Systems and Procedures
A Division of The Corporate Controller's Office
IN

Procedure BS2012 - General Stores "Stockless Inventory" /ACH Payments

Auxiliary & Business Services

Policy Steward facilitating procedure: Associate Vice President for Auxiliary & Business Services

Table of Contents:


GENERAL:

A Supply Agreement has been entered into with OfficeMax and The Pennsylvania State University, through The Pennsylvania State University contract 8726-B-2017. OfficeMax will sell office supplies to Penn State for a “Stockless Inventory” program for the period of December 1, 2010 to November 30, 2017 (“Initial Term”) with two (2) optional one (1) year extensions to be effective only upon the mutual agreement of both parties.

The General Stores sale of merchandise is conducted through the eBuy online system. Authorized Penn State employees are authenticated and logged on to the eBuy system, after which they place their orders. The order information is transmitted to OfficeMax electronically throughout the day, and OfficeMax will deliver the order to Penn State the next business day. In addition, OfficeMax offers a discount on total monthly purchases, if payment is received within five Ten (10) business days after an invoice is issued to Penn State. The agreement, The Pennsylvania State University contract 8726-B-2017, is on file in General Stores and Procurement Services and contains more specifics on pricing, customer service, existing office supply inventory and insurance.

This procedure establishes the necessary accounting procedures and controls for order processing and the monthly payments made to OfficeMax.

PROCEDURE:

ESTABLISHING THE STANDING PURCHASE ORDER

General Stores will prepare a Standing Purchase Order Requisition (per BS10, Blanket or Standing Order) to OfficeMax with a special vendor Operations number for the “Stockless Inventory” program.  Funds will be encumbered by the Standing Purchase Order Requisition to the General Stores’ budget for the total amount of the estimated fiscal year’s activity. The Standing Purchase Order Requisition will be forwarded to the Department of Purchases and when approved, will become a Standing Purchase Order sent to the vendor.

PROCESSING GENERAL STORES ORDERS AND TRANSMITTING ORDER TO OFFICEMAX

During the month, University departments will log on to the eBuy online system and place orders. The order information is transferred to into the OfficeMax terminal at General Stores and converted to a web-based, General Stores Purchase Order (Exhibit “A“).

The purchase order data is transmitted to OfficeMax, who will fill the order. As items in the order are filled by OfficeMax, the OfficeMax customer service representative assigned to General Stores will make the appropriate entry to the General Stores Purchase Order (Exhibit “A“), thereby updating the “Delivery Information To Date” area of the form (see bottom of Exhibit “A“). Likewise, an OfficeMax Packing List (Exhibit “B“) is generated. Once the order is filled, OfficeMax will deliver the goods, with OfficeMax Packing List (Exhibit “B“), to General Stores.

NOTE: All adjustments, cancellations and returns for items ordered through the OfficeMax terminal and received into General Stores will be communicated immediately to the OfficeMax customer service/marketing representative assigned to General Stores. All adjustments to correct the invoicing will be made by the OfficeMax representative via the OfficeMax terminal and documented for subsequent review by the General Stores Assistant Manager.

When goods are received from OfficeMax, General Stores personnel will check the items received to what is listed on the OfficeMax Packing List (Exhibit “B“). Any discrepancies or disputes will be brought to the attention of the General Stores Assistant Manager. Such discrepancies or disputes will be resolved per discussion with the OfficeMax customer service representative, at which time the appropriate adjustment made to the corresponding General Stores Purchase Order (Exhibit “A“; see NOTE, above). Once the order is checked/validated, a General Stores Invoice (Exhibit “C“) will be generated. Additionally, the merchandise is scanned into a handheld tracking device.

Upon arrival at the ordering department, the General Stores delivery Delivery Driver/ driver will scan the merchandise being delivered. Next, the delivery Ordering driver will obtain an electronic signature from a representative of the Department ordering department, having the individual sign in the appropriate area of the handheld tracking device. The electronic signature for the merchandise is stored electronically at General Stores (see Exhibit “G” – Electronic Signature Page) as acknowledgement/evidence of receipt. The General Stores Invoice (Exhibit “C“) is retained by General Stores, as well. The OfficeMax Packing List (Exhibit “B“) is given to the department for their records at the time of delivery.

NOTE: A separation of duties will exist between those placing the orders (entering eBuy order information into the OfficeMax terminal), those receiving the orders (checking items received to the OfficeMax Packing List - Exhibit “B“), and those reconciling the Monthly Invoice Summary (Exhibit “D“) to the Monthly Detailed Invoice Listing (Exhibit “E“) prior to payment authorization.

Returns- Customers are encouraged to inspect orders immediately upon receipt. If there is a discrepancy with any General Stores order, or if the incorrect goods have been ordered, this must be reported to General Stores within thirty (30) days following delivery. A Return Form is REQUIRED to be completed for all returns. The form (and pertinent information about returns) is available under the “Returns” link on the General Stores website. A Return Form must be submitted on- line to receive the appropriate credit. All orders are considered final after thirty days.

VALIDATION/RECONCILIATION AND PROCESSING PAYMENTS TO OFFICEMAX

As a result of the OfficeMax “Rebate” section of the Master Supply Agreement, it is necessary for General Stores to track the monthly gross amount of all General Stores Purchase Orders (Exhibit “A“) processed in a given month in order to verify the correct calculation of the discount (rebate) amount, as well as the correct amount due OfficeMax for the month.

Billing- OfficeMax will send a Monthly Invoice Summary (Exhibit “D“) to General Stores via email attachment by the third working day after the last day of the month, stating the billing period, the account number, and total remittance amount due to OfficeMax for the period. Also received will be a Monthly Detailed Invoice Listing (Exhibit “E“), a multi- page document specifying the details, by invoice and credit memo, that correspond to the totals reported on Monthly Invoice Summary (Exhibit “D“). (NOTE: this document is typically hundreds of pages long by virtue of the activity transacted in any given month.)

Validation/Reconciliation- General Stores will validate the “Pay This Amount” total listed on the Monthly Invoice Summary (Exhibit “D“) by comparing the detail entries listed on the Monthly Detailed Invoice Listing (Exhibit “E“) to their corresponding General Stores Purchase Orders (Exhibit “A“) originally generated from the eBuy process, then comparing that monthly total to the total being requested by OfficeMax. This process verifies the accuracy of the dollar total being billed by OfficeMax prior to General Stores authorizing any payment for the services rendered.

Any discrepancies discovered between General Stores records and the details reported on the Monthly Detailed Invoice Listing (Exhibit “E “) will be brought to the attention of the General Stores Assistant Manager, investigated and resolved between the General Stores Assistant Manager and OfficeMax customer service/marketing representative. The balance due will adjusted if/as needed prior to General Stores authorizing payment. This activity will be documented to provide adequate evidence of review and resolution.

NOTE: Not every detail is reconciled every month, because of the massive volume of orders processed. Instead, all credit memos are verified against their corresponding General Stores Purchase Orders (Exhibit “A“), and large, high dollar orders are spot-checked in the same fashion. However, on a semi-annual basis, General Stores does trace agree EVERY line item on the selected Monthly Detailed Invoice Listing (Exhibit “E“) to their corresponding General Stores Purchase Orders (Exhibit “A“), as well as comparing the monthly total to validate the accuracy of the Monthly Invoice Summary (Exhibit “D“). Proof of this reconciliation will be evidenced by signature and date on the applicable Monthly Detailed Invoice Listings (Exhibit “E“) by the individual performing the review.

Payment- Upon General Stores validation of amount being billed by OfficeMax to the appropriate records, payment will be authorized. The General Stores Assistant Manager will submit an EFT Request Email (Exhibit “F“) to Accounting Operations requesting an electronic funds transfer to OfficeMax for the amount due (the General Stores Manager, Business Services Manager and Purchasing Services are copied, as well). A copy of the Monthly Invoice Summary (Exhibit “D“) is attached to the email that is sent to Accounting Operations and Purchasing Services as support for the electronic funds transfer request.

Per the agreement with OfficeMax, a 1% discount will be applied if payment is made by an ACH payment by the seventh (7th) day of the month. The discount is shown on the Monthly Invoice Summary (Exhibit “D“) as a reduction to the current gross amount (labeled “Net 10 Day Payment Discount of 1%”).

The remittance amount is charged against the General Stores Standing Purchase Order with OfficeMax.

The amount of the Monthly Invoice Summary (Exhibit “D“) and other required ACH payment information will be forwarded to Financial Management by Accounting Operations to make release the ACH payment to OfficeMax’s bank.

Financial Management will confirm to Accounting Operations via the ACH Receiving Detail Remittance Report (not exhibited) that the authorized payment amount to OfficeMax’s Bank was made for the amount indicated on the date required.

Upon receipt of the invoice, Accounting Operations will prepare a Journal Voucher (JVCN) per instructions in GURU for the amount due on the Monthly Invoice Summary (Exhibit “D“) to reflect the charge (debit) against the General Stores Standing Purchase Order for OfficeMax, and the credit against cash (bank account) for the ACH payment. A fee for the ACH payment will be included on the Journal Voucher as a charge to the General Stores budget.

AUDIT COORDINATION - FINANCIAL AND PROCEDURAL

The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area, as well as performing an annual audit that is submitted to the Assistant Controller.

RECORD RETENTION, DISPOSITION AND DESTRUCTION:

Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.

Upon expiration of a stated period of time, documents must be discarded and/or destroyed, unless permission is granted by Records Management Officer or designee to retain the records. Archival records created more than 20 years prior to the current date must be reviewed before destruction. Units should also contact the University Archivist before discarding any document which may be of permanent or historical value to the University. To safeguard the privacy of individuals, documents that contain salary information, personally identifiable information (PII), or student records must also be shredded. See Policy AD53 - Privacy Policy and AD22 - Health Insurance Portability and Accountability Act for additional information regarding privacy and the protection of an individual's personal information. For documents that must be shredded, departments may arrange for Blue Bag service by contacting the Blue/White Shredding Program of the Office of Physical Plant. Exceptions to the practice are as follows:

Additional questions may be directed to the University Archivist or the Records Management Officer.

EXHIBITS:

CONTACT INFORMATION:

For questions, additional detail, or to request changes to this procedure, please contact the Manager of General Stores.

CROSS REFERENCES:


Procedure Status:

Date Approved: 4/13/2015

Most recent changes:

Revision History (and effective dates:)