PROCUREMENT COMPLIANCE PROCEDURE

Transcription

1 PROCUREMENT COMPLIANCE PROCEDURE FINANCE DIRECTORATE VERSION : 1.0 ISSUE : OCTOBER 2017 NEXT REVIEW : OCTOBER 2020 Page 1

2 CONTENTS 1. INTRODUCTION SCOPE AIMS OBJECTIVES PROCEDURE Raising a Requisition to Generate the Purchase Order Receipt and Payment To Enable Payment to be Made Procedure in cases of non- compliance RESPONSIBILITIES TRAINING IMPLEMENTATION Internal External MONITORING & AUDIT REVIEW... 7 Appendix 1: Purchase Order Exceptions... 8 Appendix 2: Purchase Orders Available Within Oracle... 9 Appendix 3: Supplier Reminder Letter Appendix 4: Staff Reminder Letter Page 2

3 1. INTRODUCTION 1.1. This Procedure draws its authority from Health Board Standing Orders and should be read in conjunction with Standing Financial Instructions (Schedule 6) and Financial Control Procedure (FCP) 14 Non Pay Expenditure ABMU Health Board has a responsibility to ensure that it makes the best use of scarce resources and accounts properly for its use of public money The Health Board in conjunction with the NHS Wales Shared Services Partnership (NWSSP), which operates the Procurement and Accounts Payable functions on behalf of the Health Board, will put suitable processes in place to ensure required goods and services are received in a timely manner within a cost controlled environment that facilitate the achievement of statutory requirements. 2. SCOPE 2.1. This Procedure covers all non-pay expenditure (with agreed exceptions as listed in Appendix 1) and is applicable to all staff with requisitioning and receipting responsibilities within the Health Board. 3. AIMS 3.1. This Procedure aims to ensure that: a) Goods and services are ordered appropriately via official Purchase Orders; b) Efficient processes are put in place so that goods are delivered when required; c) Goods are receipted in accordance with financial control procedures; d) Invoices to suppliers are paid within statutory deadlines; and e) Cost control is effective and therefore: i. all non-pay expenditure incurred by the Health Board is valid and appropriately authorised; and ii. minimising transactional costs associated with payment for goods and services; 4. OBJECTIVES 4.1. The principle to be adopted is that if no purchase order has been raised (unless included within Appendix 1), no payment will be made for goods and services received. As financial resources are further constrained, accounting properly for their use is imperative. Using the Oracle Purchase Order (PO) system allows for improved cost control via the in-built authorisation hierarchy Increasingly, automated processes minimising transactional costs for ordering of and payment for goods and services are being introduced. To ensure the Health Board can maximise these opportunities and direct as Page 3

4 much of its resources as possible to front line service delivery, improved use of the PO system is necessary For this to work effectively there is a responsibility on the Health Board to ensure that all staff comply with this procedure as it applies to their area of work. Suppliers will also need to play their role and provide adequate information when supplying invoices so that they can be paid promptly. 5. PROCEDURE 5.1. The Health Board must ensure that all the goods and services it receives have been appropriately authorised and receipted in a timely manner in order that the suppliers invoice can be paid in accordance with the agreed contractual terms. This also supports prompt payments of its suppliers Raising a Requisition to Generate the Purchase Order The first stage in this process is that all goods and services (with agreed exceptions listed in Appendix 1) are requisitioned via the Oracle PO system. See Appendix 2 for the different POs available for use within Oracle Requisitions can only be approved by an officer with authority for specified cost centres up to an agreed threshold which is set up within the Oracle approval hierarchy. The system will automatically select the relevant approver. If the requisitioner manually changes the approver, the system will continue to automatically flow through the hierarchy until an approver with the appropriate threshold for specified code(s) is found Where Quality, Value and Cost (QCV) panels are operating, this is recognised within the Oracle approval hierarchy Receipt and Payment NWSSP Accounts Payable function will pay suppliers where: a) Goods or services have been officially ordered by the Health Board and; b) The goods or services ordered have been delivered and receipted; and c) A valid invoice has been received All staff should note that Purchase Orders must be accurately receipted promptly in the Oracle system, within 5 working days of receipt at the very latest, as set out within FCP 14 Non Pay Expenditure. This is an essential contribution to the integrity of the system and unless are receipted, payments cannot be made To Enable Payment to be Made The following will normally be provided: Page 4

5 a) A valid and approved Oracle PO number and; b) An Oracle Goods Received Note (GRN) and; c) A supplier invoice quoting the correct PO number Where the PO, GRN and invoice match within agreed tolerance limits, payments will be made. Where the tolerances are exceeded, NWSSP Accounts Payable and Procurement will work to resolve the issues to allow payment to be made It should be noted that there are a very limited number of agreed two way matched POs and invoices and these are only allowed with the agreement of the Assistant Director of Finance (Corporate) A list of exceptions to these principles is attached at Appendix 1 whereby invoices without POs are accepted Procedure in cases of non- compliance It is appreciated that some potentially conflicting principles apply here as follows: a) Suppliers want to be paid: this must be used to incentivise compliance b) Requisitioners want supplies: this must be used to incentivise compliance. c) Service to patients must be maintained: which can operate as a disincentive to compliance Full enforcement could lead to some interruption of supplies which is unacceptable in a hospital setting. A range of graded measures are therefore needed as follows: a) Reminder to staff of the existence of this procedure, the reasons for it and the need for compliance (No PO Raised). b) Specific first reminders to non-compliant suppliers and requisitioners (Appendix 2 & 3) (No PO Raised) c) Where non-compliance relates to not receipting goods and services within 5 days as set out within FCPs, the following escalation process will be used by NWSSP Procurement: Sent 1 st Send 1st to end user to receipt Send 2nd to end user to receipt Request POD and send 3rd to end user and copy in the budget holder/line manager If a response is still not received at this stage, the order can be automatically receipted using the POD as evidence Before the order is receipted the receipting officers will need to confirm the validity of the POD, which must have been signed by a Health Board member of staff. To ensure that the control system in Page 5

6 place is not compromised, the receipting officers are authorised to receipt the orders adding a note to the receipt highlighting the escalation process followed and the receipt of a valid POD. This will then ensure that the order is closed down and duplicate payments cannot be made. d) Remedial retraining and formal performance management for NHS Staff. e) Suspension of payment to non-compliant suppliers f) Removal of contracts from non-compliant suppliers Repeat offenders will be identified and highlighted by the Health Board and NWSSP Accounts Payable Group to the Audit Committee since this constitutes a breach of Standing Orders. Staff who have received retraining and formal performance management but continue to persistently breach procedures may be subject to disciplinary procedures. 6. RESPONSIBILITIES 6.1. This procedure applies to all Health Board staff and NWSSP staff working for ABM. The responsibility for administering it and for highlighting cases of noncompliance rests with NWSSP. In detail this means: NWSSP will produce management information and distribute it to suppliers The Health Board and NWSSP will jointly distribute the management information to requisitioners and approvers and communicate the importance of the initiative NWSSP will monitor levels of compliance. On the first instance of noncompliance by supplier or staff member a specific reminder letter or will be sent Subsequent instances of non-compliance by staff will be formally notified by NWWSP to the Health Board. It will then be a Health Board decision as to how to manage the staff member concerned Subsequent instances of non-compliance by suppliers will result in invoices being registered on Oracle and placed immediately on hold. NWSSP Accounts Payable will write to the supplier to inform them that without a PO, the invoice cannot be paid. Where this in turn results in the Health Board being placed on stop by the supplier, the matter will be formally notified to the Health Board. It will then be a joint decision whether to protect supply by authorising payment on a discretionary basis or to seek supplies from an alternative source. In these instances, the requisitioner may in the first instance, be required to raise a retrospective PO. Continued non-compliance with this procedures will be addressed as set out in Section Page 6

7 NWSSP will produce regular statistics for discussion at the bi-monthly joint meeting of the Health Board and NWSSP Accounts Payable Group, of the level of compliance and the number or formal referrals made. 7. TRAINING 7.1. Training in respect of raising requisitions on Oracle is provided by the Oracle Systems Team within the Finance Directorate of the Health Board. Any staff who identify the need for such training as a result of this procedure should contact the Team to arrange a suitable training slot. 8. IMPLEMENTATION 8.1. Internal An awareness raising campaign will be instigated in the first instance via the intranet and staff bulletins. This procedure will also be sent to Unit Service Directors who will be expected to disseminate throughout their delivery units, and to support full compliance. 8.2 External Suppliers were advised of the Health Board s intention to implement a Purchase Order Compliance Procedure in February By exception, further letters will be issued to new suppliers where necessary. 9. MONITORING & AUDIT 9.1. Monitoring of the procedure will be ongoing to ensure its effectiveness and impact. NWSSP will be providing reports monitoring compliance levels to the Health Board and NWSSP Accounts Payable Group to enable and Health Board managers to take action where there are high levels of noncompliance within their areas of responsibility Audit of compliance is important to assurance of financial control and will be at the discretion of the Head of Internal Audit. 10. REVIEW This Procedure will be reviewed after 3 years, or sooner, as required. Page 7

8 APPENDIX 1: PURCHASE ORDER EXCEPTIONS Some items do not require a Purchase Order to be raised as either there are already appropriate ordering systems in place or to do so would not be practicable. These exceptions are listed below. Rents, Rates, Utilities e.g. water, electricity, gas and telecoms (including mobile phones/pagers) Healthcare (e.g. SLAs, NCAs, IPP) MANP Forms Agency (e.g. Admin & Clerical, Estates) University Clinical Medical Recharges Patient Transport (e.g. Red Cross, Taxis) TV Licences Clinical Medical Recharges to/from University Alternative system in place: CHC/FNC (Nursing Home Payments) Pharmacy NHS Organisations Nurse Bank Agency Primary Care Contractor Services including Out of Hours, Low Vision, Collaborative Fees, Blue Badges Foreign Currency Payments (Oracle is not set up to process foreign currency transaction) Payment of Salary deductions Tax, NI & Pensions Petty cash Losses & Special Payments including Redress Reimbursement to Staff for Eye Sight Tests Reimbursements to Patients including Patients travelling Purchase Card (e.g. visas for overseas nurses, Bunkered Fuel & Fuel Cards Page 8

9 Appendix 2: Purchase Orders Available Within Oracle Standard Purchase Orders You generally create standard purchase orders for one-time purchase of various items. You create standard purchase orders when you know the details of the goods or services you require, estimated costs, quantities, delivery schedules, and accounting distributions (financial codes). Blanket Purchase Agreements (also known as Call Off Orders) You create blanket purchase agreements when you know the detail of the goods or services you plan to buy from a specific supplier in a period, but you do not yet know the detail of your delivery schedules. Confirmed long-term orders to a supplier for specified good(s) or service(s), for a fixed period or in a fixed quantity, at pre-agreed prices or pricing method. Blanket Releases You can issue a blanket release against a blanket purchase agreement to place the actual order (as long as the release is within the blanket agreement effectivity dates). Standing Orders Standing Orders can be set up to cover a certain period of time and the end users can request for a set quantity to be delivered at certain times throughout the life of the order. For example, weekly, fortnightly, monthly. Call Off Orders Call Off Orders can be set up to cover a certain period of time, the end users can call off the required amounts as and when required, but they won t necessarily be the same every time. Confirmation Orders Confirmation/Emergency order numbers issued out for urgent orders where requisitions are unable to be raised or authorized, or could be raised when an invoice is received. For example, Loan Kits. Page 9

10 Appendix 3: Supplier Reminder Letter Morgannwg Health Board On behalf of Abertawe Bro Ein cyf/our ref: Gofynnwch am/please ask for: Rhif Ffôn /Telephone: Ffacs/Facsimile: E-bost/ ACCOUNTS PAYABLE DEPARTMENT Dear Supplier YOUR INVOICE NO: Date: In accordance with our Procurement Compliance Procedure and as part of ongoing efforts to improve efficiency we are currently monitoring the level or purchasing taking place outside the Oracle Purchase Order (PO) system. We have recently received the above quoted invoice from yourselves and a valid purchase order number was not quoted. Please be advised that use of valid PO numbers is mandatory for this category of supplies. On this occasion the invoice concerned will be passed for retrospective authorisation. We must however advise you that this process is discretionary and release of your payment may be delayed as a result. If you wish to secure prompt payment in future please do not accept orders for this category of supplies without first receiving a valid PO number which then should be quoted on your invoice. If you wish to discuss this matter further, please contact me as Follows:- Name: Tel No: Page 10

11 We are continuing to monitor the level of compliance with this procedure, and reserve the right to return invoices, suspend payment or review your contract if instances of non-compliance with our payment procedure continue to occur. Your help in resolving this issue is appreciated Yours faithfully Lynne Hamilton Director of Finance Page 11

12 APPENDIX 4: Staff Reminder Letter On behalf of Abertawe Bro Morgannwg Health Board Ein cyf/our ref: Gofynnwch am/please ask for: Rhif Ffôn /Telephone: Ffacs/Facsimile: E-bost/ ACCOUNTS PAYABLE DEPARTMENT Dear Colleague Procurement Compliance Procedure Date: In accordance with the above Procedure and as part of ongoing efforts to improve efficiency we are currently monitoring the level of purchasing taking place outside the Oracle Purchase Ordering (PO) system. The following invoice has been received and a Purchase Order Number has not been quoted, but your name has been stated by the Supplier as the ordering point of contact:- Name: Department: Supplier Name: Invoice No: Invoice Value: Brief description of goods/services invoiced: Please be advised that in accordance with the above Procedure, use of Oracle PO numbers is mandatory for this category of supplies. Page 12

13 If you did make this purchase through the Oracle system can you please contact me (details below), to advise me of the PO Number:- Name: Tel No: This will enable me to take the matter up with the supplier concerned. Please ensure that supplies of this type are only ordered through the Oracle system. Failure to use the Oracle system slows down payment and risks interrupting supplies and is a contravention of the LHBs Standing Financial Instructions. Your help in resolving this matter is appreciated. Yours faithfully Lynne Hamilton Director of Finance Page 13