In a recent Post-Payment Audit of the University of Houston, the Comptroller found a few procedures that we need to be reminded of when using state-appropriated funds:
1) Orders for goods or services paid with state-appropriated funds must be documented by a purchase agreement (quote, purchase order, or contract), regardless of dollar amount. The University may not pay more than the agreed upon amount, unless the purchase agreement is amended because the vendor will provide an additional benefit. The following is copied from MAPP 04.01.03, Vouchers:
State purchase vouchers that are not supported by a formal contract or purchase order should have a quote from the vendor attached, so that the department can verify that the invoice matches the quote before paying the invoice. The quote must be received prior to the receipt of goods or services. If the state voucher is supported by a contract or purchase order, a quote is not required.
Example: Professor X calls a vendor to place an order for teaching supplies, which she intends to pay for with state funds. The vendor tells Professor X that the teaching supplies will cost $2,000 and will be shipped to Professor X along with an invoice. Professor X should request a written quote (email or fax) from the vendor at the time the order is placed, which will serve as the purchase agreement. When the invoice arrives, Professor X should make sure that the invoice amount for each item and in total does not exceed the written quote and only pay up to the quoted (agreed upon) amount. The quote must be attached as backup to the state purchase voucher, along with the invoice. If Professor X called the vendor back to order more teaching supplies after receiving the original quote, she should request a revised written quote from the vendor that will serve as the revised purchase agreement.
Orders more than $5,000 must be placed on purchase order (PO), so the PO would serve as the purchase agreement. If the price or quantity will be increased, the PO must be modified. Likewise, a contract serves as a purchase agreement and must be amended if the amount to be paid is more than the original agreement. Changes to POs and contracts for price increases are required regardless of source of funds.
However, spot purchases” do not require a quote. A spot purchase is when you pay the vendor “on the spot” when the purchase is made. For example, you place an order over the internet and charge it to your personal credit card or P-Card when the order is placed. Also, when you buy something over-the-counter at a store and pay the store at the time of purchase you are not expected to obtain a quote. You only need a quote when you place an order and pay later based on an invoice.
2) Any freight, shipping, and handling charges paid by the University must be included on the purchase agreement (quote, PO, or contract).
Example: Professor Y obtains a written quote from a vendor for lab supplies, which he intends to pay for with state funds. The vendor’s quote indicates that the lab supplies will cost $1,000 but there is no mention of freight, shipping, or handling charges. If the vendor’s invoice includes freight, shipping, or handling charges, Professor Y should not pay for those charges on state funds. We should always ask the vendor to add any freight, shipping, or handling charges to their quote. If they do not know the exact amount, we should ask them to add an estimated not-to-exceed amount. We cannot pay more than the amount indicated on the written quote with state appropriated funds. If a PO was issued, the PO must be modified to indicate the cost of freight, shipping, or handling before the invoice is paid.
3) Texas Government Code Annotated, Section 2155.382(d) (Vernon 2008), authorizes the Comptroller to require state agencies to schedule payments made with state-appropriated funds. The Comptroller requires state agencies and universities to schedule all payments greater than $5,000 as late as possible (without being past due) in accordance with the Comptroller’s Prompt Payment and Scheduling Guide. MAPP 04.01.10, Prompt Payment and Payment Scheduling, provides instructions for complying with the Comptroller’s requirements.
The following dates, which are entered on a voucher, determine when the payment is considered due:
For state vouchers greater than $5,000, the Finance System will calculate the Net Due Date (last day to pay before it is considered past due) and the Scheduled Due Date (scheduled date to pay) as 30 days after the later of the Invoice Receipt Date and the Goods Receipt Date. Users cannot change the Net Due Date on the voucher. However, they may change the Scheduled Due Date under certain circumstances. Below are common reasons for changing the Scheduled Due Date:
State payments to University employees and students and transfers to University departments and other state agencies are automatically scheduled to pay immediately and will not pay interest if paid after the Net Due Date. All local fund payments are scheduled to pay immediately and do not payment interest unless the calculated interest amount is greater than $5.00.
See MAPP 04.01.10 for more information.
State of Texas sales tax may not be paid with state-appropriated funds. It should not be charged directly to the University on a voucher or P-Card or reimbursed to an employee. Likewise, Texas sales tax cannot be paid or reimbursed with sponsored project funds. Employees should present the Texas Sales and Use Tax Exemption Certification to the vendor when they make a purchase that is subject to Texas sales tax. The form is located at: http://www.uh.edu/finance/pages/tax_doc.htm
See MAPP 04.01.03, Vouchers, for additional information.
If you have any questions, contact Mike Glisson at 713-743-8706 or firstname.lastname@example.org.