Policy No.: 104.4 (previously 104.11, Check Requisition)
Revision No.: 2
Effective Date: 2/28/97
Category: Purchasing
Title: Exceptions to the Purchase Order Process

I. In situations where use of a Purchase Order is inappropriate (see below), a department may authorize the purchase of goods or services using the following methods:

A. Prepare a Check Requisition (see Item III below). B. Authorize a payment via approval of a vendor invoice (see Item III below). C. Prepare an Expense Report to reimburse an employee for travel and entertainment - see Policy 105.5. D. Prepare an Inter-Departmental Transfer (IDT) - see Policy 104.9.

Under the above methods, funds are not encumbered or removed from a department's budget until the check requisition, invoice, expense report or IDT is entered into the University's accounting systems by Procurement or General Accounting Department. The Procurement Department will conduct periodic reviews of activity. Those not adhering to policy may have approval authority removed subject to Division Head review. The purchase order process affords the department the opportunity to encumber funds at the point of order preparation. More importantly, methods A. and B. above do not afford Procurement the opportunity to bid or confirm the use of a preferred (University) vendor, which could result in a costlier purchase to the University.

II. The above methods are used for the following:

A. Instances where a vendor does not accept a purchase order. B. Reimbursement to employees for travel and entertainment -Expense Report only (see Travel and Entertainment Policy 105.5). C. Acquisition of goods or services from another University department - IDT only (see IDT policy 104.9). D. Petty Cash Disbursements. E. Books and subscriptions (professional journals, periodicals, etc.). F. Registration fees for meetings, conferences, seminars, tournaments, etc. G. Honorariums, speaking fees, guest lecturers. H. Bands, stage crews, sports officials, special events security guards, athletic entry fees. I. Reimbursement to employees or students for supplies. An employee cannot approve their own reimbursement. J. Stipends for the seminary or campus ministry. K. Payments from agency accounts. L. Professional fees to attorneys or accounting firms.

III.Check Requisitions should be used for the above situations, not including travel and entertainment reimbursement and inter-departmental purchases, where a vendor invoice is not present. This usually is the result of a situation where payment is required to order a good or service (subscription, registration, etc.), a reimbursement to an employee or student for a supply purchase is necessary, stipends must be paid for the seminary or campus ministry, etc. Documentation to support the purchase should be attached to the check requisition. Examples of supportive documentation are as follows:

A. A contract evidencing acceptance, signed by Seton Hall University Management and the contractor, describing in sufficient detail the nature of services to be provided on the contract (time, place, date, nature of service, proof of satisfaction, etc.). B. A letter of intent provided by University management on Seton Hall letterhead in the form of an invitation to a speaker, guest lecturer or honoraria recipient, detailing Seton Hall university's expectations (time, place, service) and amount of consideration offered for same. C. A copy and the original subscription order or registration/ dues document (original is mailed with check).

As the check requisition itself must contain a business "reason for expenditure" and must reflect the appropriate approvals, no further signatures, explanations, etc. must be on any supporting documentation. The "reason for expenditure" area of the check requisition must reflect the date of receipt of good or service, where applicable; for those requisitions processed in June and July, due to fiscal year-end considerations.

IV. Where a vendor invoice is present for one of the above listed non-purchase order situations, the vendor invoice should be approved in the following fashion:

A. Manager or Executive signature (depending on dollar value indicated in Policy #204.0) and signature date B. Date of Receipt of good or service, if applicable, for invoices processed in June and July, due to fiscal year-end considerations. C. Account number or purchase order number

If a check must be picked up or an enclosure is to accompany the check to the vendor, then a check requisition form (or a copy of the check requisition form) must be used and the invoice must be attached to it. A reference such as "see attached" should be indicated in the "Payable to" section of the check requisition and the "Special Instructions" section of the check requisition must be completed. No other areas of the check requisition need be completed.

V. Internal Revenue Service Considerations: Any check payment to a non-employee individual must be accompanied by Internal Revenue Service Form W-9, unless the individual has already filed such form with Procurement in the past. Form W-9 requests that the individual receiving payment certify that their taxpayer identification number (either social security number or employer identification number) provided therein is correct, and that he or she is not subject to backup withholding taxes. If an individual fails to provide Procurement with a taxpayer identification number, Federal law requires the withholding of 31% Federal Income Tax.

Prior to generating a payment to an individual, a determination should be made, based upon Internal Revenue Service guidelines, as to whether the individual is an independent contractor or an employee who should be paid through the payroll system with the appropriate employment taxes withheld and paid to the government. Generally, the individual's status is dictated by the behavioral and financial control the University can exert over the individual and the relationship of the individual to the University. If the University has the right to direct or control how the work is done, the right to direct or control how the business aspects of the worker's activities are conducted, or the University and the individual perceive their relationship to be of an employee/employer nature, then the worker may have to be classified as an employee and paid through Payroll. As this is not always a clear cut decision, guidance on this matter should be sought from either Human Resources or the Controller's Department.

Generally, all compensation payments to be made to individuals who are already employees of the University should be made through payroll. This would exclude expense reimbursements.

VI. Student Financial Aid Considerations:

The University is responsible to the Federal government to consider all financial aid when processing a student for Federal funds. Accounts payable checks to students for awards, etc., must be considered in correctly determining financial aid available to a student.

Therefore, any check requisition disbursements to students that are not expense reimbursements (with receipts attached) or tuition/fee refunds must be brought to the attention of and requires the co-signature of the director of financial aid. The responsibility associated with the above falls with individual department management.

(JJP-6/97)