Loading...
HomeMy WebLinkAbout2011-02-02 PACKET 08.A.REQUEST OF CITY COUNCIL ACTION -' - COUNCIL AGENDA MEETING ITEM # DATE 2/2/11 ORIGINATING DEPARTMENT DEPARTMENT HEAD COUNCIL ACTION REQUEST Consider /Review the proposed Credit Card Use Policy which would allow use of City Credit Cards by authorized staff in the course of City business and in accordance with the City purchasing policy STAFF RECOMMENDATION Adopt the Credit Card Use Resolution authorizing issuance and use of City credit cards. i�� z�� r�� _� � r• 1 m r i ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES /RIGHTS ❑ ECONOMIC DEV. AUTHORITY SUPPORTING DOCUMENTS DATE REVIEWED El El El El ACTUAL AMOUNT APPROVED DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ® MEMO /LETTER: ® RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDA T ION: ❑ LEGAL RECOMMENDATION: ® OTHER: MN State Statute, State Auditor Statement of Position, Section VII purchasing policy. ADMINISTRATORS COMMENTS Z 4 C"ttyAdmiistrator' Date COUNCIL ACTION TAKEN: AP ROVED ❑ DENIED ❑ OTHER H: \Council items \City Council Action Form.doc • To: Honorable Mayor and City Council Ryan Schroeder, City Administrator From: Robin Roland, Finance Director Date: January 27, 2011 Subject: City Credit Card Use Policy Introduction In an effort to increase efficiency and reduce the instances of employees paying for City expenses with personal credit cards and subsequently requesting reimbursement, it is proposed that City purchasing cards (credit cards) be authorized. Cities have the statutory authority to make purchases using credit cards issued to the public entity, but only after adoption of a credit card policy. Discussion Attached is a proposed "Credit Card Use Policy" which follows Minnesota State Statute 471.382 and would allow City employees to utilize a Purchasing Card (otherwise known as a credit card) to pay expenses incurred in the course of City business. The City Administrator and /or Finance Director would determine who would be issued a City credit card. Department heads and their designees would be eligible to obtain one under the policy. As the policy states, cards are to be used only for legitimate City expenditures under City purchasing guidelines. Credit limits for each user would be established and programmed into the respective card. Under no circumstances whatsoever would cash advances or withdrawals be allowed. Acceptance of the cardholder privilege by the employee would acknowledge their agreement to abide by the Credit Card policy and to accept the consequences of the violation of said policy. The policy includes a copy of the cardholder acknowledgement which would be signed. Also attached with this memo is the Statement of Position from the State Auditor's office and a copy of the State Statute. Section VII "Operating Budget Purchasing Levels" from the City's purchasing policy is also included. Subsequent to the approval of the policy, further authorizing documents are required to be adopted in order to have the credit cards issued and begin using them. Action Requested Council is asked to review the proposed Credit Card Use Policy and authorize its adoption. BE IT RESOLVED, by the City Council of the City of Cottage Grove, County of Washington, State of Minnesota, as follows: CITY OF COTTAGE GROVE CREDIT CARD USE POLICY Purpose To establish the policy and procedure for purchasing goods and services using a credit card issued in the City's name consistent with the authority and restrictions specified in state law (M.S. 471.382). Guidelines The City credit card is intended for purchases needed for City operations. All purchases by credit card must otherwise comply with all statutes, rules and policies applicable to City purchases. Credit card use must also comply with laws concerning borrowing. Credit cards will not be used for carrying debt. The entire card balance shall be paid in full each month. Any employee authorized to make a purchase on behalf of the City under the limits of the City's purchasing policy may be authorized to use a City credit card, if approved by the City Administrator and /or the Finance Director. Credit cards will be issued only when it is clear that they will create efficiencies in the normal purchasing process. Each card issued will bear the name of the City of Cottage Grove and the individual cardholder. The City credit card (not a personal card) should be used for any City business requiring the use of a credit card. Each cardholder will sign an acknowledgement of the rules which apply to use of a City credit card prior to being issued the card. It is the responsibility of the individual cardholder to: 1. Ensure that the card is used only for legitimate City business expenditures in accordance with the cardholder's job duties. 2. Follow City purchasing policy with respect to purchase orders, quotations and bids. 3. Maintain all supporting documentation associated with credit card purchases (receipts, confirmations, purchase orders etc.) with expenditures properly coded and approved by the department. Deliver such documentation to the Finance Department — Accounts Payable as soon as possible. Documentation must be match to the credit card statement for the appropriate month. 4. Contact the Finance Department immediately if the card is lost or stolen. If after regular business hours, contact the Credit card Company directly with a follow up to the Finance Department as soon as possible afterwards. 5. Any personal charges on the card either made inadvertently or as part of travel expenses must be reimbursed to the City at the time the documentation is submitted to the Finance department. Credit limits, in accordance with City purchasing policy, will be established for each cardholder and will be programmed into the card. Cash withdrawals are not allowed with the card. The employee shall be personally, financially responsible for any improper or unauthorized use of the credit card, as specified in Minnesota Statutes 471.382. Administration The Finance department will administer the issuance of cards and compliance with the above policies and procedures. Policy violations will result in the cancellation of an individual card. Intentional or negligent misuse of a City credit card will be subject to disciplinary action, up to and including dismissal and /or garnishment of wages if necessary to recover City funds. Cards must be returned to the City at time of separation from service or termination. Adopted by the City Council of the City of Cottage Grove this _ day of , 2011. Myron Bailey, Mayor Attest: Caron M. Stransky, City Clerk CITY OF COTTAGE GROVE CREDIT CARD POLICY ACKNOWLEDGMENT The City of Cottage Grove is authorizing you to use one of its credit cards on its behalf. It is important that you understand the rules regarding its use. If the rules are not followed the City may cancel the card and you may be personally liable for any misuse. ❑ Credit cards may only be used for appropriate City business. Personal use may be grounds for discipline. ❑ The credit card shall not be used to obtain a cash advance. ❑ The credit card must be protected from theft or unauthorized use. ❑ The Finance Department must be notified immediately if the card is lost, stolen or if you suspect unauthorized use. ❑ The credit card must be returned to the Finance Department immediately upon request or upon leaving employment with the City. ❑ Department Heads must be sure there are budgeted funds available to pay for credit card purchases. ❑ Receipts or invoices for each credit card use must be signed and submitted in a timely manner to the Finance Department for processing. ❑ The City will not be responsible for interest charges accrued due to delayed submission of receipts and payment requests. ❑ I have read the above statements and the attached Credit Card Use Policy and agree to abide by same. Date Signature rr nx yan [ C STATE OF MINNESOTA OFFICE OF THE STATE ,AUDITOR SUITE 500 (651)296 -2551 (Voice) Amy 525 PARK STREET REBECCA OTTO SAINT PAUL, MN 55103 -2139 (651) 296 -4755 (Fax) scate.auditor @state.mn.us (E -mail) STATE AUDITOR 1 -800- 627 -3529 (Relay Service) Statement of Position Credit Card Use and Policies Counties, cities, towns and school districts have authority to make purchases using credit cards issued to the public entity.' In 2007, this authority was also granted to watershed districts, and to soil and water conservation districts. Before implementing the use of credit cards, a public entity should adopt a comprehensive credit card policy that implements statutory requirements, as well as good management practices and minimum internal control procedures. The statutes authorizing credit card use by counties, cities, towns, school districts, watershed districts, and soil and water conservation districts restrict the use of credit cards to purchases for the public entity. According to statute, the credit cards should only be used by those employees and officers otherwise authorized to snake purchases. No personal use of the credit card is permitted. If the public entity does not authorize the credit card purchase, the officer or employee who made the purchase becomes personally liable for the amount of purchase. Purchases ]Wade with the credit card must be consistent with other state law. For example, under Minnesota law, claims presented for payment must be in writing and itemized .3 Bills received from a credit card company lack sufficient detail to comply with these statutory requirements. As a result, public entities using credit cards must have the invoices and receipts needed to support the items charged in the bill from the credit card company. Similarly, listing only the credit card company on a claims list would merely identify the method of payment. It would not identify the vendors providing the goods and services. The credit card statutes were not intended to be another method for creating debt for the public entity. The authority to use credit cards does not authorize the creation of a new form of debt for the public entity. The statutes governing the issuance of debt by a public entity have a number of restrictions attached to the issuance of any obligation. The credit Minn. Stat. § 471.382 (cities and towns); Minn. Stat. § 375.171 (counties); Minn. Star. § 12313.02, subd. 23 (school districts). 2 Minn. Stat. § 103D -325, subd. 4 (watershed districts), Minn. Stat. § 103C.321, subd. 6 (soil and water conservation districts). s See Minn. Stat. § 471.38, subd. 1. Reviewed: July 2008 2007 -1005 Revised: September 2007 card statutes simply authorize another type of payment. Therefore, the public entity's governing board must adopt a policy of paying off the credit card charges on a monthly basis. We urge the adoption of a comprehensive credit card policy that provides the following safeguards: • Identify the employees and officers who are authorized to make purchases on behalf of the public entity and are eligible to use the card; • Identify the particular purchases that are to be made with the credit card; • Set up a review process for all purchases made with the credit card; • Prohibit the use of the credit card for personal purchases; and • Require supporting documentation for all purchases made with the credit card. In addition, public entities may want to restrict the total amount of charges that can be made on the credit card. This will help limit exposure to theft or other improper uses of the credit card. The ability to use a credit card for small purchases in the ordinary course of business offers many advantages. However, the ability of the cardholder to make the public entity liable for an improper or illegal purchase is an inherent risk associated with credit cards. Compliance with statutory requirements, and the adoption of and adherence to a policy implementing further internal controls will greatly reduce the public entity's exposure to loss of public funds through theft or misuse of the credit card. Reviewed: July 2008 2 2007 -1005 Revised: September 2007 An invoice that is submitted to the Finance Department later than 30 days from the invoice date must be accompanied by a written explanation regarding the delay. VII Operating Budget Purchasing Levels Purchases are divided into categories listed below. Department Heads are authorized to approve budgeted purchases (including repairs) under $2,500. Purchase orders that will result in a budget deficit for a category (commodities, contractual, capital outlay), or will be charged to a category with an existing deficit, must be noted as such and approved by the City Administrator. Blanket Purchase Orders. Blanket purchase orders may be used for budgeted purchases from the same vendor that occur in similar increments during the fiscal year (i.e. uniform allowance, cleaning service etc). One copy of the purchase order shall be filed with the Accounts Payable Clerk. The purchase order number shall be noted on each invoice. Purchases are to be charged to the budget year that the good is received or the service rendered. Operating Budgeted Purchases: Expenditure Required Quote /Open Required Advertising MN State Level Documentation Market Approval required? Statute Under $500 Discretionary Open Dept Head or No Market designee $500 -$999 Purchase Order Open Dept Head or No Market designee $1,000- $2,499 Purchase Order Open Dept Head No Market $2,500 - $14,999 Purchase Order Two Quotes Administrator No $15,000 - $99,999 Purchase Two Quotes Administrator No Order /Service with Council Agreement Approval $100,000 or over Contract Sealed Bids City Council Yes 471.345 A. Advertising for Improvement Projects: If the amount of the contract is estimated to exceed $100,000, sealed bids shall be advertised in the newspaper and such other papers and for such length of time as the Council may deem advisable. If the estimated cost of the improvement is greater than $100,000 (best value alternative) then the publication V