Office of Procurement & Real Property
July 24, 2014
New Policy – PCard Preferred Method
for Small Dollar Purchases
• PCard will be Preferred Method of
Small Dollar Purchases <$2,500
• To Improve Efficiency &
Effectiveness of UH’s Small-Dollar
New Policy – PCard Preferred
Method for Small Dollar Purchases
• Issues & Concerns:
• Increased Potential for Misuse
• Exposure to Financial Losses
• Maintaining Control Over Spending
New Policy – Preferred Method for
Small Dollar Purchases
• Justification Required for Purchases <$2,500 that
are Made on PO
• Enter Statement or Pull Common Reason from
Justification Table
• Common Reasons on Justification Table
• Justification Will Not Appear on PO
Preferred Method for Small Dollar
Purchases - Exceptions to New
• Vendor does not accept credit card or MasterCard
• Purchase above Cardholder’s Limit
• Vendor assesses fee for credit card purchase
• Real Property Leases & Rentals
• Legal Services
• High Risk purchase
• Vendor requests payment to a third party
• Other reasons where PCard is not a viable option for purchase
• Stipend payments
• Payments for scholarship & fellowship
New Policy – PCard Preferred
Method for Small Dollar Purchases
• Purpose of New Policy to Improve Efficiency &
Effectiveness of UH’s Small-Dollar Procurements
• Streamline & Improve Process While Maintaining
Prudent Fiscal Control
• Revise Purchasing Card Program Goals
• Update Purchasing Card Policies & Procedures
• Transition to More Robust Electronic Processes
PCard Goals Revised
• Old: Simplify & Expedite Procurement
Process for Small Dollar Goods & Services
• New: Provide Operational Efficiency for
Purchase of Small-Dollar Goods & Services
w/out Sacrificing Fiduciary Control
• PCard is a Privilege
Transition to Newer & More Robust
Electronic Processes - PCDO
• New Kuali Module for Purchasing Cards
• Facilitates Business Workflow
• Eliminates Need for Manual Logs
• Provides Electronic Routing of PCard Transactions for
• Allows PCard Transactions to be Reallocated Directly in
UH’s Financial System
• Accounts & Object Codes Validated Immediately
• Charges Can Post to General Ledger Balances More
Transition to Newer & More Robust
Electronic Processes - CentreSuite
• Discontinuing PVSNet
• Using CentreSuite to Supplement PCDO
• Newer, Improved Card Management Tool
• Real-Time Data
• Higher Level of Self Service
• Easy to Use
• View Transactions Prior to KFS Feed
• Transaction Details (Level 3 Data)
• View Approvals & Declines
• View Statements
• Expense Module
CentreSuite – Expense Module
New PCard Button on Requisition
• New “Issue by PCard” Button on Requisition
• Allows FA to use requisition to obtain pre-
approval for PCard transaction
Built-In Controls – Card Limits
• PCardholder Limits
• Maximum Transaction Limit: $2,499
• Maximum Card (Billing Period) Limit: $24,999
Built-in Controls - Blocked MCCs
• Merchant Category Codes (MCCs) are Assigned
by Vendor’s Merchant Bank Based on Type of
Goods or Services That Vendor Typically
• Blocking Certain MCCs Provides a Measure of
Protection vs Unauthorized or Prohibited
• By Policy, UH has Established that PCard Cannot
be Used at Certain Categories of Vendors &
Blocked their MCCs
Built-In Controls - Blocked MCCs
• Since Cardholders Have Different Purchasing
Needs, Created New MCC Exception (UHDec)
Groups Categorized by Job Duties
• Basic Cardholder
• Business Unit (Fiscal Support)
• Interisland Traveler
• Traveler
• Operational Unit (relating to operations, facilities)
• Research
• Assignment to UHDec Group Based on Various Factors
• Changes Require Justification
Guidelines for PCard Use
• No Personal Use
• Use Must be in Accordance w/ All Pertinent Policies,
Procedures, Guidelines & Regulations
Understand What CAN & CANNOT be Purchased w/
Ensure Purchases Have Legitimate Business Purpose &
are in Best Interest of University
Adhere to Purchase Limits & Restrictions of PCard
Don’t Misuse Card
• Reimburse UH for Improper Purchases
• Parceling is Prohibited
Guidelines for PCard Use
• Parceling
• Artificial or Intentional Division or Fragmentation of a
Purchase of Same, Like, or Related Items of Goods,
Services, or Construction into Several Purchases of
Smaller Quantities, in Order to Evade Procurement
Requirements or Limits of Delegated Purchasing
• Multiple Expenditures Shall Not be Created at Inception
of a Transaction so as to Evade PCard Limit
Guidelines for PCard Use
• Don’t Allow Others to Use your PCard
• Retain Itemized Receipts for Purchases
• Obtain Support Documentation (Appropriate Forms &
Certify Receipt of Goods & Services
Ensure Purchases Do Not Exceed Budgeted Funds
Safeguard PCard
Do Not Accept Cash in Lieu of Credit
Report Lost, Stolen or Compromised Cards Immediately
Notify FA or Dept PCard Coordinator Prior to Transferring
or Terminating Employment
Guidelines for PCard Use
• Report Disputes in Timely Manner
• FHB Must be Notified w/in 60 Days of Cycle in Which Item First
Appears on Cardholder Statement
• Ensure Appropriate Credit Appears on Account
• Utilize SPO Price/Vendor Lists & UH Requirements
Cardholders Utilizing Extramural Funds Must Comply with
OMB Circular A21, Section J
Rebates, Free Gift w/ Purchase
Foreign Transaction Fee
Third Party Providers (e.g. PayPal)
Restricted Commodities - Inappropriate
• Restricted Commodities
• Items Listed in A8.225, Limitations in Purchasing
• Items of Personal Nature
• Contributions or Donations
• Controlled Substances
• Firearms & Ammunition
• Payments to Individuals
• Non-Business Related Goods & Services
Don’t Use PCard for Purchases
That Require Contract
• PCards May Not be Used for Purchases that
Require a Contract
• PCards May Not be Used to Pay Against
Contracts or Purchase Orders
• PCards May be Used in Lieu of Maintenance
Contract when
• 1) Scope of Work is Simple
• and
• 2) Agreement Provides for One-Time
Payment or One Time Servicing
Purchasing Requirements
• Purchasing Requirements for Various Types of Goods &
• Refer to Procurement Section of APM, A8.200-A8.299
• Not Allowed to Use PCard for Certain Goods/Services
• Legal Services
• Real Property Leases & Rentals
• Services on Contractual Basis (UH Services Contract)
• Some Goods & Services Require Authorization in
• Hazardous Materials (Hazardous Materials Mgmt Office)
• Biological Commodities (Research Compliance Office)
Purchasing Requirements
• Certain Goods & Services Require
Approval/Authorization/Review in Advance
• Insurance (must be submitted for review & processing by Office of
Risk Management)
Travel Related Expenses
Business Cards
Repairs & Alterations to Buildings & Grounds (FPMO)
Keys & Lock Service (FPMO)
Leis (amt. must be determined reasonable by FA)
Telecom Equipment & Service (proposed procurement actions
should be forwarded to ITS for approval)
Information Technology Hardware, Software & Services (contact
ITS in advance to determine whether requirement can be fulfilled
internally & whether there are internal guidelines for compatibility or
Purchasing Requirements
• Certain Goods & Services Have Other Requirements
• Meals & Refreshments – Form 56 or 136
• Construction – approving & reporting requirements, minimum wage
& skilled tradesperson clauses
• Organizational Membership – must benefit UH & be directly
supportive of departmental function & have a reasonable &
acceptable cost/benefit ratio
• Car Rentals – confined to compact & subcompact vehicles unless
reasons exist to justify need for larger vehicle
• Ethyl Alcohol – restricted to certain UH programs, must be obtained
from Chemistry Dept. on Manoa campus via IDO
Original Receipts
• Original Receipts Preferred
• In accordance w/ Section 40-57.6, HRS, the State Comptroller
has determined the acceptability of the following documents
submitted in lieu of an original bill for purchases made by
• Sales slip or charge receipt
• Electronic purchase confirmation (for internet purchase
• Itemized packing slip
• E-mail confirmation of purchase
• Above Documents Must Have:
• Vendor’s Name
• Date of Purchase
• Description
• Cost of Goods Purchased
Meals & Refreshments (A8.265)
• 5)
Where the purchase of meals &/or refreshments
utilize special, revolving &/or endowment funds
(unless expressly precluded by the terms &
conditions of the fund) & are for University events &
activities excluding internal staff meetings, training
sessions, and similar activities; provided that the
purchase is:
• a)
• b)
necessary, reasonable in cost, & appropriate to the particular
University event or function; &
approved by the President, a Vice President,
Chancellor, or their designees.
New Three Strike Violation Process
for Non-Compliance
• Following Will Subject Cardholder to Three
Strike Violation Process:
• Card used for Personal Use or
Unauthorized Purposes
• Purchase is Parceled
• Purchase Split Among Cardholders to
Circumvent Purchasing Card Limit
• Failure to Approve the PCDO eDoc within a
Reasonable Period of Time (e.g. by next
billing cycle)
New Three Strike Violation Process
for Non-Compliance
• Failure to Provide Adequate Support
Documentation for Purchases
• Failure to Provide, when requested,
Information About a Specific Purchase
• Violation of Grant Restriction or
• Misuse (wide range of violations, some of
which are more severe than others)
New Three Strike Violation Process
for Non-Compliance
• Three Instances of Non-Compliance May
Result in Revocation of PCard
• Violation #1
• Notification Sent to All Parties
• Notification Placed in Dept’s Violations File
• Notification Serves as Warning & Explains
Corrective Action Necessary
New Three Strike Violation Process
for Non-Compliance
• Violation #2
• Meets w/ PCard Administrator, Director of
Procurement &/or VP for Administration
• Purpose of Meeting
• Discuss Problem
• Provide Additional Training
• Documentation Placed in Dept’s Violations
New Three Strike Violation Process
for Non-Compliance
• Violation #3
• May Result in Immediate Termination of
• Repeated Violations w/in Department May
Result in Entire Department Losing PCard
Privileges for One Year
Serious Violations
• If Cardholder’s Offense Deemed to be Deliberate,
Fraudulent or Illegal Misuse, Cardholder’s
Account May be Terminated Immediately &
Cardholder May be Held Liable for Total Amount
of Prohibited Purchase
• May Subject Cardholder to Disciplinary Action, up
to & Including, Termination of Employment, in
Accordance w/ Applicable Collective Bargaining
Agreements & UH Admin. Procedures
Serious Violations
• Matter May be Referred to UH General
Counsel for Appropriate Civil Action vs
Cardholder to Recover UH Funds Expended
as Result of Unauthorized &/or Inappropriate
Use of PCard
• Will Determine Appropriate Course of Action
for Serious Violations of PCard Policies
Compromised Cards
• Compromised Card
• Card that is at risk of being used fraudulently
• Card information may have been obtained by
unauthorized individual(s)
• FHB notifies Cardholder by phone that card may have
been compromised
• WATCH on Account
• If FHB’s Fraud Unit suspects fraud, WATCH is placed
on account
• Once WATCH is placed on account, subsequent
transactions are declined until WATCH is removed
Compromised Cards
• WATCH on Account
• Usually Generated by Foreign Transactions
• Much of Fraud Comes from Overseas
• Notify PCard Administrator when traveling overseas
• What to Do
• Check CentreSuite
• Return FHB’s Call or Notify PCard Administrator
• Verify Transactions
• Dispute Unauthorized Transactions That Have Posted
to Account
FAQs from Tax Treatment Webinar
• Q: Can I use PCard to purchase airfare on behalf of stipend recipient?
• A: Do not use PCard to purchase airfare. This is because there is no
mechanism in the bank PCard system to capture the data that is used to
determine resident status and purpose of the trip….
Q: With the changes in PCard & preference to use PCard instead of PO,
can we continue w/ small PO process for 3rd party payment on behalf of
stipend recipient?
A: Yes. In fact, we ask you to make stipend payments using purchase
order process, if possible…
Q: If we receive a WH-1 before making a hotel reservation, could we use
our PCard to pay for the non-employee foreigner’s lodging?
A: Do not use a PCard to purchase non-employee foreigner’s lodging…..
• Tax Treatment Webinar powerpoint presentation is posted on the UH
FMO website www.fmo.hawaii.edu/fmo/
PCard Shopping Tips
• Effective Jan 2013, Vendors in US Permitted to Impose
Surcharge on Consumers When They Use Credit Card
• Retailer must notify customer before customer makes actual
purchase, or in an online environment, on first page that references
credit card brands
• Retailer must disclose surcharge fee on every receipt
• Retailers can offer a discount for cash & check purchases
• Against MasterCard’s Regulations for Vendor to Bill Cards
Prior to Shipping
• Courtesy Discount for PCards at Bookstore
• To Obtain Discount, Must Identify Yourself as PCardholder – Can’t
Send Student to Bookstore w/ Your Card
New Cardholders
• New Cardholders should visit the Purchasing Card
website, hawaii.edu/oprpm/pcard/ for:
• PCard Program information
• PCard Application & Agreements
• Eligibility Guidelines
• Must be UH Employee
• Students, Casual Hires & RCUH Employees Not Eligible
• Must Attend PCard Training
• Must Complete & Submit Application & Cardholder Agreement
• Must Obtain Access to KFS
Purchasing Card Website
• How to Apply for a PCard
• Training Schedule
• Usage Guidelines
• Lost, Stolen or Compromised Cards
• How to Dispute a Transaction
• CentreSuite User Guides
• Exceptions to “Pcard is Preferred Method of Small Dollar
Purchases” Policy
• How to Cancel a PCard
• Cardholder FAQs
Purchasing Card is a Privilege
• Purchasing Card is a Privilege
• As De Facto Purchasing Agent for UH, Cardholder
Must Have Understanding of UH Policies &
• New PCDO Process Greatly Reduces the Amount
of Paperwork Associated w/ PCard, Allowing
Cardholder to Focus on Purchasing Responsibly &
• Cardholder is Accountable for All Purchases
Made w/ PCard
PCDO eDocs
• PCDO is Reconciliation Tool for PCard Transactions
• PCDO eDocs are Routed to Four Approvers
• 1. Cardholder
• 2. Reallocator
• 2. Approving Authority (Account Supervisor)
• 3. Fiscal Administrator
• Some Roles May be Assigned to the Same Person
• At Least Two Different Individuals Must Review & Approve
PCDO eDocs to Ensure Proper Separation of Duties
Revisions to PCard Program
Roles & Responsibilities – PCDO
• 1st Approver in PCDO process
• Promptly reviews & takes action on PCDO
• Scans & attaches receipts & documentation
to PCDO eDoc in orderly manner
• Certifies goods/services received in good
order & consistent w/ what was ordered
• When purchases are reallocated to extramural
accounts, all goods/services should be
received before PCDO eDoc is approved by FA
Revisions to PCard Program Roles &
Responsibilities – PCDO
• Reallocator
• Reallocates PCard transactions to correct account
& object code
• Verifies that appropriate documentation received
• Approving Authority (Account Supervisor)
• Certifies that purchase supports program objectives
• Ensures purchase allowable under terms of
sponsored program account
Revisions to PCard Program Roles &
Responsibilities – PCDO
• Fiscal Administrator
• Provides fiscal, policy & internal control
management of its PCard Program, ensuring
validity of PCard transactions
Reviews transactions for compliance
Certifies availability of funds
Ensures proper accounting of charges
Verifies receipt of goods/services
Provides final approval in PCDO process
Revisions to PCard Program Roles
& Responsibilities – PCDO
• Department Coordinator
• Liaison between Dept & Purchasing Card Admin.
• Approving Official
• Sets Card Limits
• Approves PCard Applications
• Provides Key Point of Control to Maintain
Appropriate Spending Activities
Revisions to PCard Program Roles
& Responsibilities - PCDO
• Reconciler
• Ensures reliability of & maintains PCard financial records
• Reconciles bank statement to PCDO report on monthly basis
• Corrects Errors
• Ensures Goods & Services Received & PCDO eDocs Fully
• Files & Retains PCDO Records in Accordance w/ E2.216
• Electronic version of original paper document, once
scanned, recognized by UH as official record. Original
paper documents shall be retained for one year after scan
PCard Program Contacts
• Joyce Teraoka – ph. 956-7977, [email protected]
• Cindy Flynn – ph. 956-5405, [email protected]
• Matthew Chow – ph. 956-2765, [email protected]
• Contact Matthew for PVSNet logon problems & CentreSuite access

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