Financial Procedures

4. Expenditure

4.1 Purchasing and ordering

4.1.1 Introduction
The supply of goods or services is based on an Official Order system. It is essential, for financial control purposes that the following policy statements and procedures for ordering are complied with:

4.1.2 Purchasing Policy
(i) The College shall have control at all times over the supply to it of goods and services and such control shall be exercised through its official Purchase Order System

(ii) Delivery of goods or the receipt of services which are not supported by an official order will be rejected

(iii) Suppliers' invoices which do not match official orders will not be paid for by the College

(iv) The College will not be held a party to any arrangement for the supply of goods or services in circumstances where it may be prevented from exercising its veto over the supply. This is particularly serious in regard to the discharge of its obligations respecting certain funds as any contemplated expenditure from such funds must be tested as regards its legality

(v) The placing of an unofficial order may be construed as having the criminal intent of conversion to personal use with consequential disciplinary action to follow

(vi) The audit test shall be satisfied in all cases, i.e. every invoice must be supported by an official order.

4.1.3 Purchasing Procedures
The responsibility for initiating orders rests with authorised signatories approved by the head of each academic and administrative department of the College to whom an approved budget allocation has been granted. The head of department should see that the following clearly defined rules are strictly observed by their staff:

• A Request to Place an Order Form must be signed by an authorised signatory and sent to the Purchasing Office so that it can be checked and an Official Order raised and despatched. (Where on-line purchasing has been introduced within a department authorised signatories will have authority to approve and dispatch to suppliers orders for goods and services up to a value of £2000 (excluding VAT).
• A copy of official orders produced centrally will be sent to the ordering department.
• In cases of extreme emergency when there is no time for a department to complete the documentation, an official order number must be obtained by telephoning the Purchasing Officer. The order number given must be quoted by the spending department to the supplier. The department must follow up with the usual ‘Request’ confirming the transaction and quoting thereon the order number supplied.
• All Requests for amounts exceeding £2,000 should carry a simple justification for the expenditure and would be scrutinised by the Purchasing section and the Head of Purchasing. Orders in excess of £30,000 will also be examined by the Director of Finance. It is very important, when completing a Request that the price is properly estimated and the expenditure coded stated so that the College commitments can be assessed with reasonable accuracy.
• Where it is necessary to vary an existing order by an addition or deletion, a Request form should be completed and authorised by the Department in the usual manner quoting the original order number and the variation required.
• The order system should cover all goods and services to be bought in by the College for whatever purpose, including research, but excluding payments made under contracts and conditions of employment for staff issued by the Personnel Department (such as miscellaneous travel and subsistence costs) and small petty cash purchases.
• Petty cash purchases should not exceed £50 per transaction and should not include items which could be purchased through the official order system.
• Departments have no authority to commit the College to expenditure without following these procedures. The initiator of any form or order which falls outside these procedures may be regarded as being in breach of his/her contract of employment with the College and could be held personally liable for the cost of the irregular order.
• The College’s Audit Committee is subject to the HEFCE Code of Practice for Audit. Every department will be examined at some time by the Internal Auditor under a programme agreed by the Audit Committee and reported on. The report will embrace compliance with purchasing procedures.

If the foregoing procedures are strictly followed the Purchasing Section will be able to settle suppliers' invoices promptly and, further, will be able to trace the origin of orders which occasionally are delivered in this section.

4.1.4 Scope of Purchasing Office Services
The Purchasing Office is well placed to advise on best buys and alternative sources of supply of general supplies while requests for specialised goods should first be referred to the heads of departments devoted to those specialisms. For instance, all computer purchases should be vetted by the Information Services Department to ensure consistency in hardware and software stock and support.

The scope of services covered by the Purchasing section includes the following:

(i) The purchase of goods for delivery direct to departments.

(ii) The administration of service contracts for building repairs, improvements, window cleaning, office equipment maintenance, etc.

(iii) The purchase of official publications, subscriptions.

(iv) The maintenance of Open Orders, now renewable annually. (NB Open orders have now been discontinued for departments using Web ordering and will eventually be discontinued for all departments).

All goods/services contracts, open orders and subscriptions should be purchased through the official order system and requisitioned by the completion of a Request form.

Emergency orders must be covered by a confirmation Request form and should only arise in the case of breakdowns and urgent repairs occasioned by fire, storm, flood or other such damage. An order number must be obtained from the Purchasing Section before placing such an order.

4.1.5 Contracts and Competitive Quotations
It should be noted that the Financial Regulations require Departmental Heads to obtain competitive quotations when:

(i) the cost or quantity involved, either in regard to an initial order or a continuing requirement, justifies this action, or

(ii) there is more than one source of supply.

Arrangements for annual contracts should be made through the Purchasing Section of the Finance Department. Staff must obtain the most advantageous terms for their purchase.

The following limits apply to quotations and tenders

Contracts for the provision of supplies and services exceeding Euro 236,945 (£163,862) and for works exceeding Euro 5,923,624 (£4,096,559) must first be advertised in the Official Journal of the European Community (OJEU) according to EU Procurement Rules. The Rules are stringent on aggregation in order to forestall avoidance of putting out to tender and failure to observe them can result in very heavy penalties on the purchaser if aggrieved suppliers decide to seek redress through the Courts.

All purchasers contemplating procurements above the aforementioned thresholds must publicise their requirements in advance throughout member states of the EC by means of a Pre-Information Notice (PIN) placed in the OJEU. The OJEU contains advertisements from all member states, is published daily, is available from HM Treasury and has direct computer access to it by Internet. The purpose of this publicity is to provide suppliers within the EU with equal opportunities to tender for business.

Purchasers must follow laid down procedures for the award of contracts. They must publish the result of the contract award by placing a notice in the OJEU and debrief unsuccessful bidders. The Rules detail the information to be published and provided during the debriefing process.

Besides the heavy penalties that can be imposed, a delinquent purchaser can lose out on available EU grants.

The Purchasing section is familiar with these rather complex regulations and is competent to provide advice to prospective purchasers.

4.1.6 Central Stores
It should be noted that the Financial Regulations require Departmental Heads to obtain competitive quotations when:

4.1.7 Other Centralised Stores
Specialised service units of the College, e.g. the Reprographic Unit, IT Services and the Textiles shop, hold stocks and are required to account for such in a form acceptable to the Director of Finance. Halls of Residence are also required to account for unused stock in hand as at the end of each financial year (31 July).

4.1.8 Special Purchasing Organisations
The College is a member of the London Universities Purchasing Consortium (LUPC) and the Buying Agency (TBA). Through these the College benefits from the economies arising from negotiated prices with recommended suppliers, the interchange of statistical data, the provision of advice and the sponsoring of seminars, courses, etc designed to improve the effectiveness of purchasing staff.

All staff wishing to buy goods and services must refer to LUPC agreements before an order is placed. A list of our current agreements and the approved suppliers is available at London Universities Purchasing Consortium (LUPC).

The Purchasing section of the Finance Department is well placed to advise on sources of supply and special terms available to the College and should be consulted before goods or services are ordered from non-approved suppliers. Goldsmiths has full access to all the agreements LUPC has arranged, as well as multi-regional and national agreements that we are participating in, arranged by other consortia across the UK. LUPC is an independent organisation that provides a service to its member institutions - Universities and Colleges in and around London - through consensus and the common desire to maximise its purchasing power in the market place.