PRE-PURCHASE

Prior to making any purchase with the FlexCard, your department should continue to follow its existing pre-purchase process for low value orders. While practices will vary from department to department and according to the type and amount of the purchase, the Cardholder should observe the following general process prior to placing an order. (Some of these steps may be performed by someone else – the end user perhaps – who presents the Cardholder with the information necessary for him/her to make the purchase.)

1. Determine whether the purchase is an allowable low value purchase:

   1. Does the total value (tax included) exceed your card's per transaction limit?

   2. Is the commodity restricted, such as inventorial equipment, a controlled item such as ethyl alcohol; narcotic or dangerous drug; firearm; precious metal; explosive or other hazardous material; personal services, including consulting services?

   If the answer to either question is Yes, the FlexCard cannot be used.

2. Obtain the necessary pre-purchase approvals. In the case of extramural funds, this may involve written approval of the P.I. (often in the form of an email). Some departments require a signed Request for Delivery or equivalent form before an order can be placed. On the other hand, many departments do not require written pre-approval for routine purchases of low value stock supply items.

3. Obtain purchase specifications from the end user (Merchant name, list of items, quantities, pricing, etc.). Often, this takes the form of an e-quote or website printout, or the information may be supplied on the Request for Delivery or equivalent form.

4. If used by your department, obtain the low value number, department dash number, cost type, cost center and/or project code associated with the purchase: these will be very important when it comes time to allocate the payment to the correct location-account-fund-sub-object code (LAFSO).

Back to Top

 

MAKING THE PURCHASE

The Cardholder can place an order in several different ways: via the Internet, over the telephone, by mail or in person.

1. When placing your order, if helpful for your department, provide the Merchant with your low value number (and department dash number) and ask the Merchant to include it when submitting your Visa card charge. Many Merchants are not capable of doing this. See the Merchants and Low Value Numbers section for more details.

2. Document the order. The documentation will take different forms, depending upon how the order was placed:

   1. Internet: print a copy of the Order Confirmation, confirmation email, order page, or other similar document

   2. Telephone order: write down the confirmation number, etc. on the Request for Delivery or other form that you used to place the order

   3. In-person purchase: retain a copy of the cash register receipt – which should be itemized to provide a full list of items purchased – and initial the receipt

3. Paper clip the order documentation to any pre-purchase approval documentation, keeping the paperwork for each order separate for easy reference.

4. Retain the documentation package for each order until you have received email notification of the charge via the Allocation Module and have confirmed that you placed the order.
   

   THE “BEHIND THE SCENES” PROCESS

   1. When the Merchant ships the order, it processes the charge against your FlexCard: a charge should never be processed before the order is filled. (If you made the purchase in-person, the charge is processed immediately.)

   2. The Merchant’s Visa processor passes the charge to the Merchant’s bank (the Merchant’s account is credited).

   3. The Merchant’s bank passes the charge to U.S. Bank (U.S. Bank is debited).

   4. U.S. Bank passes the charge (debit) to UCSB, as part of a file that is received each working day, Monday-Friday.

   5. When UCSB receives the U.S. Bank file, each charge is matched (by means of the card number) with the correct Cardholder and made available in the Allocation Module for processing by your department.

   6. The Allocation Module generates an email notification of a new transaction pending review that is sent to the Cardholder, Allocator (if a separate one has been set up) and Reviewer. Only one email notification per program participant is generated per day: if 36 new transactions made by 3 Cardholders are processed, the Reviewer receives one email notification, as does each of the Cardholders.

Back to Top

RESPONDING TO FLEXCARD ALLOCATION MODULE EMAIL NOTIFICATION OF A NEW TRANSACTION PENDING REVIEW

NOTE: Except in the case of in-person purchases, you will almost always receive the FlexCard Allocation Module email notification of new transactions prior to delivery of the order.

CARDHOLDER

1. Log onto the FlexCard Allocation module and verify that the transaction information is correct:

   1. Did you place an order with this Merchant? If no, there may be credit card fraud – follow the procedures outlined under Fraudulent Charges and Disputes.

   2. Is the Merchant total accurate? If higher, it may be because of shipping charges added by the Merchant. If lower, it may be because of a partial shipment. You will need to wait for actual delivery of the order before you can confirm any billing discrepancies.

REVIEWER

Unless the transaction was an in-person purchase and the goods have been received, there is nothing for the Reviewer to do at this point in time: the charges cannot be allocated until the order has been received (see below, Receiving the Order).

If the transaction was an in-person purchase, the Reviewer can proceed with allocation of the expense (see below, Allocating Charges to the General Ledger).

Back to Top

 

RECEIVING THE ORDER

Note: In order to maintain proper separation of duties and controls, an employee OTHER THAN THE CARDHOLDER should be responsible for receiving the order.

1. Review the shipment for completeness: were all the items shipped or are some on back order? Is the shipment correct (i.e., do the items received match the items ordered)?

2. If there are any problems with the order – for example, if the wrong item was shipped – contact the Merchant and take the necessary steps (return of incorrect item, processing of credit invoice, re-shipment of correct item) to remedy the situation. If desired, enter a Comment into the FlexCard Allocation Module. There is no need to file a Dispute with U.S. Bank unless you cannot resolve the problem with the Merchant.

3. Check off each item on the packing slip/or pro forma invoice enclosed with the order.

4. Sign and date the packing slip/pro forma invoice and attach it to the order documentation package.

5. Pass the documentation package to the Allocator or Reviewer, as appropriate in your department. (If you are a Cardholder/Allocator, retain the package until the expense has been allocated via the Allocation Module, and then pass it to the Reviewer.)

Back to Top

TRANSFERRING CHARGES TO THE GENERAL LEDGER

IMPORTANT GENERAL INFORMATION: Your department has 14 days from the day that the notification of a new transaction was emailed to REVIEW it (that is, to approve the expense and allocate it to a specific LAFSO). If you do not review the transaction within the 14-day window, it will automatically be allocated to the FlexCard’s default LAFSO.

Whenever you log onto the FlexCard Allocation Module, a message will alert you if any unallocated transaction is going to post – THE NEXT DAY – to the default LAFSO unless you review it.

If you do not review an unallocated transaction, the next time you log onto the Allocation Module, a message will warn you that it has posted to the default LAFSO.

Even if the default LAFSO was correct, the transaction MUST STILL BE REVIEWED. Email notifications will be generated when unreviewed transactions are about to reach 30-, 45- and 60-day milestones.

If you do not review a transaction within 60 days, FlexCard Program Administration will be notified and your department’s FlexCard purchasing privileges will be suspended. Email notifications will be sent not only to the Reviewer, but also to the Cardholder(s) and Department Administrator.

The Reviewer will need to log onto the Allocation Module and allocate (via TOE, if necessary) all transactions not reviewed within 60 days. The FlexCard Administrators will schedule a meeting with the Reviewer and/or Department Administrator to discuss the situation and the measures that your department will need to implement in order to prevent its recurrence. Only after this meeting has taken place will FlexCard purchasing privileges be re-instated.

It is critical that all transactions be reviewed within the 60-day window because your department loses the right to dispute charges through U.S. Bank once this milestone has been reached. Even if the charges are fraudulent, your department will be liable for them. In addition, UC financial policy and controls oblige departments to show due diligence in the monitoring of their expenditures.

Within the 14-Day Window

1. Have the purchase documentation package in front of you in order to verify all pertinent details before proceeding.

2. Log onto the FlexCard Allocation Module and allocate the charges as appropriate.

(See the FlexCard Allocation Module User Manual for complete details on how to allocate charges.)

3. Approve the charges, thereby transferring them to the General Ledger.

Remember: If you are an Allocator, or a Cardholder/Allocator, you can only allocate the charges and save the allocation, you cannot approve the transaction. Only a Reviewer can approve the transaction and transfer it to the General Ledger.

After the 14-Day Window (15-60 days)

1. If a transaction is not approved within the 14-day window, it will automatically be allocated to the FlexCard’s default LAFSO.

2. If the default LAFSO is not the correct one, reallocate the charge using TOE. You can access TOE from within the FlexCard Allocation Module (see the FlexCard Allocation Module User Manual) or by logging directly onto the Transfer of Expense system via the Espresso single sign-on portal.

As noted above, even if the default LAFSO was correct, the transaction MUST STILL BE REVIEWED. “Passive” review (approval) is not an acceptable control procedure.

After the 60-Day Window

If you do not review a transaction within 60 days, having ignored the 30-, 45- and 60-day warnings, FlexCard Program Administration will be notified and your department’s FlexCard purchasing privileges will be suspended. Email notifications will be sent not only to the Reviewer, but also to the Cardholder(s) and Department Administrator.

In order to restore your department’s FlexCard purchasing privileges, proceed as follows:

1. The Reviewer must log onto the Allocation Module and approve and allocate (via TOE, if necessary) all transactions not reviewed within 60 days (and should, at the same time, approve ALL outstanding unreviewed transactions).

2. The Reviewer and/or Department Administrators must meet with FlexCard Administration to discuss the situation and the measures implemented to prevent its recurrence.

3. Upon the satisfactory conclusion of this meeting, FlexCard Administration will re-instate your FlexCard purchasing privileges.

As noted above, it is critical that all transactions be reviewed within the 60-day window because your department loses the right to dispute charges through U.S. Bank once this milestone has been reached. Even if the charges are fraudulent, your department will be liable for these charges. In addition, UC financial policy and controls oblige department to show due diligence in the monitoring of their expenditures.

Back to Top

RECONCILING TO THE GENERAL LEDGER

FlexCard purchases are no different from any other expenditures that post to the General Ledger: all financial transactions that appear on the General Ledger should be reconciled each month. There is an excellent chapter on “Reviewing and Reconciling the General Ledger” in the UCSB Campus Information and Procedure Manual created by the Office of the Controller.

In the case of FlexCard purchases, the initial reconciliation will have been made at the time that the charge was approved and allocated by the Reviewer. The General Ledger review, in the case of FlexCard purchases, will consist of verifying that the charge has hit the General Ledger in the expected amount, under the expected LAFSO. Any errors or discrepancies must be corrected via the use of the Transfer of Expense system or by working with Accounting Services & Controls (usetax, etc. issues).

Back to Top

POST-PURCHASE - AUDITS

The FlexCard Purchasing Process includes audits of purchases made using the FlexCard, at several different times during the process and at several different levels both within and outside of your department and the University. Auditing of FlexCard purchases is an important element of the FlexCard Program and is discussed under The FlexCard Audit Process.

Back to Top