Expense Authorization (Alberta Council)

From SJA

This is a draft document.

Contents 1 The Need 2 Policy 2.1 Purpose 2.2 Scope 2.3 Responsibility 2.4 Definitions 2.5 References and Related Statements of Policy and Procedure 3 Procedures 3.1 Goods or Services Less Than $50 3.2 Goods or Services Greater Than $50 3.3 Purchases Initiated By Management 3.4 GST/HST 3.5 Authorizations by Board of Directors 3.6 Barter Transactions 3.7 Attachments

The Need

This policy establishes authorization levels for expenditures of company funds.

A sound system of internal control requires that there be separation between the person approving the expenditure and the person incurring the expenditure. Routine expenditures already approved under the budget are subject to less stringent requirements than expenditures that are not approved under the budget or that are out of the ordinary course of business.

Policy

All employees shall obtain appropriate authorization for any expenditure of company funds.

Purpose

The purpose of this Statement of Policy and Procedure is to establish internal controls over the authorization of expenses.

Scope

This policy applies to all individuals making purchases on behalf of St. John Ambulance Alberta Council.

Responsibility

All operating departments are responsible for ensuring that expenditures made on behalf of the company represent good value and represent a benefit to the company.

The Finance Department is responsible for ensuring that no payments are made without appropriate authorization.

Definitions

• "Petty cash" means a small amount of cash kept on hand at a work site to be used for necessary minor purchases.
• "Cheque requisition" means a form requesting a cheque be prepared for payment of a company expense.
• "Budget" means a financial plan outlining expected revenues, expenses, and expenditures for fixed assets that is formally reviewed and approved by the Board of Directors.
• "Barter transaction" means an exchange of goods or services between two or more parties where no money changes hands.

References and Related Statements of Policy and Procedure

• Petty Cash
• Company Credit Cards
• Cheque Issuance
• Authorizations (Alberta Council)

Procedures

Goods or Services Less Than $50

• Goods and services costing less than $50 required in the normal course of business may be paid for from petty cash.
• All withdrawals from petty cash and all expenditures using petty cash must be authorized by the department manager where the expense is to be coded. The authorization may occur at the time that the petty cash fund is replenished.

Goods or Services Greater Than $50

• For individual goods or services costing more than $50 required in the normal course of business, the purchase order process must be used, except in the case of regular predictable expenses such as rent or utilities where a contract is set up.
• For purchases of a recurring nature from major suppliers, or for standing order purchases, the purchase order process must be used regardless of the amount.
• Refer to Authorizations policy and procedure for detailed information on who authorizes expenses.
• Authorization for any activities, unless specified otherwise in another policy, shall be as follows:
  • Any agreement that may materially affect the direction or the finances of the company shall be reviewed and authorized by the Board of Directors.

Purchases Initiated By Management

All purchases made on behalf of the company must have an authorizing signature other than that of the initiator of the purchase. Where a manager or Department Head initiates a purchase, the authorization will be in accordance with the Authorization Policy and Procedure, or the individual's direct supervisor, whichever is higher.

GST/HST

In this policy, for the purpose of determining authorization and approval levels, the amount of a purchase ("gross value") excludes GST/HST, but includes any other taxes or charges.

Authorizations by Board of Directors

• The Board of Directors authorizes the annual expenses of the company by approving the annual budget.
• For major purchases not reflected in the budget, the Board of Directors delegates authorization responsibility to the President. However, the Board of Directors shall be informed of major purchases that have the potential to affect the direction or financial results of the company.
• The Board of Directors must approve purchase commitments (individuals purchase orders or supplier contracts) longer than two years or greater than $100,000. The Board of Directors may follow the practice of ratifying such commitments after the fact.

Barter Transactions

• Barter transactions are generally discouraged, by may be appropriate in special circumstances. They must be approved by a Vice President or CEO and the Finance Department, in addition to whatever approvals are required based upon the value involved.
• Barter transactions are accounted for at the amounts that would have been paid had they occurred as routine transactions in the ordinary course of business. Authorizations for barter transactions shall follow the same process as for a standard purchase, at the normal commercial value of the exchange. GST, as well as any other taxes must be accounted for as for a standard purchase.

Attachments

None.