UCR

UCR Policies and Procedures

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Campus Policy Number: 200-59

Invoice Processing in Response to Purchase Orders

Policy Owner: Accounting Office
Effective Date: May 1, 2003

     

  1. INTRODUCTION
  2.  

    This is the campus policy and procedure related to processing vendor invoices received in response to purchase orders. Invoices may be either paper or electronic. Generally, we make payment to vendors by check or Electronic Funds Transfer (EFT).  This chapter does not cover direct charges, employee reimbursements, or procurement card transactions.  

     

  3. BILLING ADDRESS
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    The official billing address for the University of California, Riverside is:

    University of California
    Accounting Office – 002
    Riverside, CA 92521-0123

     

  5. DEFINITIONS
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    Low-Value Purchase Authorization (LVPA): The LVPA program is designed to provide timely and cost-effective procurement action through efficient utilization of personnel in both the Purchasing department and the participating department.  Departments with proper authorization from the Purchasing department can place orders up to $1,500 per transaction.  These purchases are initiated through the SubPOlite application. For more information about LVPA program, log on to the campus policy # 750-39.  

    Purchase Order (PO): Orders initiated by the Purchasing department for goods/services that are not low-value in nature.  The departments use electronic Purchase Requisition (PRlite) application to submit requests for purchases of goods/services (excluding those items which are available from the Storehouse, Printing & Reprographics or Equipment Management's Excess and Salvage Program).  The campus procedure for Purchase Requisition is covered under policy # 750-60.  Purchasing department uses POlite application to process these requests.

     Blanket Orders/Sub-Purchase Order (Sub-PO): The Purchasing department utilizes "blanket orders" to delegate procurement authority to departments. Blanket orders authorize the expenditure of funds for materials and/or services that are repetitively purchased from the same or similar vendors. Blanket orders are implemented to reduce order processing costs without loss of fiscal control.  Sub-POs are utilized in the same manner as LVPA Sub-PO except transaction limits may be much greater.  For more information about Blanket Orders, log on to the campus policy # 750-03.

     

  7. SALES AND USE TAXES
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    The University is subject to sales and use taxes imposed by the State of California for the privilege of consuming tangible personal property in California. Therefore, the appropriate sales and use tax amount must either be paid or accrued, based on information contained in the purchase order or invoice.  A California vendor is a vendor that has registered with the State of California to sell goods in this state. For sales of tangible personal property at retail by a California vendor, the sales tax is the responsibility of the retailer (Section 6015).

    An out-of-state vendor is a vendor that has not registered with the State of California to sell goods in California.  Use tax is required to be accrued and remitted to the State for items purchased for consumption from an out-of-state vendor.  For more information on the application of California Sales and Use Tax regulations to University purchases, refer to the University of California Sales and Use Tax Manual, which is located at the following web site address: http://www.ucop.edu/ucophome/policies/sutm/iii-i.pdf 

     

  9. PAYMENT OF INVOICES – $5,000 AND UNDER
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    Invoices that are $5,000 or less are processed immediately upon receipt provided that the goods/services are marked as “received” and “okay to pay” in the purchasing systems. 

       

    1. Auditing
    2.  

      Accounts Payable processors will make sure all invoices are reviewed to verify item descriptions, unit prices, quantities invoiced, discount terms and applicable taxes.  In addition, the A/P processor will verify that the vendor name and remit-to address are correct.  Use tax will also be accrued for Non-California Vendors that have not charged sales tax. 

       

    3. Verification and Processing
    4.  

      For an invoice to be paid, a three way match process comparing the invoice, PO/Sub-PO, and receiving information must be successfully performed.  Match exceptions that cause an invoice not to be paid include:

         

      • PO/Sub-PO not marked “finished and received”.
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      • Invoice line item value exceeding PO/Sub-PO line item value more than ten percent (10%).
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      • Invoice line item value exceeding PO/Sub-PO line item value more than one hundred dollars ($100).
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      Note: PO/Sub-POs in a “SAVED” status will fail the match process.  Therefore, it is critical to mark PO/Sub-POs “FINISHED and RECEIVED” as soon as possible.  When there’s a match, the system will schedule the invoice for payment on the due date.  

       

    5. Match Exceptions
    6.  

      If there is no three-way match, the A/P processor will research the discrepancy with the department for Sub-PO’s, or with the Purchasing department for PO’s.  The following items will be looked at in resolving discrepancies:  

         

      1. SAVED STATUS
      2.  

        This indicates that Sub-Purchase Orders/Purchase Orders are not finished and completed in the POlite/SubPOlite applications.  PO’s/Sub-PO’s in the "Saved" status within POlite/SubPOlite applications are not passed on to PeopleSoft Accounts Payable until they are marked "Finished".  Invoices for "Saved" PO’s/Sub-PO’s will reject when entered in the PeopleSoft Accounts Payable system. The PO Aging application will notify the SAA by e-mail the list of PO’s/Sub-PO’s on SAVED status and open for 5 days or more.  Transactors need to use the Sub-POlite application to “Finish” the order so the information can be transferred to the PeopleSoft Accounts Payable system.  This action requires immediate attention.  

         

      3. FINISHED BUT NOT RECEIVED
      4.  

        This indicates that Sub-Purchase Orders/Purchase Orders are not marked “received” and “okay to pay”.  The PO Aging application was created to indicate a condition in which Accounts Payable unit has processed an invoice for a Sub-PO/PO that is marked “finished” but not marked “received” and “okay to pay”.  In most cases, when this condition exists, the goods/services have been “received”.  PO Aging application will notify the transactor by e-mail the list of sub-PO/PO numbers that failed the matching process because the orders have not been marked “received” and “okay to pay”.  The e-mail will identify the Sub-PO/PO requiring attention and explain the actions required. 

         

      5. MISCELLANEOUS
      6.  

        a) unit price (b) quantity (c) F.O.B Point (d) others such as shipping terms, shipping charges, special handling charges, UPS charges, etc. that do not align with the terms of the initial purchase order or sub-PO.  

       

    7. Post Audit Notification (PAN) 
    8.  

         

      1. PAN for Purchasing - A PAN e-mail is sent out to the Reviewer when orders are placed through the Purchase Requisition Lite (PRLITE) or Sub-Purchase Order lite (SUB-POLITE) applications.  If the Reviewer discovers any error(s) on the requisition or sub-purchase order, the Reviewer should contact the transactor immediately to have the requisition or sub-purchase order changed or canceled.
      2.  

         

      3. PAN when Invoices are Vouchered - Generally, a PAN notice would not be generated when an invoice is vouchered for payment.  In the event that PAN for Purchasing is not activated (turned on), a PAN notice will be generated when invoices originating from purchase order/sub-PO are vouchered for payment.  If the Reviewer discovers any error(s) on the notice and wants the transaction(s) canceled or stopped, the Reviewer should contact the Accounts Payable (AP) unit immediately at x8-3305.  Please give the AP processor as much information as possible  (e.g., PO/sub-PO number and Invoice number).
      4.  

     

  11. PAYMENT OF INVOICES – OVER $5,000
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    Accounts Payable unit will send copies of invoices that are over $5,000 to the department for approval.  Original invoices will always remain in the Accounts Payable unit.  The department is highly encouraged to approve or not approve the invoice and return it back to the Accounts Payable unit within five working days.  Follow these procedures before approving the invoice.

       

    • Verify vendor name, remit address, item descriptions, units price, quantities invoiced, discount terms and applicable taxes.
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    • Compare Invoice to the Purchase Order.
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    • Verify that the goods/services have been received.  Use the appropriate purchasing system to mark the good/service received and okay to pay.
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      When the approved invoice is returned to the Accounts Payable unit, the procedures described in section V above will be initiated.

     

  13. INTERNAL CONTROLS
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    1. ACCOUNTS PAYABLE
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      As a general rule, vendor checks will not be returned to the department.  However, Accounts Payable unit may allow exceptions.   

       

    3. DEPARTMENT
    4.  

      The employee who has been delegated as the PAN reviewer for purchased transactions should carefully review all PAN notices generated when the purchase transactions are initially entered (i.e. commitment to the vendor is made) into the PRLITE and SUB-POLITE applications.  

      Departments should ensure that payments charged to their accounts are valid by establishing appropriate internal control procedures, such as assigning a staff member to review payments. The departmental reviewer should not be assigned any responsibility for requisitioning, ordering, or certifying that goods or services were received.   

      The department business officer should periodically review the PO Aging report to gauge the level of orders awaiting payment (outstanding accounts payable).  

     

  15. RESPONSIBILITIES
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    1. DEPARTMENT
    2.  

      1. PAN Review
        The employee who has been delegated as the PAN reviewer for purchased transactions should carefully review all PAN notices generated when the purchase transactions are initially entered (i.e. commitment to the vendor is made) into the PRLITE and SUB-POLITE applications.
      2. Approval of Invoice
        The individual certifying that goods and services were received and approving the invoice for payment must have a signature authorization on file in the Accounting department.  Invoices that require approval (over $5,000) must be returned to Accounts Payable promptly in order to prevent loss of discounts and to maintain satisfactory relations with the vendor.
      3. Receiving Procedures
        The department must certify that the goods and services were received in acceptable condition, in the quantity ordered.
      4. Invoice Review
        The department should review invoices greater than $5,000 prior to payment, in accordance with the procedures outlined in this chapter.
      5. Accounts Payable Review
        The department business officer should periodically review the PO Aging report to gauge the level of orders awaiting payment (outstanding accounts payable).

     

  17. REFERENCES
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    D-371-36 UCOP Accounting Manual  - Disbursements: Invoice Processing in Response to Purchase Authorizations.  

    D-371-12.1 UCOP Accounting Manual - Disbursements: Accounting For and Tax Reporting of Payments Made through the Vendor System. 

    UCR P&P 750-03 – Blanket Orders and Sub-Purchase Orders.  

    UCR P&P 750-39 – Low-Value Purchase Authorization program. 

    UCR P&P 750-60 – Purchase Requisitions. 

    UCR P&P 750-63 – Purchase Authorization