This Policy is under review.

720R-B - Procurement and Credit Card Management

Last Updated Date: 01/03/2018

Adoption Date: 08/05/2009

Revision History: 10/19/2011, 01/03/2018

  1. Purpose

    To establish regulations for the use and control of procurement cards (P-cards). Frederick County Public Schools (FCPS) will issue procurement cards to authorized cardholders to facilitate the procurement of business related goods and services for specified amounts. The P-card program is implemented with the objective of improving administrative procedures by streamlining paperwork processes and improving acquisition times for materials, supplies and services.

  2. Definitions

    1. Procurement Card (P-Card) - A credit card issued by a financial institution for the purpose of enabling FCPS schools and offices to acquire needed materials in a timely and efficient manner. A. P-Cards also include travel cards which are generally used only for out-of-town business travel. Travel cards are the only P-Cards that have the MCC codes for hotels, vehicle rentals, restaurants and other travel related codes.

    2. Procurement Card Manual – Provides detailed instructions on total program administration. Review of the manual will be conducted at mandatory training sessions. All forms associated with the procurement card will be included in the procurement card manual.

    3. Billing Cycle - The monthly billing period, ending on the last business day of each month.

    4. Cardholder - A person whose name is on a P-Card and given authority to make purchases within preset limits on behalf of FCPS.

    5. Cardholder Agreement - The agreement signed by the person whose name appears on the P-Card. This agreement outlines the policies regarding using a P-Card and must be signed by all persons receiving a P-Card. This signed agreement will be filed by purchasing staff.

    6. Cut-Off Date - The last day in which charges can be approved and costs redistributed prior to payment being made. Packets for payment should be submitted to Accounts Payable within five (5) business days of the end of the billing cycle (last business day of the month).

    7. MCC - Merchant Category Code assigned to a merchant by VISA, which identifies the primary goods or services provided by the merchant.

    8. Monthly Spending Limit - A dollar limitation of purchasing authority assigned to the Cardholder for the total of all charges made during each monthly billing cycle. The default credit limit shall be 10,000. However, it is possible to establish different limits on a per Cardholder basis, based on needs as determined by the Account Manager and Program Administrator . Limits will be monitored and recommendations made to adjust limits when doing so is appropriate and will assist in limiting the liability of the school division.

    9. Receipt/Documentation - A merchant produced document that records the relevant details for each item purchased including quantities, amounts, a description of what was purchased, the total charge amount and the merchant's name and address (e.g. sales receipt, original invoice, packing slip, credit receipt, online order confirmation page, etc.).

    10. Transaction/Charge Limit - A dollar limitation of purchasing authority assigned to the Cardholder for each total charge made with the P-Card. This amount will be established by the program administrator in collaboration with the relevant account manager to determine limits that are reasonable. The Program Administrator will establish limits on a per Cardholder basis at amounts that are aligned with the needs of that individual department or cardholder.

    11. Lines of Credit –A form of credit other than a P-Card. These can include merchant credit cards or other charge accounts without cards that send monthly billings for orders picked up or delivered to FCPS.

  3. Roles and Responsibilities

    1. Executive Director of Finance – Responsible for designating a Program Administrator. May approve exceptions to any restrictions contained herein should
      it be in the best interest of the school division.

    2. Program Administrator – Responsible for school division administration of the P-Card program. Establishes regulations, user manuals, and training programs to guide and support P-Card users. Oversees compliance with state and local purchasing laws and regulations. Performs audits of transactions and works with Account Managers regarding the findings of audits. Corresponds with card-issuing financial institution staff to implement and improve card program.

    3. Program Administrator Designee – Responsible for assisting with overall program administration. Assists with the day-to-day issues related to the P-Card program, i.e. card issuance, end-user questions, etc. Acts as Program Administrator in his/her absence.

    4. School/Department Account Managers – Responsible for overseeing the acceptable use of P-Cards within their school or department. Reviews and approves monthly cardholder statements to ensure that purchases made are appropriate and aligned with the mission of the school division. Notifies Program Administrator or Designee of any compliance issues. Approves requests for card issuance at his/her location, which are forwarded to the Program Administrator for review. Also, designates the Proxy Reconciler within his/her school or department.

    5. School/Department Proxy Reconciler – Person designated by the Account Manager who is responsible for reconciling monthly cardholder statements with receipts and other forms of documentation. Using the card issuer’s web-based management system, the Proxy Reconciler allocates funds using appropriate general ledger account codes. Once the statement has been reconciled, the Proxy Reconciler forwards the statements to the Account Manager for review and approval. Also, forwards potential misuse or inappropriate purchases to the Account Manager and Program Administrator.

    6. Cardholders – Person whose name is on a P-Card and given authority to make purchases within preset limits on behalf of FCPS.

      Cardholder responsibilities:

      1. Attending training and signing the Cardholder Agreement PRIOR to issuance of a P-Card

      2. Keeping their P-Card and P-Card account number and PIN confidential and secure

      3. Using the FCPS P-Card for school-related business only

      4. Understanding that intentional misuse or abuse of the P-Card will result in immediate revocation of charging privileges and possible disciplinary action, up to and including termination of employment

      5. Not splitting transactions to avoid maximum per transaction dollar limits

      6. Obtaining receipts for each transaction and submitting those receipts to the person responsible at their site for reconciling P-Card activity.

      7. Reporting a lost or stolen P-Card immediately to the P-Card issuing financial institution and to the Program Administrator.

      8. Notifying the Program Administrator of departure from school division for any reason, i.e. retirement, resignation, etc.

      9. Notifying the Program Administrator of a change in work location.

  4. Procedures

    1. Card Issuance

      P-Cards will be issued to individuals who have a need as determined by their Account Manager, in coordination with the Program Administrator. Examples of individuals who may need a P-Card are:

      1. Anyone who performs school/departmental ordering on a frequent basis

      2. Anyone who has a demonstrable need for the card to prevent spending personal funds for school-related work.

      3. Anyone who needs to make frequent purchases while away from their usual work location.

      4. Anyone who travels outside of the division frequently.

    2. P-Card Application Process

      1. Obtain an application form from the P-Card Manual or Program Administrator.

      2. Complete the application and have it signed by the Account Manager.

      3. Send the completed application with original signatures to the P-Card Program Administrator in the Finance Department.

      4. Attend a mandatory training session.

    3. Card Restrictions

      In coordination with the Program Administrator, Account Managers should examine the cardholders’ duties and buying responsibilities to determine what restrictions should be applied. The card application includes sections where Account Managers may select Cardholder restrictions from the following available options:

      • Dollar Limits per Transaction: This limit allows Account Managers to designate the maximum dollar amount for Cardholders to spend on each purchase or transaction (default of $1,500). At the point-of sale, P-Card Provider's Credit Authorization System (CAS) verifies that the purchase amount falls within the approved transaction limit. If the amount requested for authorization exceeds the limit, the authorization is denied.

      • Monthly Limits per Cardholder: This limit allows Account Managers to designate the total amount an employee can spend during the monthly billing cycle (default of $10,000). A running balance is maintained in CAS that increases with each authorized charge until the Cardholder reaches the assigned monthly limit. If the limit is reached before the end of the billing cycle, new attempts for authorization are denied.

      • Merchant Category Code Restrictions: Account Managers can set industry restrictions based on merchant category codes (MCC). The restrictions enable departments to more accurately target industries from which departments purchase high volume, low cost commodities used for maintenance, repair, and operation of the department. Certain merchant categories will be automatically blocked.

      • Preferred Supplier Restrictions: This feature helps FCPS manage relationships with preferred suppliers by restricting Cardholder spending to select merchants (for example, state contracts or vendors currently under contract with the school division).

      • Other Restrictions: P-Cards shall not be used for cash advances, local working meals, privately owned vehicles or personal items or services.

    4. Procurement Card Security

      Authorized use of the P-Card is restricted to the person whose name appears on the face of the card. The P-Card shall not be loaned to another person. In the case of a departmental card, the card shall be kept secure by the departmental reconciling official, typically a secretary or bookkeeper.

      The account number must not be faxed or e-mailed to vendors. Cardholders may submit orders by e-mail or fax - leaving off the P-Card number - then call the vendor to provide the P-Card number.

      The P-Card, or any document containing the card account number or PIN, should be kept in a secure location, accessible to only the Cardholder or Reconciler. The account number on the P-Card should not be posted or left in a conspicuous place.

      If the P-Card is lost or stolen, the Cardholder must immediately notify the P-Card Financial Institution and Program Administrator.

      The school division is liable for the use of the P-Card by authorized users, provided that use is within the single per transaction dollar limit. The school division does not accept liability for the following:

      • Unauthorized use of the P-Card, including personal use.

      • Account numbers that are fraudulently used.

      Purchases made with stolen or lost cards that are beyond the maximum limit of $50, and the maximum length of liability of 24 hours after discovery and reporting of card loss or theft. [Exception. If P-Card Provider investigation finds the employee used the P-Card for personal gain -- the school division becomes liable.]

    5. General Requirements of P-Card Use

      Proxy Reconcilers will maintain a transaction log for purchases within their school or department to allow for monitoring of spending limits and reconciliation of purchasing activity to the monthly P-Card statements. Cardholders will be required to submit receipts to the school/department Proxy Reconciler for documentation and reconciliation. A new P-Card transaction log should be established for each account at the beginning of each new billing cycle.

      To use the P-Card the Cardholder should take the following steps:

      • Identify a vendor that sells the goods and services needed. Cardholders should first search sources that are under contract with the school division.

      • Call, go on-line, or go to the vendor's place of business and place the order.

      • Information to give supplier (vendor):

      • Cardholder name and P-Card number.

      • Expiration date of P-Card.

      • State that the school division is exempt from sales tax. The vendor will verify the account number with the P-Card Provider. The spending limit will be checked electronically for compliance with applicable limits.

      • Shipping information.

      Information to obtain from supplier (vendor):

      • Order confirmation or tracking number.

      • Base cost of purchase.

      • Anticipated delivery date.

      • Freight costs, if available (actual or estimated).

      Cardholder must submit all documentation pertaining to the purchase to the Proxy Reconciler. When the vendor delivers the order, documentation of the purchase (such as a sales receipt or packing slip) should accompany the order. This documentation must be retained by the Proxy Reconciler for reconciliation to the P-Card statement.

      The purchase information should be entered on the P-Card transaction log. The log should contain, but not be limited to, the following information:

      • School/Department name

      • Cardholder name

      • Date of purchase

      • Vendor name

      • Description of purchase

      • Amount of purchase

      • Confirmation that receipt was submitted

      • Account Code to be charged when payment is made

    6. Reconciliation Process

      1. The P-Card provider has available a computer program that allows charges to be reconciled and/or reallocated to other accounts online. Proxy Reconcilers are responsible for reviewing and approving transactions on a routine basis as per the instructions listed in the P-Card Manual. Proxy Reconcilers should log into the web-based management system or financial software at least once per week to reconcile outstanding transactions.

        • Charges are available to reconcile after the supplier submits the charge and the bank receives and processes the data. This normally takes one to three days (in some instances this takes longer, if it takes too long call the vendor).

        • Proxy Reconciler assigns the proper account code for each purchase that is made on the management system.

        • Self reconciliation is never allowed. No one is authorized to reconcile his or her own card. Purchases made by a Proxy Reconciler shall be reconciled by the Account Manager. Purchases made by an Account Manager shall be reviewed by another administrator at his/her location.

      2. Specific Duties of the Proxy Reconciler

        • The Proxy Reconciler challenges or approves each purchase and allocates approved charges to the appropriate account code.

          If a receipt is not available, the Proxy Reconciler must have the cardholder submit a Lack of Documentation Waiver Statement, signed by the cardholder’s Account Manager. The proxy reconciler acts as the initial approval authority for each P-Card purchase. If, as the reconciler, you do not understand the charge or have reason to believe that the charge is not proper:

          • Go to the cardholder for an explanation.

          • Go to the Account Manager to verify that the charge was appropriate.

          • Go to purchasing staff to verify that the charge is within applicable laws and FCPS policies.

          • Go to the Program Administrator if fraud or abuse is apparent or suspected.

        • The Final step of the reconciliation process is “APPROVAL”. At this step, the Proxy Reconciler electronically signs off on the transactions and approves the cardholder statements within their department. This electronic approval serves as certification that all purchases made in the school or department are appropriate and compliant with established policies and regulations.

  5. Lines of Credit

    The use of a line of credit for any merchant other than the issuer of the P-Card must be approved by the Executive Director of Finance prior to use. Any record of the line of credit will be maintained in the Finance Department for audit reporting purposes.

  6. Audits

    Audits will be performed by the Program Administrator or Designee on a regular basis to ensure purchases are in compliance with FCPS Policies, Regulations and the P-Card Manual. Audit findings will be documented, communicated to the account manager and kept in the Finance Department.


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