Category: Finance
Policy No.: F-3
Subject: Purchasing Cards
Date Issued: 10/11/2021
Staff Contact: Finance and Administration Director
Last Updated:
It is the policy of the City of Kenmore to allow employees to use Purchasing Cards for specific procurements. Purchasing Cards are designed to provide a convenient and efficient method of procuring low value goods and services. city users will be able to make these small purchases simply and easily when a need arises. Purchasing Cards will reduce costs associated with processing requisitions purchase orders and accounts payable, while creating good business relations with suppliers by speeding up payments to them. These efficiencies will allow all groups and individuals involved to be more effective and focused on the value added aspect of their jobs.
This document sets forth the City’s policy and procedures by which the City will conduct the Purchasing Card Program. This Policy shall apply to all City departments and divisions.
A. 
Purchasing cards will be issued to authorized regular City employees only.
1. 
The department head is responsible for authorizing their employees to use a Purchasing Card.
2. 
Temp/Seasonal employees working on long term projects are eligible for a Purchasing Card with the approval of the Division Director/Manager. The Director of Finance/Administration has final approval.
B. 
The employee whose name appears on the card is the only individual who may use the card.
C. 
An authorized employee will be required to:
1. 
Complete a Purchase Card application (appendix 1[1])
a. 
Should be approved/signed by department head
2. 
And sign and abide by a cardholder agreement (appendix 2[2]).
A. 
The maximum credit card limit will be established by the Director of Finance & Administration or designee.
B. 
A department head may establish lower limits for department employees.
C. 
Use of the Purchasing Card does not relieve the cardholder from complying with City and departmental policies and procedures. The Purchasing Card is not intended to replace effective procurement planning which can result in quantity discounts, reduced number of trips and more efficient use of City resources.
D. 
The cardholder will be responsible to report a lost or stolen card by phoning the contracting bank and advising their department head and the Finance Department. The Finance Department will confirm the loss in writing to the bank.
E. 
Cardholders are responsible to immediately inform the Finance Department of any fraud directly relating to their purchasing card which occurred outside of their control such as unauthorized charges.
A. 
Each single purchase may be comprised of multiple items, but the total must not exceed the maximum established transaction limit.
B. 
When a purchase exceeds the maximum established transaction limit, the normal procedure of using purchase orders must be followed. Purchases must not be split to circumvent the transaction limit.
C. 
The least expensive item that meets the needs of the department should be sought.
D. 
Cardholders must follow their department’s administrative control of funds procedures to ensure that sufficient budgeted funds are available for the purchase.
E. 
The cardholder must obtain an itemized receipt from the vendor and submit the receipts along with their reconciled account statement to the Finance Department for payment.
1. 
The reconciled account statement must be signed by cardholder and their respective department head.
A. 
The following list covers purchases for which the Purchasing Cards are specifically prohibited.
1. 
Cash advances or cash refunds
2. 
Personal use of any kind or any non-City purpose
3. 
Telecommunications equipment, software or services unless approve by IT (cell phone accessories are okay).
4. 
Computer hardware, software or peripherals (except Finance/IT) including any technology that attaches to connects to or passes through PC, network or wireless devices.
a. 
The following may be procured by Purchasing Card key-boards, thumb drives, mice, cameras (photo, not PC type) and tablet device accessories (data plans and wireless devices for tablet devices must be processed through Finance/IT.
5. 
Repairs to City vehicles (within Kenmore)
6. 
Good or services on City contract; unless payment by credit card was specifically contracted.
B. 
The following list covers merchant categories from which the entire City account is restricted:
1. 
Casinos, Gaming
2. 
Dating Services
3. 
Drinking Places
4. 
Liquor Stores
5. 
Massage Parlors
C. 
The department head may specify further prohibitions or restrictions for department employees.
A. 
If for any reason disallowed charges are not repaid by the cardholder before the card billing is due and payable, the City shall retain a prior lien against and a right to withhold any and all funds payable to the employee up to an amount of the disallowed charges and interest (at the same rate as charged by the purchasing card contractor). Consequences for misuse of the Purchasing Card can include:
1. 
Permanent revocation of Purchasing Card privileges
2. 
Assignment of wages for repayment of discrepancies
3. 
Notification to the Director of Finance & Administration and the Human Resources Manager to investigate the matter further
4. 
Disciplinary action, up to and including discharge
A. 
A Purchasing Card may be canceled for any of the following reasons.
1. 
The card is lost or stolen
2. 
The employee transfers to another department
3. 
The employee retires, resigns or is otherwise terminated from City employment
4. 
The authorizing department head requests cancellation for any reason
5. 
The City Manager or Director of Finance/Administration approves cancellation for cardholder misuse or abuse of card privileges.
B. 
It is the responsibility of the department head to advise the Finance Department of the termination or transfer of any cardholder. The Finance Department will then cancel the cardholder‘s Purchasing Card.
A. 
Authorized employees will each receive a unique Purchasing Card with the employee’s name embossed on it. Only the employee shall use the card. No other person may use it. It has been specifically designed to avoid confusion with personal credit cards. In all other respects, the card is considered a regular credit card. However, the Purchasing Card must not be used for personal purchases under any circumstances.
B. 
In order to receive a Purchasing Card, the employee will need to submit a Purchasing Card Application form (appendix 1[1]) to the Finance Department. The employee’s department head must authorize use of the card and indicate the desired Purchase Card limit (up to the maximum limits established by the City). The requested limit will be reviewed by Director of Finance/ Administration or designee.
C. 
When the Purchasing Card is received at the Finance Department, the employee will be contacted to personally sign a Cardholder Agreement.
D. 
Prior to using the card, the employee must telephone the bank to activate their account by calling the toll-free phone number given on the card.
E. 
Employees should sign their card immediately, exactly as they will sign the purchase receipts.
F. 
Employees may use their Purchasing Card at any merchant that accepts credit cards for payment. See Exclusions listed above.
A. 
Cardholders shall obtain an itemized receipt for any purchases made. Sometimes the vendor will give a single receipt that includes the credit card transaction information as well as the itemized list of merchandise purchased. Some vendors may give two receipts, one for the credit card transaction and one for the merchandise. In either case the employee must retain both of these documents and submit them to the Finance Department with their reconciled credit card statement and/or reconciled cardholder activity statement. The receipts must give a description of each item purchased, price, totals and must include tax, where applicable.
B. 
The merchant will require a signature on the sales draft. Before signing the draft, the cardholder shall verify that the dollar amount is correct and that sales tax has been added, where applicable. Typically, City purchase are taxable. Also, verify that the merchant business name is on the receipt.
C. 
Safeguard the Purchasing Card and the Purchasing Card number from unauthorized users. Do not allow anyone else to use it. Keep the card in a safe place. Make sure that the merchant returns the card. Be sure to confirm with the merchant that your purchasing card number will not be kept “on file” by the merchant.
D. 
Retain itemized receipts for completing the reconciliation to bank statement and/or reconciliation of cardholder activity statement.
E. 
If someone other than the cardholder is sent to pick up an item they must sign the charge slip as follows: “Received by (name)”
A. 
When placing a telephone, mail, internet or fax order the employee will be asked to provide their name, credit card number, expiration date on the card, and an appropriate billing address. Order forms that allow credit card payment will require the cardholder’s signature.
B. 
The cardholder shall specify to the merchant that an itemized receipt that shows description of item and tax on taxable items must be shipped with the merchandise.
C. 
When the order arrives, the receipt document(s) should be retained and submitted to the Accounting Department with the reconciliation to the bank statement or cardholder activity statement.
D. 
If a mail, phone, or fax order transaction is posted to the statement before actual receipt of the goods, it should be noted on the reconciliation. The receipt, with explanation, should be forwarded to the Accounting Department as soon as possible. (A merchant cannot charge the card until an order has been shipped, so the delay time should only be the time it takes for shipping.)
E. 
For subscription payment, the original subscription form or renewal form shall be attached to the re c o n c ilia t io n where the charge appears.
F. 
Internet orders should only be placed with reputable merchants who provide a secure ordering site. A secure site will show a padlock icon in the lower right corner of the computer screen or will have an internet URL address beginning with "https".
G. 
For registration payments for out of town conferences/classes, etc., a copy of the signed Travel Authorization and a copy of the conference brochure shall be attached to the reconciliation where the charge appears.
H. 
For food purchases for trainings/meetings, an agenda and a sign-in sheet for said training/meeting shall be attached to the reconciliation where the charge appears.
A. 
The reconciliation can be performed using; the U.S. Bank Access Online Reconciliation Application cardholder activity report (see appendix 4[1]) or Purchase Card statement.
[1]
Editor's Note: Appendix 4, Reconciliation Application is included as an attachment to this title.
B. 
The cardholder may record the details of each purchase in the cardholder activity report or on the Purchase Card Statement reconciliation.
C. 
The cardholder activity report can be accessed online and printed on the “access online” website with the Bank providing the City’s Purchasing Card Program. Detailed instructions for online access are provided in appendix 4.
D. 
The cardholder activity report will include the following information:
1. 
Cardholder’s name, department name and phone number
2. 
Month/Year of the billing cycle being recorded
3. 
Date of transaction
4. 
Merchant Name
5. 
Complete item(s) description
a. 
Be specific. A description of “Misc. parts” is not acceptable)
6. 
Budget code & budget code description for each transaction
7. 
Indicator of whether sales tax has been charged correctly
8. 
Total amount charged for each transaction.
9. 
Total purchases for the billing cycle.
E. 
The reconciliation of the cardholder activity report and/or monthly purchase card statement must be completed and submitted to accounts payable no later than the last day of the month ending prior to the due date.
F. 
After coding all the transactions on the purchasing card Bank website or purchase card statement, all itemized receipts for this billing cycle shall be attached to the reconciliation (but only for those transactions shown on the bank statement. If there are any receipts for purchases that didn’t get posted on the bank statement, the cardholder should hold them over and record them on next month’s reconciliation.
G. 
The City’s billing cycle runs from the fifteenth (15th) of the month through the fifteenth (15th) of the following month. The cardholder may print the Cardholder Activity report from the Purchasing Card Bank website or wait for the purchase card statement. The statement will show all transactions posted to each cardholder account during the billing cycle. The total figure on the reconciliation shall match the total on the received bank statement.
H. 
The cardholder shall sign the Reconciliation, obtain their department head or designee’s approval signature and return to the Finance Department before the last day of the month ending prior to the payment due date.
I. 
If an item is being returned attach the credit slip to the reconciliation for the month in which the credit appears on the statement. It is the cardholder’s responsibility to see that returns are properly credited. A return of goods purchased using the Purchasing Card must always result in a credit issued towards the cardholder’s Purchasing Card account. If a merchant refuses to issue a credit contact the Finance Department.
J. 
If there is a charge on the statement that the cardholder does not recognize the Bank should be contacted at 1-800-344-5696 to obtain the identification of the charge. If after contacting the Bank the employee still does not recognize the charge contact the Finance Department.
K. 
If an employee will not be available to complete and sign the reconciliation because of leave or travel all sales receipts, credits, etc. should be forwarded to the employee’s department head or designee so the transaction log can be completed and returned to the Finance Department on time.
L. 
If a charge shown on the statement is incorrect or is still unrecognizable after contacting the company the purchase was made from, the cardholder shall contact the purchase card bank and the Finance Department.
M. 
The Bank will then send the cardholder an affidavit to sign and return to the Bank. The required written information shall be returned to the bank within sixty (60) days of the date of the first statement on which the disputed charge occurred. The cardholder shall make two (2) copies of the letter, attach one (1) copy to the reconciliation and keep the other copy.
N. 
The Bank will research the charge and make necessary adjustments to the account. The disputed item will be noted on the following month’s statement for reconciliation purposes. The disputed item will be reflected in the outstanding balance but will not be part of the total amount due.
O. 
When a disputed item has been resolved, a line item credit will be added to the statement and reflect a note regarding the status of the credit. The outstanding balance will be adjusted by the credit amount to reflect the final settlement of the disputed item.
A. 
In the case of a lost or stolen card, the cardholder shall immediately notify the Finance Department, his/her department head, and the Bank. The Police Department should be notified depending upon the situation, the robbery, burglary, etc. The following telephone number may be used to notify the Bank.
1. 
24 HOURS, 7 DAYS A WEEK – 1-800-344-5696
2. 
Failure to report immediately a lost or stolen card could result in the employee being responsible for fraudulent use of the card.
B. 
The following information should be provided to the department head and Finance Department:
1. 
Cardholder’s name
2. 
Card number
3. 
Date reported to the police (if applicable),
4. 
Date reported to the Bank,
5. 
Last known purchases before the cards was discovered lost or stolen.
C. 
The missing card will be cancelled, and a new card number will be issued to the cardholder by the Finance Department.
A. 
Changes to cardholder’s name, work address or department assignment (i.e. moving to another department) must be reported by completing the “cardholder Account Maintenance Form” (appendix 3[1]) and forwarding it to the Finance Department. The Finance Department will submit the changes to the Bank and order a new card if necessary. The employee’s old card must be turned in to the Finance Department when a new card is delivered.
B. 
It is the responsibility of the department head to notify the Finance Department of the termination or transfer of any cardholder. The Finance Department will cancel the cardholder’s Purchasing Card. A cardholder who is transferred to another department must re-apply for a Purchasing Card with the new department head’s approval.
A. 
The department head is responsible for ensuring compliance for this policy within their department.