Procedure CR2069 - Direct Billing
Office of the Corporate Controller
Policy Steward facilitating procedure: Associate Vice President for Finance and Corporate Controller
Table of Contents:
- DIRECT BILLING
- PROCURING GOODS AND SERVICES
- SPECIAL PROVISIONS
- Office of Physical Plant
- Securing Approvals of Department Being Billed Prior to Providing Goods or Services
- Possession/Access to Approvals of the Department Being Billed Prior to Submitting Charges to Accounting Operations
- Approval Documentation
- Submission of Charges
- Processing Direct Bill Financial Activity Information
- Contention of Charges
- AUDIT COORDINATION - FINANCIAL AND PROCEDURAL
- RECORD RETENTION, DISPOSITION AND DESTRUCTION
- CONTACT INFORMATION
- CROSS REFERENCES
It is recognized that certain interdepartmental business transactions may be made more efficient by streamlining the transaction process while maintaining a required degree of control. There are two general ways to buy and sell goods and services between departments: Simple transactions where the supplier processes a document per transaction to debit and credit the applicable budgets, or Direct Billing where the supplier is authorized to batch process the debit and credits for multiple transactions. Direct billing represents an internal process whereby one University department is authorized to forward to Accounting Operations a summary of charges that another University department has incurred for provided goods and services. The purpose of direct billing is to eliminate much of the traditional detailed paperwork that is sent to and processed by Accounting Operations. It is NOT intended to eliminate the required approvals specified by Policy FN18 .
In order for a supplying department to participate in the direct billing process, the department's budget administrator must submit a written request to their respective Financial Officer for approval. The request must specify the exact nature of the activity (ies) that would be direct billed, and must provide justification for the request. The Financial Officer will judge the request on the merit of the department's ability to provide the necessary processing structure and on the reliability of the department to comply with the provisions of Policy FN16 . If the request is approved by the Financial Officer as an appropriate candidate for the direct billing process, the Financial Officer will submit the request to the Assistant Controller/Director of Financial Officers (further referred to as Assistant Controller) for final approval.
If the request is for multiple activities; the Assistant Controller may individually reject or approve each activity. Once the Assistant Controller has processed the request, the Assistant Controller will notify the Financial Officer of the outcome and copies will be sent to Internal Audit and Accounting Operations. The Assistant Controller will contact Administrative Information Services (AIS) to add the entity to the direct billing process and Accounting Operations to determine the type of report to be received for the direct billing process.
The supplier is authorized to batch process the debit and credits for multiple transactions. This is used by supplier departments with a high volume of transactions. The direct billing may be done by either:
- Electronic Upload to IBIS
- Use of Central Journal Voucher (JVCN) using an assigned JVCN reference number from Accounting Operations
Requirements for Electronic Upload to IBIS
The following are requirements which must be met by departments wishing to upload transactions to IBIS:
- Billing System must provide appropriate security at logon.
- Billing System must validate PSU account numbers via the use of an account validation file which will be provided via FTP to the Billing System on a nightly basis. The account validation also checks the account dates to ensure that the account is active.
- Billing System must be able to generate a Direct Bill file that will be used to charge individual accounts throughout the University. The file is a 1000 byte detail input record. The Billing System must have a feature to define a range of dates to build the Direct Bill file. Additionally, the Billing System must provide a unique control number on each 1000 byte detail to reference back to the billing system data/invoice. Contact AIS for the 1000 byte record format.
- Billing System must have a record retention feature where PSU can define the retention schedule for active billing records. An archival feature is also desirable to retain billing records for a specified period of time (beyond the active status).
- Billing System must have capability for the review of invoices - By user, by appropriate FO, and by Central Offices (access to all invoices). Billing information must provide detailed information regarding the charges. References to other documents without detailed information are not adequate.
- Billing System must be able to send confirmation emails to the user and to the appropriate FO, with detailed information on the purchase/order and who placed the order.
The direct billing process is allowable only when a department supplies goods or services on a routine, ongoing basis to the entire University (e.g., telephone charges). Departments utilizing direct billing may set up various methods for obtaining authorization for purchases from the department but must follow either Policy FN18 approvals or have another approved methodology for obtaining purchasing authority from the unit which will be direct billed.
An interdepartmental blanket order and an interdepartmental standing order are variations of the use of one of the above purchasing methods and are used to establish purchasing authority for a series of transactions using a single authorization document. An interdepartmental blanket order is issued to a supplying department for a specific period, up to a fiscal year, and a stated maximum dollar limit not to exceed $25,000, including subsequent increases. Purchases made against a blanket order are limited to goods or services ( including equipment and furniture) allowable on any of the internal purchase documents indicated in Policy FN16 (including direct billing). Purchases made against a blanket order are for items that are varied in nature and therefore indeterminate until a release is made, or are such that the department has found that a blanket order is the most efficient, controlled way to purchase such items.
An interdepartmental standing order is issued to a supplying department for a specific period, up to a fiscal year, and a stated maximum dollar limit. Interdepartmental standing orders may be used for all goods and service ( excluding equipment and furniture) allowable on any of the internal purchase documents indicated in Policy FN16 (including direct billing). Such goods and services are to be repetitive or recurring. All standing orders must be priced according to a bid or contract price. To establish a standing order, the goods or services to be purchased must be specifically defined on the order. Interdepartmental leases, rental, and service agreements must be made by standing orders.
The body of the documents used to establish a blanket or standing order MUST also contain the name(s) of the individual(s) authorized to make releases/requests against the order, the location(s) to which goods or services are to be delivered or made, and the stated maximum dollar limit for the total of all purchases to be made against the blanket or standing order.
The following forms administered through Systems and Procedures are to be used in establishing standing orders/billing authorization with the Office of Physical Plant:
- Maintenance Standing Order Authorization
- Material Billing Authorization
- Garage Repair and Fuel Service Authorization
The supplying department must have written evidence of, an approved request for goods or services from the department requesting goods or services prior to providing such goods or services . Such evidence must reflect a description of the goods or services to be rendered, the estimated cost, the account distribution for the actual cost, the department name and address, the required Policy FN18 approvals (unless another approved method for obtaining approval is in place), and, for blanket/standing authorizations, the name(s) of persons authorized to make releases or requests.
Supplying departments which do not have the necessary approvals prior to providing goods or services to a requesting department are at risk of non-payment; the requesting department is under no obligation to make settlement. The supplying department must credit the requesting department at the next billing cycle for any such unapproved charges that are disputed by the requesting department's budget executive, budget administrator, budget assistant, Financial Officer, financial assistant or respective proxies (see Policy FN18 for further information about these approvers).
Possession/Access to Approvals of the Department Being Billed Prior to Submitting Charges to Accounting Operations
The supplying department must have in its possession, or have access to, the required Policy FN18 approvals for each transaction or series of transactions prior to submitting any charges to Accounting Operations . Such evidence must reflect a description of the goods or services to be rendered, the estimated cost, the budgetary distribution for the actual cost, and the department name and address, and, for blanket/standing authorizations, the name(s) of persons authorized to make releases or requests. Any charges submitted without the supplying department having the required documentation of approval shall be a violation of Policy FN18 and must be fully borne by the department submitting the charges to Accounting Operations.
Any document having original Policy FN18 approvals and the information specified in the previous section shall be considered suitably approved documentation.
Supplying Departments may also accept purchase authorization in their own systems from individuals based on the Authorized Direct Billing in IBIS through ADBA (updated through UDBA). Direct Billing systems permitted preauthorized direct billing must use a notification system which sends confirmation of orders to not only the person requesting the purchase, but another person designated by the department to receive such notifications or the Financial Officer if no one else is designated. The Notify Role in the Role Authorization Tool (WebRAT) is commonly used to establish the appropriate notifications based on department and type of direct bill.
Approval documentation shall be valid only within a single fiscal year. Exceptions shall be:
The Office of Physical Plant Maintenance Standing Order Authorization and the Garage Repair and Fuel Service Authorization (on GURU) both which will remain in effect until rescinded. The Office of Physical Plant must remind each "customer" department on a fiscal annual basis of the active authorizations it maintains.
Long-term non-maintenance Physical Plant jobs in which case the documentation shall remain valid for the life of each job up to the stated estimated cost.
Direct Bill Authorizations established in IBIS through the ADBA/UDBA functions.
In order to streamline the approval process when a recurring blanket or standing order is involved (such as for utilities, telecommunications, copy services, etc.), the following is suggested: On an annual basis, the supplying department sends renewal notices to each customer. These notices detail the current year's commitments. The customer is asked to review the current information, make any changes, obtain the necessary approvals, and return the notice to the supplying department.
The supplying department may claim charges only for items delivered to the department being billed or for the portion of services satisfactorily completed.
Orders containing Items that are "back-ordered" will need to be re-submitted once the items are back in stock. The Supplying Department may not charge the procuring department for items they did not receive. The same is true for yearly services; the Supplying Department may not charge the procuring department for an entire year of a particular service when only a single month has transpired. An exception shall be a cancellation charge where the possibility of the charge is made known to the department to be billed at the time the transaction is initiated.
There are two methods for direct billing, both of which must be approved by the Corporate Controller's Office:
- Uploading transactions directly into IBIS. This method must be coordinated and established through AIS. The supplying department sends a file in approved format to AIS for uploading to IBIS on an established schedule, but no less than monthly.
- Preparation of JVCN. The supplying department prepares a Central Journal Voucher (JVCN) in IBIS which charges the accounts listed without requiring additional approval from the departments being charged. These should be done at least monthly by the supplying department.
At the same time the direct bill is prepared, the supplying department must provide a detailed statement to each customer department reflecting all transactions from the summary pertaining to that department. The statements may be provided electronically through a central portal or manually. The format of the detailed listing may be whatever the supplying department chooses, but must indicate at minimum:
- the name of the supplying department
- the billing period that the listing represents
- a brief general description of the nature of the charges (e.g., "catering services," " telephone toll charges," etc.)
- the name of the department being billed
- Each transaction must include:
- the account distribution for the department being billed. This must include the same account information that would be required on an Interdepartmental Charges and Credits . If a requesting department has provided a department reference number or cost center to the supplying department, that reference number or cost center must be carried forward to the direct bill.
- a clear description of the transaction including the date and the nature of the business function (e.g., "refreshments for 120 people, 'Excellence in Teaching' awards reception, lobby of Kern Bldg. on 3/11/XX, service request number 1234")
- a point of contact in the supplying department should the department being billed have questions regarding the billing
NOTE: the above budgetary information and descriptive information must be sufficiently detailed to allow the department being billed to identify and verify the accuracy of the billed transaction(s).)
Any contention by the department being billed of the accuracy of billing information must be made to the supplying department within 10 business days of receiving the detailed listing of transactions. The supplying department must respond to a claim within 10 business days. If the supplying department agrees with the claim, the correction must be made for the next billing cycle (or within the same fiscal year if contended billing is for the last month of the fiscal year). If the supplying department disputes the claim, then the budget administrators of both areas shall attempt to resolve the claim. If the budget administrators are unable to reach consensus, then the Assistant Controller shall review the claim and make the final ruling.
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.
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.
- Documents subject to a Legal Hold (see AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
- Documents under audit or review, either internally or externally. The retention period extends until released by the Corporate Controller's Office. The Financial Officer will be notified regarding any accounts which are under audit; the Financial Officer will be responsible for contacting the department.
Additional questions may be directed to the University Archivist or the Records Management Officer.
For questions, additional details, or to request changes to this procedure, please contact the Associate Controller
- Policy AD22 - Health Insurance Portability and Accountability Act
- Policy AD35 - University Archives and Records Management
- Policy FN16 Interdepartmental Transactions
- Policy FN18 University Approval Authorization Policy
- Blue/White Shredding Program
Date Approved: 7/6/15
Most recent changes:
- Revision 2 - dated 7/06/15
- Revision 1 - dated 10/6/99
- Original - dated 8/4/93