Procedure 7.3.3 Purchasing Cards
Chapter 7 - General Finance Provisions
for Board Policy 7.3
Part 1. Authority
Board Policy 7.1, Authority, delegates to the chancellor authority to develop procedures and guidelines to implement Board policies.
Part 2. Purpose. Purchasing cards provide the college, university or system office with a cost-effective, convenient and streamlined method of purchasing items, thereby reducing the volume of individual vendor payments processed by the institution. Reports on cardholder activity enable the institution to capture information necessary to better manage institutional purchasing activities.
Part 3. Definitions.
Subpart A. Purchasing Card. Purchasing card means either an individual card or fleet card, as defined below.
Subpart B. Cardholder. Cardholder means a state employee who is issued an individual card and agrees to abide by this procedure and any additional procedures established by the issuing college, university or system office. Contractors, contract employees, and student workers are ineligible to be cardholders but may be authorized to use fleet cards.
- Individual card. An individual purchasing card is a card in the name of a college, university or system office and in the name of a state employee in which the institution is liable to the card issuer for all charges made in connection with the purchasing card issued to the individual.
- Fleet Card. Fleet card means a purchasing card in the name of a college, university or system office assigned to a specific state-owned or -leased vehicle in which the institution is liable to the card issuer for all charges made in connection with the purchasing card. A fleet card may be used for appropriate purchases by any individual authorized to use the vehicle to which the card is assigned. Vendor-specific gasoline cards are prohibited. Use of a fleet card program that manages all tax exemptions is encouraged.
Subpart C. Card administrator or coordinator. The individual within the college, university or system office who coordinates the Purchasing Card program for the institution and acts as the institution's intermediary in correspondence with the card issuer.
Part 4. Procedures for Obtaining a Purchasing Card.
Subpart A. Procedure. A college, university or system office may establish a purchasing card in the name of the college, university or system office with a financial institution provider (card issuer) for official college, university or system office business use only. No retail store or vendor-specific cards are permitted. The college, university or system office must receive monthly statements from the financial institution provider.
Each college, university or system office using a financial institution provider shall establish procedures and forms for implementing and monitoring a purchasing card program that includes, but is not limited to, the following:
Subpart B. Encumbrance. Each college, university and the system office is responsible for encumbering the funds for its purchasing card purchases. Funds must be encumbered prior to incurring the obligation; an institution may annually encumber funds for the purchasing card program.
- A dollar limitation on the purchasing card;
- A dollar limitation of purchasing authority assigned to the cardholder per transaction made with the individual purchasing card;
- A dollar limitation of purchasing authority assigned to the individual cardholder for the total of all charges made during each monthly billing cycle;
- Merchant category blocking.
Subpart C. Delegation of Authority. Each cardholder must be specifically delegated the authority to obligate the issuing college, university or system office to the specific dollar limit of the purchasing card. This delegation requires ongoing compliance with applicable statutes, rules, and board policies. See System Procedure 1A.2.2, Delegation of Authority.
Part 5. Authorized Card Use. Purchasing cards may be used to purchase eligible merchandise or services required in association with the duties or responsibilities of the cardholder or fleet card user at the college, university or system office. Unauthorized and inappropriate card use is addressed in Part 6 of this procedure.
A purchase made with a purchasing card may be made in-store, by U.S. mail or by electronic means such as telephone, fax or internet.
Part 6. Unauthorized and/or Inappropriate Card Use. Purchasing cards are not to be used to purchase items for personal use or for non-college, non-university or non-system office purposes, even if the cardholder or fleet card user intends to reimburse the college, university or system office.
A cardholder or fleet card user who makes an unauthorized purchase with the card or uses the card in an inappropriate manner may be subject to disciplinary action, up to and including termination, as well as revocation of the purchasing card, criminal prosecution, and restitution of the unauthorized use.
Subpart A. Prohibited use. Cards are not to be used for purchases in the following categories:
Subpart B. Use allowed only when specifically authorized. Specifically authorized cards may allow for purchases listed in this subpart that comply with applicable system procedures, and any applicable grant agreement. In all cases, prior approval for the expenditure must be received using the special expense process:
- Food and beverages for an individual employee;
- Alcoholic beverages;
- Cash or cash advances;
- Items for personal use;
- Employee relocation expenses;
- Expenses required to be reimbursed under System Procedure 5.19.3, Travel Management (including gasoline for personal vehicles);
- Sensitive items as defined in System Procedure 7.3.6, Capital Assets (including weapons of any kind); or
- Items for non-college, non-university, non-system office purposes.
Subpart C. Gasoline and vehicle-related expense. A fleet card may be used only to pay for vehicle expense related to the specific state-owned or -leased vehicle to which it is assigned. All merchant types other than service stations must be blocked from card usage. No personal use is permitted.
- Travel-related expenses (by cardholder). An authorized card may be used for all travel-related expenses of the cardholder except food and beverages. Examples of allowable expenses include: airfare, room and related taxes, vehicle rental, gasoline for a rented vehicle and parking while in travel status.
- Travel-related expenses (for persons other than cardholder). Authorized cards may allow for a cardholder to make arrangements for transportation or lodging for another individual or group of individuals.
- Food and nonalcoholic beverages for members of athletic teams.
- Food and nonalcoholic beverages for student activities that will be paid for with student activity funds in compliance with system and institution procedures.
- Food and nonalcoholic beverages for business meetings. Parameters for food and beverages at business meetings are set out in System Procedure 5.20.1, Part 2, subd. C, paragraphs (1), (2), (4), (5), (6), (7), Special Expenses.
- Food and nonalcoholic beverages that will be paid for with grant funds if allowed by a grant agreement.
- Conference and seminar registration.
- Entertainment and recreation. Use of purchasing cards for entertainment and recreation is prohibited except that authorized cards may allow for entertainment and recreation purchases for
i. student activities that will be paid for with student activity funds;
ii. activities that will be paid for with grant funds as authorized by the grant agreement; or
iii. academic activities that will be paid for with course fees.
Each institution shall establish a control method to track vehicle use and fleet card use. A driver or pilot authorized to use a fleet card is personally liable for any unauthorized use of the fleet card made during the time the driver or pilot is authorized to use the vehicle.
Subpart D. Late fees and finance charges. Late fees which occur because the cardholder did not submit a monthly statement and required documentation to the business office in a timely manner are the responsibility of the cardholder. Cardholder must reimburse the institution within one billing cycle from the date of the late fee or finance charge. Reimbursement may be made by cash or personal check to the business office. If payment is not received within one billing cycle, the card will be canceled and no new card will be issued until the fees and finance charges have been repaid in full.
Subpart E. Returns and exchanges. If any item purchased with a purchasing card is unacceptable or not allowable, arrangements must be made for a return for credit or an exchange whenever feasible. A cash refund or check is prohibited unless the vendor insists that a refund must be by cash or check. In such cases, the funds must be deposited immediately with the college, university or system office. If a refund is issued in the form of a check, the check must be payable to the institution.
Part 7. Responsibility and Accountability
Subpart A. Cardholders and fleet card users. Each individual cardholder or fleet card user has the following responsibilities:
- Safeguard the purchasing card and card account number at all times; lost or stolen purchasing cards must be reported immediately in accordance with college, university or system procedure.
- Keep purchasing card in a secure location at all times.
- Do not allow anyone else to use the purchasing card or card account number.
- Obtain and retain original itemized receipts for goods and services purchased. All forms of canceled checks and copies of purchasing card bills do not substitute for original receipts. A card user may be allowed to file an affidavit in lieu of a receipt if the original receipt is lost or a receipt is not obtained. All credits, including returns, must be documented with itemized receipts referencing the original purchase and purchase date.
- In a timely manner, review individual card monthly statements from the financial institution provider for accuracy and ensuring all transactions posted are legitimate transactions made by the cardholder. Receipts or packing slips and the customer's copy of the charges must be attached to the monthly statement. The authorized user of the purchasing card must sign the statement that the goods or service have been received. A time period of five days is considered a timely review and submission.
- In a timely manner, submit the individual card statement and documentation to the business office for payment processing. For fleet cards, complete necessary purchase documentation log or submit receipts in accordance with institutional policy.
- Surrender the individual card and corresponding support documentation to the Card Administrator or Coordinator prior to separation from the college, university or system office or as otherwise requested. For fleet cards, ensure card is returned or stored in accordance with institutional procedure.
- Take any other steps necessary to ensure that the purchasing card is used only for authorized purposes.
Subpart B. Supervisors. Supervisors of cardholders are responsible for reviewing cardholder expenses and ensuring compliance with this procedure and any applicable college, university or system office procedures. Supervisors' duties include:
- Approving employees for participation in the purchasing card program.
- Reviewing purchases to ensure they meet objectives and are within restrictions placed on the card.
- Reviewing purchases to ensure card has not been used for unauthorized or inappropriate purchases.
- Responding to any misuse of the card by cardholder.
- Ensuring closure of purchasing card at time of employee's separation from employment or removal of purchasing card authority.
Subpart C. Audit. The college, university or system office shall conduct periodic reviews for proper card use. Purchasing card records are subject to audit from time to time.
- Policy 7.3 Financial Administration
- Procedure 7.3.1 Accounting and Payroll
- Procedure 7.3.2 Auxiliary Operations
- Guideline 126.96.36.199 Auxiliary Fund Accrual Financial Statements and Multi-year Financial Planning
- Procedure 7.3.4 Cost Allocation
- Guideline 188.8.131.52 Cost Allocation and Implementation
- Procedure 7.3.5 Revenue Fund Management
- Procedure 7.3.6 Capital Assets
- Guideline 184.108.40.206 Capital Leases Involving Tax-Exempt Interest
- Procedure 7.3.7 Impairment of Capital Assets
- Procedure 7.3.12 Scholarships
- Procedure 7.3.13 Surplus Personal Property/Building Disposal
- Procedure 7.3.16 Finance Exception Reporting
- Procedure 7.3.17 Electronic Payments
- Guidelines for 220.127.116.11 Guideline for Payment Card Acceptance, Processing and Security
- Policy 7.1 Authority Board
Date of Implementation: 1/18/02,
Date of Adoption: 1/18/02,
Date & Subject of Revisions:
1/25/12 - The Chancellor amends all current system procedures effective February 15, 2012, to change the term "Office of the Chancellor" to "system office" or similar term reflecting the grammatical context of the sentence.
12/08/10 - Revised to reduce the number of audit findings related to non compliance with system procedure by bringing the procedure in line with business practices preferred by campuses while maintaining appropriate controls.
07/09/09 - Amended Part 7, Number 5, giving a five day time period for review and submission. Corrected "Office of the Chancellor" title and spelled out Minnesota State Colleges and Universities throughout the procedure.
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