ACCOUNTS PAYABLE

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ACCOUNTS PAYABLE

• GENERAL POLICIES
• and
• PROCEDURES
• Part A

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ACCOUNTS PAYABLE

• Monitors University Disbursements
• Over 1.5 million transactions annually
• Ensures compliance with University policy and
  governmental regulations
• Commitment to Service

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Accounts Payable

• Reviews and disburses payments in a timely
  effective manner
• Ensures that only valid, appropriate and
  DAF-approved invoices are paid by the University
• Ensures that payments and employee reimbursements
  are in full compliance with University and
  governmental regulations
• See
• www.finance.columbia.edu/hr/resources/APparta
  policiesandprocedures.
• ppt

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Accounts Payable

• Issues stop payments and voids
• Manages the American Express Corporate Card and
  Citibank Diners Club programs
• Reports 1099-MISC. payments to the IRS

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Why monitor costs?

• Sound business practice, ensures the on-going
  financial health of the University
• Good public relations
• Compliance with federal
• guidelines

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ACCOUNTS PAYABLE

• For Up-to-Date Accounts Payable Policy
  Information

http//finance.columbia.edu/procurement/ap/index.
html
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The Life of a University Expense
Request gt Approval gt Order gt Invoice gt Process gt
Approval gt Payment
Check Produced

• Your
• Department

Accounts Payable
Purchasing
Approval
Vendor
AP / CAR
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Departmental Responsibilities

• Retain copies of AP invoices, purchasing
  documents and journal transfer documentation for
  a minimum of 4 years (Exception EDM)
• Retain copies of general financial records and
  restricted funds for 7 years from the end of
  grant or contract.

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UNIVERSITY COMPLIANCE RULES

• Compliance is everyones responsibility
• The importance of University and Federal
  compliance cannot be understated and remains of
  the highest importance to the University
• Attention to compliance regulations should be
  rigorous at every level

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The Role Responsibilities of the Departmental
Processor

• Understands the nature of each expenditure
• Checks the completeness and accuracy of
  accounting
• Inputs expense reports into AP/CAR and selects
  appropriate approvers
• Segregates unallowable expenses to an 8500
  sub-code
• Ensures that all supporting documentation is
  provided

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The Role Responsibilities of the Designated
Approver (DAF)

• Understands nature of the expense
• Completeness of documentation and accuracy of
  accounting
• Segregation of unallowable" expenses
• Compliance with University policy and funding
  agency regulations
• Absence of a conflict of interest (employees
  duty and responsibility to conduct business
  matters solely for the benefit of the University)
• Appropriateness of expense and availability of
  funding

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Role Responsibilities of AP

• Process DAF approved expenditures and prepare and
  issue timely payment to the vendor or employee.
• Image and archive all original documentation
  related to the expenditure.
• Perform audits of expenses to verify
• Compliance with University policy
• Completeness of documentation and accuracy of
  accounting
• Segregation of allowable expenses
• Assist with policy procedure guidance and
  approval of exceptions

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Compliance with Federal Regulations

• Unallowable or Segregated expenses
• NO government funds are to be used to pay for
  Unallowablesor Segregated expenses, that is,
  expenses characterized by the Federal Government
  as frivolous
• The terms "unallowable" or "segregated" do not
  mean that the expenses are not reimbursable, but
  that they must be charged to a series 8500 sub
  code.
• Costs not clearly related to University business
  (e.g. alcohol, flowers, chocolate, entertainment)
• Excess expenses over policy thresholds

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Expectations of a 501(c)3 Organization

• The University is supported by
• IRS taxpaying public (tax exemption)
• Donors
• Students
• Granting Agencies

We must be careful stewards of these
funds! (Remember the front-page test)
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Honorarium Payments

• An honorarium is an expression of thanks from
  Columbia University and is not negotiated with
  the recipient. It is defined as a gratuitous
  payment provided to a lecturer or a professional
  person from outside the University community (not
  a University faculty or staff member). It is
  taxable income and is reportable to the Internal
  Revenue Service if over 600 annually.
• Payment is made by a Check Request

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Compliance w/Federal Regulations1099 Reporting
and 1099- MISC Form

• IRS regulations and University policies require
  reporting of various additional or misc.
  disbursements to individuals, such as gifts,
  awards, honorariums, etc.
• The Form 1099-MISC is used to report payments
  made to a person or business that is not being
  paid as an employee of Columbia University. 
  These payments are called non-employee
  compensation.  Form 1099-MISC is required when
  total payments for the year exceed 600.  The
  Form is provided by the University to the IRS and
  to the person or business that received payment. 
  It will be mailed to recipients by January 31st
  of the following year.

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1099 are issued for the following type of
payments when the annual exceeds 600
Form 1099 continued..

• Prizes
• Gifts
• Awards- Honoraria
• Independent Contractors
• Consultants
• Sub Contractors
• Non Employees
• Employees providing service outside of the their
  regular duties/hours
• Study Subjects
• Study Participants
• Patient Donors
• Partnership
• LLCs
• Payment for Rent and Royalties
• Payment for Medical Services

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1099 Tips

• The IRS requires that Columbia University have a
  Taxpayer Identification Number (TIN) on file for
  every person or business that receives a
  reportable or taxable payment
• A TIN van be any of the following a Social
  Security Number (SSN) an Individual Taxpayer
  Identification Number (ITIN) or an Employer
  Identification Number (EIN)

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DEPARTMENTAL EXPENDITURES

• INVOICES for equipment and services
• CHECK REQUESTS for payment of goods and services
• PETTY CASH usage and replenishment
• PAPERLESS transactions
• TRAVEL and BUSINESS expenses to be reimbursed

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Departmental Expenditures Basics

• Know proper account and sub-code to charge
  expenditures against (See FFE for sub-code list)
• Follow proper procedures when paying invoices
  from restricted accounts.
• See Finance Gateway for Restricted Funds Policies
  and Procedures or visit web link
• http//finance.columbia.edu/controller/resource
  s/admtrainrf.ppt282,5,Administrative Training
  Restricted Funds Division Funding Sources

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Questions to ask yourself before paying for ANY
expenditure

• Is there a clear business reason? (Please write
  out the business reason on the documentation if
  its not obvious.)
• What are we paying for? Were the goods received
  or was the service satisfactory?
• Do I need original documentation, receipt or
  backup?

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Questions to ask yourself before paying for ANY
expenditure (cont.)

• Is the amount owed correct? Are there taxes
  included for which CU, as a non-profit, is
  exempt?
• (CU does not pay NY or NJ Sales Tax. See
  Glossary of AP for more info)
• Is the amount necessary reasonable? Will it
  bear scrutiny from a third party?

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Questions to ask yourself before paying for ANY
expenditure (cont.)

• IS THIS PAYMENT CONNECTED TO A PURCHASE ORDER?
• You should be thoroughly familiar with
  University Purchasing Guidelines regarding the
  ordering of supplies, equipment, restricted
  substances, hazardous materials, upholstered
  furniture, payments to consultants, etc.

Refer to the Purchasing Office website for more
info http//www.columbia.edu/cu/purchasing/
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What is a Purchase Order?

• A Purchase Order (PO) can only be issued by the
  Purchasing Office. It is used to place larger
  orders with vendors
• (example materials, parts, supplies, equipment,
  repairs, services, construction)
• And represents a legal contract between the
  University and the vendor.
• carry standard terms and conditions designed to
  protect the University in the event of a problem
  with the purchase.

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Purchase Order example

• Dept Identifies the need
• Ex. New copier for EDM

Accounts Payable reviews Invoice and, upon
final approval, issue payment to vendor
Dept determines that a PO is required
Dept. receives invoice And approve payment Via
APCAR
Dept creates and releases All prior and DAF
approval for requisition using FFE
Dept. receives goods And services
Purchasing uploads Requisition electronically
Purchasing Automatically transmits approved PO
to vendor And sends PDF copy Of PO to Dept. via
email
Buyer analyzes Requisition and any Backup
documentation And approves PO issuance
Buyer sends Confirmation email to Dept.
Purchasing receives Documentation and a
Requisition is assigned To appropriate buyer
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What is an EZPO?

• The EZPO gives departments the ability to issue a
  Purchase Order to a vendor for a small purchase
  without involvement of the Purchasing Office.
  EZPO's are sent directly to the vendor by the
  department.
• EZPO's may be used for purchases of goods,
  services and equipment of up to 2,500, where a
  central Purchase Order is not required.

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What is a P-card?

• The P-Card issued by Bank of America, can be
  used to for business-related, small-dollar
  purchases under 2500 including
• Subscriptions
• Lab and medical supplies
• Conference Registrations
• Professional Memberships
• Books
• Cell phone, paging, and answering service bills
• The P-Card cannot be used for
• Travel expenses (hotel, airfare, meals etc.)
• Florists
• Personal Purchases of any kind
• Preferred vendors should be used whenever
  possible
• Please contact pcard_at_columbia.edu for further
  information

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When is Neither a Purchase Order nor an EZPO
Required?

• In the case of the following purchases,
  neither
• an EZPO nor a PO is required
• honoraria, postage, registration fees,
  membership dues, subscriptions, books, reprints,
  printing services, short term rentals,
  advertisements, food, and utility bills
• Otherwise, (except for P-Card prepay
  purchases or Corporate Express orders) you should
  obtain a purchase order (Regular PO or EZPO) for
  ALL other purchases prior to submitting invoice
  or reimbursement to AP.

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INVOICESTypes

• Company Invoices for equipment and services
• Phone and credit card Bills
• Letter-type Invoices
• Monthly Service Agreements
• Sub-Contract Payments
• Check Requests
• Travel Business Expense Reports
• Paperless Invoices

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INVOICESAn example

• A Company Invoice
• Can you find ?
• Invoice
• Invoice date
• Total amount
• Location of Voucher
• P.O

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InvoicesWhat to look for

• Only pay CURRENT ACTIVITY
• Only pay from an ORIGINAL INVOICE
• ( FAX copies are okay)
• Make sure payment goes to the CORRECT ADDRESS
• i.e. Remit to or Make Checks Payable to
  vendor address

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InvoicesWhat to look for

• Is the BILLING ADDRESS on the invoice, in fact,
  Columbia University?
• If not, why are we paying for it? Document the
  reason.
• If the payment is a REIMBURSEMENT, why isnt CU
  paying the vendor directly? Provide a detailed
  explanation of the emergency circumstances.

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InvoicesWhat to look for

• Know the correct INVOICE NUMBER types include
  number generated
• By VENDOR
• As per CHECK REQUEST
• As per TRAVEL Business Expense Report/Advance
• By AP/CAR using ACCOUNT NUMBER
• BY AP/CAR using AMOUNT
• As per authorized LETTER with DATE

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Credit Amounts from Vendors

• Processed as a Credit Memo in AP CAR
• Usually resembles an invoice in every respect
  except that the gross amount is a credit to the
  University, not a request for payment (debit).
• DO NOT simply subtract credits from
• future orders

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Urge Vendors to Sign Up for DIRECT DEPOSIT
Payments

• Provides faster access to funds
• Eliminates need for Check Pick Up
• Payments cant get lost in the mail
• Easy sign-up on the AP Website (http//www.finance
  .columbia.edu/procurement/ap/ap_services-programs/
  direct_deposit.html)
• To sign up, vendors submit a completed Direct
  Deposit Form (one is for members of the
  University community and the other is for
  non-University vendors)
• Separate set-up from Payroll Direct Deposit
  required

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Corporate AMEX Charge Card

• A convenient method of paying for
  University-approved travel and business-related
  expenses. Any full-time officer with a salary
  greater than 20,000 may apply.
• For most employees, the card eliminates the need
  for travel advances.
• Use it to purchase an airline ticket for a
  business trip at least a month in advance and
  obtain reimbursement before the trip.

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Corporate AMEX Charge Card

• Supplies and equipment should be billed directly
  to Columbia University and processed through AP,
  not charged on a corporate card.
• The University will not pay the corporate charge
  card company directly

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CHECK REQUESTS
Invoice No. R
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Filling out Check Requests

• Separate out charges as per account and
  appropriate sub-code
• Use Description of Services to explain purpose
  of charge. Include
• Dates of services
• Appropriate reference numbers
• (i.e. PC )
• Affiliated names
• Brief explanation of goods/services rendered
• For Check Pick-up Please Call
• Information communicated in AP CAR
• (No need to fill out special instructions on
  form.)

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CHECK REQUESTSWhen to use

• Description of payment needed
• Document for Invoice
• Subscriptions and Memberships
• Honorarium
• Non-Employee Business Expense
• Petty Cash (CU)
• NOTE Pay Consultants via invoices if possible

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Check RequestsDescription of Payment Needed

• Some charges need additional explanation. In
  these cases, you can use a Check Request as an
  invoice cover sheet so that payment reasons are
  made clear.
• Be sure to attach pertinent back-up documentation.

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Check RequestsDocument for Invoice

• If you only have a letter from the vendor, but no
  invoice number and no account number
• Summarize charge and attach vendor letter
• If you have no documents from the vendor
• Explain charge and produce DAF authorized back-up
  letter

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Check RequestsTo pay Subscriptions and
Memberships

• Use Check Request if publication does not provide
  a numbered invoice
• Enter pertinent information in Description of
  Services section, such as name of recipient,
  title of publication, dates of renewal, etc.
• When processing, above description will be
  entered into a data field in AP CAR so vendor can
  identify payment
• Attach basic documentation

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Check RequestsTo pay an Honorarium to US Citizens

• Summarize charge
• Include Payees name, home address and social
  security number
• Attach honorarium approval memos and/or other
  documentation (i.e. flyer from event)
• Include a W-9 form completed by the payee
• Honorariums to Non US Citizens handled by HRPC

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Check RequestsReimburse Non-Employee Business
Expenses

• For Non-University guest lecturers, consultants,
  prospective employees
• or students
• Include Payees name, home
• address and social security number
• Attach receipts and backup documentation
  (including flyer from event)
• Must comply with all University expense
  reimbursement policies

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Check RequestsPetty Cash Reimbursement

• The Basic Concept
• a small cash fund, monitored by DAF, to be used
  when normal invoicing procedures are not
  practical
• When to Use
• for University faculty, students and staff only
• business expenses 80 or less
• for necessary and reasonable emergencies
• research subject cash payments (see Institutional
  Review Board (IRB) regulations for additional
  requirements)
• Local carfare, parking and tolls

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Petty Cash

• Department must demonstrate a true business need
• Each department may establish a Petty Cash fund
  up to 500
• Special circumstances that require funds greater
  than 500 must be approved by the Deputy
  Controller, Financial Accounting
• Send a check request with a letter of explanation
  to the Deputy Controller, Financial Accounting
  615 West 131st street 3rd Floor
• Letter of explanation should include

• Reason for the fund
• Dollar amount of the fund
• Name and title of the individual who will act as
  the fund custodian
• Description of how and where the funds will be
  secured
• Approval by the Department Head

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Petty Cash Custodian responsibilities

• The Petty Cash Custodian, who must be a full-time
  permanent employee, is responsible for
  reconciling the petty cash fund. A petty cash
  fund cannot be used to open a bank account in
  either the name of the University or the
• custodian.
• Keeps fund in a safe or
• locked cash box
• Reconciles fund on a regular basis

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Petty Cash Vouchers

• Vouchers should include the following
• Date of transaction
• Purpose
• Amount
• Signed by the custodian and receiver of the Petty
  Cash
• Morningside
• use different vouchers to monitor transactions
• CUMC
• uses logs to monitor transactions
• Please contact Francisco Valdez for petty
  cash receipt vouchers used at Morningside
• fjv1_at_columbia.edu
• or 212-854-4694

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Petty Cash Monitoring

• The custodian must reconcile the fund on a
  monthly basis, weekly if the fund is active
• Reconciliation ensures the sum of the outstanding
  reimbursements, cash, and vouchers is equal to
  the original amount of the fund
• For departments with multiple funds, an overall
  department reconciliation should
• be performed quarterly
• Internal Audit may perform
• spot check counts
• A reconciliation form is available on the web for
  guidance and/or use

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Petty Cash Limitations

• Petty Cash cannot be used to pay for (or
  reimburse) honoraria, services, equipment, travel
  or salary advances, registration fees, business
  meals outside of the office, personal loans,
  subscriptions, debit or credit card
  reimbursements, consultant fees and any other
  type of service payments, or the cashing of
  personal checks.

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Reimbursing a Petty Cash Fund

• On a monthly basis, or when the fund is low, the
  custodian should enter the information
  electronically via AP/CAR and complete a Check
  Request
• The Check Request is to be approved and signed by
  the DAF and forwarded to AP along with the proper
  documentation
• Petty Cash Custodian encloses petty cash vouchers
  and original, required receipts in a large
  envelope
• On the envelope, custodian prints the date, the
  amount, his/her name, dept. name, and check
  request number
• Custodian attaches envelope to the petty cash
  fund replenishment check request
• Custodian must keep copies of the original
  documentation for their own departmental files

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Petty Cash Reimbursement Log
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Closing a Petty Cash Fund

• The custodian must close the fund immediately if
  the purpose for which the fund was established
  ends or changes significantly
• Upon completion of the custodians employment by
  the University, the fund must either be closed or
  a new custodian appointed
• To close an existing fund, deposit any remaining
  cash in the fund via the FFE Cash Module
• Send a memo along with the approved Cash Module
  batch number and any petty cash receipts to the
  Controllers Office, Financial Accounting

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Consultants

• A firm or individual with whom a Consultant
  Services Contract is executed for a specialized
  service that is generally not performed by
  University employees.
• Honoraria and human subjects are exempt from this
  policy.
• preferred way to pay for this type of service is
  via invoice number format in AP/CAR

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AP understands that under certain circumstances,
Rush or Special processing may be required
RUSH AP Processing

• Enter the invoice information into AP/CAR.  If
  you need to hand deliver or overnight the payment
  to the vendor, select the Check Pickup special
  handling function in AP/CAR. 
• Secure the necessary approvals and write down the
  Accepted Voucher Number on the paper invoice.
• FILL OUT ONLINE RUSH REQUEST FORM - SUBMIT. Rush
  requests must be received by the AP Supervisor by
  1200 p.m. in order to be included in that days
  requests. YOU MUST HAVE A GOOD REASON FOR
  REQUEST!

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RUSH AP Processing

• Where can RUSH checks be picked up??
• Accounts Payable-
• Studebaker
• 615 West 131st Street, 3rd Floor,
• New York, NY 10027
• Health Science Division
• Black Building

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Who to Contact in AP?

• AP Service Center- 854-2122
• Email- apservice_at_columbia.edu