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Office of Internal Auditing

Internal Controls: Purchasing, Expenditures and Payables

Below is a listing of internal control (IC) best practices and the related University policy, if applicable:

IC 1: Contracts and agreements for services are signed by only personnel who have been authorized with delegated authority.

See University Policy 7.1.40 Contracting. Budget Officers may sign agreements for services, subject to purchasing guidelines. Only the ISU President and those authorized by the President may sign contracts. Individual Budget Officers/budget officers are not authorized to contract on behalf of the University.

IC 2: Agreements for services and/or purchase orders, when required, are in place prior to the purchase or service date.

Agreements for services must be signed by the vendor and Budget Officer before work begins. Agreements or purchases totaling $10,000 or more also need to be sent to Purchasing with a requisition and must be signed by the Director of Purchasing before services can begin.

IC 3: A purchase order is created for expenditures $10,000 or more.

Orders for $10,000 or more must be submitted to the Purchasing Office as a requisition.

IC 4: Multiple quotes are obtained for purchases of $20,000 or more.

Purchase orders of $20,000 or more require three or more quotes submitted with the requisition, with at least one quote from a certified diverse vendor.

IC 5: Purchase orders (requisitions) and agreements for services are approved by the Budget Officer/budget officer.

Purchasing must receive a valid requisition for purchases over $10,000 that is signed by the Budget Officer. Purchasing then reviews the requisition and will issue a purchase order.

An agreement for services for less than $10,000 must be signed by the Budget Officer and the service provider prior to the beginning of service. If the agreement for services is for $10,000 or more, it must include a requisition and be submitted to Purchasing for processing.

IC 6: Invoices and vouchers are sufficiently documented including a business reason appropriate for University purposes.

See University Policy 7.1.38 Budget Officers. All expenses must have adequate supporting documentation to clearly substantiate the business reason for the purchase. All invoices and requisitions must be signed by the Budget Officer or delegate to verify his or her approval.

IC 7: Invoices/vouchers are paid within 30 days from the date the invoice is received.

University Policy 7.3.10 Invoice Vouchers requires that invoices/vouchers are to be paid 30 days from the date the invoice is received.

IC 8: There is a separation of duties so that the same person does not order and receive purchased goods.

All purchases require documentation to prove the receipt of goods/services. When possible, separate individuals should purchase and verify the receipt of goods. If not possible, mitigating controls should be in place.

IC 9: Documentation is completed to verify the receipt of goods and services (e.g., signature/sign off on shipping record).

All purchases require documentation to prove the receipt of goods/services. When possible, separate individuals should purchase and verify the receipt of goods.

IC 10: The Principal Investigator (PI) approves grant expenditures prior to approval by the Budget Officer.

It is best practice for grant expenditures to be approved by the Principal Investigator (PI) prior to approval by the budget officer and submission to Research and Sponsored Programs (RSP)

IC 11: P-Cards are:

  1. Used only for University business: The P-Card can only be used for University business and not for personal use.
  2. Not used for prohibited purchases: University P-Cards cannot be used for certain purchases or any items that are not for University business. Refer to P-Card information at the Purchasing Office website.
  3. Adequately documented to include business purpose: Every P-Card purchase transaction must have valid supporting documentation including original itemized receipts. This includes online purchases.
  4. Approved by the Budget Officer: P-Card transactions and monthly statements should be approved by the Budget Officer/budget officer. Transactions made by the Budget Officer must be approved by his or her supervisor.