(a) Purchase Order.
(1) Ohio R.C. 5705.41 states that no contract or orders involving the expenditure of money may be made unless the fiscal officer has certified that “the amount required to meet the obligation has been lawfully appropriated for such purpose and is in the treasury or in the process of collection to the credit of an appropriate fund free from any previous encumbrances.” The vehicle to present this certification is the purchase order.
(2) Any contract made without this certification shall be void and no warrant shall be issued in payment. The only exception to this comes under the provisions of a “then and now” certificate. Basically this provision allows for the legislative body to approve a purchase order after the goods or services have been purchased if two conditions have been met:
A. There were appropriations to cover the payment at the time the contract or order was placed, and
B. Currently there are appropriations to cover the payment. If the order is for one thousand dollars ($1,000) or less, the fiscal officer may authorize the expenditure.
Otherwise, the legislative body must authorize the expenditure.
(3) The process of using purchase orders not only facilitates the ordering of the merchandise or services, it is also a part of the budgetary process. The amount of each purchase order shall be posted to the proper appropriation ledger pages(s). This is known as “encumbering” or “setting aside” a portion of the appropriation. The fiscal officer’s certificate appears on the bottom of the purchase order. This states that the funds are available and/or in the process of collection. This means that the legislative body has appropriations and the cash to pay for this purchase or the money is estimated to be collected. This posting of the purchase order reduces the amount of available appropriations. When an appropriation account reflects zero, no purchase orders should be entered into until the taxing authority increases that account’s appropriation.
(4) Each purchase order should provide the following information:
A. Purchase order number (consecutively numbered)
B. Requisition number (if applicable)
C. Date.
D. Name of local government.
E. Name of vendor.
F. Account code.
G. Quantity, unit description, price per unit, and amount.
H. Name and title of person authorizing purchase order.
I. Destination.
J. Method of shipment.
K. Fiscal officer’s certification.
(5) There are two types of purchase orders, regular and blanket, as described below.
(b) Regular Purchase Order. A regular purchase order is issued when a purchase order of specific items is planned. A regular purchase order is done to issue orders for payment, and make contracts or obligations calling for or requiring the payment of money made for specified permitted purposes from a specific line item appropriation account in a specified fund for a sum of money exceeding five thousand dollars ($5,000) upon that certification by the fiscal officer that this sum of money has been lawfully appropriated, authorized, or directed for a permitted purpose and is in the treasury or in the process of collection. These purchase orders are usually for specific expenditures that are recurring and are reasonably predictable operating expenses for the current year. More than one such purchase order may be outstanding at any time. An example of such a purchase would be the entity’s telephone expense for the year. If a purchase order is issued at the beginning of the year for the current telephone expense, then the certificate of availability of funds would set aside the amount from the appropriate appropriations at that time for this specific expense.
(c) Blanket Purchase Order. A blanket purchase order is used to purchase a variety of items over a period of time. The maximum length of time a blanket purchase order can be outstanding is three months or until the end of the fiscal year, whichever comes first. The maximum amount of the blanket purchase order is five thousand dollars ($5,000) per appropriation account. Blanket purchase orders can be issued to a variety of vendors or a specific vendor. A blanket purchase can be issued for up to three months for a specified amount under five thousand dollars ($5,000). The purchase order would be encumbered against the appropriate account. The dollar amount should be based on an estimate of what will be needed. If the purchase order is depleted before the time element has expired, a new blanket purchase order may be issued. A blanket purchase order should be labeled as such and state the effective dates and maximum dollar amount.
(d) Order and Recording the Purchase.
(1) The purchase order, once given to a vendor, not only constitutes an order to pay: it is a record to compare to an actual shipment of materials and a document which, when accompanied by an invoice from the vendor, will authorize the fiscal officer to prepare a voucher for the purchase.
(2) Once a purchase order is approved and signed by the appropriate officials, the following copies will be distributed.
A. The original copy is mailed or hand-carried to the vendor.
B. The second copy is filed in an “Open Purchase Order” file in the fiscal officer’s office.
C. The third copy, used as a “receiving” copy, is given to the department user for his or her use in comparing the purchase order with the actual materials or services.
(3) Upon receiving the actual materials or services ordered by the purchase order, the requesting department will check the shipment against the receiving copy of the purchase order and inform the fiscal officer:
A. If the shipment is complete, the requestor will indicate such on the receiving copy of the purchase order and forward that copy to the Fiscal Officer.
B. If the shipment is only partial, the department will indicate on the receiving copy those items received and mark the copy as a partial shipment. The copy may then be forwarded to the fiscal officer to authorize partial payment; however, the original must be returned to the requesting department for subsequent documentation of receipt of final shipment.
(4) Upon receipt of the receiving copy of the purchase from the requesting department, the fiscal officer will match the receiving copy with its corresponding in the open purchases order file. These copies are then refiled until receipt of the vendor’s invoice.
(e) Payment of Invoices.
(1) When an invoice is received by the fiscal officer for goods or services, the fiscal officer will compare the copies of the purchase order with the invoice. No invoice will be paid without a corresponding purchase order confirming receipt of the goods or services. No vendor will be paid from a periodic “statement” nor from a duplicate invoice to assure that the proper amount is paid and no duplicate payments are made.
(2) When the fiscal officer has matched the invoice to a purchase order, he or she will compare the amount of the invoice with the amount of the purchase order. If the invoice billing is greater than the purchase order authorization and the purchase order amount was derived from a firm quote by the vendor, the fiscal officer must consult the vendor to determine the reason for the difference and have the legislative authority approve the difference before a voucher is written.
(3) The fiscal officer will create a voucher to be attached to the receiving copy of the purchase order, the invoice, bill of lading, etc., with the expenditure posting detail written on it. Until payment, this voucher will be filed in an “Open Voucher” file.
(4) If the voucher is over one thousand dollars ($1,000) the fiscal officer must forward the voucher and attached documents to the legislative authority for approval. The fiscal officer will present the voucher to the legislative authority for approval, in a public meeting on the 2nd and 4th Thursday of each month. If an emergency situation arises and approval is needed before a public meeting, a special session of Council can be called.
(5) After approval from the legislative authority the fiscal officer will record each in the disbursement journal and the appropriations ledger. The following information will be recorded on both the journal and the ledger.
A. The date the check was issued.
B. The payee’s name.
C. The original purchase order number.
D. The amount of the check.
E. The amount of that check will also be recorded in the proper fund’s column portion of the cash journal, which is used to record each fund’s cash balance.
(6) In addition, indication that the check has been written should be made to the original purchase order entry on the purchase order register by writing the check number on that entry.
(7) Once the check has been recorded and sent, the receiving copy of the purchase order is to be attached to the voucher and filed by the check number. The “Open Purchase Order” file copy of the purchase order is filed in a “Closed Purchase Order” file, by the purchase order number.
(f) Purchase of Continuing or Contractual Services.
(1) A separate purchase order for contractual services will be initiated at the time a contract is entered into by the City. The purchase order will show the title and date of that contract and the amount appropriated for that contract during the fiscal year. If the contract carries beyond any fiscal year, a new purchase order should be initiated for the new fiscal year. All payments for invoices under the contract will then be associated with this purchase order number.
(2) Each month, upon receiving a bill and confirming the existence of adequate cash and unencumbered funds, the fiscal officer will prepare a voucher for the amount of the bill for these contractual services.
(g) Purchase of Capital Assets. When a purchase order is initiated for the purchase of capital assets out of the permanent improvement fund, City Council must first approve the purchase of all capital assets prior to purchase, even though there may be appropriations to cover the purchase. This allows Council to be aware of purchases made by the City.
(h) Emergency Situations. When an emergency situation arises, that could be life threatening to the citizens of Uhrichsville, the Mayor at his discretion can enter into a contract or agreement to stabilize the situation.
(i) Responsibilities. All employees, elected officials, and appointed officials of the City are required to follow the purchase policy. Any purchases of goods or services without proper authorization, which states in this policy, will not be paid for by the City.
(Ord. 2-03. Passed 2-27-03.)