Demonstrating Separation of Duty

Overview

To ensure adequate internal controls, functions should be divided so that no one person has control over all parts of a transaction (i.e. having "two sets of eyes" looking at a transaction). Thus it is mandatory to demonstrate separation of duty for purchasing responsibilities. Departments must display that each ProCurement Card transaction is reviewed by at least two people, the cardholder and the reconciler. An online PaymentNet review does not fulfill separation of duty functions alone; two reviewers are required to review and document the review with signatures on a JP Morgan Chase statement or monthly report.

PaymentNet is a transaction review system used to ensure proper account codes for transactions and track the transaction status for budget management. Departments must designate individuals responsible for assigning proper budgets and object codes to each transaction. Usually the reconciler is the fiscal expert and is assigned the responsibility for appropriate account code assignment.

Departments must have at least one individual review the online transactions at PaymentNet. Only the online “Rev” & “Rec” review boxes need to be checked and can be done by one individual. It is not necessary to have both cardholder and reconciler review the online transactions on PaymentNet, but it is recommended when possible at a minimum. When only one individual reviews the transactions online, the second individual should review transactions with a hardcopy of the monthly statement along with a PaymentNet report detailing the specifics of the purchases. To demonstrate fulfillment of separation of duty functions, the cardholder and reconciler are required to sign and date the cardholder's statement or monthly transaction detail report.

The Approval

Department purchase approval procedures must be established by department administrators. Cardholders must follow their department purchase procedures.

Examples of Cardholder Purchase Approval:

• Cardholder has authority regarding what can be purchased because she/he is employed in a position of department authority and is an expert regarding department, university and state purchasing regulations.

• Cardholder has department pre-approval to purchase up to a certain monetary limit. Beyond the limit the cardholder must seek written approval from a department head.

• Cardholder has department pre-approval to purchase specific items or categories of items and may have monetary limits also. Outside of pre-approved items or item categories, the cardholder must seek written approval from a department head or designee.

• Cardholder records on a transaction spreadsheet:

• Transaction date
• Merchant name
• Item purchased
• Transaction amount

•Check off the above information when the transaction is posted at PaymentNet

The Reconciliation

Each ProCurement Card transaction must be reviewed by at least two people, either with a PaymentNet online review or with a hardcopy review procedure.

• Either the cardholder or reconciler must review the cardholder’s transactions at PaymentNet ensuring proper account code allocation and checking the “Rev” & “Rec” boxes

• The purchase cycle is closed when it is determined that the correct amount was charged and the item was received in acceptable condition

• Do not check off the review boxes until the purchase cycle is closed.

• Do not check any of the review boxes if a dispute has been initiated with the vendor or online with PaymentNet's dispute process.

• Do not check off these boxes if the transaction is being reviewed by JP Morgan's Fraud Department.

• The cardholder (or person designated with this authority) must print the cardholders statement

• Either the cardholder or a reconciler must run the “Transaction Detail with Notes Report & Accounting Codes” matching the account cycle for the monthly statement

• The cardholder and reconciler must sign and date the statement representing the inspection of purchases for the designated monthly cycle

Document Filing

Proper filing of purchasing documents is critical in demonstrating the appropriateness of expenditures. Original purchase documents should be retained centrally within the department and not with the cardholder.

• ProCurement Card purchasing documentation has a retention cycle of six years. This includes:

• Purchasing documentation (invoices, receipts, internet order pages, packing slips, etc.) should be retained by budget

• Monthly statements along with attached reports should be retained by month