Procurement Card Policy : 4.02.10.10

Policy/Guideline

1. Authority
   1. The authority to approve procurements of goods and services is delineated in TBR Policy 1-03-02-10.
2. General Procurement Card Policies
   1. Procurement Generally
      1. PCards are to be used only for authorized official institutional business. Employee participation in a PCard program is considered a privilege and may be revoked at any time for abuse, inappropriate/fraudulent use, or for program mismanagement.
      2. Procurements of goods or services shall be in compliance with all applicable federal and state requirements and TBR Policies and Guidelines.
      3. A complete record shall be maintained on each procurement transaction in order to provide a clear audit trail.
   2. Procurement Card Guideline
      1. The Office of Business and Finance, in conjunction with the Council of Buyers shall maintain a procurement card guideline, which may be in electronic format, setting forth all processes and procedures for procurement card purchases to ensure that all transactions are in compliance with federal and state laws, regulations, and all applicable TBR Policies and Guidelines. All Institutional procurement card purchases shall be in compliance with the TBR Procurement Card Guideline B-125. Each Institution shall maintain procurement card procedures, which may be in electronic format, setting forth any procedures of the Institution in addition to or necessary to comply with this Policy.
3. Exceptions
   1. The Chancellor or designee may approve exceptions to the requirements of this Policy in appropriate cases.

Procedures

1. Introduction
   1. The PCard Program is a program developed to streamline the purchasing process, including procurement, receiving, and payment processing. This Guideline governs an Institution’s PCard Program in conjunction with all applicable state, TBR, and Institution Policies and Guidelines. Cardholders must use discretion and be good stewards when making purchases and/or incurring expenses on behalf of the Institution.
2. Program Administration
   1. PCard Services/Management
      1. The PCard program is administered by each Institution. Responsibilities include the application process, issuing and canceling cards, initial training, and managing the daily operations of the program.
   2. Program Procedures/Compliance
      1. Each Institution shall designate individuals to direct program compliance by utilizing various review methods. These methods may include annual compliance reviews, transaction reviews, introductory reviews for new cardholders, and other reviews as deemed appropriate and necessary.
      2. Other areas of responsibility may include training, distribution of educational materials, initial set up of general ledger accounts, set up of user account credentials for the Institution’s PCard software, and any amendments to Institutional procedures necessary to comply with TBR and Institution policies.
   3. Audit Services
      1. The Institution’s auditing personnel may, in addition to departmental and procurement staff, shall may assist in auditing the purchasing card program, and may decide to conduct an official audit of an individual PCard and/or an Institution's PCard program.
3. Procurement Card Program/Operating Procedures
   1. PCard Application Process
      1. The Institution PCard program is reserved for eligible personnel as determined by the Institution. To obtain a PCard, an employee must satisfy all steps of the Institution’s process before a card will be issued.
   2. Program Requirements - To remain eligible for participation in the PCard program, Institution cardholders, approvers, and support staff must adhere to the following requirements:
      1. Application Process
         1. Institutions shall have a defined process in which eligible personnel apply/complete a request to obtain a PCard.
            1. There will be no credit reference check on the personal credit of the employee for the PCard, nor will the use of the PCard have any impact on the employee’s personal credit rating.
            2. The account number for the PCard Program is a credit card number issued in the name of the employee, who is responsible for insuring that all purchases made using the card are for official Institution purchases.
            3. Legitimate charges to the PCard are an Institution Liability (not a personal liability to the individual cardholder).
      2. Training
         1. Cardholders, and others identified by the Institution, are required to receive training prior to the activation of a PCard and the date of training must be documented.
         2. Upon completion of training, the employee shall sign a Cardholder Agreement. (See Exhibit 2 for sample)
         3. The Institution shall maintain a training manual that includes procedures and administrative resources for the Cardholder.
      3. Terminating Employment
         1. In the event of termination, the cardholder must return the PCard to the Institution or destroy the card at the direction of the program administrator.
         2.  A review will be conducted by the Institution’s designee prior to the employee's departure or final compensation.
      4. Departmental Transfer
         1. When a cardholder transfers to another position within the Institution, the cardholder shall work with the Institution’s PCard Program Administrator to take appropriate action.
      5. Leave of Absence
         1. When a leave of absence has been granted, the Institution’s PCard Program Administrator may suspend cardholder’s PCard during the leave of absence.
      6. Voluntary Termination or Card Suspension
         1. When a cardholder voluntarily terminates its PCard account or it is deemed necessary by the Institution to suspend card privileges, the Institution shall maintain adequate documentation to support the change in cardholder status. (See Exhibit 3 for sample)
   3. Disputing Fraudulent Charge(s)
      1. It is mandatory that the cardholder immediately notify the Institution’s PCard Program Administrator, the commercial card provider, and any designated Institution personnel when fraudulent activity is suspected or verified.
      2. The cardholder will work with the Institution to complete the required documentation from the commercial card provider. (See Exhibit 4 for a sample)
   4. Lost or Stolen PCard
      1. Cardholders must report a lost or stolen card to the commercial card provider and Institution’s PCard Program Administrator as soon as possible.
      2. The cardholder's reporting efforts must be documented for audit purposes.
   5. File Management Requirements
      1. Maintaining complete PCard file documentation is a requirement of the program.
      2. The Institution will only be responsible for business purchases supported by original receipts, invoices, and/or supporting documentation directly from a vendor.
      3. Cardholders and approvers could be held personally liable for undocumented or unauthorized purchases.
      4. PCard privileges may be revoked for file mismanagement.
         1. All purchases, including online vendors, must have an itemized receipt identifying the goods or services purchased. Receipts are the primary method used by the Institution’s PCard Program Administrator to support business related purchases. Packaging slips, invoices, or other equivalent documentation should be maintained for all purchases when available.
         2. If a receipt is misplaced, the cardholder must contact the vendor to request a copy of the receipt. If the vendor cannot replace the receipt, the cardholder must complete the required Institution’s PCard Program documentation. (See Exhibit 5 for a sample).
         3. Documentation, such as required policy approval forms, policy exception memos, and other related institution required documentation must be kept on file with the original purchase receipt.
         4. Monthly activity logs detailing the transactions may be maintained (See Exhibit 6 for sample). The monthly commercial card statements, original receipts, invoices, and other supporting documentation shall be included as backup for each log. This information must be retained in accordance with the Records Retention and Disposal of Records Guideline (G-070).
         5. Cardholders and/or support staff are responsible for reviewing and resolving all back orders, unfilled orders, sales tax charges, credits refunded by vendors, and fraudulent charges.
         6. Cardholders and approvers are responsible for assigning purchases to the correct ERP account codes.
         7. Card purchases must be shipped to an Institution location, department or to Institution’s Central Receiving.
         8. Approvers are required to check receipts and monthly reconciliations on a routine basis per the Institution’s PCard Program requirements and address any issues or fraudulent charges if discovered.
   6. PCard Usage Parameters
      1. Purchase Transaction Limits shall be established according to the Institution’s policies and procedures. Monthly Credit Limits are set by Institution’s PCard Program Administrator.
      2. Merchant Category Codes (MCC) – the Institution shall make a determination with the commercial card provider regarding any MCC Code restrictions.
   7. Sales Tax
      1. It is the cardholder's responsibility to ensure the Institution is not charged sales and/or use tax when purchasing goods and services.
      2.  Upon request, a sales tax exemption certificate shall be provided to the vendor.
      3. Reasonable measures must be pursued by the cardholder to recover erroneous taxes paid on the PCard and efforts are to be documented.
   8. Unallowable PCard Practices
      1. Splitting Purchases
         1. The practice of splitting purchases of goods or services for the purpose of evading State purchasing requirements is a direct violation of TBR purchasing policies, and may result in revocation of PCard privileges (TBR Purchasing Guideline B-120, Section V.3.).
         2. Splitting purchases includes, but is not limited to:
            1. Splitting a purchase with one vendor into multiple orders.
            2. Using two (2) or more cards for purchases from the same vendor.
            3. Multiple purchases with the same vendor over the span of a few days.
            4. Multiple purchases of like items from different vendors over the span of a few days.
         3. Cardholders that purchase or anticipate purchasing more than established bid limit amounts during a fiscal year with a non-contracted vendor shall contact Institution’s Procurement Office for possible bidding/contract options.
      2. Departmental PCards
         1. PCards that are issued in the name of the department, in lieu of an individual, shall have an assigned custodian for the card.
         2. The custodian shall maintain documentation related to departmental employees that check in/out the card, and the details all purchases, with receipt/backup documentation maintained.
      3. Purchasing Goods and Services with Non-Contracted Vendors
         1. Institution’s should utilize State of Tennessee, TBR (including all TBR Institutions and TBR approved Group Purchasing Organizations (GPO)) and University of Tennessee contracts as primary sources for purchases.
         2. If the good or service desired can be procured at a lower price or is unavailable on current contracts, the Institution may purchase with another vendor.
         3. All PCard purchases shall be made with due diligence and fiscal responsibility.
   1. Prohibited Transactions
      1. The following items are excluded from the PCard Program and may not be obtained with a Pcard:
         1. Personal purchases and cash withdrawals.
         2. Gift Cards.
         3. Travel expenses, with the exception of conference registration fees, airline tickets, required advance hotel payments, and team/group travel expenses incurred during actual travel time.
         4. Equipment (as defined under TBR Guideline B-110, Fixed Assets and Sensitive Minor Equipment)
         5. Any other category as mandated by the Institution.
   10. Non-Compliance and Consequences
       1. Violations and Reimbursements
          1. Under certain circumstances, cardholders and/or approvers may be required to reimburse the Institution for unallowable purchases.
          2. PCard privileges may be suspended until the Institution has been reimbursed.
          3. Situations that may require reimbursement include but are not limited to the following:
             1. Charges incurred outside of applicable TBR/Institution policies.
             2. The inability to document purchases with receipts and/or other supporting documentation.
             3. The continued purchase of unallowable goods and/or services where the cardholder has received previous notice(s) of non-compliance from Institution’s PCard Program Administrator.
             4. Any occurrence where Institution and/or grant funds are subject to substantial waste and/or abuse by the cardholder and/or approver.
          4. The Cardholder will be required to reimburse the Institution for any personal purchases placed on the PCard.
          5. In some instances, non-compliance could result in the permanent revocation of PCard privileges, personal reimbursement, and/or termination of employment.
       2. PCard Mismanagement
          1. Cardholder and/or Approver mismanagement of PCard privileges when procuring goods and services outside the parameters of this policy or other policies may result in adverse action.
          2. Consequences will depend on the severity of the violations identified.
       3. Consequences for Non-Compliance
          1. Temporary Suspension
             1. PCard privileges may be temporarily suspended for any cardholder and/or department who does not comply with all policies and regulations pertaining to the use of PCards.
             2. The decision to suspend privileges and the duration of suspensions will be determined based upon the severity of the violation(s), the number of offenses, and the department's ability to take corrective action.
          2. Other Corrective Action
             1. Intentional use of a PCard for any purposes other than state business will result in disciplinary action, up to and including termination from state employment or criminal prosecution.
   11. Reporting Fraud, Fiscal Misconduct, or Violation of TBR Financial Policies

Institution employees who know or suspect that other employees are engaged in theft, fraud, embezzlement, fiscal misconduct or violation of Institution or TBR policies and guidelines have a responsibility to report its concerns in accordance with State Law. (TBR Policy 4:01:05:50, Preventing and Reporting Fraud Waste and Abuse)