Accounting Instruction No. 1 - Gloucestershire County Council



Accounting Instruction No. 1 - Gloucestershire County Council
Accounting Instruction No. 1
Financial Regulations Financial Planning B7, B11 & B15 and Systems
and Procedures D4, D8, D9 & D13 apply to this accounting instruction
and can be found on page 135 of the Gloucestershire County Council
The objective of this Accounting Instruction is to provide employees with
guidelines on the approved procedures for purchasing goods and services on
behalf of the County Council. These procedures should be treated as a basic
framework for the guidance of officers. It is recognised that circumstances
may vary and that Directors may wish to issue supplementary instructions to
deal with specific situations as required.
The procedures laid down in these instructions and the Employee Code of
Conduct Gloucestershire Staffnet - Code of Conduct for employees, are to
protect the County Council and staff against the effects of misuse and
misallocation of orders. Any departures from these procedures are likely to
remove or reduce this protection. It is considered essential, therefore, that
these procedures are followed. Directors and officers designated as being
responsible for staff placing orders should ensure that such staff are fully
aware of and follow the procedures laid down.
Council Funds can only be used for appropriate business purposes.
Officers are reminded that they are required to obtain value for money in
respect of all goods and services ordered for the Council, and that goods and
services purchased from GCC funds must only be used for official GCC
When Should Orders Be Placed
Where possible all orders should be raised in advance on SAP.
Official orders must be used for the acquisition of all items, with the exception
http://thisweek/utilities/action/act_download.cfm?mediaid=12710 . For items
on this list specific agreements should be drawn up between the Authority and
the supplier.
Recurring items under a specific contract, e.g. a yearly contract for
cleaning windows which is paid each quarter. In such cases only an
initial order (on at least an annual basis) should be given. Subsequent
invoices can be passed against this order.
Items bought through Petty Cash.
Items purchased using Purchase Cards
Items purchased via specific contracts, which require the use of the
suppliers ordering system. The relevant GCC staff will be given
appropriate access and training for these systems.
Orders should be placed electronically through SAP unless the goods or
services constitute an exception as outlined by the Director of Strategic
Procurement. Orders given by telephone or in person should be confirmed
via SAP as soon as possible, thereafter marked “confirming verbal/telephone
order”. These orders should be placed by the officer normally responsible for
ordering; if this is not possible, then the officer normally responsible for
placing orders should agree to the telephone order before the order is made.
How Should Goods or Services Be Purchased
The person purchasing any goods or services is required to obtain value for money.
Items / services ordered through an existing pre-tendered, Council framework
arrangement do not need to be subject to further competition or three quotations.
When shopping through SAP, the approved supplier will be the default. If a supplier
other than the preferred supplier is selected the purchase order will be routed via a
sourcing pool prior to being sent to the supplier.
Items totalling less than £1,000
The person purchasing any goods or services is required to obtain value for
money but they are not required to retain evidence of having obtained three
separate quotes. They should, of course, still obtain comparative prices for
purchases below £1,000 whenever possible.
Items totalling from £1,000 to less than £5,000
For orders from £1,000 the following procedure should be adhered to when
obtaining quotes. The values below should be interpreted as applying to an
item, any multiple of an item, or groupings of items e.g. camera/tripod/case or
desk/chair - even though the individual values may be below a threshold it is
the total value of the "camera equipment" or "furniture" that should be
Three prices should be examined and retained for orders from £1,000 to less
than £5,000. These prices may be taken from suppliers via the Internet,
written or verbal quotations or from current catalogue/price lists. Where
catalogues or price lists are used officers must ensure that they are current
editions. Where it is not practical to obtain three prices, the Budget
Manager/Holder should sign a waiver to this effect which should be retained
on file.
Items totalling from £5,000 to £50,000
Independent written evidence, e.g. emails or quotations provided on suppliers
headed note paper, of at least three prices should be obtained and retained
for orders from £5,000 to £50,000.
Note: In instances where a Director is satisfied that it would not be practicable
to seek prices outlined above, a written waiver, in the form of an email, to this
effect must be obtained from the Director and this held on file.
Items totalling more than £50,000
Orders for the supply of goods or services exceeding £50,000 or the regular
supply of goods and services for which the aggregate estimate cost exceeds
£50,000 must be in accordance with the Contract Standing Orders (see
above). Orders should not be split so as to avoid these requirements.
The County Council has produced Procurement Guidance for Tendering and
Contract Management (see http://thisweek/index.cfm?articleid=11442) which
sets out when financial checks on tenders should be undertaken. Appendix 3
describes the procedure for obtaining financial references and performance
Supplier Determined by Another Organisation
In instances where the Council is a member of e.g. a consortium for a
particular supply contract, but is not the lead organisation in negotiating its
price, written evidence of the steps taken to determine the price agreed
should be obtained from the lead organisation and kept on file. Similarly, in
instances where a body or organisation other than the Council has
determined which supplier the Council should purchase from (e.g. if the
Council is acting as an agent for another organisation), written evidence of
this arrangement should be kept on file.
Please note – the completion of Gateway Forms and, where appropriate,
the seeking of Directors’ waivers is still necessary under these
There are strict rules governing the acquisition of vehicles and
equipment via Credit Arrangements.
Advice, guidance and the County Council Procurement Strategy can be found
on the Strategic Procurement pages of staff net. The Director of Strategic
Procurement should be consulted on large procurement issues.
Ordering Procedure
Before any order is placed it is essential that the person responsible for
placing an order has ensured that there is sufficient budgetary provision for
that order. Purchasing should in most instances only be carried out by
registered “Shoppers” on SAP. The role of the “Shopper” is specified in
Appendix 7.
Where an order constitutes an exception to SAP
http://thisweek/utilities/action/act_download.cfm?mediaid=12710, a Budget
Manager (BM) or Budget Holder (BH) can delegate authority to raise orders
against their budgets to other members of staff. This delegation should be in
writing and include details of any ordering limits or other requirements. A copy
of this delegation should be kept by both parties. If the BH is making the
delegation they must inform their BM (the BM has discretion to stop this
delegation if they chose to). Even if the BM or BH has delegated responsibility
for raising orders, the responsibility for managing the budget remains with the
BM or BH. A copy of a general delegation form is attached at Appendix 5 (see
http://thisweek/utilities/action/act_download.cfm?mediaid=9921). The link to
Where a purchase is to be made using a purchase card, details of the
commitment including the quoted price should be recorded on the
cardholder’s transactions log immediately. More information on the use of
purchase cards and a list of P Card holders can be found at Gloucestershire
Staffnet - P Cards
Where orders are placed via the suppliers ordering system (for specific
corporate contracts) then appropriate management reports will be made
available from these systems to ensure a record of orders is maintained.
Receiving Goods
Where goods / services have been ordered on SAP, goods receipting on SAP
must also be carried out promptly. Goods received should be checked against
the original order and also to ensure they are in satisfactory condition. Any
differences between the delivery note and the goods received should be
reported immediately to the supplier.
Suppliers should be asked for instructions for returning goods that have been
received in error or damaged.
All goods received in respect of purchase card transactions should be
recorded on the cardholder’s transactions log (see Gloucestershire Staffnet P Cards for further information).
Invoices for part deliveries may be paid providing they only relate to goods
which have been already received.
On specific corporate contracts the recording of goods received may be
entered on the suppliers system. Where this applies the relevant GCC staff
will be given appropriate access and training for these systems.
Payments Of Accounts
Payments must only be made against an invoice when the goods have
been received and been found to be in good order. Statements, delivery
notes and acknowledgements of orders should not be used to pay for goods
or services received.
Purchase card statements should be reconciled promptly and any
discrepancies recorded, brought to the attention of both the supplier and
purchase card administrator, and remedied as quickly as possible. See
Gloucestershire Staffnet - P Cards for more information on the use of
purchase cards.
There is a risk that suppliers who are paid for goods by purchase card will still
send an invoice for these goods. It is important that staff are aware this may
happen and they ensure goods are not paid for twice. As they are subject to a
separate process, goods paid for by Purchase card will not appear as paid on
the payment system.
If a supplier provides goods via the Purchase Card process then any invoices
from this supplier should be checked against the individual’s card log, to
ensure the goods have not already been paid for by Purchase Card.
Invoices which are lost or destroyed should be replaced by obtaining copy
invoices from the supplier. Alternatively the supplier may send an invoice
electronically via e-mail or fax. These invoices should be clearly marked as
“Copy Invoice” with "I certify original has not been paid" and signed by a
certifying officer after confirming it has not already been paid or entered onto
the system for payment.
Commitments appear on the system when an order is authorised. When the
goods are marked as received the commitment is reduced and replaced by a
charge to the accounts.
In many cases the invoice will go straight to the BSC and processed. If it
matches with the order it will be paid. It is not scrutinised by the budget holder
at this stage.
Where orders have not been raised through SAP, two people should always
be involved in the payment of accounts. One, usually the certifying officer,
must have the authority to commit expenditure against a particular budget.
The other will be responsible for ensuring the goods have been received.
The budget against which the invoice is being paid should be identified. This
is usually done by completion of coding slips attached to the invoice and
should have been determined when the order was placed. (See Section 5)
If the account is paid by a manual cheque then the cheque number, the date
paid and the total amount must be written onto the invoice or a photocopy of
the signed cheque attached (unless the manual cheque is raised by the BSC
Finance Administration who will do any necessary computer recording). Care
needs to be taken when making these payments - refer to BSC Finance
Under the terms of the Performance Indicators, GCC is required to pay all
invoices within 30 days of receipt.
On specific corporate contracts, as long as the agreed ordering and goods
received/authorisation process has been properly completed this may be
sufficient to enable the supplier to produce a consolidated invoice ready for
payment by GCC without further authorisation.
Payments Through The Payments System
All invoices paid through the Payments System should have a coding slip
(shown below) attached to the invoice. It should be attached in such a way
that it does not obscure any of the details on the invoice. Spreadsheets can
also be used, once agreed with BSC – Financial Administration.
Please note that the Service User Assistance Form should be used for Social
Care emergency and regular payments in respect of service users. For
further information, see Gloucestershire Staffnet - Emergency Payments.
The person who checked receipt of the goods will usually sign the “goods
received/work done” box. The person signing this box is confirming that the
goods or service have been received by the County Council.
The relevant details from the invoice should then be completed by a
responsible officer. The following must be completed by them:
Invoice Reference
SAP General Ledger code
Amount to be paid for the goods
(from the invoice)
(from the invoice)
VAT marker
Transaction date
Date received
Amount of VAT to be paid
Total amount to be paid
(from the invoice)
(from the invoice)
(when first received by GCC)
(from the invoice)
(from the invoice)
The Prices & Arithmetic box should then be signed after checking that the
details on the coding slip are correct and add up.
Payments involving sub-contractor work should be identified and marked
clarification on payments.
All entries on the coding slip should be done in black or blue ink unless a
credit entry is needed in which case it should be in red ink. The VAT marker
should be either “V2” for VAT at 5%, “V8” for VAT at 15%, “V1” for 17.5%,
“VT” for 20%, “V0” for exempt from VAT, “V3” for zero rated VAT, or “V4” for
non-business transactions outside the scope of VAT. Refer to the guide "VAT
How to Recover VAT on Expenditure" or contact the VAT Officers on (01452)
425882 / 426416.
The invoice should then be passed to the certifying officer who after checking
the invoice and coding slip should ensure that sufficient budget is available. If
the budget is not available then, unless the sums involved are immaterial,
they must make arrangements to vire money into that budget. When satisfied
the certifying officer should sign either the Establishment Certification or the
Central Office Certification.
A sample of a coding slip to be used when making payment against an
invoice is shown below.
The invoice should then be passed to the section responsible for inputting
your documents into the Payments system.
The person entering the payment into the Payments system must check that
there are two signatures on the coding slip. Payment input staff must return
to the originator any invoice not certified by an authorised certifying officer.
All users of the computer system must be fully trained by SAP System
Support and be aware of system security and data protection.
On specific corporate contracts the supplier may send a consolidated invoice
file to the Payments Team in the Business Service Centre for payment
through the payments system.
Where an invoice is disputed/queried GCC will amend the received date to be
the date of the resolution of the dispute query.
Any purchases made using a purchase card must be made in accordance
with the guidance laid down in Gloucestershire Staffnet - P Cards
Officers should not accept additional charges imposed by suppliers on goods
simply because of the form of payment being used e.g. Purchase Cards.
If payment has been made by cheque and the status of the payment is
required (i.e. whether or not the cheque has been presented), the Tax,
Control & Pensions Finance section can advise accordingly on receipt of the
cheque number. This check must be made before deciding to place a stop on
a cheque.
Cheques over 6 months old will be reversed on SAP and the invoice
reinstated. The invoice will be cancelled. If it requires payment then a new
invoice must be created.
Interest on Late Payments
Under the provisions of the Late Payment of Commercial Debts (Interest) Act,
1998 GCC may be charged interest for late payment of creditor invoices. All
such charges must be checked and if in doubt, confirmation should be sought
from BSC Finance Administration.
An invoice is late if a credit period agreed with the supplier e.g. 30 days, is
Example: If the current base rate is 2%, then the statutory rate of interest is
10.5% (2% + 8.5%). The 8.5% will remain constant until changed by
If the debt is £1,000 and is paid 30 days late (i.e. 30 days after the due date)
then the interest owed is:
£1,000 x 10.5%
28.77p x 30 days
£105 per annum
28.77p per day (105/365)
Care must be taken when making Sub Contractor payments. Please refer to
Large contract payments are often paid in stages.
requested in the form of a certificate.
Each payment is
As this is not a 'proper' invoice for the purposes of VAT, an authenticated VAT
receipt is sent to the Creditor for signing. The blue copy is returned to the
paying department and the white copy retained by the Creditor. This receipt
should be signed and returned within fourteen days. Procedures for recording
such receipts for HM Revenue & Customs inspection can be obtained from
Payments Team (ext 5944).
Note: not all contract stage payments are for sub-contractor work. Care
must be exercised.
If a contract exceeds the original tender by £1,000 or 2½% and the final cost
of the contract is greater than £50,000, then a report should be made to the
appropriate Cabinet Member by the responsible Director. A report does not
need to be produced if the Department for Transport will fully reimburse the
Value Added Tax (VAT)
Value Added Tax is a tax which is levied on a variety of both goods and
services. Gloucestershire County Council (GCC) is a VAT registered
organisation and as such, subject to certain conditions, can recover from HM
Revenue & Customs most of the VAT it incurs on purchases. When
appropriate GCC must also declare VAT on its income, at the correct rate, to
HM Revenues & Customs. HMRC have powers to levy substantial penalties
for non compliance with VAT regulations.
For comprehensive VAT guidance regarding purchasing please visit
Gloucestershire County Council’s VAT guidance How to Recover VAT on
Expenditure. VAT guidance generally can be found on Staffnet A-Z (V for
VAT). You can also contact the VAT Officers on (01452) 425882 /426416.
Duties of The Certifying Officer
The certifying officer certifies, on behalf of his/her Director, that the budget
provision is available, that the goods/services are to be used for official GCC
services, good value has been obtained, goods/services have been received
at the correct price, that the agreed verification procedures have been carried
out, that the invoice is properly chargeable to the appropriate budget and that
legislation regarding VAT and sub-contractors tax procedures have been
adhered to.
It is not expected that the certifying officer will personally verify each of these
stages but he/she is responsible for seeing that they have all been carried out
and accounted for. He/she is moreover, expected to exercise reasonable
judgement on the effectiveness of the system and the efficiency of his/her
staff and should take note of any circumstances which would warrant a
deeper investigation into an invoice.
Budget Managers are allowed to delegate the responsibility for certifying
invoices to other members of their staff, the details of whom must be recorded
A copy
must be forwarded to the section which processes the service’s invoices.
Responsibility for budgetary control cannot be delegated beyond Budget
The certifying process is not meant to be automatic and does entail the need
to exercise care and judgement. If sufficient time to do the job properly is not
available, then the remedy is to review the delegation of authority.
Additional Information
1. Payments made to individuals must be examined carefully to identify
whether they should be made via Payments or Payroll systems.
An assessment must be made as to the nature of the relationship between
the individual and the Council, rather than the usual employment status of
the individual who is carrying out the work. This must be done using the
HMRC web based tool A copy of
the results must be printed off and attached to the invoice for payment.
The County Council should not be placed in a position with the HM
Revenue & Customs whereby tax or National Insurance contributions have
been overlooked because of lack of due care and attention. Please refer
to "Tax Liabilities on Payments and Staff Benefits: A Guide to your
Responsibilities" at Red Tax Book.
2. It is important that the re-issue of payments SHOULD NOT be made until a
full investigation is made as to why the original payment has not been
received. Issued payments not received MUST be reported to the
Payments Team (ext 5712) to enable them to stop cheques or BACs and
implement the necessary controls before re-issue.
3. If a cheque has been issued to the correct payee and to a valid address for
that payee and the cheque has to be stopped, a replacement payment will
not be made until we have written confirmation from our bank that the stop
has been actioned. Occasionally the bank may subsequently rescind their
confirmation of a stop being actioned. If this occurs, the Payments Team
should be immediately advised and if the reissued payment has not
already been made it should be stopped until the amount of the original
payment has been received in the Authority’s bank account.
4. Any changes in the section's/service's list of certifying officers specimen
signatures/initials need to be retained by the department for checking by
Internal Audit.
5. Under agreement from HM Revenue & Customs and District Audit,
invoices need only be retained for 3 years plus current year.
6. Further guidance on ordering and purchasing can be found on the
procurement web pages on Staffnet.
Use of Council Funds
County Council funds should only be used for the purchase of goods or services for
business purposes.
They must not be used for the purchase of gifts, etc. for members of staff on
occasions such as retirements, birthdays, etc., or to fund gatherings or parties
associated with such events. Any purchases or payments that are made from private
collections, contributions, etc. must not be processed through the Council’s creditor
or payroll systems.
Long Service Awards
Please note however that there are different rules covering Long Service Awards
(see the booklet ‘Tax and N.I. Liabilities on Payments and Staff Benefits’ section 8,
and Personnel Handbook section D4 and visit Special VAT Rules LONG SERVICE
Current Council rates of payment must be observed
Gifts must be in the form of tangible articles, not cash (non-cashable
vouchers are acceptable)
Payment should be made through the SAP system – reimbursements to
members of staff must not be made
Contract Standing Orders
Please see the procurement pages http://thisweek/index.cfm?articleid=11442 for
full details.
July 2013

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