ACCOUNTS PAYABLE AND DISBURSEMENTS

INTRODUCTION

1. This chapter contains the policy and procedures relating to accounting and control for Accounts Payable and Disbursements. For ABACIS procedures, see the ABACIS Applications Manual, Chapter 5.

2. The provisions of this chapter do not apply to payroll cheques, which shall be processed as outlined in Chapter 20.

POLICY

3. Accounts payable records that clearly and fairly present liabilities to suppliers shall be maintained.

4. Separate accounts payable records shall be maintained for each self-accounting entity (CANEX, messes, Base Fund, etc).

5. With few exceptions, as per para 6, all transactions shall be processed through the Accounts Payable Journal (ABACIS SUIGEN).

6. Disbursements for accounts covering items not for resale (eg. emergency payments, CFPAF, reimbursement of mess dues) may be recorded through the Disbursements Journal (ABACIS DISGEN) as direct payments.

7. Suppliers' credit terms are to be utilized to the greatest advantage possible. The practice of clearing all supplier accounts on one given date each month is not an acceptable means of exercising cash management. In this regard, the following guidelines are provided:

1. Cash Discounts. While the cash discount terms offered on any one purchase may not be significant (in terms of absolute dollars), the total of all such discounts for a year can represent a material sum. Therefore, procedures shall be introduced to ensure that cash discounts are, in fact, realized and invoices offering such terms are settled on the due discount date;

2. Extended Terms. On occasion, purchasing authorities may succeed in obtaining terms that provide for payment over an extended period. Such terms shall be taken advantage of and the RAM shall not settle such accounts earlier than required; and

3. Normal Terms. In most instances, suppliers offer 30-day payment terms. While strict adherence to such terms could impose an undue workload, full advantage of those credit terms are to be taken.

8. The RAM is responsible for the following:

1. creating Accounts Payable (SU) records. The creation of the records centrally is required to ensure that a standardized numbering structure is followed and to ensure that the number of records for each supplier is kept to one;

2. maintaining the SU files including purging, archiving and deleting obsolete records and balancing SUs to the GLs;

3. issuing supplier payment cheques;

4. dealing with supplier queries;

5. reconciling the monthly supplier statements to the SUs; and

6. create "exception" reports, for printing at bases, to identify suppliers that require action (lost discounts) or hastening (O/S credit notes).

9. The NPFAS is responsible for:

1. receiving supplier invoices, entering the invoice data into ABACIS and forwarding the registers and supporting documentation to the RAM;

2. if required, investigating supplier queries through the use of SUQERY, SURKIV, AUDIT and CHEQRP; and

3. printing and distributing "exception" reports, as well as any other correspondence, to the entity/outlet managers for hastening action.

PROCESSING SUPPLIER INVOICES

10. Upon receipt of a PO, invoice, and, if applicable, Request for Credit, from an entity/outlet the base NPF accounting clerk shall verify the details of the documents and:

1. enter the invoice data in the SUIGEN;

2. record the Accounts Payable Journal (SUIGEN) reference prominently on the face of the invoice, taking care not to obliterate any information on the invoice; and

3. pass the unposted SUIGEN and supporting documents to the NPFAS.

11. The NPFAS will:

1. review the invoices and SUIGEN, ensuring that supplier discounts have been taken;

2. post the SUIGEN and forwards the register and supporting documentation to the RAM.

12. The RAM will:

1. file the invoices by due date;

2. generate a DISGEN by due date and review the associated invoices. If there are payments on the DISGEN that the invoices have not been received at the region, the cheques are to be raised and the invoice details filed in a pending file and confirmed upon receipt of invoices from the base:

3. write cheques by posting the DISGEN;

4. Documents shall be stamped paid and show the cheque number and date;

5. file the invoice and supporting documents in the supplier file maintained alphabetically; and

6. send the payment to the suppliers. Details of the invoices being paid are to be indicated on the cheque stub.

PROCESSING INTER-REGION PAYMENTS

13. Payments to NPF entities at another region (eg. payables to a CANEX store which transferred merchandise) shall be made via transfer voucher (TV) vice cheque. All other procedures for processing supplier invoices apply.

RECORDING CASH DISCOUNTS

14. When cash discounts are offered, the net cost (invoice cost less the cash discount) is a debit to Purchases and a credit to Accounts Payable.

15. When payment is not made on time, the cash discount lost shall be charged to the Cash Discounts Lost expense account, which shall form part of the General Revenue and Expense Statement of the entity and not on the Income Statement of the particular outlet. This procedure is based on the assumption that all cash discounts will be taken and lost discounts are attributable to the overall administration of the entity.

PROCESSING DIRECT PAYMENTS

16. Invoices from "one-time or occasional" suppliers for which a supplier record (SU) is not maintained are paid as a direct payment.

17. At the base level:

1. the outlet will prepare and send a Cheque Request (see Chapter 9, Annex E) to the NPFAS;

2. the NPFAS reviews the Cheque Request, creates a DISGEN and notifies RAM. At this time, the NPFAS shall record the DISGEN reference prominently on face of invoice taking care not to obliterate any information on the invoice and forwards register and supporting documentation to RAM

18. The RAM will:

1. write cheques by posting the DISGEN;

2. file the invoice and supporting documents; and

3. send the payment to the supplier. Details of the invoices being paid are to be indicated on the cheque stub.

PROCESSING EMERGENCY DIRECT PAYMENTS

19. Bases will be issued a special series of cheques to be used in cases where a 48-hour turnaround time is not acceptable given the nature of the particular emergency. The NPFAS will:

1. review the Cheque Request and circumstances requiring the emergency payment;

2. prepare the cheque by hand, ensuring that the cheque is sequential, have it signed by authorized personnel, and provide it to the recipient;

3. enter the data in a DISGEN (no modification is allowed at base level); and

4. forward the DISGEN and the supporting documents to the RAM.

20. The RAM will:

1. produce a cheque listing report;

2. modify the DISGEN, if necessary, and post the DISGEN; and

3. file the invoice and supporting documents.

21. The RAM will be personally responsible to review the utilization of the emergency cheque procedure on a quarterly basis in order to prevent abuse.

INTERNAL CONTROLS - DISBURSEMENTS

22. Personnel employed in Accounts Payable positions shall be advised of their responsibilities with regard to the validity of entries recorded. Personnel shall not record entries for which properly approved documents have not been received. When unauthorized entries are discovered, the incident shall be reported to the RAM and appropriate disciplinary action taken.

23. All cheques (payroll, petty cash reimbursement, accounts payable items, etc) must be accompanied by properly authorized invoices purchases, request for cheques, etc. when presented for signature.

24. Personnel appointed as cheque signers must satisfy themselves regarding the validity of cheques presented for signature. The cheque signers must review and initial the supporting documentation at the time of signing the cheque. Particular attention should be given to large amounts and unknown suppliers (payees). These vouchers and invoices, presented with the cheques, must also be marked or cancelled to prevent duplicate payment. For manual units, documents should be stamped "PAID" and show the cheque number and date. ABACIS units should stamp the document "DISGEN # ____". If staff resources are available, the signed cheques are to be mailed to the supplier by someone other than the clerk who raised them.

RECONCILIATION OF SUPPLIER STATEMENTS

25. Supplier reconciliations are a good means of internal control as they can reveal duplicate billings, goods received but not invoiced, the status of credit memos, etc. Proper reconciliation can therefore avoid the loss of revenues through timely resolution of discrepancies.

26. Supplier statements must be reconciled with the supplier's subledger (SU) by the RAM whenever a statement is received or at least monthly. The statements will be initialed indicating the reconciliation was performed and maintained in the supplier file.

27. The Accounts Payable subledgers are to be reviewed each month by the RAM. Large or recurring debit balances are to be investigated.