SECTION 271:  Purchasing Card

  Last Updated: November 2009

I.  Purpose

A.  The MSU Purchasing Card (PCard), a MasterCard® product, is designed to allow for the direct procurement of low dollar purchases by the faculty and staff through the use of a credit card. The intent is to increase efficiency by eliminating the need for small dollar requisitions, direct payment vouchers, reimbursement vouchers and petty cash funds. PCard purchases result in quicker turn around time, greater flexibility in ordering, and reduced paperwork. The PCard is to be used for purchases up to or equal to $2,500. There are restrictions with the use of the PCard (i.e. personal use, travel, radioactive material, etc.). For a complete list of the restrictions, as well as other information regarding the PCard, see http://purchasing.msu.edu/PurCard/purcard.htm.

B.  The PCard is a privilege granted to departments’ faculty and staff (excluding on-call, temporary employees, students and graduate students). It is to be used in a responsible and appropriate manner. Fraudulent or intentional misuse of the PCard will result in revocation of the credit card and/or possible criminal charges. Periodic audits of each cardholder's transaction file and monthly statement reconciliations are conducted by Internal Audit. In addition, the Purchasing Card Coordinator reviews various reports to ensure that cardholders are adhering to MSU, MasterCard® and bank policies and procedures. Questionable activity is referred to Internal Audit for further investigation. 

II.  Procedures

A.  Completion of a Cardholder Application Form, approved by an authorized signer and attendance at a PCard orientation are the only requirements for obtaining the PCard. At the conclusion of the PCard orientation, the cardholder is required to sign an agreement form stating they understand the program policies and procedures and that the credit card is not to be used for personal use.

B.  Individual transactions must not exceed $2,500 (including shipping/handling). Transactions at $2,500.01 and greater will be denied at the point of sale. It is not permissible to make multiple charges in the same day, or consecutive days, to the same merchant in order to facilitate a charge that exceeds $2,500 (with the exception of the payment of conference registration fees where a cardholder needs to register multiple attendees for the same conference). PCards have a $2,500 single purchase limit, this amount cannot be changed. Each card has a monthly spending limit that has been set by the departmental business office based on spending needs. All monthly spending limits are subject to final approval by Accounting, Purchasing and/or Contract & Grant Administration. To request an increase to the monthly spending limit, send a memo (no e-mails) signed by both you and an authorized signer on the account to the MSU Accounting Department, 360 Administration Building. Accounting will forward the approved memo to the Purchasing Card Team. The memo should include cardholder name, the account number, last four digits of the PCard and the new monthly spending limit. A monthly spending limit of $25,000 or greater requires the signature of the unit administrator (dean, director, or chairperson, or assistant/associate dean, director or chairperson).

C.  In addition to the expenditure policies outlined in the Manual of Business Procedures, certain items are strictly prohibited from being purchased on the PCard.

D.  The MSU Federal tax identification number is embossed on the bottom line of the credit card (38-6005984). It is the cardholder's responsibility as the MSU purchaser to ensure that tax is not charged. In those cases where the supplier does not accept MSU tax exempt status at the time of purchase, request the tax credit for those purchases that exceed $1,000. Contact the Controller's Office if you need further assistance convincing a merchant of MSU's tax exempt status beyond the Sales and Use Tax Exempt Status Certificate.

E.  The U.S. Treasury Department's Office of Foreign Asset Control (OFAC) maintains a list of countries with which economic trade sanctions have been imposed. The sanctions pertain to the importing and exporting goods and services to and from countries whose practices are inconsistent with U.S. foreign policy and national security. Under no circumstances should a shipment or purchase be made to or from a country that appears on the sanctioned list regardless of the funding source. Sanctioned countries are listed at http://www.treas.gov/offices/enforcement/ofac/programs/. 

Federally funded contracts further restrict purchases from certain parties who are deemed excluded from receiving federal contracts, subcontracts, etc. These individuals and/or businesses can be viewed at: http://www.epls.gov. Under no circumstances should purchases be made to these listed parties using a PCard tied to federal funds.

F.  Only the authorized cardholder may use the PCard. Delegation of authority is not permitted. Merchants require that the signature on the credit card match the signature on the receipt. Sharing the PCard with others increases the likelihood of fraud. The cardholder is held responsible for all charges made against his/her PCard.

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III. Reconciliation and Accounting

A.  The PCard billing cycle is from the 25th of the month through the 24th of the next month. Monthly billing statements will coincide with monthly fund ledgers and must be reconciled within 60 days. A Cardholder Statement of Account is mailed shortly after the close of the billing cycle. All purchases must have itemized back-up documentation supporting the expense. After the statement has been reconciled, the cardholder must sign the statement. It must then be reviewed, approved, and signed by someone administratively senior to the cardholder, or when authorized, by the unit's budget/business administrator. The unit's budget/business administrator can be authorized to sign PCard reconciliation statements on behalf of the unit providing a signature authorization memo signed by the dean, director, or chair is on file in the departmental business office. However, the delegate may not sign his/her own statement. Even though sound internal control and accounting procedures dictate that cardholders can not be the final approver/reviewer of their own statement, university policy does allow unit administrators (dean, director, or chair, or assistant/associate dean, director, or chair) or above, to do so.

B.  Each PCard is associated with one account number. PCard transactions will be reported as expenditures on fund ledgers under object code 083 with the description: PCard, with an exception of cell phone charges which will appear under object code 041.

IV.  Responsibilities

A.  Although the PCard has many built-in controls, there are certain steps that the cardholder must take to ensure the responsible use of university funds. The cardholder should become familiar with both university expenditure policies and the National Association of Educational Procurement (NAEP) Code of Ethics. Purchases made on the PCard must be in accordance with the established university expenditure policies and be made in an ethical manner.

B.  The PCard is a privilege granted by the university and it is expected that it will be used responsibly.

C.  The cardholder is responsible to retain receipts, packing slips, etc. for all PCard purchases. Receipts must be itemized. When placing an order over the phone, remind the merchant that MSU is tax exempt and an itemized receipt is required with the shipment. At the end of each billing cycle, all receipts pertaining to a particular statement must be attached to that statement and filed for audit.  Consult the departmental business office as some departments require more extensive expenditure reviews. All purchases must have itemized back-up documentation supporting the expense as specified in the expenditure policies and guidelines detailed in the Manual of Business Procedures. The cardholder is required to maintain complete files of all receipts in accordance with university retention policies (six years plus current year).

D.  The cardholder is responsible for ensuring receipt of materials as well as any follow-up efforts required to resolve delivery problems, discrepancies, damaged goods, billing problems or returns.

E.  Internal Audit, Contract & Grant Administration, or the Purchasing Department may request backup documentation on a particular transaction or group of transactions. The cardholder must provide the information by the date requested or the PCard may be suspended. Additionally, department administrators can request that a PCard be suspended or canceled at any time by notifying a member of the Purchasing Department.

F.  If the PCard is lost or stolen, it is the cardholder's responsibility to notify JPMorgan Chase and the Purchasing Card Cordinator. The credit card will be cancelled immediately, and a new credit card issued. If the PCard is stolen on campus property, contact the Police and Public Safety Department. The department/account will be liable for any charges that may have occurred prior to the PCard being canceled.

G.  There are specific duties and responsibilities for the Cardholder, Statement Approver, and Contact Person.

Cardholder Responsibilities:

1. Ensure that the university's resources are spent in a responsible and ethical manner in accordance with the Manual of Business Procedures
2. Never share a PCard; only the authorized cardholder may use the PCard
3. Be aware of prohibited items
4. Never use the PCard for personal use
5. Immediately report a lost or stolen card
6. Obtain original itemized receipts for all purchases
7. Notify the merchant that MSU is tax exempt and provide the tax ID number or Sales and Use Tax Exemption Certificate if requested by the merchant
8. Reconcile Cardholder Statement of Account within 60 days of the posting date, attach receipts and sign the statement.  The statement must then be reviewed, approved and signed by someone administratively senior to the cardholder or when authorized, by the unit's statement approver.
9. Ensure receipt of materials and resolve any delivery problems, discrepancies, damaged goods, billing problems or returns with merchants
10. Submit a Statement of Questioned Item Form to the bank for disputes that cannot be resolved directly with the merchant
11. When transferring to a new unit, notify the Purchasing Card Coordinator, in writing, of the change prior to the effective transfer date. Once in the new department the employee should submit a new Cardholder Application signed by his/her new dean, director or chair. If the cardholder transfers to a new department under the same unit, a memo can be sent to the Purchasing Card Coordinator indicating the new account number. In either case, all receipts for outstanding purchases should be turned over to the Statement Approver so the final statement can be reconciled.

Statement Approver Responsibilities:

1. Verify that the Purchasing Card Coordinator has been notified when a cardholder terminates from the university or transfers to another department
2. It is the recommendation of both Internal Audit and the Purchasing Department that an appropriate separation of duties exist. However, if the cardholder is also the same person who receives the fund ledger, it is essential that a person senior to the cardholder review and sign the Cardholder Statement of Account on a timely basis each month.
3. Memos to change the account number and/or monthly spending limit on a PCard must be signed by the authorized signer. Internal Audit requires verification of signatures for these types of changes.
4. The approver must be at least one level administratively senior to the cardholder, or have been delegated signature authority, in writing, by the dean, director or chair. A statement approver may not provide the oversight approval for his/her own statement.
5. Review all transactions and receipts and verify that they are appropriate expenditures of university funds and are in compliance with university policy
6. Completes final statement reconciliation for employees whose last statement arrives after they have left their position (the cardholder will leave all outstanding receipts with the statement approver in this case)
7. Attend a cardholder orientation session in order to better understand the program and ensure compliance

Contact Person Responsibilities:

1. The contact person receives and distributes to the cardholder his/her monthly Cardholder Statement of Account and a copy of the monthly cover letter
2. When a cardholder leaves the department or terminates from the university, verify with the statement approver that the Purchasing Card Coordinator has been notified
3. Advise the Purchasing Card Coordinator of any address changes for cardholders
4. The contact person must attend a cardholder orientation regardless of whether they are a cardholder or not

V.  Audits

A. Internal Audit, Contract & Grant Administration, and/or the Purchasing Department will conduct periodic audits of cardholders' transaction files and monthly statements. Additionally, the Purchasing Card Coordinator performs compliance reviews to ensure that PCard procedures are being followed properly. Questionable transactions will result in a letter to the cardholder requesting detailed information on specific purchases. If the activity still appears questionable after receiving the cardholder's explanation, a follow-up letter is sent to the cardholder and copied to the appropriate dean, director or chair as well as Internal Audit. The cardholder must provide the information by the date requested or the PCard may be suspended. The university will seek restitution for any inappropriate charges made to the PCard. Fraudulent or intentional misuse (including the use of the PCard for personal purchases) will result in revocation of the PCard, possible criminal charges and discipline up to and including termination.

B.  All administrators, faculty members, support staff, and other employees should promptly report any known or suspected fiscal misconduct by contacting the director of Internal Audit at http://www.msu.edu/unit/intaudit/hotline.html or by phone (517) 355-5036. The university has also established a toll-free hotline (800) 763-0764 that can be used to anonymously report known or suspected misconduct.

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