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.
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 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 Divisional Vice President 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 Budget to Actuals within SC Connect Self-Service. Requests for access to accounts should be emailed to the Assistant Controller with approval from the Divisional Vice President.
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 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.
1) 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.
Major departments are defined as grant programs or those departments with operating budgets (excluding salaries and benefits) greater than $300,000. A budget approval tree will be submitted to the President’s Cabinet on an annual basis for their approval and to update 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 Vice President for Business and Finance. See approval level hierarchy below.
| Department Head | Up to 1,000 |
| Divisional Vice President | Up to $10,000 |
| Vice President for Business and Finance | Up to$100,000 |
| President | Over $100,000 |
2) Use of Purchase Orders
If a vendor requests a Purchase Order, one can be completed with only department head approval.
A Purchase Order, if required, must be completed prior to ordering goods or services. Invoices 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.
There are resources available for purchasing documents on the Welcome to the Accounts Payable Resource Center within the internal website.
3) Check Requests/Submission for Payment
Requests for payment should be submitted through the procurement system to go through approval routing. Documentation should also 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, or the Welcome to the Accounts Payable Resource Center page within the internal website 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, adequate documentation to support the expenditure, as well as the purchase order number or requisition number. Requests for payment without adequate documentation (e.g., itemized invoice support) or approval will also be returned to the requesting department.
Payment requests or Invoices submitted, approved, and sent over to the Accounts Payable Office by Tuesday at 4:30PM will be processed by Friday of the same week. Payment requests and Invoices either submitted, approved, or sent over after Tuesday at 4:30 PM will not be available until the following Friday. All invoices and payment requests remain subject to approval by the Controller. Approved payments will be processed based on available cash flow and organizational funding priorities. Exceptions to this policy will only be allowed with the approval of the 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 or downloaded here 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.
For any lease, rental, or similar financing arrangements please include the Vice President of Business and Finance or Controller in the process.
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 in full at the time of purchase or through payroll deduction. Employees will be expected to pay applicable sales taxes.
8) 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) 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 |
| Idaho | Need Idaho certificate of exemption |
| Illinois | Need copy of letter from Illinois lodging not exempt |
| Iowa | Need completed exemption certificate lodging not exempt |
| Indiana | Must apply each time of travel lodging not exempt |
| Kansas | Need completed Kansas form |
| Kentucky | Need Kentucky out-f-state purchase exemption certificate |
| Maine | Need completed Maine form |
| Massachusetts | Need Massachusetts form |
| Michigan | Need completed certificate at time of purchase |
| Minnesota | Need completed Minnesota form lodging not exempt |
| Mississippi | Need copy of letter from Mississippi |
| 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.
12) Procurement Cards
Procurement Card Policy
The Simpson College Procurement Card (P-Card) program is designed to provide employees with a convenient and efficient method for purchasing goods and services necessary to conduct College business. The program reduces administrative processing by minimizing the need for purchase orders, direct payment vouchers, and employee expense reimbursements. Procurement Cards may only be used for legitimate business purposes and must be used in accordance with all College purchasing policies, spending limits, and established cardholder restrictions.
Procurement Cards are issued only to approved employees whose job responsibilities require purchasing authority. The card remains the property of Simpson College and may not be transferred, shared, or used by anyone other than the individual whose name appears on the card. Cardholders are responsible for safeguarding the card, ensuring all purchases are tax exempt when applicable, maintaining adequate supporting documentation, and complying with all monitoring and reconciliation requirements. Personal purchases, cash advances, and any unauthorized transactions are strictly prohibited.
Cardholder Responsibilities and Reconciliation Procedures
Cardholders are responsible for reconciling all Procurement Card transactions in the online banking platform by the 10th day of the month following the statement cycle. Statement cycles close on the 28th of each month, and all transactions must be reviewed, assigned the appropriate General Ledger (GL) account coding, and supported by the required itemized receipts and documentation. Timely and accurate submission is required to ensure proper financial reporting and compliance with College accounting procedures.
Failure to submit expense reports on time or to provide complete and accurate GL coding may result in corrective action. A first occurrence of missing, incomplete, or incorrect reconciliation information will result in a warning to the cardholder. A second occurrence will result in notification of the cardholder’s supervisor. Upon a third occurrence, Procurement Card privileges may be suspended until the cardholder demonstrates compliance with program requirements. Repeated violations may result in permanent revocation of Procurement Card privileges and additional disciplinary action as deemed appropriate by the College.
Any disputed charges or billing errors should first be addressed directly with the vendor. If a resolution cannot be reached, the cardholder must promptly contact the bank to initiate a formal dispute. Lost, misplaced, or stolen cards must be reported immediately to both the Procurement Card Administrator and the issuing bank to prevent unauthorized use. Failure to reconcile transactions on time, provide required documentation, comply with program requirements, or use the card in accordance with College policies may result in suspension or permanent revocation of card privileges, disciplinary action, and, when appropriate, legal prosecution.
To ensure proper stewardship of College resources, all Procurement Card activity is subject to review and audit. Spending limits, merchant category restrictions, and other purchasing controls are established based on business need and may be modified only with appropriate approval. Procurement Card transactions must comply with all College policies, budgetary restrictions, and applicable laws and regulations. Attempts to circumvent established purchasing limits, including splitting purchases into multiple transactions, are prohibited and may result in the loss of card privileges and additional disciplinary action.
All credits and refunds must be issued directly back to the Procurement Card account used for the original purchase. Under no circumstances may a cardholder accept cash, gift cards, or other forms of reimbursement in place of a credit to the account. Cardholders are expected to exercise sound judgment and ensure that all expenditures support the mission and business operations of Simpson College
