialist Communications Coordinator Community Development *Community Development Director Deputy Director of Building & Community Standards Housing Community Standards Supervisor Administrative Assistant Planning & Zoning Specialist Business & Workforce Development Specialist Community Activities, Recreation & Services (CARS) *Community Activities, Recreation & Services Director Program Supervisor(s) Administrative Assistant Golf Course Superintendent Maintenance Supervisor Earle Brown Heritage Center Director Earle Brown Heritage Center Secretary/Billing Clerk Earle Brown Heritage Center Operations Director Earle Brown Heritage Center Sales Director Earle Brown Heritage Center Maintenance Fiscal & Support Services *Fiscal and Support Services Director Assistant Finance Director Accountant Account Technician II Utility Billing Technician Liquor Operation Manager Liquor Store Manager(s) Assistant Store Manager Liquor Store Office Assistant Fire *Fire Chief Deputy Fire Chief Administrative Coordinator Police *Chief of Police Commander(s) Administrative Assistant Support Services Manager Public Works *Director of Public Works City Engineer Assistant City Engineer Project Engineer Engineering Technician Public Works Administrative Assistant Deputy Director of Public Works Supervisor of Streets and Parks Supervisor of Public Utilities Administrative Technician(s) *Denotes Department Head APPENDIX B: PETTY CASH PROCEDURES The City has petty cash available for minor purchases made out of pocket by the employee. All departments, divisions, and operations of the City must follow the petty cash procedures. The maximum amount of petty cash one can be reimbursed is $30. The following are authorized to maintain a system of petty cash: City Clerk, EBHC Manager, Recreation Director, and Police Chief or Police Chief’s designee. Original receipts are required to obtain petty cash reimbursement. 1. Petty Cash Procedures - Employee Reimbursement For purchases over $30, employees must submit a voucher to the Finance Department for reimbursement. For purchases under $30, employees may be reimbursed using the petty cash procedures outlined below from the City Clerk or their department’s custodian of petty cash: a. An employee requesting petty cash reimbursement must submit the original receipt to the custodian of petty cash. Petty cash will be reimbursed to a maximum of $30.00. b. The petty cash receipt (provided by the custodian) must be completed including the description of the item, amount, date, account number, received by signature and approved by signature. The employee must provide the account number. c. The receipt of petty cash is stapled to the original receipt. d. The employee is reimbursed the requested amount. 2. Petty Cash Procedures – Petty Cash Account a. The custodian of the petty cash shall at all times have a record of the total cash entrusted to him/her. b. The cash on hand and the receipts accepted from employees shall at all times equal the total. c. Cash shall never be removed from the petty cash account for any reason other than to reimburse employees who have submitted complete and proper receipts. d. The custodian will periodically balance the cash account and submit the receipts to the Finance Department for reimbursement. All receipts for expenses and petty cash must be reconciled for December 31st. AUTHORIZED PETTY CASH ACCOUNTS AS OF January 1, 2018 City Clerk $200.00 Police Administration $130.00 Community Center $100.00 Earle Brown Heritage Center $200.00 APPENDIX C: CREDIT CARD USE POLICY Adopted 09/19/2007 Revised 3/24/2014, 4/25/2016, 1,/1/2018, 10/2019 Authorized Account Holders The City will issue credit cards to the following positions: City Manager City Clerk City Manager’s Designee Chief of Police Public Works Director Community Activities, Recreation & Services Director Earle Brown Heritage Center Director Recreation Program Supervisor Finance Director Assistant City Manager Community Development Director Fire Chief Staff authorized by the City’s Purchasing Policy to purchase on behalf of the City may make charges to a City issued credit card by contacting one of the authorized account holders for account information. Staff that are not authorized account holders as identified in this policy, shall not retain credit card information or make purchases using a City issued credit card without prior approval from an authorized account holder. The Finance department will be responsible for establishing, updating, and closing all City issued credit card accounts. The credit limit on these accounts will be established individually, based on an appropriate level of need, not to exceed $5,000. The credit limit on these accounts will be in accordance with the City’s Purchasing policy. Upon termination of employment with the City, the City issued credit card will be returned to the Finance Department on or before the employee’s last day of employment. Use of City Issued Credit Cards Purchases using a City issued credit card authorized by this policy include those purchases that cannot readily be made through the City’s normal vendor payment process, as outlined in the City’s Purchasing Policy. These items include, but are not limited to: airline and hotel accommodations for authorized conferences and training, training and conference registrations, purchases made over the internet for items that cannot be purchased by other means or for cost savings, and purchases or rentals of equipment that require immediate payment (i.e., delivering and retrieving election equipment from voting places). City issued credit cards are to be used for authorized City purchases only. No personal use of the City issued credit card is allowed. No single purchase shall be made on a City issued credit card that exceeds the credit limit available on that card. Documentation for Purchases The billing statement from the credit card issuer does not contain sufficient information to document a purchase made. Appropriate documentation is required for all purchases to verify compliance with this policy and the City’s Purchasing Policy. A copy of the invoice or receipt for payment must be included to verify the amount charged on the card. Receipts from vendors that only list the total charged are not considered sufficient documentation. The receipt must identify all products or services purchased, shipping charges, and sales tax. A printed confirmation of an internet purchase may be sufficient to comply with this requirement. If an invoice is not immediately available, the invoice must be forwarded to the Finance department when it becomes available and another form of documentation must accompany the original charge. *Note: Use tax will be added to any item that would be subject to sales tax if purchased in Minnesota. Card users should ensure that the proper tax rate is used when a vendor collects sales tax for Minnesota, 6.875%. For purchases that are exempt from sales tax, the City is required to provide the vendor with a completed Minnesota Certificate of Exemption (ST3 Form). The City is not required to pay local sales tax, such as the Hennepin County Stadium sales tax of 0.15% or the Minneapolis Stadium sales tax of 0.5%. (The zip code 55430 includes property in both Brooklyn Center and Minneapolis, so some vendors may incorrectly charge the Minneapolis sales tax.) However, the City is required to pay any special sales tax, such as a hospitality tax charged on hotel or dining within another City or County. The budget account to which the purchase should be charged must accompany all documentation included with each statement. Staff may contact the Finance Department with questions on the appropriate account codes. Any meals charged to a City issued credit card should include an explanation of those in attendance and the purpose of meeting held. In any instance where a product or service purchased with a City issued credit card is returned or canceled the transaction must be refunded to the credit card account. Review and Payment of City Issued Credit Card Statements All credit card statements will be reviewed by the Finance Department for compliance with this policy. Additional documentation may be requested from a card user to ensure compliance with this policy and the City’s Purchasing Policy. Payment of the outstanding balance of City issued credit cards will typically be made through the City’s normal vendor payment process, however, the Finance Department reserves the right to pay the credit card bill outside the normal vendor payment process if necessary to avoid finance charges. Upon receiving the monthly credit card statement, account holders should match credit card charges with supporting documentation to ensure all charges have been accounted for. The documentation shall be forwarded to the Finance department within 5 business days from when the current statement is received, to ensure prompt payment and to avoid finance charges. The Finance Department will periodically review the use of the City issued credit cards to determine if accounts can be established with vendors where repetitive purchases are made. If an account has been established with a vendor, all purchases should be made through that process, unless extenuating circumstances exist. Unauthorized Purchases/Noncompliance with Policy Personal use of the City issued credit card is prohibited. Each card holder will be responsible for ensuring that purchases made with their card comply with this policy and the City’s Purchasing Policy. Purchases that do not comply with this policy, or that are not approved by the City Council, may become the personal responsibility of the card holder and/or purchaser. Not covered under this policy This policy does not restrict the use of personal credit cards for purchases/payments eligible for reimbursement from the City in accordance with the City’s Purchasing Policy. Additional Retail Credit Card Accounts In addition to the City credit card accounts the City has credit cards with the following vendors: Home Depot Sam’s Club A list of cardholders is maintained by the Finance Department for these accounts. After a purchase is made the receipt/purchase order should be approved, coded and sent to the Finance Department to reconcile with the monthly bill. RELEVANT LINKS: League of Minnesota Cities Handbook for Minnesota Cities 9/9/2022 Expenditures, Purchasing, and Contracts Chapter 22 | Page 14 Handbook, City Administrative Staff. While smaller cities likely do not have one person solely responsible for purchasing, an administrative officer (the city’s clerk, deputy clerk, administrator, administrative assistant, or manager) often has the responsibility to make most purchases and take advantage of savings through bulk purchasing, systematic procedures, and effective expenditure controls. 2. Authority for purchasing Because only the council may approve actual purchases, a purchasing agent should obtain approval before taking any final action. Minn. Stat. § 412.691. In Plan B statutory cities, the manager has the authority to make purchases and negotiate contracts for amounts up to $20,000, unless the council sets a lower limit. Even in this case, the council must audit all bills for materials, supplies, and services. Minn. Stat. § 412.271, subd. 8. Statutory city councils may delegate their authority to pay certain claims to an administrative official if: Office of the State Auditor, Statement of Position: The Importance of Internal Controls, Feb. 2014. LMC information memo, Procedures for Paying City Claims. • The council has adopted a resolution specifying the types of claims to be paid in this manner and the specific administrative official to whom the council grants this authority. • The council establishes internal accounting and administrative control procedures that ensure the proper disbursement of public funds, including periodic review of the official’s actions by the council. • The authorized administrative official submits the list of expenditures for review at the next council meeting after payment. • The city prepares an annual audited financial statement attested to by an independent certified public accountant, public accountant, or the state auditor. 3. Use of credit cards Minn. Stat. § 471.382. A city council may authorize the use of a credit card by any city officer or employee otherwise authorized to make a purchase on behalf of the city. A purchase by credit card must comply with all statutes, rules, and city policies applicable to city purchases. If a city employee or officer makes or directs a purchase by credit card not approved by the council, the officer or employee is personally liable for the amount of the purchase. Minn. Stat. § 412.271, subd. 2. Minn. Stat. § 471.38. Claimants must provide the city with an itemized list in writing or in an electronic transaction record. Cities should work with city attorneys to determine if a credit card statement contains the detail necessary to satisfy these requirements. RELEVANT LINKS: League of Minnesota Cities Handbook for Minnesota Cities 9/9/2022 Expenditures, Purchasing, and Contracts Chapter 22 | Page 15 In the alternative, city staff could retain invoices and receipts for all items charged to a credit card. Minn. Stat. Ch. 475. Handbook, Debt and Borrowing. Credit card use must also comply with laws governing city borrowing. Cities may not carry debt on their credit cards. Cities that use credit cards must adopt a policy of paying the entire credit card balance each month. Office of the State Auditor, Statement of Position: Credit Card Use and Policies, Feb. 2014. The Office of the State Auditor recommends cities develop a credit card use policy to avoid misuse or misappropriation of funds. The policy should: • Identify the officers and employees authorized to make purchases on behalf of the city and eligible to use the card. • Identify the types of purchases to be made with the card. • Set up a review process for all purchases made with the card. • Prohibit the use of a city credit card for personal purchases. • Require supporting documentation. • Limit the total amount of charges that can be made on city credit cards. • Obtain signed written acknowledgments of the credit card policy from all authorized card users. 4. Other electronic funds transfers Minn. Stat. § 471.38 subd. 3. Electronic funds transfer means value exchange by mechanical means without the use of checks, drafts, or similar negotiable instruments. A local government may make an electronic funds transfer for the following: Minn. Stat. § 471.38 subd. 3. • For a claim for a payment from an imprest payroll bank account or investment of excess money. • For a payment of tax or aid anticipation certificates. • For a payment of contributions to pension or retirement fund. • For vendor payments. • For payment of bond principal, bond interest and a fiscal agent service charge from the debt redemption fund. 5. Cooperative purchasing Minn. Stat. § 471.59. Minn. Stat. § 471.345, subd. 15. Cities may increase savings by making purchases jointly with one or more governmental units through a process commonly known as cooperative purchasing. Under these programs, several governmental units can authorize one city to solicit bids on behalf of all participating units. Communities have found it profitable to purchase such items as fire hoses, street signs, paint, coal, oil, soap, office supplies, fire trucks, and police cars in this manner. Standard Operating Policy City of Oakdale Policy Number:FR-022 Pages:3 and 3 attachments Subject:Purchasing Cards Approved:2022 1.0 Introduction 1.1 The City has the authority to make purchases using credit cards under Minnesota Statute §471.382. The use of credit cards (purchasing cards) by staff for City business is an authorized payment method, and not a method of creating debt, therefore all credit card balances shall be paid off on a monthly basis without delinquency fees or finance charges. Failure to avoid finance fees will require the discontinued use of the respective credit account. This guideline is intended that an employee neither gain nor lose financially from the use of credit cards. All employees shall be responsible for complying with these directives. This policy supersedes any other existing policy reference to credit/purchasing cards. 2.0 Authorized Employees 2.1 The Finance Director has been designated as the City CFO with the bank and is responsible for administering this policy. 2.2 The Finance Director, in consultation with the City Administrator, has the authority to assign, remove or modify users for the City purchasing card program. 2.3 The Finance Department will maintain a listing of accounts, limits, and personnel authorized to use purchasing cards. 2.4 A staff member who wishes to obtain a city purchasing card to conduct city business shall submit a Purchasing Card Request Form (Attachment A) and Purchasing Card User Agreement (Attachment B) to his or her supervisor. All requests must be submitted to the Finance Director. 3.0 Card Security 3.1 Cardholders should always treat City issued purchasing cards with at least the same level of care as one does their own personal credit cards. 3.1.1 The card should be maintained in a secure location and the card account number should be carefully guarded. The only person entitled to use the card is the person whose name appears on the face of the card. The card may not be lent to another person for any reason. However, a cardholder may use his or her card to make purchases on behalf of City staff. 3.2 Keep the Purchasing Card in a secure location. It needs to be accessible only to the cardholder. If the Purchasing Card is lost or stolen, notify Customer Service immediately at the 24-hour telephone number on the card and call the Finance Director. The card will be closed and monitored. A new card will be issued if necessary. 3.3 When a cardholder determines possible fraudulent charges on their card, they should call Customer Service immediately at the 24-hour telephone number on the card and notify the Finance Director. 3.4 Disputed transactions must be resolved with the Supplier and the Bank by the Cardholder. 4.0 Suppliers 4.1 The Purchasing Card is a Visa or MasterCard product. Any supplier or merchant who accepts such can accept the Purchasing Card. 5.0 Conditions of Use 5.1 Since use of the purchasing cards is restricted to purchases for the City, no personal use is permitted and all purchases must be for a public purpose. Charging personal transactions to City purchasing cards is not acceptable under any circumstances. 5.1.1 If purchases made by City staff are not authorized by the City Council, the cardholder will be personally liable for the purchase and repayment must be made immediately to the City. 5.2 The purchasing card cannot be used to obtain cash advances or for expenses other than those incurred by the assigned personnel named on the card. 5.3 Cardholders must follow all applicable city policies in regards to appropriate purchases. Any questions should be submitted to the Finance Director. 6.0 Documentation Requirements 6.1 The cardholder is responsible for ensuring that every transaction has valid supporting documentation. 6.2 The nature of the goods or services received will determine what information the receipt must contain. However, all invoices should contain basic information about the transaction. These are: 6.2.1 Vendor or merchant name 6.2.2 Transaction date 6.2.3 Line-item information 6.2.4 Quantity 6.2.5 Description 6.2.6 Unit Price 6.2.7 Line Price (quantity x unit price) 6.2.8 Total invoice amount 6.3 Receipts and supporting documentation must be turned into the Finance Department for payment on a timely basis. 6.3.1 Statement will be sent out monthly to card holders and supervisors. 7.0 Missing Receipts 7.1 Should a receipt be lost or unobtainable from vendor, the cardholder must provide the Finance Department with a completed Lost Receipt Affidavit (Attachment C). 7.1.1 Failure to provide the Finance Department with a completed Lost Receipt Affidavit may result in disciplinary action. 7.2 A completed Lost Receipt Affidavit does not necessarily relieve the cardholder of liability. 7.3 Any pattern of missing receipts or those lacking details as outlined in the section 6 of the policy may result in disciplinary action. 8.0 Loss of Privileges 8.1 Failure to comply with the requirements of this policy will result in immediate revocation of Purchasing Card privileges and may result in disciplinary action, up to and including termination, if any of the following occur: 8.1.1 Lending the card to another individual for use 8.1.2 Failure to submit itemized receipts 8.1.3 Fraud or intentional misuse for personal benefit 9.0 Cancellation of Purchasing Cards 9.1 Upon resignation, retirement, termination, administrative leave, leave of absence, or any other means of leaving employment, the employee must immediately surrender their purchasing card to the Finance Director or Human Resources Director. 9.2 Prior to departure or termination of duties, the Cardholder must acquit all expenditures on his/her Card account. 9.3 The City reserves the right to cancel any Purchasing Card at any time for any reason. Attachment A Purchasing Card Request Form To: Finance Director From: (Department Head) Re: Request for Credit Card Full Name (print): Signature: Title: 30-Day Purchase Limit: Reason for Request: I have read the City of Oakdale Purchasing Card Use Policy and I understand the responsibility of purchasing services and supplies using the City of Oakdale Purchasing Card Program. I agree to abide by the policy for the use of a Purchasing Card. I also understand that misuse of the card can result in disciplinary action or may be cause for dismissal. ______________________________________________________________________ Signature of the Employee _______________________ ______________________________________ Date Amount approved per Finance Director _______________________________________________________________________ Signature of the Finance Director, after consultation wi th City Administrator Attachment B Purchasing Card User Agreement I agree to the following regarding the use of the Purchasing Card Policy: 1. I understand that I am making financial commitments on behalf of the City of Oakdale and will strive to obtain the best value for the City. 2. I understand that under no circumstances will I use the Purchasing Card to make personal purchases, whether for myself or for others. 3. I understand the use of the Purchasing Card to obtain cash is expressly prohibited. 4. I have been given a copy of the Purchasing Policy, which I have read and understand the requirements for Purchasing Card use. 5. I will follow the established policies and procedures for use of the Purchasing Card. Failure to do so may result in either loss of privileges and/or disciplinary actions, up to and including termination of my employment. 6. I agree that should I willfully violate the terms of this agreement, I will reimburse the City of Oakdale for all incurred charges and any fees related to the collection of those charges. 7. I understand that any fees or interest charged by the card company because of late payments due to untimely submission of record to the Finance Department will be my responsibility and will not be paid from City funds. 8. I understand that misuse of the card can result in disciplinary action or may be cause for dismissal. Employee Name (Print): __________________________________________________________ Employee Signature: __________________________________________________________ Date: _________________________ Attachment C Lost Receipt Affidavit Cardholder Name (please print): __________________________________________________ I certify that I made the purchase shown below for official business but do not have a receipt because check all that apply): ▢Vendor did not provide a detailed receipt. ▢I have requested an invoice, but the vendor has not provided it. ▢I had a receipt but cannot locate it. ▢I have a receipt but it is not readable and this document is provided in order to describe the items purchased. ▢Order was placed via telephone, fax, or Internet and vendor has not supplied an invoice. All information must be typed, completed on-line, or printed in ink. All information is required. Use one affidavit per lost receipt. Vendor Name City Date of Purchase Detail Description of Items Purchased Item Amount Total Purchase Amount Tax paid?▢ No ▢ Yes This document will be used in lieu of an invoice or receipt for this transaction. I certify that all items listed above (and on the attached, if applicable, were purchased and received for City of Oakdale business. I also understand that habitual use of this form instead of submitting actual receipts or invoices will result in suspension or termination of purchasing card privileges. Cardholder Signature: ___________________________________ Date: ________________ Supervisory Signature: __________________________________ Date: ________________ Supervisory Name (print): ______________________________________________________ Blaine Purchasing Policy and Procedure Manual 7 Disposal of Fixed Assets The disposal of fixed assets is guided by City policy 2.1. Pursuant to this policy, when disposing of obsolete supplies, equipment, or fixed assets, employees will make every effort to secure the highest value of the asset via sale, trade-in, or auction of the asset. Prior to the disposal of fixed assets, equipment, or supplies, the owning department will attempt to find another department to make use of and avoid any potential waste of the items to be disposed. Disposal of Real Property The disposal of real property is guided by City policy 2.2. Pursuant to this policy, all real property shall be disposed of through the adoption of an ordinance. Employees shall refer to City policy 2.2, Disposal of Land/Real Property before beginning the process to dispose of real property. Credit and Purchasing Cards The City participates in a credit card program that allows certain employees to use a credit card to transact official City business. Approval of claims using credit or purchasing cards must follow the general authority section of this purchasing manual and provide proper supporting documentation for all purchases. The credit and purchasing card programs will be maintained by the Finance Department and have the following regulations and requirements: • Credit or purchasing card enrollment forms are to be filled out, approved by department directors or the city manager and submitted to the Finance Department. • Enrollees must sign the card user agreement. • Purchases for personal use are prohibited. • The Finance Department will maintain a practice of paying off the purchasing card charges monthly to avoid interest charges being assessed to the City. Purchases should be limited to smaller dollar amounts or used whenever it is more feasible than traditional invoicing (e.g., class registration, membership renewal(s)). 57 o A deposit to cover the City’s cost for determining a bid protest will be made in the form of a certified check payable to the City Treasurer, in an amount determined by the Finance Director. • The City Manager will deliver the protest and all relevant information about the solicitation, evaluation, and award of the bid to the City Attorney or designee. • A Hearing Date will be set by the City Attorney or designee for the appeal to commence, which date should not be later than twenty business days from the notice of appeal. The complainant will be presented with an opportunity to present their case to the City Attorney or designee. • Upon the conclusion of the appeal, the City Attorney or designee will issue a decision within twenty business days of the conclusion of the appeal. Staff will track all costs (e.g., wages, expenses) spent in the appeals process. The total cost will be subtracted from the deposit. Any remaining balance will be returned to the vendor. If the appeal is upheld, the total deposit will be returned. The Finance Director, in their sole discretion, may reject any unreasonable bid protest to prevent the unnecessary delay in the contract award process or to avoid additional cost to the City. Sales and Use Tax As a local government, the City remains generally exempt from sales and use tax. As such, staff should refrain from paying sales and use tax on official City transactions. The Finance Director, or their designee, may approve payment of sales and use tax on a case–by–case basis (e.g., staff reimbursement for an emergency expenditure). Procurement Card Use Policy Pursuant to Minnesota Statute § 471.382, the City may provide Procurement Cards (P–Cards) to employees that demonstrate a business rationale, such as frequent travel or routine purchasing. The City shall not issue a P–Card for merely for the personal convenience of an employee. Authorization Consistent with the delegated authority of the City Manager as the Chief Purchasing Agent, the City may only provide P–Cards upon the request of the respective Department Director. All P–Cards requests must be approved by the Finance Director prior to issuance. Only full–time or part–time regular employees shall be issued P–Cards. All P–Cards shall maintain the following limits, unless otherwise authorized by the Finance Director of their designee: Staff Level/Position Transactions Approval Per Total (Monthly) Non–Management $500 $3,000 Division Manager Division Manager $1,000 $5,000 Department Director Department Director $2,000 $10,000 City Manager City Manager $5,000 $25,000 Finance Director Accounts Payable $10,000 $50,000 Finance Director 58 User Guidelines and Rules Each card holder will be responsible for ensuring that purchases made with their card comply with Minnesota Statutes, other sections of this Manual and this Procurement Card Use Policy. All employees authorized to use a P–Card shall review and sign an acknowledgement of the P– Card Use Policy and a P–Card User Agreement as provided by the financial institution issuing the P–Card, which shall be retained by the Finance Department. The P–Card User Agreement must also be signed by the applicable Department Director. The terms of the P–Card User Agreement are considered a part of this Manual. P–Card shall be issued in the individual employee’s name. The City shall not issue any generic or department–wide P–Cards, nor may any individual possess more than one P–Card account, unless otherwise authorized by the Finance Director. If the City issues a generic P–Card, it must be assigned and held by a supervisor or manager. Additionally, the P–Card must be accompanied by a log, which includes the staff using the card, the vendor name and a description of the purchase included its estimated cost. The generic P–Card must be returned to the supervisor or manager before being used for another transaction. Employees that do not possess a P–Card shall not retain either physical possession of the P–Card or electronic possession of the corresponding account information. All P–Card use must be approved by the authorized P–Card holder prior to any transaction. Personal use of the City issued P–Card is prohibited. It is the P–Card holder’s responsibility to safeguard the P–Card (and corresponding account information) and protect it from theft and unauthorized use, including, but not limited to: • Immediately reporting lost cards or unauthorized use to the P–Card company as well as to the Finance Department; • Promptly returning expired P–Cards to the Finance Department for destruction; • Keeping the P–Card in a secure location; • Submitting the appropriate and requested documentation to support purchases and other activity in a timely fashion; • Taking appropriate precautions when using the P–Card to make purchases; and • Returning P–Card to the Finance Director upon termination. The Finance Director, in their sole determination, may revoke the P–Card for any reason. Improper use of the City’s P–Card may result in disciplinary action, and cardholders may be held personally responsible for unauthorized purchases, consistent with this Manual and the Charter. Documentation The billing statement from the P–Card issuer does not contain sufficient information to document a purchase made. Appropriate documentation is required for all purchases to verify compliance with this and other City policies. 59 A copy of the invoice or receipt for payment must be included to verify the amount charged on the P–Card. Receipts from vendors that only list the total charged are not considered sufficient documentation. The receipt must identify all products or services purchased, shipping charges, and sales tax. A printed confirmation of an internet purchase may be sufficient to comply with this requirement. If an invoice is not immediately available, the invoice must be forwarded to the Finance Department as soon as possible. In lieu of an invoice or receipt as described above, the purchasers may sign an affidavit attesting to the purchase. The City will not be responsible for any financing or interest charges accruing as a result of untimely submission of P–Card receipts and transactions. In any instance where a product or service purchased with a City issued P–Card is returned or canceled the transaction must be refunded to the P–Card account. Review and Payment The P–Card holder should sign and approve the overall monthly statement that shall constitute their approval of each individual charge or activity. The applicable supervisor shall review all aspects of the invoice and verifying the validity of the expenditure. The P–Card holder and applicable supervisor shall also be responsible for providing the account coding and description of purchase so that expenditures are appropriately classified in the City’s financial records. The applicable supervisor will authorize the expenditure for payment by including a date and signature or electronic approval. All P–Card statements will be reviewed by the Finance Department for compliance with this Manual and to ensure accurate accounting. Additional documentation may be requested from a P–Card user to ensure such compliance. When granted, it is the P–Card user’s responsibility to submit documentation to the P–Card holder. Ultimately, it is the P–Card holder’s responsibility to obtain documentation for all activity. When charges relate to more than one person, the purpose of charges and names of attendees should be noted on the statement. The City will not use the P–Card account for carrying any debt. The City shall make payment for the entire outstanding balance of the P–Cards and all P–Card purchases shall be made through the City’s normal vendor payment process. No employee of the City shall use the P–Card for cash advances or withdrawals. Under no circumstances may P–Cards be used by non–City employees. Individual Vendor Procurement or Credit Cards The City has established charge accounts with a handful of vendors to expedite the purchasing process with those respective vendors. These accounts may or may not have physical cards accompanying them. All sections of this Procurement Card Use Policy are also attributable to the respective vendor charge accounts. Policy Number: 104.301 Title: Use of Purchasing Cards Effective Date: 2/18/19 PURPOSE: To outline procedures to ensure purchasing cards are used appropriately by authorized state employees (hereinafter “cardholders”) so specific categories of merchants, goods and services may be procured on behalf of the state of Minnesota in an efficient and cost-effective manner and consistent with statewide and agency policy. Use of purchasing cards is an alternate means of payment and must not circumvent use of state contracts, purchasing laws, rules, policies, or procedures. APPLICABILITY: Department-wide DEFINITIONS: Agency purchasing card coordinator – the Authority for Local Purchase (ALP) certified manager or supervisor appointed by the department to manage, coordinate and control purchasing cards within the agency. Cardholder – specific department employee who has been authorized a card by the purchasing card vendor. Emergency –a threat to public health, welfare, or safety that threatens the functioning of government, the protection of property, or the health and safety of people. Invoice – the summarized monthly bill of all purchasing cards that is sent by the purchasing card vendor to each department paying location. Original receipt – the customer copy of the receipt signed by the cardholder at the time of purchase. In the case of fax or telephone orders, original receipt means the copy of the receipt sent by the supplying vendor to the cardholder with the goods purchased. Paying location – the area and individuals within the department who receive the memo statements and receipts from the cardholders and make the payments to the purchasing card vendor. PO agency P-Card administrator –the DOC employee authorized in the statewide accounting system purchasing card module to maintain information related to the agency’s credit card information. In DOC, this is the same as the agency purchasing card coordinator. Purchasing card reconcilers and approver – DOC financial services staff who have been designated to receive and review monthly information from cardholders. Purchasing log – the form filled out by the cardholder listing the purchases made each month with the purchasing card. Split purchase – the division of one transaction into two or more transactions to avoid exceeding an established purchasing limit. This practice is a policy violation. Statement – the detailed itemized monthly accounting of charges sent to the cardholder by the purchasing card vendor. Statement in lieu of receipt (attached) – a notarized memo signed by the cardholder and approved (signed) by the cardholder’s supervisor explaining the nature of the purchase, detailing how the original receipt was lost and what steps will be taken to ensure receipts are not lost in the future. Statewide integrated financial tools (SWIFT) – the state’s accounting system PROCEDURES: A. Card Issuance 1. Purchasing cards are assigned or issued to cardholders under the authority of the agency head and the commissioner of the Minnesota Department of Administration. 2. Purchasing cards may be issued only after the authorized user: 1. Is recommended and approved by the user’s supervisor and the agency purchasing card coordinator or delegate (see supervisor duties below); 2. Signs a statement acknowledging the use restrictions and consequences for misuse of the card; and 3. Completes documented training on card use policies and procedures from the agency purchasing card coordinator or designee. B. Purchasing card rules 1. Acceptable card uses a) Travel-related services Purchases of travel-related services must comply with Minnesota Management and Budget (MMB) policies and DOC policy 104.461 “Employee Reimbursement for Travel and other Business Expenses” on travel expenses; MMB policies and procedures for documenting travel; Minn. Stat. §15.435, which states in part, “whenever public funds are used to pay for airline travel by an elected official or public employee, any credits or other benefits issued by any airline must accrue to the benefit of the public body providing the funding”; and must be procured from the current state contract vendor for travel services per the contract release T- 742(5) unless a written exception is provided as per the contract release. b) Other business-related goods or services not otherwise prohibited by this policy. 2. Prohibited purchases a) Fuel (self-service fuel of the type and grade specified by the vehicle manufacturer, E85 (85% ethanol, 15% gasoline) for flex-fuel vehicles when available, and blended for the season diesel fuel in diesel powered vehicles); b) Cash, cash advances, or extensions of credit; c) Explosives; d) Weapons of any kind, including firearms, ammunition, and firearm accessories; e) Telephone calls (either personal or business); g) Meeting refreshments or meals of individuals (including cardholder); h) Alcohol; i) Consulting or professional/technical services; j) Construction services; k) High risk services; l) Equipment that is required to have a license affixed on it (e.g. vehicles, trailers, boats, ATVs) due to special tax considerations; m) Capital assets (capital assets are covered by MMB policy 0106-00, Capital Asset Reporting); n) Sensitive items, as defined in the State of Minnesota Property Management Policy and User Guide by Admin’s Fleet and Surplus Division, and/or in DOC policy 104.350 “Fixed Asset/Property Management”, are items that are generally intended for individual use, or that could easily be sold and are most often subject to pilferage or misuse; o) Tobacco (except as required for American Indian programming, see Policy 302.310, "Use of Tobacco for American Indian Ceremonies"); p) Services performed on state property and/or when insurance would be required to protect the state; q) Cellular purchases, repairs, or use charges; r) Any purchase using grant funds (3000) unless approved by the agency purchasing card coordinator; and s) Split purchases that divide one transaction into two or more transactions to avoid exceeding an established purchasing limit. 3. Rewards, loyalty programs, and other incentives a) Agency use allowed The use of rewards, loyalty cards, and other incentives from merchants is allowed. Any cardholder joining a loyalty club or receiving rewards or incentives must notify the agency purchasing card coordinator to ensure the agency has a mechanism in place to review and monitor that the rewards are accruing to the benefit of the agency and have not been used by an employee for personal benefit. b) Employee benefits prohibited When using the state purchasing card, the acceptance of items or any other benefit—including such examples as customer loyalty points, rewards, free items, or gift cards—for the benefit of the employee and not for the benefit of the state agency is prohibited. (See Minn. Stat. §§43A.38 subd. 2 and 15.43 subd 1.) c) Purchasing cautions for agency rewards, loyalty programs, and other incentives: (1) The merchants used with the purchasing card should be based on the best price and efficiency and not influenced by a rewards/loyalty program. (2)_ Merchants should be selected considering best value, which includes such examples as price, quality, location and efficiency. (3) Cardholders must not create an “exclusive” type relationship with a particular vendor. 4. Use of financial service, PayPal a) The use of a financial service such as PayPal is discouraged, and must only be used in cases where it is the only means to make a valid, authorized state business purchase. Every effort must be made to make purchases by other means before resorting to using a financial service. Note: Sometimes when purchasing from an online vendor or website, it appears to the purchaser that you are purchasing from the manufacturer or reseller directly, but the transaction is really going to PayPal, and their presence is hidden from the purchaser. These cases, in which the purchaser is not aware of using Pay Pal, constitute an exception. These situations must be documented in the file when discovered and when approving the transaction in SWIFT. Cardholders must document on the log that, while the transaction was processed through PayPal, they did not set up a PayPal account linked to the state credit card when making the purchase. b) Purchasing card transactions with a financial service must be for the exact amount of the purchase price from the vendor. Transactions with a financial service are for just one purchase at a time, and only at the time you make the purchase. c) The cardholder must obtain a receipt from both the financial service and from the merchant providing the product. The merchant receipt must show the item description, the quantity and the price of the product purchased. Both receipts must be kept together and with the purchasing card log. Receipts must be handled per the agency policy. d) Financial services such as PayPal must not be used if: (1) The vendor accepts the state purchasing card (currently a Visa card). (2) The vendor accepts a state purchase order. (3) The Visa transaction has been declined due to a blocked MCC code. (4) The purchase is prohibited by this policy under A.2, Prohibited purchases. (5) The purchase is over $2,500 (even if the cardholder has a higher transaction limit). e) In the event a cardholder needs to establish a PayPal account in order to make the purchase, prior written approval from the CFO or designee is required. The approval must be kept with the receipt and turned in with the purchasing card log. 5. Emergency use Declared emergencies are exempted from normal purchasing rules under M.S. § 16C.10 and the Authority for Local Purchase (ALP) Manual section 1.6.1. a) Declaring an Emergency Admin’s Office of State Procurement (OSP) director or acquisitions manager may declare an emergency. OSP’s Acquisitions Request for Emergency Authorization form should be used to request emergency procurement authorization. If time permits, staff seeking to purchase on an emergency basis should contact Admin OSP at 651-201-2400/2446 to report the emergency and process the form using signature blocks A and B. When time does not allow contacting Admin OSP, the agency head or authorized delegate may declare an emergency by processing the form using signature blocks A and C. In declared emergencies, any individual may purchase if required to respond to the emergency. b) Documenting an Emergency When an agency head or delegate declares an emergency without advance authorization from Admin OSP, the declaration must be documented by completing the Acquisitions Request for Emergency Authorization form or in writing and submitted to Admin OSP as soon as practicable. The declaration must include the nature, date, location and scope of the emergency and any limits to actions that should be taken to rectify the situation. c) Regardless of whether OSP or the agency head declares the emergency, the agency must submit a written report to OSP’s director or acquisitions manager upon completion of its emergency procurement activities, unless the purchases are under $5,000. The report must fully document the actions taken, why the competitive bid process could not be utilized, how the scope of work was minimized to what was immediately necessary, and the final costs of the goods and services procured under the emergency authority. A copy of this final report must be kept in the purchasing file. d) When the emergency is declared by the agency head or delegate, and a state purchasing card is used, the authorized card user must contact the agency purchasing card coordinator. Emergency use of the purchasing card must be reported to the agency’s purchasing card coordinator no later than the next business day following the emergency. The agency purchasing card coordinator must then call OSP’s acquisitions manager at 651-201-2446 and report the event. 6. Services The state purchasing card may be used for the purchase of simple services. Simple services are services where the vendor does not come on state property, insurance is not required, and the agency determines it is low risk. Simple services include such examples as film processing, news clipping services, and car washes. The card must not be used for the purchase of a service if the service is performed on state property or when insurance should be required to protect the state from potential liability. The card must not be used to purchase construction services, professional/technical services, or for high risk services. 7. Sales tax The state purchasing card is exempt from the use of the state’s direct pay permit. Cardholders must instruct the merchant to charge applicable state sales tax and local use tax when presenting the card for payment. Cardholders must check that the vendor applied all applicable sales tax. 8. Consequences of improper use If a card is used in violation of this policy or the statewide policy, the authorized card user must report the matter to the agency purchasing card coordinator no later than the next business day. Violations of this policy may result in consequences including such examples as forfeiture of purchasing card, discipline, or discharge. In the case of a prohibited purchase, the authorized user must immediately reimburse the agency for the prohibited purchase. There may be situations where such reimbursement may not be warranted, in which case the agency must assess and resolve matters on a case-by-case basis. 9. Fraud Pursuant to Minn. Stat. § 609.456 subd. 2, all suspected fraud with the state’s purchasing card must be reported to the office of the legislative auditor (OLA). This requirement includes those instances when the state-owned purchasing card account number has been compromised and/or unauthorized use of the account is discovered either by the purchasing card contract vendor or a state employee. 10. Encumbrance of funds a) State law requires state entities to project and encumber sufficient funds for the cost-effective reimbursement of anticipated expenditures prior to obligating the state to pay for a purchase. For this reason, expected, predictable purchasing card expenses must be encumbered for the current month and one additional month prior to the use of the purchasing card. b) The agency manages this requirement at a statewide level. Using the BPC order document type in SWIFT, sufficient funds are set up to cover the anticipated billings for the next two billing cycles/periods. Invoices are charged directly to the accounts listed by the cardholder on the purchasing log. At the end of the fiscal year, a new encumbrance using the funds for the next fiscal year is created to meet this requirement, when the new budget is available. Then the previous year’s encumbrance is released. 11. Processing transactions for payment Purchasing card payments are processed in the SWIFT system. Transactions are loaded into SWIFT from the contract vendor and must be reconciled and approved either individually or by doing a select all and approve in SWIFT, and the voucher is generated from this process. Approving transactions individually, as they are ready to be approved, has the ability to speed up the creation of a payment voucher to the contract vendor, thereby maximizing the available incentive for fast payment from the contract vendor. 12. Card controls a) Purchasing card controls are controls that are placed on cards to control spending activity. There are two basic types of controls. One control is set by the state for the entire card program at the vendor level by using the merchant category classification codes (MCC codes) to block undesirable or inappropriate categories. The other control is dollar amounts that are set up per cardholder at the time the card is created from the agency request. The dollar amounts are covered in section A.13, Card spending limits, below. b) Purchases other than those permissible under this policy require advance approval from the agency purchasing card coordinator. Cardholders must get all the pertinent data about the purchase from the end user: item or service needed, the business mission need for the good or service, any required approvals that have been obtained and why the purchase must be made using the purchasing card. The cardholder must make a request of the agency purchasing card coordinator to get an exception authorized for the purchase. If the purchase is allowed by the statewide policy, but restricted by the agency policy, the agency purchasing card coordinator may seek exception approval within the agency. If the exception is to the statewide policy, the agency purchasing card coordinator must request the exception from OSP, using either the exception request form or via an email or memo. See section 2.6 in the statewide policy. c) If a cardholder has received a permanent exception to the agency policy or the statewide policy, the new controls or limits must be annotated on The Authorized User Purchasing Card Acknowledgement of Use Agreement in the text box provided to list limits and new signatures obtained. 13. Card spending limits a) Purchasing cards are subject to two limits: (1) A maximum transaction dollar amount of $500. (2) A maximum payment cycle dollar amount of $2,500. b) If a card is used for a transaction in excess of an established limit or approved exception, the transaction is automatically declined. Splitting a purchase into more than one transaction to avoid exceeding an established purchasing limit is prohibited. If a need above an established limit occurs during normal business hours, the purchasing card authorized user must call the agency’s purchasing card coordinator to request an exception. c) Upon written request and approval by the CFO or designee, cardholders may be granted a higher limit not to exceed the following: (1) A maximum transaction dollar amount of $5,000 (2) A maximum payment cycle dollar amount of $20,000 14. Retention of receipts a) All purchase cardholders must obtain receipts for card transactions. b) If the original receipt does not itemize the purchase, an itemized receipt must also be obtained. c) If the purchase was made by phone, the original receipt should be annotated by the cardholder to reflect the fact that the order was placed over the phone. d) Receipts must be: (1) Segregated by billing cycle; (2) Maintained pursuant to the agency’s records retention schedule for these records; (3) Readily available during the payment process to assist in verifying correct payment; and (4) Original itemized receipts. If the authorized user cannot obtain a receipt from the merchant at the time of sale because of mechanical or technical difficulties, the authorized user must complete, sign, and have notarized a Statement in Lieu of Receipts (attached), and which is available from the agency financial services office. This form should only be for exceptional circumstances. See section 2.84 of the state purchasing card policy for more information about receipts. 15. Applying funding string information to card purchases The cardholding must apply the funding string for a purchase to the purchasing card log. 16. Approval levels summary table a) The following changes require approval from Admin OSP: (1) Changes to agency policy; (2) Changes to dollar limits above the state policy limits; (3) Changing the permanent MCC blocking structure of a card to a non- standard MN blocking structure; (4) Creating a vendor location in SWIFT for a new purchasing card paying location; and (5) Establishing emergency cards. b) The following changes may be authorized by the DOC: (1) Raising or reducing a card’s single transaction limit or the monthly limit to a value within the agency’s approved purchasing card policy; and (2) Temporarily requesting a MCC code be opened up for a single purchase. C. Duties and responsibilities 1. Establishment of the agency purchasing card coordinator a) The CFO designates an agency purchasing card coordinator to manage and administer the program consistent with the statewide policy and this policy. The CFO must report the name(s) of its purchasing card coordinator(s), along with contact information (address, phone, fax, e-mail) to the OSP, State Purchasing Card Administrator. The duties of the purchasing card coordinator are delegated to multiple persons based on the agency’s structure and business practices. b) The state accounting system requires a PO Agency PCard Administrator for the purchasing card module. In the DOC, this is the same person as the agency purchasing card coordinator. c) The agency purchasing card coordinator must identify if and when additional purchasing card payment locations are necessary for the adequate administration of this policy. Currently, the central office and Minnesota Correctional Facility – Lino Lakes are payment locations for purchasing cards. 2. Agency purchasing card coordinator duties The duties of the purchasing card coordinator include: a) Creating account(s) and account access so that card requests and changes may be managed and monitored; b) Administering card policy and training authorized card users so that cards are properly used; c) Monitoring card usage through the review of card statements and monthly invoices; d) Enrolling in and using Access Online, the contract vendor’s online tool to monitor and manage the purchasing card program; e) Using Access Online to ensure requested accounts or changes to accounts were made accurately; f) Supervising and ensuring that the review process of invoices is done per the agency review plan so that purchasing card bills are paid appropriately, in a timely manner, and the agency receives available rebate incentives. This review of invoices may include use of: (1) Regular paper logs; (2) Data analytics tool; and/or (3) SWIFT to review the approvals; g) Ensuring that adequate funds are encumbered for anticipated purchasing card purchases; h) Reminding supervisors that they must do a thorough review of every purchasing card transaction every month per the guidance in the agency purchasing card policy; i) Monitoring cardholders to ensure their need for a purchasing card is validated every three years and providing updated cardholder training; j) Ensuring that cardholders sign a new Authorized User Purchasing Card Acknowledgement (104.301A, link attached) every three years; k) Keeping copies of cardholder’s dispute requests and monitoring and following-up on dispute resolution; l) Informing cardholders of current contracts, provisions, and policies relating to purchasing card purchases; m) Maintaining a file of purchasing card request forms; n) Maintaining a list of the employee name, supervisor and location for employees that have been issued cards; o) Maintaining a file of Authorized User Purchasing Card Acknowledgement of Use Agreements, which must have a signature date within the last three years, for all of the agency cardholders; p) As the SWIFT PO agency P-card administrator, maintaining the vendor locations, agent number, company number, cardholders, reviewers, reconcilers, approvers and proxies; and q) As the SWIFT PO agency P-card administrator, monitoring the receipt and application of the incentives received for the agency from the contract vendor, and ensuring they are credited to the appropriate funding source. r) Maintaining a log of any fraud, and any unauthorized or improper use, and report monthly to the agency CFO who is responsible for reporting to the OLA. 3. The purchasing cardholder must: a) Follow all purchasing laws, rules, policies and procedures. Failure to comply with this policy may result in forfeiture of purchasing card and/or discipline. b) Consult with a certified agency buyer when needed for guidance about purchasing with the purchasing card. c) Maintain a purchasing card log. The log must list appropriate funding information for each purchase. d) Annotate on the log any appropriate sales or use tax not charged by the merchant that is due to the Department of Revenue. e) Record on the log any incentives (rewards/loyalty points, gift cards, etc.) earned on a purchase. f) Submit the log with original receipts to the cardholder’s supervisor and ensure that it is received in financial services no later than the 15th of the month. g) Re-sign the Authorized User Purchasing Card Acknowledgement of Use Agreement if any changes are made to limits or other controls on the cardholder’s card. h) Re-sign the Authorized User Purchasing Card Acknowledgement of Use Agreement at least every three years 4. Purchasing cardholder’s supervisor’s responsibilities and duties a) Request as needed that appropriate individuals receive purchasing cards from the agency purchasing card coordinator. Supervisors need to determine who needs a purchasing card to assist them in the pursuit of their job responsibilities. The agency purchasing coordinator is the one who requests the card from the contract vendor. b) Review cardholder transactions monthly. Ensure that purchases: (1) Are necessary business expenses used to support the mission of the agency; (2) Are not split to avoid established card limits; (3) Are not contract items from a non-contract vendor; (5) Are from properly selected vendors; (6) Have original receipts to support the purchasing card log; (7) Have legally valid and appropriate funding designated on the log if required by agency policy; (8) Have not been submitted as an employee-reimbursable expense; (9) Have not had incentives of any kind (including such examples as rewards/loyalty points, free items, or gift cards) given to the cardholder, and, if there are incentives shown, they have been documented in the agency process for agency use only; and (10) Are not sensitive items. c) Devote extra scrutiny to the transactions where no original receipt is attached (a Statement in Lieu of Receipt is used), when the transaction is listed as PayPal, and when the receipt is not itemized. d) Compare the original itemized receipts to the completed purchasing card log to ensure they agree, and the log is supported by the items on the receipt. e) Approve the appropriate purchases on the log, sign it, and ensure that it is received in financial services no later than the 15th of the month. f) Review the cardholders assigned under the supervisor for the continued need for the purchasing card at least every three years and provide updated training. Re-sign the Authorized User Purchasing Card Acknowledgement for the cardholder if the need for them to continue having a purchasing card is confirmed. g) Re-sign the Authorized User Purchasing Card Acknowledgement of Use Agreement if any changes are made to limits or other controls on the cardholder’s card. 5. Purchasing card reconcilers and approvers a) In DOC, the same employee is both the reconciler and the approver. b) The duties of the purchasing card reconcilers and approvers include: (1) Reviewing and reconciling statements and purchasing logs; (2) Reminding supervisors that they are to do a thorough review of every purchasing card transaction every month per the guidance in the Agency Purchasing Card Policy; (3) Keeping copies of cardholder’s dispute requests and monitoring and following-up on dispute resolution; (4) Informing cardholders of current contracts, provisions, and policies relating to purchasing card purchases; (5) Receiving and applying the incentives received for the agency from the contract vendor, and crediting the appropriate fund sources; and (6) Maintaining a list of the employee name, supervisor, and location for employees who have been issued cards. c) The purchasing card reconciler must promptly reconcile and approve transactions in SWIFT. d) The reconciliation and approval must be completed as quickly as possible. Processing transactions as soon as possible maximizes the agency’s speed of payment incentive from the bank. D. Purchasing card review and record retention 1. Establishment of a purchasing card review a) It is the responsibility of the agency to designate staff to review monthly purchasing card charges and monthly invoices to: (1) Prevent theft, abuse, and fraud relating to the overall use of the card; and (2) Eliminate unnecessary and inappropriate charges. b) All cards are subject to review at any time. c) Additionally, cards may be reviewed based on prior incidents of suspected purchasing violations. d) The agency purchasing card coordinator completes these reviews, creates a summary document of completed reviews, and retains the summary according to retention schedules. 2. Review plan details a) Each quarter at least three percent, but no fewer than five, of the agency’s purchasing card accounts must be randomly selected for review. Ten percent, but no fewer than ten, of the selected card accounts’ transactions from the month with most activity during that quarter must be reviewed. b) The review selection may be made from either the paper purchasing card invoice from the bank or the purchasing card transactions loaded into the statewide accounting system from the bank. c) The agency purchasing card coordinator must request all back-up documentation, including such examples as logs, receipts, monthly memo statements, and statewide account transactions, for the sample selected from the appropriate accounts payable location. Upon completion of the review, all documentation must be returned. d) Upon discovery of any problems, the reviewer must appropriately expand the scope of the review to uncover any additional issues. e) The agency purchasing card coordinator must review transaction logs and compare them with receipts to verify that all transactions are legitimate, appropriate, and should have been paid by the agency. The coordinator must also review receipts to ensure that state and local taxes on any taxable purchases were applied correctly. f) In the event that an issue or problem is discovered during the review process, the purchasing card coordinator or designee must work with the cardholder and appropriate supervisor to resolve the issue. When appropriate, the vendor, OSP, and/or the OLA must be consulted. 3. Record retention Receipts and other documentation must be retained pursuant to the agency’s records retention schedule for these records. E. Procedures 1. Procedure for requesting and authorizing purchasing cards a) Employees applying for a purchasing card must fill out the Request for a Purchasing Card form (attached) and receive prior written approval from their supervisor. The request must include a brief justification for the need for a purchasing card. The supervisor forwards the request to the local purchasing card coordinator and includes a listing of any additional limitations to be applied to the cardholder other than those specified in this policy (e.g., quantity of items purchased, type of item purchased, per purchase authority limit). b) The local purchasing card coordinator evaluates each request and determines the appropriate purchasing limit. The agency or local purchasing card coordinator provides approved employees with training on the use of purchasing cards and an information packet, including all required forms, prior to accepting their applications for a purchasing card. In the event the local purchasing card coordinator requests to be a cardholder, the agency purchasing card coordinator reviews the request. c) Each cardholder completes training and a Policy and Procedure Acknowledgement form (attached) prior to receiving the card. Supervisors of cardholders must also complete training. In the event that a supervisor has not received training or the position is vacant, the agency purchasing card coordinator must work with the employee to designate an alternate trained supervisor. 2. Process for cardholder reconciliation and submission a) The cardholder receives a statement directly from the vendor at the end of each billing period with card transactions. The cardholder must reconcile the statement to the receipts and purchasing log and sign the purchasing log indicating it is accurate. The cardholder submits the statement, log and receipts to the cardholder’s supervisor. The cardholder is responsible for ensuring that the log and documentation is received in financial services no later than the 15th of the month. b) The cardholder’s supervisor must also review and sign the purchasing log and forwards the log, statement, and receipts to the purchasing card reconciler. All purchasing card logs and back-up information must be received in financial services no later than the 15th of the month. Review and approval must be completed timely or could result in the forfeiture or suspension of the cardholder’s purchasing rights. c) Original receipts or Statements in Lieu of Receipts must be submitted to support all purchases. Receipts must support the dollar value of all purchases unless the item is being contested with the vendor or formally disputed with the purchasing card vendor. 3. Process for purchasing card approvers reconciliation and approval a) The purchasing card approver must review all transactions on the statement and sign the purchasing log, verifying that all purchases were appropriate. The purchasing card approver must review and reconcile transactions with paper receipts to verify that all transactions are legitimate, appropriate, and should be paid by the agency. This review ensures that: (1) Itemized receipts must be present for all charges and they agree with the transactions as shown on the invoice. (2) Cardholders are properly using the purchasing card for permissible purchases. (3) Sales tax has been paid to the vendor, when applicable. Adjustments must be completed as necessary. (4) Potentially fraudulent transactions resulting from lost or stolen purchasing cards are identified. (5) Travel-related expenses are not submitted as reimbursable employee business expenses. b) The purchasing card approver must approve the purchasing card transaction in the statewide accounting system. (1) In order to be properly credited, the payment(s) must be issued by the 20th day of the month. (2) Disputed charges must be included in the payment for the invoice on which they appear. (3) Invoices, logs, and receipts must be retained in financial services according to the DOC records retention policy. 4 Process for disputing charges a) If a cardholder does not agree with a charge posted on the monthly memo statement, the cardholder should dispute the charge and notify the local purchasing card coordinator of the dispute. b) The first effort to resolve the discrepancy must be made with the vendor who is billing the transaction. If the error cannot be resolved with the vendor, the cardholder must notify the purchasing card vendor by calling the 1-800 number listed on the back of the purchasing card, and file a dispute within 60 days after the date of the first statement on which the disputed charges occurred. 5. Process for payment of sales tax The paying location pays the appropriate state and local sales and use tax when the tax has not been charged by the vendor. 6. Process for reporting lost or stolen purchasing cards Cardholders must immediately notify the purchasing card vendor and the local purchasing card coordinator of any lost or stolen cards. The local purchasing card coordinator forwards this information to the agency purchasing card coordinator. 7. Process for suspension or cancellation of purchasing cards a) Purchasing cards may be suspended or cancelled. The supervisor and/or the local purchasing card coordinator initiates the suspension or cancellation of the card. (1) Reasons for suspension may include such examples as: (a) Statements, receipts or purchasing logs turned in late to the local purchasing card coordinator twice within a six-month period, regardless of whether the employee or the supervisor delayed turning the log into financial services; or (b) Improperly completed logs or reconciliations. (2) Improper usage of the card results in immediate cancellation and may result in disciplinary action. Reasons for cancellation may include such examples as: (a) Personal purchases; (b) Purchase of any prohibited items such as the examples listed in section B of this policy; (c) Allowing another person to use the purchasing card; (d) Misplacement or loss of the purchasing card; (e) Missing original receipts or submitting affidavits for purchase three times within a year; or (f) Non-compliance with established purchasing rules and policies. 8 Reinstatement of suspended purchasing cards a) Suspended purchasing cards are automatically reinstated within 60 days of the violation. After reinstatement, the supervisor must monitor all purchases and approve the purchasing log each month. b) A cardholder with a reinstated card is on a six-month probation. Any violation during the probation period may result in permanent cancellation of the purchasing card. 9. Cancelations of purchasing card a) If the cardholder’s job status changes, the cardholder’s supervisor must notify the agency purchasing card coordinator or the purchasing card approver of the need to cancel the purchasing card. b) The purchasing card approver notifies the agency purchasing card coordinator of the need to cancel the card. c) The agency purchasing card coordinator notifies the purchasing card vendor on-line and cancels the card. d) The employee or the supervisor must appropriately dispose of the card. 10. Purchasing violations a) Misuse of the purchasing card as outlined in the purchasing card policy constitutes a violation of Minn. Stat. §§ 16A.15, subd. 3 and 43A.38, subd 4. b) Cardholders are required to complete a DOC purchasing violation form in accordance with DOC Policy 104.305 “Purchasing Violations.” c) In the case of a prohibited purchase, the authorized user may be required to immediately reimburse the agency for the prohibited purchase. INTERNAL CONTROLS: A. Requests for Purchasing Card forms and the Authorized User Purchasing Card Acknowledgement of Use Agreement are retained by the agency purchasing card coordinator. B. The agency purchasing card coordinator and local purchasing card approvers maintain a list of the employee name, supervisor and location for employees that have been issued cards. C. Reconciled and processed purchasing card statements, logs, and receipts are retained in financial services. D. The agency purchasing card coordinator retains a summary document of completed purchasing card reviews, according to retention schedules. ACA STANDARDS: None REFERENCES: Minn. Stat. §§ 15.43; 15.435; 16A.15, subd. 3; 43A.38, subd 4; and 609.456, subd. 2 Minnesota Department of Administration, “Purchasing Card Use Policy 1b,” 11/1/2013, revised 4/2018. Policy 104.300 “Purchasing” Policy 104.305, “Purchasing Violations” Policy 302.310, "Use of Tobacco for American Indian Ceremonies" Policy 104.460 “Special Expenses” Policy 104.461 “Employee Reimbursement for Travel and other Business Expenses” Policy 104.350, “Fixed Asset/Property Management” Contract Release No. C-684(5) (Contract release for purchasing card.) Authority for Local Purchase Manual (Purchasing Manual Bulletin No. 00.07, Authority for Local Purchase) Operating Policy and Procedure, Employee Business/Travel Expenses, PAY0021 Minnesota Department of Revenue, Sales and Use Taxes Minnesota Management and Budget, Statewide Operating Policy 0807-01, “State Taxes on State Agency Payments” State of Minnesota Property Management Policy and User Guide Minnesota Management and Budget Policy 0106-01, Capital Asset Reporting REPLACES: Policy 104.301, "Use of Purchasing Cards," 12/5/17. ATTACHMENTS: Authorized User Purchasing Card Acknowledgement (104.301A, on iShare under Finance forms) Purchasing Card Individual Account Information Record (104.301B) Purchasing Card Log (104.301C, on iShare under Finance forms) Statement in Lieu of Receipt (104.301E) Request for Purchasing Card (104.301F) APPROVALS: Deputy Commissioner, Community Services Deputy Commissioner, Organizational Services Assistant Commissioner, Facility Services Assistant Commissioner, Office of Strategic Planning, Implementation, and Employee Development Commissioner, MN Department of Administration