The following are the financial policies and
procedures of the Borough of Dumont concerning general recordkeeping
and budget controls. Each department head must annually review their
office procedures to ensure that adequate internal controls are in
place. The purpose of these policies is to ensure compliance with
general law, operate using best practices, and ensure the safekeeping
of taxpayer funds. This includes compliance with the Local Budget
Law,[1] the Local Fiscal Affairs Law,[2] and the Local Public Contracts Law.[3] Legal compliance can only be maintained with the diligent
application of these financial controls.
A.
B.
Cash verification. Each department head or supervisor
must ensure the safety of cash deposits. The Borough of Dumont has
a "banking" type arrangement in the Tax Collector's Office which assists
each department in making fast deposits. Each Borough office that
collects cash must ensure that it is deposited quickly with the Tax
Collector and no later than 48 hours (per N.J.S.A. 40A:5) after receipt.
The department head must examine the receipt book at least monthly
to ensure its veracity.
C.
Purchasing. Every department must follow the accompanying Borough of Dumont Purchasing Guidelines (§ 69-117 of this chapter). Please ensure that original invoices, receipts, and all necessary descriptions and certifications are attached to each purchase order and voucher. This is an essential control and if not followed will result in nonpayment by the Finance Office. Also, please ensure that the requisition system resulting in a purchase order is followed.
D.
Budget controls. Every department head may not exceed
their budget allocation for salaries and wages and other expenses
(operating expenses). No emergencies allowed in operating budgets
(reference N.J.S.A. 40A:4). If an officer or employee of the Borough
over expends a budget (S&W or OE), state law is broken and the
official is subject to possible prosecution. Do not spend money you
do not have. Each department head must review his or her budget printout
monthly and if there are any questions, contact the Finance Office.
E.
Equipment. All office equipment must be listed in
a department register. This includes photocopiers, calculators, personal
computer, etc. The Finance Office has contacted every department for
verification of these items.
F.
Employee information. An accurate log of sick, vacation,
holiday time, etc. must be maintained for each employee. Please use
the Borough's standardized forms for all department employees. Each
department must maintain a roster of employees used to record time
balances as well as to verify annual budget information.
G.
Overtime approval. The approval of overtime must be
made directly by the department head. If a supervisor is making the
day-to-day decision of overtime approval, there must be adequate justification
of the expense. Please remember that overtime is subject to the aforementioned
budget controls.
H.
Payroll.
(1)
Every payroll change must be accompanied by a personnel
action form. This form must be signed by the department head, Borough
Treasurer/CFO, and Borough Administrator.
(2)
The finance department will verify all payroll information.
In no case will an employee be compensated greater than allowed by
law. These internal controls are designed to protect the Borough of
Dumont from fraud, misappropriation of assets, etc. Also, statutory
compliance is maintained by continually reviewing these controls.
A.
Purchasing cycle.
(1)
The purchasing cycle begins when the department head,
division head, or other designated Borough officer makes the decision
that a product or service is required by his or her department. Upon
making this decision, the budget must be carefully checked and reviewed
for sufficient funds. Authorization for any expenditure must be received
from the Borough Treasurer/CFO or Borough Administrator. After the
budget balance has been verified and it is determined that sufficient
funds are available, then the purchasing cycle begins. If an order
is under $150, the department may purchase said item by voucher. If
an order exceeds $150, a requisition must be processed through the
Borough Treasurer's Office prior to the placement of the order.
(2)
If an order or a combination of orders for any group
of materials, supplies and/or services exceed $3,150 and is less than
$21,000, three written or verbal quotations must be received from
three different vendors. The quotations must be kept on file for a
three-year period and must be available upon demand by the Borough
Treasurer/CFO, Borough Administrator, or Borough Auditor. Any order
or group of orders, in the aggregate, exceeding $21,000 must be formally
bid with a few exceptions. This is a requirement of state law (N.J.S.A.
40A:11-1 et seq.)
(3)
Once the voucher copy of either the purchase order
or Borough voucher is received, payment will be made after the Council
has approved said voucher at a regularly scheduled Public Council
Meeting.
B.
Purchasing forms. Three basic forms are used in the
purchasing process. They are the requisition, purchase order, and
voucher. The following is the simple process used in filling out each
form:
(1)
Requisition.
(a)
The department's requisition must be used in
all purchases of goods and services over $150 except as approved by
the Borough Treasurer/CFO or Borough Administrator. On the upper portion
of the requisition form, the date, department number, and the department
name must be inserted. The vendor number and other pertinent information
should be inserted in the space provided. The account number and full
description of the good or service being requisitioned must be entered
in the space provided, as well as the unit and extended price. The
suggested vendor must be included and the requisitioner must either
initial or sign the form and the department head must approve the
requisition by signing it.
(b)
If the requisition is not properly completed,
it will be returned to the department for proper disposition. Requisitions
must be used prior to actual placement of orders.
(c)
There are two parts to the requisition form
as follows:
[1]
White. This is the top copy of the requisition
and is considered the original. This is retained by the Finance Office
for their records to be attached to the final voucher once it is issued
for final payment.
[2]
Yellow. This is the second part of the requisition.
This copy is attached to the purchase order (Borough Treasurer's Office
copy) upon final payment.
(2)
Purchase order.
(a)
The purchase order form is printed by the Borough's
computer, based upon the information contained on the requisition
form. At the time the purchase order is entered in the computer system,
the budget account is encumbered (charged) for the amount of the order.
The purchase order is the official written order of the Borough of
Dumont to the vendor, and represents the initiation of the purchasing
cycle for all orders over $150, except as may be excluded by the Borough
Treasurer/CFO or Borough Administrator. The purchase order is initialed
in the bottom-right-hand corner by the Borough Treasurer/CFO as acknowledgment
of posting to the budgetary account (encumbrance).
(b)
There are three parts to the purchase order
as follows:
[1]
Voucher copy (white). This is transmitted to
the vendor (claimant) and must be signed by the vendor and returned
for payment to the Finance Department. The receiving copy of the purchase
order and all original invoices, billing slips, or other documents
pertaining to the purchase are attached to the voucher copy. The signed
voucher copy is the only means by which a check can be issued by the
Borough of Dumont to the vendor for any purpose and must have the
completed using department copy of the purchase order and all original
invoices or billing slips attached together with all appropriate signatures
being affixed.
[2]
Finance copy (green). This copy is retained
by the Finance Department. This is a control copy for the Borough
Treasurer's Office to be signed by the Borough Treasurer/CFO so that
the Finance Department is aware of the purchase and of the propriety
of the purchase.
[3]
Using department/agency (pink). This copy is
forwarded to the department after printing of the purchase order and
is to be retained until the goods and/or services are received by
the department. It must be signed by the employee receiving the goods
and/or services and the department head. It should be forwarded to
the Borough Treasurer's Office within 24 hours after receipt of the
goods and/or services or as soon thereafter as possible. The issuing
department must make a photocopy for their records.
(3)
Simple voucher.
(a)
The simple voucher form is a four-part form
used to initiate all payments under $150 and other payments as authorized
by the Borough Treasurer, Chief Financial Officer, or Borough Administrator.
Under no circumstances are orders to be split and put on simple voucher
forms for the purpose of meeting the $150 limit. Such orders will
be rejected and sent back to the departments for proper disposition.
The simple voucher must be filled in completely with similar information
as contained on the requisition of the goods and/or services being
ordered, the full account number, unit and extended price. The vendor's
signature must be entered into the appropriate space at the bottom
right-hand portion of the form. The department must certify and sign
the voucher as stated in the middle of the form.
(b)
It should be noted that the Borough Treasurer/CFO
must sign the bottom left-hand column and must approve all minor purchases
under $150. In addition, as with the voucher part of the purchase
order form, the Borough Treasurer/CFO must approve all vouchers prior
to payment and prior to the submission to the Borough Council for
authorization to pay said vouchers.
(c)
The following may be processed by voucher:
[1]
Utility bills including electricity, telephone,
and heating fuel payments.
[2]
Insurance payments.
[3]
Personnel-related expenses including reimbursement
for attendance at conferences or meetings.
[4]
Certain bid items are approved by prior resolution
of the Borough Council and are authorized only by an agreement executed
by the Borough Administrator.
It is the responsibility of the department to
receive as many prices and quotations for the acquisition of goods
or services as possible. If assistance is needed, the Borough Administrator's
Office should be contacted. The practice of receiving competitive
prices, for the most part, has been successfully used in most municipalities
and has resulted in substantial savings to the municipality. In the
event that a purchase of a group of goods or services exceeds $3,150,
three verbal or written quotations must be received from three or
more different vendors. In the event that verbal quotations are received,
a memo for Borough files must be kept for a minimum of three years.
The documentation must be kept on file for review by the Borough Treasurer/CFO,
Borough Administrator, or Borough Auditor upon demand. In addition,
the Borough Treasurer/CFO may require said quotations be attached
to the voucher.
A.
In the event that a group of goods and/or services
exceeds $21,000, the purchase or purchases must be formally bid as
per N.J.S.A. 40A:11-3. The following are exceptions to this bidding
requirement. It should be noted that Borough Council action is required
for all exceptions.
(1)
State contracts may be utilized for the purchasing
of goods or services of any sum but are particularly important for
categories of purchases over $21,000. An index of the items covered
by state contracts is on file in the Borough Administrator's Office.
It is the intent of the Borough to continue to utilize state contracts.
(2)
Professional services such as legal services, audit,
medical, and other professional services are generally exempt by the
bidding requirements pursuant to N.J.S.A. 40A:11-5. In addition, the
law exempts extraordinary and unspecifiable services. The Borough
Administrator must approve extraordinary and unspecifiable services
prior to the commitment of Borough funds. It should be noted that
the procurement of services either professional, extraordinary, or
unspecifiable in excess of $21,000 must be formally approved by action
of the Borough Council.
(3)
Furnishing of Tax Maps.
(4)
Supplying of a product rendered by a public utilities
company which is subject to the jurisdiction of the Board of Public
Utilities.
(5)
The printing of bonds and documents necessary to the
issuance and the sale of bonds.
(6)
Publication of a legal newspaper.
(7)
Insurance, including the purchase of insurance coverage
and consulting services which exceptions shall be in accordance with
the requirements for extraordinary and unspecifiable services.
(8)
Contracts entered into with the United States of America,
or the State of New Jersey, or any county or political subdivision
thereof.
B.
Any purchase contract or agreement may be made and
negotiated or awarded for contracting without public advertisement
or bidding when an emergency affecting the public health, safety,
or welfare requires the immediate delivery of articles or services
provided that the following guidelines are met:
(1)
A written requisition for the performance of work
or the furnishing of services be submitted to the Borough Treasurer/CFO
and Administrator within 24 hours of the occurrence of the emergency.
(2)
A memorandum must accompany the requisition indicating
the nature of the emergency, the time, the place, and the estimated
budget impact of the emergency.
(3)
The same strict guidelines affecting the emergency
appropriations effect emergency purchases and contracts pursuant to
N.J.S.A. 40A:4-47. That is, the emergency must be unforeseen and unbudgeted
prior to the time of budget adoption. This means that any operating
expense, including overtime and legal fees, are not emergencies. Only
those purchases that are caused by a specific event subsequent to
the time of budget adoption may be considered emergency purchases.
Please remember a that a department's lack of planning is not the
Borough's emergency.
As in the past, the department head or designee
must take an active role in developing bid specifications for the
goods or services to be acquired by the Borough of Dumont. Specifications
for goods or services must be submitted to the Borough Treasurer as
soon as the need arises. On file in the Borough Treasurer's Office
are blank forms to accompany the bid specifications for advertisement
and affidavits to be signed by the vendor that is submitting a proposal
or quotation. Again, wherever possible, the State contract will be
utilized.
It is the responsibility of the department or
any other Borough office to ensure adequate funds are budgeted and
available for each purchase of a good or service. The Borough Treasurer,
Chief Financial Officer, or Borough Administrator, at any time prior
to the issuance of a check, may reject a purchase on the basis of
insufficient funds within the Borough budget. However, prior to the
disapproval, the department will be directly contacted for advice
on the purchase. The Finance Department will not reject purchases
on the basis of wisdom or need, but solely on the basis of budgetary
requirements. However, the Borough Administrator may reject purchases
based on efficiency issues.
Petty cash is available to reimburse out-of-pocket
expenses paid directly by employees. The maximum amount allowed to
come out of the petty cash fund for individual expenses is $10. Upon
the disbursement of funds from an employee's pocket, a receipt must
be presented to the Borough Treasurer's Office with the proper budget
code so that a petty cash slip can be initiated for charging against
the budget.
At all times a separation is maintained by different
individuals assigned specifically to the following responsibilities:
A.
Processing and recording of expenditures is assigned
to the Finance Office.
B.
Distribution of checks for vendor payment and emergency
check writing may be assigned to the Administrator's Office.
C.
Custody of unissued checks is maintained by the Finance
Office.
D.
Vendor approval must be made by the department head
and the Borough Administrator.
E.
Payroll is processed by the Finance Office based on
time sheets submitted by the department and signed by the department
head. General payroll oversight is performed by the Borough Administrator.
The Borough has an active audit program which
exceeds the requirements of the New Jersey Local Fiscal Affairs Law.[1] Each department and office must immediately comply with
all verbal or written requests of the auditor. Failure to do so may
be cause for disciplinary action or monitoring of department activity
by the Finance Department and Borough Administrator. To ensure compliance
with the law, all of our internal financial controls must be followed.
[1]
Editor's Note: See N.J.S.A. 40A:5-1 et seq.
