PROCEDURE FOR USING PURCHASE ORDERS
1. All items not eligible to be purchased from petty cash or by procurement card should be acquired by issuance of a purchase order. Direct Pay Forms may be used ONLY when no other means to purchase is available.
2. When contracts or tender documents are the controlling document, a purchase order is to be assigned to the document, with the purchase order number as a control point for all correspondence and payments related to the contract or tender. This is required in order to record the commitment in the Banner Finance System and to permit more effective budgeting.
3. Charge Accounts with Suppliers
3.1 It is the responsibility of the unit issuing a purchase order to determine if the particular supplier will grant the University credit. This is done via the purchase order itself rather than formal application for credit.
3.2 The only employees who may issue purchase orders for goods and services are persons authorized by the Dean, Director, Grant holder or Associate Vice-President as applicable.
4. Emergency Purchasing
4.1 An emergency situation will meet one of the following conditions:
4.2 Generally, emergency purchasing procedures will not be used unless such procurement practices would be offset by a corresponding or greater loss to the unit as a result of the delay. Failure to anticipate a need is not, of itself, considered a bona fide emergency.
4.3 When emergency work has to be carried out, the following procedures will apply:
5. Creating a Purchase Order
5.1 The process of creating a purchase order starts with the preparation of a requisition for goods and/or services. This requisition is completed by the employee requiring the goods and/or services. Refer to PROCEDURE FOR DEPARTMENTAL REQUISITION.
5.2 When the employee designated to control purchasing within a unit receives a requisition which requires the issuing of a purchase order, he/she is required to:
If the goods and/or services can be obtained internally within the University, the requisition should be forwarded to the appropriate unit, unless prior arrangements have been made with these units to permit external purchasing. Consult the Departments of Facilities Management, Technical Services, Printing Services, Financial and Administrative Services, and Computing and Communications for details on policy and procedure for their respective areas.
If the goods and/or services have to be obtained externally, the employee designated to control purchasing should determine if his/her unit has the appropriate approval authority for the particular purchase. If the items on the requisition are as described in the Special Purchase Approvals List, the requisition will require the approval of the appropriate University office.
5.3 When the requisition has been approved, the purchase may be processed.
6. Pricing of Purchase Orders
It is the responsibility of the unit, in consideration of the specifications for the goods and services set out on the requisition, to select the supplier and to establish the price to be paid in accordance with these guidelines.
6.1 Correct Pricing
It is the responsibility of the employee designated to control purchasing within a unit to ensure that the prices quoted are current prices. The Department of Financial and Administrative Services will request additional approvals if the supplier invoice is not in agreement with the applicable purchase order within specified limits.
Catalogues are only to be used as a source for obtaining quotations. Pricing purchase orders from a catalogue is not permitted, as generally the prices are not current.
All purchase orders should indicate whether a shipment is to be sent freight collect or prepaid. To reduce freights costs, require prepaid freight wherever possible.
Shipping terms are important in identifying when ownership of the purchase takes place, reducing associated trade and customs risks, and defining the transportation arrangements. In most situations the terms should specify that the vendor will retain ownership and liability for the purchase, and pay the shipping cost until the University has physically received it.
Use of the correct shipping term is critical to ensuring the University's shipping requirements are met. Incoterms are internationally accepted commercial terms that determine the roles and responsibilities of the buyer and seller in the sale of goods. The shipping terms DAP (delivered at place) or DDP (delivered duty paid) should be used in most situations.
DAP and DDP means that the seller is responsible for all costs associated with making goods available to the buyer at a named place of destination, cleared for import, but not unloaded from vehicle. These terms can be used for any mode of transport.
If the University is assuming ownership of the purchase at the point of shipping, consideration should be given to insuring the shipment. This is important as some carriers have limited liability and, should the shipment be damaged in transit, the University may only receive token recovery and the unit will be required to withstand the loss.
7. Issuing of Purchase Order
7.1 The unit, having complied with the provisions of these procedures, will issue the purchase order, representing the contract for the goods or services, and will record required delivery, sales tax, freight, and delivery location.
7.2 It is very important that the unit complete all applicable information as to the date required, shipment method and terms, billing terms, payment discount, unit, building including room number, and insurance coverage.
7.3 For commitment purposes the unit must estimate the freight charge involved, as well as the Harmonized Sales Tax.
7.4 Units should not issue several purchase orders for identical items to the same supplier. When the total requirement is known, a purchase order should be issued for that requirement with more than one delivery date given.
8. Other Considerations
The employee responsible for issuing the purchase order must ensure legal and risk implications have been considered and addressed. Such implications include, but are not limited to:
9.1 The issuance of a purchase order results in a legally binding contract. However, it may be advisable to develop a separate contract document in addition to a purchase order depending on the complexity of the purchase. See the Contract Administration policy.
10. Supplier Invoices
10.1 All supplier invoices are to be sent directly to the Department of Financial and Administrative Services for processing. Exceptions to this procedure should be arranged with the Director of Financial and Administrative Services prior to placing the order. Payment cannot be generated without the original invoice and the receiving completed on the purchase order.
10.2 The supplier's invoice must show all particulars of the transaction. Monthly statements are not acceptable as invoices.
10.3 When an invoice is handwritten, it must bear the signature of the supplier as follows:
10.4 Some expenditures require the Department of Financial and Administrative Services to check, verify and process the invoice prior to obtaining unit approval. These are:
10.6 Internal invoices for requisitions within the University will be processed on receipt by the Department of Financial and Administrative Services. If an invoice appears to be incorrect, contact the unit from which the charge originated and arrange for an adjustment.
11. Standing Purchase Order
In situations where supplies and services are required on a recurring basis throughout the year, a standing purchase order can be issued. This purchase order will state the estimated yearly cost to be incurred and the contract should be awarded in accordance with the Purchasing policy and procedures. All standing purchase orders will be for the fiscal year only. For each purchase on a standing purchase order, complete the receiving for each order received and forward the invoice to Accounts Payable in order to reduce the outstanding commitment.
12. Bulk Purchasing
A unit which is the major user of items needed on a recurring basis may be requested to purchase for the consolidated University requirements. Units requiring these materials should submit their requisition, once it is approved within their unit office, to the unit responsible for the central supply. An interdepartmental billing will be processed by the issuing unit for reimbursement of funds.