Good controls over purchasing and disbursements require appropriate checks and balances; therefore, more than one individual should be involved in the purchasing and disbursement functions. Any personal use or misappropriation of assets of the municipality will result in termination of employment and possible legal action.
A purchase order system is in place that requires certain documentation to be generated before a purchase can be made and before a disbursement is made. Documentation is to include the following:
- Purchase order – The purchase order form must clearly describe the item(s) and quantities to be purchased, be signed by the person/department making the request and by a designated supervisor.
- Invoices are signed documenting that the items (e.g., supplies, materials) were actually received by the municipality (signed by the employee receiving items).
- Invoice – documentation/evidence from the vendor of the services or materials provided to the municipality. These are attached to the purchase order when received in preparation for paying.
- Approval – verification by mayor and /or clerk (e.g., initials and date) that documentation is present to support the payment and the amount owed is correct. The invoice must be attached with the purchase order and be provided to the clerk for review/approval before the disbursement is made.
Related party transactions are strictly prohibited (i.e., transactions with any individual(s) or business that is “related” to a municipal official or employee).
The mayor must provide an open and competitive atmosphere and ensure that written bids/quotes are solicited for purchases (including recurring purchases) that exceed the applicable dollar thresholds provided in the Louisiana Public Bid Law.
Bid documentation (e.g., solicitation letters, advertisements, bids/quotes, tabulation sheets, minutes, etc.) demonstrating such compliance is to be maintained and filed in an organized manner.
For purchases made under an existing state contract, the council must formally acknowledge that the municipality is bypassing the requirements of the Public Bid Law and is adopting the requirements of the Louisiana Procurement Code (R.S. 39:1551 – 1755) to make such purchases. Management must monitor and ensure that such purchases are made in compliance with those requirements.
For purchases/contracts made under the request for proposals (RFP) method, the council must establish appropriate scoring criteria and maintain documentation of its evaluations.
All disbursements are to be made by check. Cash payments are prohibited for paying accounts payable invoice.
The accounts payable/disbursement function is the supervision of the town clerk.
The supply of blank/unused checks is maintained in the town clerk’s office and access restricted to only authorized personnel.
Dual signatures are required on all checks of the town. Those designated on the bank’s signature card with authorization to sign are the mayor, a designated council member and town clerk.
Vendor maintenance is a function outside the scope of the mayor’s responsibility.
New vendors are added by town clerk without bill approval. These vendors are added when required for the issuance of a purchase order or for payment of a billing invoice.
All documentation (e.g., purchase order, receiving report, invoice) supporting a disbursement are to be maintained in town hall.
Copies of the disbursement checks are made. A copy of the check is attached to the invoice and documentation. Then, they are filed for audit. Once audited, they are boxed, labeled and stored.
Copies of the disbursement checks are made and maintained in a file along with copies of the checks used for transfer to the paying account. Posting journals, distribution by funds and a check register are also maintained.