Purchasing Policies and Procedures

GUIDELINES FOR BUDGETING AND COST CONTROLS

It is the responsibility of the Vice President for Business & Finance and the Controller to set and adjust amounts charged for various academic and administrative fees.  Departments are expected to cooperate in providing all information necessary to accurately calculate such fees.

a.  GENERAL INSTITUTIONAL GUIDELINES

Each academic or administrative department head will be expected to monitor expenditures within the department in order to determine conformity with budget guidelines.  The Vice President for Business and Finance and Controller will review and monitor expenditures in order to determine conformity to budget guidelines. The Vice President for Business and Finance will have the authority to cancel any expenditure not properly budgeted or expenditures that the Vice President for Business and Finance believes cannot be approved in the interest of financial stability.  Department heads are responsible for keeping the Vice President for Business and Finance or Controller informed of any anticipated budget overruns and strategies to correct same.  Primary responsibility for each division’s budget rests with the Divisional Vice President.

Expenditures and budget accounts should be monitored through the use of My Budget within StormFront.  Requests for access to accounts within My Budget should be submitted in writing by the department head to the Controller.  The Controller will review the requested access and coordinate with Information Services to grant the appropriate access within StormFront.

Financial planning and control require that the College operate with a balanced budget that is prepared realistically and administered carefully. Budget preparation occurs according to a schedule determined each year. The College’s fiscal year begins June 1 and ends May 31.  Parameters are established in each winter for the next academic year and are submitted to the Board of Trustees for their review.

All encumbrances for a given fiscal year not expected to be paid by May 31 must be reported to the Vice President for Business and Finance or the Controller, no later than June 15th of that year.  All encumbrances not reported by June 15th or not paid by May 31 will automatically be charged against the subsequent year’s budget.

Checks issued to Simpson College and mailed or delivered to departments other than the Business Office need to be delivered to the Business Office for deposit at the first available opportunity.  Receipts from various College functions held on weekends need to be secured in a safe until the funds can be deposited.  If this is not possible, contact the Business Office for assistance in depositing the funds in the after-hours drop at the College’s local bank.

b.  PURCHASING POLICIES AND PROCEDURES

Every expenditure of the College must be prudent and directly benefit Simpson College.  The College will assume no liability for the payment of purchases which were not made through approved purchasing procedures.  The Vice President for Business and Finance or Controller is authorized to reject payment for any purchase not properly authorized.

1)  Expenditure/Commitment Authority

The following are authorized to initiate expenditures or make financial commitments on behalf of the College up to the limits specified:

 

Department Head Up to $2,500
Department Head of Major Departments Up to $5,000
Divisional Vice President Up to $20,000
Vice President for Business and Finance Up to$100,000
President Over $100,000

Major departments are defined as grant programs or those departments with operating budgets (excluding salaries and benefits) greater than $300,000.  Major departments include the following: Athletics; Library; Division of Adult Learning; and Grants – Lilly Initiative, Upward Bound, Student Support Services Program.

A budget approval tree listing approval authority for budget accounts is included at Appendix E.  The budget approval tree will be submitted to the President’s Cabinet on an annual basis for their approval and to update with any changes or additions.  In addition, changes or additions may be made throughout the year upon the request of a Divisional Vice President and submitted to the Controller.

Note that some departments such as Purchasing, Information Services, Media Services and Public Relations make purchases to be charged to another department.  These departments must obtain written documentation approving the purchase from the appropriate party with purchasing authority.  The written documentation of the approval could include signature on a Purchase Order or an email received from the approver.

2)  Use of Purchase Orders

Purchases of goods and services under $2,500 do not require a Purchase Order.  If a vender requests a Purchase Order, one can be completed and either mailed or faxed to the vender with only department head approval.  Many of these purchases can be made through the use of a procurement card (see section following).

Purchases of goods and services equal to or greater than $2,500 requirethe use of a Purchase Order.  (See list of exceptions below.)  Purchase orders of $2,500 to $4,999 must be approved/signed by a major department head or Divisional Vice President prior to the purchase.  Purchase orders of $5,000 or above must be approved/signed by the Divisional Vice President.  In addition, Purchase Orders of $5,000 or above are subject to competitive bidding requirements (see section following).  Purchase orders of $20,000 or more require the additional approval of the Vice President for Business and Finance and Purchase Orders of $100,000 or more are to be submitted to the President for approval.

< $2,500 $2,500-$4,999 $5,000-$19,999 $20,000-$99,999 > $100,000
PO required No Yes Yes Yes Yes
Department Head sign PO Yes No No No No
Divisional Vice President or Major Department Head sign PO Yes Yes No No No
Divisional Vice President Yes Yes Yes * *
Vice President for Business and Finance approve PO Yes Yes Yes Yes *
President approve PO Yes Yes Yes Yes Yes
Competitive bid required No No Yes Yes Yes

* Individual would typically sign as endorsement of the purchase but additional signatures are required for the purchase to have proper approval.

The following items do not require a Purchase Order.  Charges may be paid directly from invoices received.  Typically, the items below are subject to a contract or agreement which is discussed below under Written Agreement/Contracts at section 6.

  • Annuity payments
  • Bank fees and debt service payments
  • Benefits services (health insurance, life insurance
  • Collection fees
  • Insurance
  • Legal and audit fees
  • Postage
  • Purchasing card transactions
  • Real estate taxes
  • Rent or lease payments under a written agreement
  • Services under a contract (i.e. facilities services, food service, consultants, talent fees, library databases, etc.)
  • Tour company fees
  • Travel expenses (including airline tickets, lodging, meals)
  • Utilities (gas, electric, water, telephone, cable, garbage)
  • Direct charges from Simpson departments (mailroom, copy center, bookstore, facilities, food service)

A Purchase Order, if required, must be completed prior to ordering goods or services.  Invoices of $2,500 or more will not be paid until a Purchase Order is received by Accounts Payable.  Fees charged by vendors for late payment of invoices will be charged to the requisitioning department.

The three-part Purchase Order form is available in Accounts Payable and is to be completed in detail.  After signature approval, the white original is sent or faxed to the vendor, the yellow copy is for departmental records, and the pink copy should be sent to Accounts Payable.

All orders should be shipped directly to the requisitioning department. The vendor invoice must include the departmental name as a reference and should be sent by the vendor directly to Accounts Payable. When the invoice is received in Accounts Payable, the pink copy of the Purchase Order is attached and forwarded to the requisitioning department for approval.  If all items have been received as ordered, the department head should indicate the account number to be charged, sign the invoice and return it to Accounts Payable within 3 working days.  If the invoice is sent by the vendor to the department, the department head should indicate the account number to be charged, sign the invoice and forward it to Accounts Payable within 3 working days.

3)  Check Requests/Submission for Payment

Requests for payment should be submitted to Accounts Payable in the Business Office using either a Payment Requisition form or the original vendor invoice.  Payment Requisition forms may be obtained from Accounts Payable and should only be used when an invoice or other form of documentation is not available.  All requests for payment should include the account number to be charged, the signature of the authorized individual responsible for the account and adequate documentation to support the expenditure.  The pink copy of the three-part Payment Requisition form should be retained by the originator of the form for departmental records.  The yellow and white copies are to be sent to Accounts Payable.  A copy of the Purchase Order, if applicable, must also be attached.

Requests for payment without a Purchase Order that meet the criteria for completing a Purchase Order will be returned to the requesting department for proper completion of a Purchase Order.  Requests for payment without adequate documentation or signature approval will also be returned to the requesting department.

Payment requests submitted by noon on Wednesday will be processed by Friday of the same week.  Payment requests submitted after noon on Wednesday will not be available until the following Friday.  Exceptions to this policy will only be allowed with the approval of the Controller or Assistant Controller.

4)  Payments to Individuals for Services Provided

Payments to individuals for services provided will only be allowed through Accounts Payable when the services provided are clearly of an “independent contractor” nature.  Services provided as an “employee” are to be paid through payroll.  Assistance in determining the nature of a relationship (independent contractor versus employee based on IRS guidelines) can be provided by the Controller.  Because the IRS levied penalties for incorrectly classifying individuals as independent contractors can be severe, it is critical that great care be taken to properly classify service providers.

Because the IRS requires that all payments to individuals for services (both trade and professional, including parts and materials) be reported to them annually on IRS Form 1099, an IRS Form W-9, Request for Taxpayer Identification Number and Certification, needs to be completed by the individual to be paid.  This form may be obtained from Accounts Payable and is used to obtain the individual’s full name, address and social security number.  Examples of payments to individuals for services provided include consulting, honorariums, speaker fees, referees/umpires, etc.  Payments to individuals for reimbursement of expenses are excluded from this requirement.  Payments for services provided by current Simpson employees should always be paid through payroll and not accounts payable.

5) Purchases Requiring Competitive Bids

The requesting of bids is a recognized and accepted means of insuring effective competition among suppliers, and the College will generally receive greater discounts and better service through competitive bidding.  The College requires bids to be obtained based on the following expenditure levels (in the aggregate):

$5,000 – $9,999 – Minimum of two competitive quotations in the form of faxed or phones quotes or published catalog pricing.

$10,000 and above – Minimum of three competitive bids in the form of a written quote or request for proposal (RFP) process.

Documentation of the competitive bids obtained should be maintained by the purchasing department and should be made available upon request of the Business Office or Purchasing.  Assistance in bidding or sending RFPs can be obtained through the Director of Procurement.

Exceptions to obtaining competitive bids are allowed under the following circumstances:

  • Bids have recently been received (within the previous 12 months) for the same item and the bids are still valid
  • Competition is not feasible due to the sole source nature of the item to be purchased (i.e. this is the only product that can be used to accomplish the task necessary in an appropriate manner)
    • Specific reasons for using a sole source vendor must be provided with the Purchase Order
  • College sanctioned preferred supplier agreements exist (i.e. copier and computer purchases)
  • There is other justification for excluding competitive bids (memo of explanation must be provided)

6) Written Agreements/Contracts

Commitments for some arrangements and services cannot always be placed solely on a purchase order or procurement card without the supplement of a written contract which is signed by both parties.  The written contract often incorporates much more detail than a simple purchase order or credit card transactions alone can provide, especially related to the operating terms and conditions and the details of the transaction itself (i.e. payments under leases, incorporation of legal requirements, liability and indemnification issues, warranty statements, etc.).  Examples of these types of agreements include, but are not limited to, the following:

  • Compensation contracts
  • Construction contracts
  • Consulting agreements
  • Design agreements
  • Grant agreements
  • Hotel/conference/banquet facilities
  • Installation services
  • Major software licenses
  • Power of attorney
  • Space leasing
  • Special events
  • Telecommunications services
  • Training services

Extreme caution should be exercised when executing contracts or agreements on behalf of the College as there may be liability issues or other contract language that could have a significant impact on the College.  Questions regarding any written contracts or agreements may be directed to the Vice President for Business and Finance.  Otherwise, contracts or agreements must be signed or approved according to the Expenditure/Commitment Authority section above.

7) Computer Purchases

Purchases of computer hardware or software must first be approved by Information Services.  It is imperative that computer purchases be compatible with Simpson College equipment and have the capacity for networking.  Software is purchased, when possible, with licenses for multiple stations.  Information Services maintains a bid list of approved vendors and can provide current specifications and advise whether the hardware and/or software are adaptable and compatible.  Time taken consulting with Information Services before purchase will ensure smooth implementation after delivery.

Employees may purchase computers for their personal use through the College.  Purchases may be paid for in full at the time of purchase or through payroll deduction.  Employees will be expected to pay applicable sales taxes.

8) Office Supplies, Copy Paper and Toner Cartridges

Office supplies, copy paper, and printer toner cartridges are to be ordered via the web using the E-Way ordering system set up with Corporate Express.  This desk-top delivery program is efficient and offers an excellent selection of products at reduced prices.  Orders placed by 2:00 p.m. will be delivered directly to the department by noon the following day.

Users can view the on-line catalog to select items.  Preference is to be given to contract items.  These are frequently ordered items with deeper discounts off list price (indicated with a green $ sign in the on-line catalog).  Orders are placed by the designated department/building representative.  Contact the Director of Procurement for questions about ordering on E-Way.

9) Capital Projects

Capital projects generally include the renovation, modification, demolition, improvement or addition to a structure or the construction or significant renovation of personal property.  Capital projects do not include routine repair and maintenance.

Requests for capital projects must be submitted to Campus Services before such projects are undertaken.  Campus Services will review these projects with the Vice President for Business and Finance to determine their conformity with overall campus planning.  Review by the Vice President for Business and Finance will typically include discussion with the divisional vice president as to the appropriate nature of the project and funding and therefore may include review by the President’s Cabinet.  Capital projects require the written approval of the Vice President for Business and Finance before any work or commitment on the project is undertaken.  Capital projects of more than $50,000 must have the written approval of the President of the College and capital projects of more than$100,000 require the approval of the Board of Trustees or the Executive Committee thereof, typically after review by the Buildings and Grounds Committee of the Board of Trustees.

10) Acquisition and Disposal of Assets

The Board of Trustees shall approve the purchase and sale or demolition of land, buildings or major equipment (per Simpson College bylaws).  For purposes of this provision major equipment is valued at more than $100,000.  Disposal of all other assets shall be approved by the President or Vice President for Business and Finance.

11) Furnishings

In order for buildings to receive consistent quality and be compatible in style and color, furnishings such as furniture, carpet, and window treatments are to be selected by the Director of Procurement in coordination with the supervisor of the building involved.

12) Surplus Property

The College has storage for furnishings that are not currently in use.  The Director of Procurement authorizes transfers of items in storage for departmental use.  If a department wishes to dispose of College property, such as equipment or furnishings, the department should first contact the Director of Procurement or the Vice President for Business and Finance to discuss appropriate procedures.

13) Cellular Phones and Related Devices

The College will provide a cellular phone to employees who have a business purpose for having such service and have approval from their supervisor.  The type of phone and plan will be determined based on the expected usage of the phone and the availability of phones and plans through the College’s cellular provider.  Expenses incurred for the purchase of phones, monthly plan charges and related equipment (case, car charger, etc.) will be charged to the departmental phone budget account as appropriate.  The College generally does not provide insurance for the loss or repair of cellular equipment.  Therefore, extreme care should be taken with the equipment as expenses for the replacement or repair of phones will be charged to the appropriate department phone budget upon approval from the supervisor responsible for the budget.  Contact the Controller to obtain a cellular phone and plan.

All College owed cellular phones are intended only for Simpson related business purposes.  Personal use of the phone should be limited to emergency situations and the cost for personal use should be reimbursed to the College.  Detail bills obtained from the cellular provider will be reviewed for excessive personal usage.  Repeated use of a phone for personal purposes will result in the removal of the phone from the employee.

14) Tax Exemption

Simpson College is exempt from paying state sales tax or local option sales tax on goods or services purchased in Iowa or delivered to Iowa.  Hotel/motel taxes are not exempt.  The requisitioning department is responsible for notifying the supplier at the time of purchase that Simpson is sales tax exempt.  If a vendor includes sales tax on the invoice, deduct the tax when approving payment.  Simpson’s Iowa sales tax exemption permit number is 1-91-003359 and has been printed on the face of all Purchase Order forms and procurement cards.  In addition, the Iowa Sales Tax Exemption Certificate is available from Accounts Payable.

When traveling outside of Iowa, the states listed below grant tax exempt status to Simpson College for goods or services purchased while in that state.  It will be the responsibility of the individual traveling out of state to ensure that sales tax is not charged in the states listed below.  Sales tax exemption from other states may be obtained if expected travel to the state warrants obtaining the tax exemption.  However, obtaining sales tax exemption can be a lengthy process and will vary depending on the individual state requirements.  Contact the Assistant Controller if tax exemption from other states should be considered.  Any required forms or letters listed below may be obtained by contacting the Assistant Controller.

Simpson College is tax exempt in the following states:

 

Colorado Need Colorado certificate of exemption
Florida Need Florida form
Illinois Need copy of letter from Illinois
Indiana Must apply each time of travel
Kansas Need completed Kansas form
Maine Need completed Maine form
Massachusetts Need Massachusetts form
Michigan Need completed certificate at time of purchase
Minnesota Need completed Minnesota form
Missouri Need copy of letter from Missouri
New York Need completed New York form
Ohio Need completed Ohio form
Texas Need completed Texas form
Wisconsin Need Wisconsin form

The following states do not have a general sales tax:

Alaska May need to pay city or local government taxes
Hawaii No sales tax, but a gross receipts tax
Montana No sales tax
New Hampshire Must pay meals and room tax
New Mexico No sales tax, but a gross receipts tax; use Iowa
form for exemption status
Oregon No sales tax

Goods or services purchased by Simpson College while in any other state are likely subject to that state’s sales tax.

Approved by Cabinet August 31, 2006
Implementation Date: October 1, 2006