MSU Purchasing Card General Policy & Users Manual
I. Introduction
Welcome to Minot State University’s Purchasing Card Program. The Purchasing Card is meant to replace the current Request for Payment (RFP) for some purchases. This manual is designed to present the framework for implementing the program. It contains the hands-on detail that MSU management and individual cardholders need to know to make the program work effectively. MSU’s Purchasing Card Coordinator will be responsible for administering the purchasing card program. MSU’s Purchasing Card Coordinator is Bruce Haskins, Business Office, phone 858-3331.
The purchasing card program delegates the authority and capability of purchasing low dollar items directly to designated cardholders, allowing them to purchase goods and services faster and easier than before. The program authorizes the use of a purchasing card for individual transactions up to and including $750.
Use of the purchasing card does not exempt MSU or its employees from the purchasing/procurement requirements of the State of North Dakota and MSU policy.
II. What is a Purchasing Card?
The purchasing card is a VISA card issued in the name of the MSU employee, to employees designated by MSU management, to make purchases =<$750 for official MSU business needs. The purchasing card will enable employees to purchase goods more efficiently and eliminate the preparation of Request for Payments to make these purchases.
The purchasing card payment system is an individual bill / central payment system. The cardholder receives a monthly account statement for information and reconciliation purposes only. The MSU Business Office obtains a consolidated electronic billing file and makes payment to VISA on behalf of all cardholders. Expenditure transactions are processed and posted to the appropriate departmental fund using the default account code string assigned to each purchasing card.
Individual credit limits, including card and cycle limits, vary as determined by MSU. To assure the effectiveness of the program, the policy and procedures in this manual must be followed. Failure to use the purchasing card in accordance with applicable policies and procedures may result in revocation of the purchasing card and may involve appropriate disciplinary action, up to and including termination and possible criminal prosecution. Policy and procedure violations include, but are not limited to:
- Purchasing items with the card for personal use
- Failure to return the card when reassigned, terminated, or upon request
- Failure to submit proper transaction documentation to the appropriate person in a
timely manner
- Transferring assignment of the card to another individual
- Repeatedly allowing sales tax to be charged when the purchases are tax exempt.
Whenever the card is used, please inform the vendor that it is a tax-exempt sale.
NOTE: MSU’s tax exempt number is embossed on each purchasing card.
The purchasing card should not be used for tax reportable services (1099) to prevent difficulties in reporting to the IRS (ex. fees, repairs-labor, equipment rental, legal services, etc.).
A purchasing card is:
- Authority delegated by MSU management to individual MSU employees
- For official university use only
- Authorized for purchases of $750 and under
- Authorized for use with only certain categories of merchants
A purchasing card is NOT:
- A means to avoid appropriate procurement or payment procedures
- A means to access cash or credit
- For use with interdepartmental billing (IDB)
- A right of employment
- For personal use
III. What are the Benefits of a Purchasing Card?
The purchasing card enables personnel to perform more effectively and focus on the value-added aspects of their jobs by:
- Eliminating purchasing delays
- Reducing the number of Request for Payments
- Reducing the number of invoices and invoicing problems
- Reducing the number of checks issued
IV. Who Are Likely Cardholders?
Because the purchasing card allows the cardholder to place orders directly with the supplier, the greatest program benefits are achieved when purchasing cards are issued to end users. Therefore, in addition to the traditional buyers (purchasing staff), other staff who should be issued purchasing cards may include:
- Field staff and others in constant travel status, who may need emergency parts or
supplies while on the road. The card is not intended to pay for travel expenses (ex.
lodging, meals,etc.)
- Staff who routinely buy subscriptions and books
- Program support staff who buy supplies
- Conference/trade show planners who may need to purchase supplies in other locations
- Physical plant / maintenance staff
- Mechanics, engineers
V. Cardholder Credit Rating
The use of the purchasing card results in liability to MSU; not a personal liability for the cardholder. The cardholder’s credit rating will not be affected. However, it is important to remember that the cardholder signs an agreement prior to receiving the purchasing card and, as such, is responsible for any misuse of the purchasing card as outlined in this manual.
The ELAN Purchasing Card Program provides liability protection to MSU once notification of any loss, theft or fraudulent use is made. However, the same level of liability protection does not apply to cards that are made available to multiple users. Therefore, only the person whose name appears on the card must use each purchasing card.
VI. How to Obtain a Purchasing Card
- Contact the MSU Business Office.
- Complete a Purchasing Card Application and Use Agreement. Employee participation must be approved by the department head and the Purchasing Card Coordinator.
- Attend a training session (either group or individual session).
- Assist in the completion of the Cardholder Account Setup Form provided by ELAN. The form is completed by the MSU Business Office.
- Submit completed paperwork to the MSU Business Office.
VII. Guidelines for Purchasing Card Use
The purchasing card is to be used to purchase low-dollar value items with the total amount of any purchase not to exceed $750. Certain exceptions to use of the purchasing card apply. Examples of items that may not be purchased with the purchasing card include:
- Alcoholic beverages
- Ammunition/weapons
- Cash Advances (ATM or other)
- Employee travel
- Entertainment/hospitality/ food
- Equipment/Software Rental
- Flowers/Gifts
- Gasoline/Fuel
- Hazardous Materials
- Insurance
- Leases
- Legal services
- Motor Vehicles
- Non-business/personal items
- Postage Stamps
- Printing
- Repairs-Labor
- Tax reportable services (1099)
(These may vary by department)
This is not an all-inclusive list.
Note: MSU departments may request, from the Purchasing Card Coordinator, a waiver to remove the restriction on the purchase of the preceding items. The waiver will be specific as to item(s) and as to cardholder. The waiver is to be attached to the appropriate Purchasing Card Application and Use Agreement.
VIII. Merchant Category Code Standards
All vendors are assigned a merchant category code (MCC) by their bank. The MCC standard for the State is the State Merchant Category Code Exclusion Standard. Attempting to buy from merchants that are excluded will cause the transaction to be denied.
Occasionally, a bank may have wrongly assigned a vendor’s MCC. The department should notify the Purchasing Card Coordinator of rejected transactions if they feel it is an appropriate purchase. If a transaction is rejected for an appropriate purchase, the MSU Purchasing Card Coordinator should ask the vendor to check with their bank to request a code change, if necessary.
IX. Use with Contracts
Contracts should be utilized to get the best price.
X. Purchasing Card Issuance
At the time a purchasing card is requested for an employee, the funding code string that will belong to that purchasing card must be determined. The funding code string is to be entered by the MSU Purchasing Card Coordinator on either the Cardholder Account Setup form or on the PVS Net home page. The funding code string, associated with each purchasing card, identifies the fund, department, TCC and project number, if applicable. This code will appear on the billing file and will be used to post the purchasing card transactions to the general ledger.
XI. Cardholder Responsibilities
Each cardholder is responsible for the following activities:
- Safeguard the purchasing card.
- Sign the purchasing card immediately upon receipt.
- Record each purchase on a Purchasing Card Record form.
- Keep original receipts from each purchase.
- Receive the cardholder statement from purchasing card company.
- Reconcile the cardholder statement with Purchasing Card Record form and receipts.
- Sign the reconciliation to attest that all purchases are for MSU business and in
compliance with all applicable rules and regulations.
- Forward signed reconciliation with completed Purchasing Card Record form and
original receipts to designated reviewer (supervisor).
- Notify the supervisor, the Purchasing Card Coordinator, and ELAN immediately in the
event of a lost or stolen purchasing card.
- Destroy and discard an expired purchasing card.
- Give the purchasing card to supervisor if employment is terminated.
- Resolve disputes in a timely manner. The Purchasing Card Coordinator should be
notified of any disputed items that the cardholder has not been able to resolve.
XII. Reviewer Responsibilities
The following items may be performed by the cardholder’s supervisor, the Purchasing Card Coordinator, or another designated employee (other than cardholder).
- Review the information submitted by the cardholder. The amount of review will
depend on a number of factors, but the reviewer should, at a minimum, periodically
compare receipts to the Purchasing Card Record Form submitted by the cardholder.
- Verify purchases are for business use.
- Sign the Purchasing Card Record Form to certify that purchases are for business
purposes and are in compliance with appropriate rules and regulations to the best of
the reviewer’s knowledge.
- Forward the signed Purchasing Card Record form, with all original receipts, to the
MSU Business Office. Departments may keep a copy of the Purchasing Card Record
form on file within their department.
- The card must not be used for personal transactions. If personal transactions occur,
the employee must repay MSU, including any applicable sales tax. Even if these
taxes are not charged by the vendor, MSU must remit the taxes to the State Tax
Commissioner.
- If it is determined that personal or other unauthorized charges are occurring on the
purchasing card, appropriate steps, up to and including dismissal, and possible
criminal prosecution may be taken to solve the misuse/abuse of the purchasing card.
XIII. Departmental Process
To maximize the benefits of using the card, some accounting processes must change. MSU will allow each user to authorize purchases in accordance with the purchasing policy except for individual cardholders of Physical Plant who must have their purchases approved by the Physical Plant Director. All purchasing card transactions will be paid centrally by the MSU Business Office. The transactions will be posted to the general ledger via the default fund code string assigned to each purchasing card. The default fund code string will identify transactions as to the fund, department, TCC and project number, if applicable. If reallocation of the purchasing card transaction is necessary, the MSU Business Office will have the ability to run a "purchasing card allocation" job on the mainframe.
If a department finds it necessary to reallocate or change the coding of transactions posted via the method noted above, they should immediately contact the Purchasing Card Coordinator with the correct information. A purchasing card allocation job is available to the Purchasing Card Coordinator to facilitate this process. This job allows the Purchasing Card Coordinator to select the transactions to be reallocated and to enter the appropriate fund information. The job, when run, will back out the transaction as it was originally coded (default fund code string) and re-record the transaction using the coding specified by the Purchasing Card Coordinator.
XIV. General Instructions for Card Use
- If item(s) purchased are greater than $750 (including shipping & handling, and other charges), use traditional purchasing procedures.
- If item(s) purchased are $750 or less (including shipping & handling, and other charges), and the item(s) to be purchased are not a contract item, use best judgement and determine an appropriate vendor for the material desired (no competition required). Give the vendor your purchasing card number and expiration date or present the card at the point of sale. Tell the vendor that MSU is exempt from sales taxes. NOTE: MSU’s tax exempt number is embossed on each purchasing card.
- If the material is to be shipped or delivered, tell the vendor to enclose or mail a copy of the receipt/invoice with each shipment. Have the vendor mark it "Credit Card Order - Paid" to avoid duplicate payments. If the material is picked up, obtain the itemized receipt indicating the purchase price.
- Maintain a record of the purchase on the Purchasing Card Record form.
5. Retain the original, detailed receipts/invoices for reconciliation purposes. The charge slip from the credit card system is not acceptable. Forward the monthly purchasing card statement, original receipts, and the completed Purchasing Card Record form to the appropriate reviewer (supervisor).
XV. Returns, Credits, and Disputed Items
The cardholder has the responsibility for following up with the vendor or bank (Elan Financial Services) on any erroneous charges, disputed items or returns, as soon as possible. Disputed billings can result from failure to receive the goods charged, defective merchandise, incorrect amounts, duplicate charges, credit not processed, as well as fraud and misuse.
If the cardholder has a problem with a purchased item or a billing resulting from the use of the purchasing card, they should first try to reach a resolution with the vendor that provided the item. In most cases, disputes can be resolved directly between the cardholder and the vendor.
Credits: Referring to the cardholder receipt, request from the vendor to issue a credit on the purchasing card account. If the item was shipped, refer to the shipping form you received and retained with the Purchasing Card Record form.
Returns: The vendor should issue credit for any item that has been approved for return. The credit should appear on a subsequent statement. Any item purchased with the purchasing card that is returned must be returned for credit. Do not accept a refund in cash or check.
Make sure you keep documentation of credits, returns and exchanges on the Purchasing Card Record form.
Disputed Items: If you have a disputed charge and cannot reach resolution with the vendor, complete the ELAN Visa Purchasing Card Billing Inquiry Form and send it to ELAN Financial Services. A copy of this form should also be sent to the MSU Business Office. This written notice of dispute must be received by ELAN within 60 days of the date that ELAN sent the first statement or transaction file.
XVI. Statement Verification
- A monthly account statement will be sent directly to the individual cardholder(s). The MSU Business Office obtains an electronic billing file for payment processing.
- The cardholder is responsible for reconciling the monthly account statement with the Purchasing Card Record form and original, detailed receipts/invoices. If inaccuracies and/or erroneous information exist, the cardholder must immediately notify the MSU Business Office. When reconciled, the cardholder signs the Purchasing Card Record form and forwards this, along with all original receipts to the appropriate reviewer.
- The reviewer is responsible for reviewing the information submitted by the cardholder, signing the Purchasing Card Record form, and forwarding the signed Purchasing Card Record form, the original receipts/invoices, and the monthly statement to the Purchasing Card Coordinator, MSU Business Office.
XVII. Monthly Processing
The monthly billing file for all MSU departments is obtained electronically by the MSU Purchasing Card Coordinator. The MSU Business Office will run a job on the mainframe that will transfer the billing information, including the default fund code string to the general ledger and will generate payment to the purchasing card company (ELAN) via direct deposit (ACH).
XVIII. Audits
Random audits of purchasing card transactions will be conducted. The primary purpose of the audit is to ensure that the purchasing card procedures are being followed and that:
- Purchase volume appears reasonable.
- The purchasing card is being used for appropriate transactions.
- Documentation is complete.
- The department and the cardholder are following required procedures.
- Proper internal controls exist with regard to the program.
XVIX. Vendor Does Not Accept Credit Cards
Not all vendors accept credit cards (VISA). If this happens:
- Choose another vendor who accepts VISA.
- Complete the transaction using traditional purchasing procedures.
- Ask the vendor if they are interested in accepting VISA. If yes, refer them to their
financial institution for more information.
XX. Purchasing Card Security
The purchasing card is to be treated with the same level of care that is afforded personal credit cards.
- Do not lend the purchasing card to anyone. The only person authorized to use the
card is the person whose name appears on the front of the card and who has
completed the Purchasing Card Application and Use Agreement form.
- Do not post or write the purchasing card account number in any location that is
accessible to others.
- Avoid sending the purchasing card account number over the Internet.
XXI. Failure to Comply with Program Guidelines
Any misuse of the purchasing card or other failure to comply with the applicable policies and procedures will result in the following:
- Revocation of the purchasing card
- Appropriate disciplinary actions which may include termination
- Repayment of transactions resulting from personal use of the purchasing card.
- Repayment will include any applicable taxes.
XXII. Termination of Employment or Transfer to Other Division
If the cardholder’s employment is terminated with MSU or if the cardholder transfers to another department within MSU, the cardholder must return the purchasing card to his/her supervisor. The supervisor is responsible for contacting the MSU Purchasing Card Coordinator, who will cancel the card. Returned purchasing cards are not to be reissued to other employees for use. Before returning a canceled purchasing card, the card should be cut in half by the supervisor.
XXIII. Key Contacts
The following resource persons are available to answer questions, solve purchasing card problems, or provide assistance in the areas listed:
MSU Purchasing Card Coordinator (Bruce Haskins 858-3331)
- To apply for a purchasing card
- For questions concerning policies and procedures
- To replace damaged cards
- For assistance with vendors
- For account inquiries
- For billing information
- To report a lost or stolen card
Elan Cardholder Customer Service: 1-800-393-3526
- To report a lost or stolen card
- For questions concerning monthly statements
- For authorization assistance
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