PURCHASES

POLICY

1. All entities and outlets shall follow the purchasing procedures set forth in this chapter unless specifically instructed otherwise. Policy and procedures relating to purchasing unique to CANEX are contained in Chapter 51.

2. This chapter deals with purchases of resale merchandise and expense items where payment is through accounts payable. Where purchases or expense items are purchased using petty cash or the Corporate Purchase Card, the procedures at Chapter 7 apply.

3. Forms CF 601 are accountable documents and must therefore be controlled in accordance with Chapter 6

REQUIREMENT FOR RAISING PURCHASE ORDERS

4. A Purchase Order (PO) form CF 601(Annex B), shall be prepared when:

1. merchandise is required from a supplier who will ship only as a result of receiving the PO;

2. supplier requests written confirmation of order given via telephone, telex, etc;

3. required to calculate detailed retail values for those outlets on retail accountability (excluding those instances covered by paragraph 5;

4. required for control over outstanding merchandise in transit;

5. resale merchandise is purchased with cash in an emergency situation;

6. resale merchandise is received as a sample, donation or free goods; and

7. the RAM/NPFAS or CANEX Mgr so directs.

5. A PO need not be prepared when:

1. part of a standing order is received on a regular scheduled basis;

2. receiving multi-delivery shipments in the same week from the same supplier;

3. merchandise quantities are not determined until time of delivery such as with deliveries of bread, milk, soft drinks, and ice cream;

4. the PO would be prepared after receipt of goods and therefore becomes merely a record of receipt or approval for payment form; and

5. the goods are being supplied by a local Base/Station outlet. Procedures for this type of transaction are provided at Chapter 22.

DISTRIBUTION OF PURCHASE ORDERS

6. After the PO has been raised and signed by the outlet manager or authorized personnel, the PO is distributed as follows:

1. Copy No.1 (White) - sent to the supplier;

2. Copy No.2 (Yellow) - maintained in outlet's "Open Order File" pending receipt of the goods; and

3. Copy No.3 (Pink) - held with yellow copy pending receipt of the goods.

PROCEDURES WHEN PURCHASE ORDER IS NOT ISSUED

7. When a PO has not been raised to cover merchandise received, the following procedures shall be followed:

1. the outlet manager and the supplier's representative shall agree to conditions of delivery;

2. the supplier's representative will, at the time of delivery, provide an itemized delivery invoice showing product description, quantities shipped, and invoice prices with full extensions and totals;

3. the outlet staff shall verify the quantities and condition of merchandise received; and

4. the outlet manager shall record the retail value (if on retail accountability) of merchandise received on the delivery invoice and acknowledge receipt.

NOTE

A rubber stamp on the face (space permitting) or reverse of the delivery invoice will be used to record the above information. The information contained on the rubber stamp must at least include the following:

Outlet/Dept___________________________
Date Received_________________________
Received by___________________________
Total Invoice (At Cost)___________________
Total Invoice (At Selling)__________________
Approved for Payment By_________________

RECEIVING OF MERCHANDISE

8. Upon receipt of merchandise, the outlet manager shall:

1. obtain copies 2 and 3 of the PO from the Open Order File (if a PO has been prepared) or, the copy of supplier's invoice shipped with the merchandise;

2. count the quantity received against that listed on the PO or invoice and check for visible damage;

3. sign the delivery slip or invoice annotating any damage or discrepancy in quantity and obtain the driver's signature acknowledging the damage or discrepancy as the case may be;

4. check the cost price, as indicated on the supplier's invoice, against the PO or other store cost records which should be maintained by both retail and cost controlled outlets;

5. when a discrepancy occurs, prepare a Request for Credit Form (CF 1333) against either the supplier or carrier. After determining the reasons for the discrepancies, the following action shall be taken:

1. Price Discrepancy

1. when the invoice price is determined to be correct, the PO copies shall be changed at cost and the new sell price established and noted on the PO. Note that this will lead to a requirement to re-ticket merchandise and process mark-downs or mark-ups for merchandise sold at the incorrect price and/or merchandise which existed prior to this delivery; or

2. when the PO price is determined to be correct, a Request for Credit Form (CF 1333) shall be raised and actioned as per Chapter 24.

2. Quantity Discrepancy

1. when the invoice quantity is determined to be correct, all copies of the PO shall be amended. No other adjustments are required; or

2. when the PO quantity is determined to be incorrect a Request for Credit Form shall be raised and actioned as per Chapter 24.

NOTE

In the case of a quantity difference or pricing error on an internal merchandise transfer then the CF 603 shall be changed at the time of pickup or delivery and the change initialed by both parties so that a Request for Credit Form will not be required

6. price the merchandise at retail value (where applicable) and forward it to the selling area of the outlet or to the storage room;

7. attach copy 2 of the PO to the supplier's invoice and process it according to paragraphs 12 to 14; and

8. retain copy 3 of the PO for information and record purposes.

BACK ORDERS

9. If the order is incomplete and a back order is required, the receiver shall:

1. return copy 3 of the PO (properly annotated to indicate items back ordered) to the outlet's "Open Order File";

2. on receipt of the back order, obtain the applicable copy 3 of the PO from the Open Order File;

3. originate a new PO for the back ordered merchandise received;

4. check the merchandise received to the PO according to paragraph 10;

5. process the copies of the PO according to paragraphs 12 to 14; and

6. if the order is still not complete and the balance of the shipment is expected to be received, repeat steps a. to e.

PROCESSING OF INVOICES

10. For cost controlled outlets, the outlet manager shall:

1. after properly receiving merchandise as detailed in paragraph 8, extend and add the supplier's invoice;

2. sign for the receipt of the goods and approve for payment in the appropriate place on the PO or, if a PO was not used, complete the information as required on the rubber stamp placed on the supplier's invoice;

3. after properly receiving internal merchandise transfers as detailed in paragraph 8, check the extensions and additions of the applicable CF 603; and

4. on a daily basis, submit to the NPFAS the POs, suppliers' invoices and MRs under cover of one DND 728.

11. For retail accountibility outlets, the outlet manager shall:

1. after properly receiving merchandise as detailed in paragraph 8, extend and add the supplier's invoice and PO (where applicable) at cost and retail;

2. sign for the receipt of the goods and approve for payment in the appropriate place on the PO or, if a PO was not used, complete the information as required on the rubber stamp placed on the supplier's invoice;

3. after properly receiving internal merchandise transfers as detailed in paragraph 8, check the extensions and additions of the applicable CF 603 at both cost and retail;

4. on a daily basis, submit to the NPFAS the POs, suppliers' invoices and MRs under cover of one DND 728.

12. Invoices covering expense items (repairs, telephone, etc) that have been properly approved shall be annotated with the expense coding and submitted under cover of the daily DND 728.