You are here: Home Internal Audit Activity Fund Manual Chapter III - Expenditures Disbursement Procedures

Disbursement Procedures

All purchases with school activity funds are subject to the New Mexico Statutes, particularly Chapter 13, Public Purchases and Property (also referred to as the Procurement Code).  The only exceptions are Trust accounts.

Purchasing procedures involve the following sequence of events and forms:

Form
Procedural Use
Activity Fund Purchase Order (AFPO) or AFPO Blanket Purchase Order, and AFPO Log Request to buy goods/services.  Pre-approval required. Logged in AFPO Log.
Invoice/Receipt (from vendor) Proof of purchase must be dated same or later than AFPO.
Activity fund check and voucher Final principal approval; review of AFPO, invoices, and check for accuracy and completeness.

 

Activity Fund Purchase Order (AFPO)

State law, (13-1-169 N.M.S.A., 1978 Compilation, as amended), mandates the use of purchase order procedures.  The Activity Fund Purchase Order, Form AC12, is available at the APS Instructional Materials Warehouse and is the standard purchase order form used by Albuquerque Public Schools (sample form on page D-13b).  Activity Fund Purchase Orders must be:

activity PO

  1. Logged in an AFPO Log to identify outstanding AFPOs and cross-reference voucher/check number when paid.
  2. Prepared in advance of the order/purchase.  The approval of the AFPO must be secured prior to placing the order/making the purchase.  Violation of the proper approval procedures will result in a denial of payment from school funds. Modifications to the AFPO must be initialed by the principal.
  3. Presented to the vendor (white copy) at the time the purchase is made (even if the vendor does not want to accept it).  This procedure will inform the vendor where to send the invoice and allow the vendor to place the purchase order number on their invoice and other correspondence.  This also fulfills the employee’s obligation to identify his/herself as a nontaxable purchaser.
  4. Sequentially numbered using the site location # as the prefix (i.e. 373-xxx, 590-xxxx) and controlled independently from the voucher/check.

 

Any modifications to the AFPO must be initialed by the principal


Refunds, cash advances, petty cash replenishments, and bank charges do not require a purchase order.

Blanket Purchase Order (BPO)

An individual purchase order is not required for certain recurring expenditures (e.g., snack bar supplies, yearbooks, monthly telephone billings, etc.). Instead, a Blanket Purchase Order (BPO) may be used and approved in advance by the principal.  The use of the BPO will reduce the amount of paperwork for these recurring expenditures. BPO’s cannot be used to reimburse APS employees.

The following statements must be written on the purchase order in the description area:

  1. “Blanket Purchase Order”
  2. Description of PO purpose, including school year (all BPOs expire at the end of the school year)
  3. “Not to Exceed $_________”.  (The estimate may be based on expected expenditures for the school year and/or past years’ expenditures.).

As payments are made, a Record of Payments for Blanket Purchase Orders must be maintained to be certain that the amount stated on the blanket purchase order has not been exceeded (sample form on page D-13d).  If the amount paid exceeds the authorized amount, another blanket purchase order must be issued for the remainder of the school year.  A copy of the BPO should be included with the voucher.

Activity Fund Purchase Order (AFPO) Log

A record must be maintained showing the date of issue, the vendor’s name, the person requesting the AFPO or account name/number and the date, the number and the amount of the voucher/check issued to pay the purchase or service.  Proper documentation can be helpful to locate the purchase    order for later verification.

Cash AdvanceAFPOlog

When cash is necessary (i.e. vendor does not accept AFPO or school check, travel, etc.) a Cash Advance may be used. Receipts for expenditures are evidence of proper use.  Unused funds must be returned, and receipted by the bookkeeper. It is not necessary to issue a purchase order when issuing a Cash Advance.

The Cash Advance Form (sample form on page D-2) must be properly completed and reconciled with proper documentation before the required deadline (approximately 3 days after the scheduled event) or the funds disbursed must be returned. No additional cash will be advanced if a previous cash advance is outstanding. It is recommended that the cash advance check number be referenced on the office receipt when funds are returned by the sponsor.

Invoices and Gross Receipts Tax

Itemized invoices/receipts are documents which cannot be altered unless it is to correct mathematical errors.  Date of invoice, purchase order number, etc. appearing on the invoice must never be changed.  A notation can, and should be attached to the invoice by the bookkeeper pointing to any discrepancy in the recording of the information shown on the invoice by the vendor. Occasionally copies of invoices, rather than the original, may be used.

Before an itemized invoice can be paid, the following steps must be completed:

  1. Match the purchase order number on the invoice to the purchase order. Verify the mathematical accuracy, including computation of extensions. Verify the correctness of the amount shown on the itemized invoice with the amount on the purchase order.  Any allowable differences, if paid, must be explained on the purchase order, properly documented and initialed by the principal.
  2. Gross receipts tax, if charged on the purchase of tangible items, must be deducted from the amount due. If a tax number has not been issued to the vendor, call the Purchasing Department and have one sent to the vendor.
  3. Gross receipts tax charged on intangibles (labor, services, etc.) must be paid.
  4. Make sure that the purchase order receiver line is signed and dated to evidence receipt of the goods/services. The receiver’s signature on the vendor invoice/receipt will suffice as evidence of receipt. If a check had to be issued in advance of receipt of the goods/services (i.e., subscriptions), the purchase order must be placed in a pending file and a signature and date obtained as soon as the goods/services are received.

A vendor statement is not sufficient support for payment unless the appropriate invoices are attached and reconciled.

Itemized invoices/receipts which cannot be matched to a timely issued and properly approved purchase order cannot be paid because payment would violate State Law (13-1-169 N.M.S.A., 1978 Compilation, as amended).

Food, when served in a restaurant, is considered to be a taxable item.  However, if a caterer will break out the cost of the catering service from the cost of the food, gross receipts tax can be paid on the cost of the catering service.


Vouchers

All payments shall be supported by a Voucher.  All vouchers must be numbered consecutively and the voucher number must be the same as the check number.  Each check, including voided checks, must be individually supported by a voucher, (sample form on page D-22).

The EPES software prints checks with check stubs that contain all the information that is necessary to constitute a proper voucher.  These check stubs may be used as the voucher as long as a signature line for the principal’s signature and the necessary verbiage to certify that the transaction is complete and ready for payment are visible.


voucherChecks must be prepared, submitted with the voucher, supporting purchase order, and itemized invoices/receipts for review by the principal prior to signing the check.

Upon payment, invoices and/or all other supporting documents must be marked or canceled in such a manner as to render them ineffective as support for further payment.  This may be accomplished by writing “PAID” or by using a “PAID” stamp on each invoice and/or supporting documentation.

 

 

Checks

To Issue a Check: Money shall be disbursed by a pre-numbered check. The following supporting documentation is required:

1. Pre-approved purchase order or cash advance form

2. Vendor’s itemized invoice and/or receipts to support disbursement

3. The receiver signature on the Activity Fund Purchase Order copy or the vendor invoice must be signed and dated to evidence receipt of goods or services.

Occasionally, pre-payment may be required by a particular vendor.  A few of those might be magazines, entry  fees,  registration  fees,  companies  that  state  pre-payment is necessary, etc.   In this situation a purchase order is still necessary. A copy of the order/form must be made and included in the voucher.

Each check shall have printed on its face the words “Void After One Year From Date” (6-10-75F N.M.S.A., 1978 Compilation as amended).

 

All checks must have a minimum of two authorized signatures to be valid and one must be the Principal/Administrative Designee.

The signing, or the countersigning of a check in advance is prohibited


To Void a Stale Dated Check: A check which has not cleared the bank after one (1) year from date of issue is considered stale dated and must be voided.  A reversing entry must be made to void a stale dated check.

To Void a Check: Checks are never destroyed. All checks must be accounted for and documented as to their use.  When a check must be voided, write “VOID” across its face and cut out the signature block. A voucher must be completed and signed by the Principal/Administrative designee for all voided checks. The voucher number is the same as the check number and, accordingly, the voided check should be attached to the voucher.  All voided checks must be posted and filed numerically with other issued vouchers and checks.

Lost or Misplaced Checks: If a vendor loses a check, it is their responsibility to pay the stop payment fee. However, before another check can be issued, an Affidavit for Duplicate School Check must be completed (sample form on page D-5b).  This serves as protection for the school should the original check ultimately be paid.

Returned Checks - Non-Sufficient Funds (NSF)returned checks

Occasionally, a check tendered in payment to the school may be returned by the bank for various reasons. When this occurs, the bank will charge the school for this check. The charge may appear on your bank statement as “other debits” or “other charges, returned item, chargeback, etc”.

In order to reflect the charge made by the bank on the school’s records, an entry must be made to the school’s Activity Funds ledgers. The return check should be treated as a “check”.

  1. Decrease the school’s General Ledger account
  2. Decrease the fund account that originally received the deposit
  3. Keep copies of all documentation for any future audit reference
  4. A copy of the check should be given to the sponsor who initially accepted it. The sponsor should then try to collect the funds. (Some bookkeepers may also attempt to collect the funds.)

When the check is re-deposited or collected:

  1. Increase the school’s General Ledger account
  2. Increase the fund account that should receive the deposit

Make sure the redeposit is made on a separate deposit ticket and identified as “Redeposit of John Doe’s check”.  Should the check be returned by the bank a second time; repeat the procedure.

If the writer of the check replaces it with cash, use the same procedure as if the check itself was re-deposited, but identify as “Redeposit of cash collected from John Doe, replaces returned check # .” A receipt must be issued on the collection of a bad check.

The NSF check should be kept in the files for review by the auditors.  Documentation is required on all NSF checks.  (See suggested sample form on page D-10).

Refunds

Occasionally, it may be necessary to issue a refund for a library book, textbook, etc. that was reported as lost, paid for, and later found.  When making a refund, a purchase order does not need to be issued. The proper procedure is as follows:

  1. Obtain a copy of the original Activity Three-Part Receipt/$25.00 and Under Log.
  2. A statement must be written on the receipt/log by the person authorizing the refund, such as “Book found, please refund” including authorizing signature.

Any requests for refunds, if previously paid by check, require a ten (10) day waiting period to ensure that the check has cleared the bank.  It is imperative that the box before the words “cash” or “check” be marked on the receipt. This will enable the bookkeeper to be certain that the ten (10) day waiting period has been met. This is to protect the school from loss in case the original payment is returned as an NSF check.
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