Writing Control Procedures Part 3

Feb 10th 2009
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By Dave Burt, CPA -
Ok, where are we? Oh, yeah, the owner gave me the job of writing control procedures. The first thing I did was load a bunch of templates that I ordered online from Copedia. To get an idea, here are the main headings for the account payable procedures:

Accounts Payable Procedures
General Accounts Payable Guidelines
Segregation of Duties
Approval Authority
Disbursement Approval Procedure
Expense Types
Interim - Manual Checks
Existing Vendors
New Vendors
Setting up and maintaining Vendors in the Computer
Receipt of Invoices
Matching Purchase Orders with Invoices
Subcontract Pay Requests
Employee Expense Reimbursement
Entertainment Reimbursement
Non-Employee Expense Reimbursement
Coding and Entering Invoices

Here is an except for the section Matching Purchase Orders with Invoices:

Matching Purchase Orders with Invoices

Payment of invoices authorized by a company purchase order will require an original vendor invoice, and delivery slip (if applicable).
The accounts payable specialist will compare the invoiced price, quantity, and terms to the ordered price, quantity, and terms in order to identify discrepancies.
The Accounts Payable specialist may approve Price discrepancies of $10.00 or less. Price discrepancies of $11.00 to $100.00 over the purchase order total require approval of the purchasing manager. A Price discrepancy greater than $100.00 requires the generation of a Discrepancy Form and that must be approved by the department and the Controller. All quantity discrepancies require the generation of a discrepancy form. Any discrepancy that involves loss of discount or additional payment of funds will require generation of a discrepancy form.

This template gives you a more or less traditional approach to this process keeping in mind best practices. You can customize it to agree with your practice. If you don’t, but do want to use purchase orders, it gives you the basics of the process.

I went through the temples and picked out and modified each template that either directly controlled assets such as bank deposits, petty cash, etc., or indirectly: customer master files, vendor master files, etc.

Here is an example of one I completed:

DATE ISSUED: 10/08/2008
PURPOSE: The purpose of these procedures is to provide guidance in the use of Company credit cards.
1. Company credit cards are only to be used for purchases made on behalf of the Company, or to pay travel and entertainment expenses incurred on behalf of the Company and authorized under Company policy. (See: Procedures for Reimbursement of Business Related Expenses, Section E-1)
2. Only Cardholders are authorized to use Company credit cards, and the right to use company credit cards should generally not be delegated.
3. Cardholders are responsible for all use of their Company credit cards.
4. All purchases and charges using a Company credit card must comply with all company purchasing, purchase order, travel, and accounts payable policies and procedures. Charges for meals, hotels, transportation, and the like must be supported by an approved Monthly Expense Report in Excel format submitted by the Cardholder. (See: MONTHLY EXPENSE REPORT FORM NO. E101)
5. Company credit cards should never be used to obtain cash advances, except in case of an emergency.
6. Company credit cards should not be used for personal purchases or for identification.
7. Cardholders are responsible for retaining the documentation necessary for proof of purchase. This includes the invoice, shipping documents, and "Customer Copy" of the charge receipt.
8. Cardholders should review all items and flag any item on their portion of the monthly credit card statement that is not reported on their Monthly Expense Report(s) and, if there is a discrepancy, said statement should be returned to Corporate Accounting.
9. Any listed expense which is not covered in the Monthly Expense Report requires a written explanation, which should include the vendor's name, date, description of purchase, business purpose, and reason support is missing.
10. Returns are the responsibility of the Cardholder and should be noted on the Company credit card statement.
11. Disputes must also be noted on the Company credit card statement and supported by any documentation supporting the Cardholder's position.

The links lead either to forms or menu shots that helps the reader to follow the process. Many of the templates were ignored completely if our current process was too different. However, the format was the same for each procedure.


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By Stephen M Musco
Jun 25th 2015 20:11 EDT

I am the CFO for a small nonprofit that uses credit cards to provide assistance to our clients who are in danger of becoming homeless. The program has grown due to Federal funding. The credit limits run out quickly. Management is reluctant to increase them which I do not disagree. Also CEO is personally liable. Any ideas?

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