Use of a PCard (aka Purchasing or Procurement card) for non-recurring, small dollar transactions less than $3,000 in lieu of more traditional purchasing methods allows for efficient, flexible spending. These advantages may come at a cost when it comes to expenditures on sponsored agreements if appropriate internal controls are not in place.

While all PCard transactions must adhere to State and CSU policies and procedures, transactions must also comply with sponsor terms and conditions making PCard transactions open to scrutiny. Sponsors scrutinize the use of PCards due to several factors:

• Approval of PCard transactions occur after-the-fact
• PCards are generally point-of-sale transactions, and those receipts may contain mistakes
• Cost transfers happen more often with PCards
• PCard transactions often lack the proper backup information

Fiscal officers approve purchases after-the-fact    

PCards work like any other credit card. Users can use a PCard to purchase goods and services at their discretion, though transactions must be in accordance with Sponsor, State and University regulations. When expenses are reallocated to a different project, Fiscal officers (FO) review and approve in the financial system after-the-fact. 

Allowability and allocability are cornerstones of purchasing on sponsored projects and purchasers often overlook these when using PCards as a purchasing method. When using a PCard, allowability can be an afterthought and expenses can easily be allocated to sponsored projects without regard to the project benefits or terms. 

Per Uniform Guidance § 200.303 and various Sponsor guidance, institutions who receive Federal Awards and Contracts are to have established internal controls over the management of those funds and methods in place to determine that those controls are working. Having approvals for purchases after-the-fact is problematic to that guidance.

Point of sale transactions

Point of sale transactions with PCards requires a conscientious cardholder and thorough review by the FO. PCard cardholders must make sure that the award agreement allows the item or service, and that they follow State and CSU policies and procedures. They must make sure that purchases are tax-exempt when goods and services are delivered to a Colorado address, that they are receiving the correct price, that the receipt is readable and itemized. If any of the above are missing, including a missing/misplaced receipt, the PCard holder needs to follow the PCard Handbook to rectify before the transaction is reallocated to a sponsored project.

PCard cost transfers

All PCard holders are set up on a default account, generally a 13XXXXX or a 16XXXXX account associated with their unit on campus. Some PCard holders are set up on a sponsored account which may not allow for review of charges prior to them posting to the 53XXXXX account. When a charge posts in the Kuali financial system (KFS), it must be reviewed and reallocated and all approvals complete within 21 calendar days of the Kuali EDoc notification, or it will remain on the PCard holder’s default account. In (KFS) the process of reallocating looks like a cost transfer to an auditor, so it is important to verify allowability prior to reallocating the charge. If the reallocation period has passed and a charge has defaulted, the reallocator or FO may need to process a cost transfer. That cost transfer should address allowability, but you should also address why proper procedures (i.e. internal controls) where not followed. Cost transfers are one of the main red flags that auditors look for to establish whether an institution has robust internal controls for managing awards. Questions of financial mismanagement can be alleviated by following the correct processes for reallocating, reviewing transactions for allowability, and setting PCard holders up on proper default accounts.

PCard Backup Documentation

All purchasing transactions, regardless of method, PCard, Automatic Purchase Orders (APO), Disbursement Vouchers (DV), should include the following documentation:

• Merchant name
• Description and quantity of item(s) purchased
• Per item cost, if available
• Total cost
• Cardholder name (PCard only)

When purchasing on a sponsored project, purchasers should take additional steps to address allowability for each expense. If the FO deems the expense allowable for that specific award, the PCard holder must include a justification to document the benefit to the project and if they split the charge between multiple projects, an allocation rationale. A PI, researcher, or someone with knowledge of and the reason why the charge is appropriate to the account(s), should provide the justification if they have departmental staff purchasing on their behalf. This is true for materials, supplies, services, registration fees, publications, shipping charges, etc. The PCard holder must provide the justification at the same time as the receipt and the reallocator can upload the justification into KFS or input in one of the Notes fields.

Alternatives to PCards

Automatic Purchase Orders (APO) are another method for purchasing goods and services totaling <$10,000. In contrast to PCards, APOs start as a request to purchase in the form of a requisition after receipt of a quote for goods or services, or from Shop Catalogs. Shop Catalogs includes vendors that CSU has vetted, established pricing guidelines, and reviewed their terms and conditions. This purchasing method also allows the FO and OSP to review allowability to the project before the expense posts to the financial system.

If a purchaser receives an invoice <$5,000, a Disbursement Voucher (DV) is another method of issuing payment to an individual or vendor. DVs share similar problems as PCards as a purchasing mechanism since they are also after-the-fact approvals of purchases, but unlike them, DVs do not post to the financial system until the FO, Procurement (in some cases), and OSP reviews and approves.

PCards can be a powerful and convenient purchasing tool that our research community uses to aid in fulfilling the work promised in an award. It is best to limit their use to a few well-trained, trusted individuals so timely reallocations can occur or to use the alternative purchasing methods described above. Fiscal Officers should be vigilant in reviewing each purchase for allowability and making sure that the purchasers provide adequate backup documentation regardless of purchasing method. This will help to limit the exposure your unit or the University might face during an audit.

Resources

https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/section-200.303

https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E

https://procurement.colostate.edu/pcard-overview/