Comptroller’s manual

Accounts Payable

1.Introduction

This section encompasses the policies and procedures for AUB accounts payable, including inquiry, invoicing, payments, and control.

2.Policies

A.Payments

The Purchasing Department will establish the procedures necessary to ensure prompt payment to the suppliers, in accordance with provisions of the purchase order, for performing in compliance with the AUB order.

  1. Local P. O.:

Upon the delivery of goods, vendors submit their invoices to the vendor’s (accounts payable section) section in the Comptrollers Office for payment. The P.O. number should be indicated by the vendor on the invoice. In case of discrepancies between the invoice and the eligible amount to be paid, invoices are passed to purchasing for investigation and approval.

  1. Foreign P.O.:

Payment in settlement of foreign P.O.'s is processed in accordance to the policy of the supplier according to the following methods:

  1. Payment by bank transfer in advance.
  2. Payment by bank transfer upon the receipt of goods and invoice.
  3. Payment by sight draft against shipping documents through the bank.
  1. US P.O.:

Payments to suppliers in the US in settlement of their invoices are made by our US purchasing agent on behalf of AUB. In return, monthly payments are made to the US purchasing agent on the basis of supporting P.O.’s issued.

B.Types of Payments

  1. Vendor Payment

All vendor payments must be made against an approved purchase order and only after verification of receipt of goods or performance of services (three-way matching).

  1. Employee Travel Advances

An employee is paid a travel advance based on an approved travel advance request and an approved purchase order initiated by either the budget control section for unrestricted funds or by the GGCP section for restricted funds.

  1. Low Value Orders

University departments are delegated the authority to make purchases from approved suppliers when the value of the purchase is $300/LL 450,000.

  1. Small Payments to Employees ($250 or Less)
  1. Departments send payment vouchers to the Office of the Comptroller with required details in the usual manner, but including employee’s payroll number.
  1. Payment vouchers will be distributed to the appropriate section of the Office of the Comptroller for budget checking.
  1. If payment voucher receives budget approval, vouchers are forwarded to the Payables Section, sorting according to amounts and checking of accuracy of voucher information.
  1. Payments to employees of amounts equivalent to $250 or less are forwarded to the Accounts Receivable Section for processing.
  1. The Accounts Receivable Section check for on-payroll staff and credits the amounts to the employees’ accounts and debits accounts as approved by the Budget Section.
  1. Employees’ credit balances will be paid with their payroll at the end of the month or will offset debit balances in their accounts, if any.
  1. Student Work scholarships or Refunds

Payments to students are made based on an approved scholarship. They will be direct paid without a PO.

  1. Petty Cash

The custodian is paid a petty cash advance based on an approval petty cash advance request and an approved purchase order initiated by either the budget control section for unrestricted funds or by the GGCP section for restricted funds.

C.Matching Invoices

  1. Supplier invoices may be received either on paper or electronically. All invoices must reference the appropriate purchase order or blanket purchase order and release number. Any invoice that does not include the appropriate reference number will be returned to the supplier for proper identification unless it is an authorized direct purchase by the department.
  2. The accounts payable section will match all invoices to purchase orders and receiving (three-way match) before processing for payment. If there are discrepancies, an automatic system HOLD will be placed on the invoice until resolution. The receiving department will collaborate with the supplier and the Purchasing Department to resolve any variance and complete the appropriate transactions.
  3. All purchase order related invoices that are will be matched to a purchase order only (two-way match). The accounts payable section will pay the amount due upon receipt of the invoice. No match to Receiving is required. The receiving department has 30 days from the invoice date to report any discrepancies to the accounts payable section. The accounts payable section will put the invoice on hold until the receiving department has resolved the issue.
  4. For goods and services received by the departments directly, departments are required to record verification of receipt in the university financial system.

D.Invoice Holds

  1. Accounts payable section will place a system hold on invoices under certain circumstances. These circumstances include but are not limited to:
  2. Quantity Variance:
  3. An invoice is placed on hold if the quantity billed exceeds the quantity ordered and/or received.
  4. A system generated alert is sent to the requesting department and the Purchasing Department notifying them of the hold.
  5. The purchasing department is responsible for resolving the variance with the supplier. The purchasing department may amend the purchase order, if necessary.
  6. Supplier Performance: All invoices from a particular supplier may be placed on hold pending resolution of issues relating to Supplier Performance. The Purchasing department will be responsible for resolving issues and authorizing releasing hold.

Authorization: An invoice will be placed on hold pending appropriate authorization and approvals (refer Authorization and Approval Levels policy). The department will be responsible for ensuring that all invoices have proper authorizations and approvals. The following are approval levels for financial transactions at the university:

Amount / Authorized Persons
Low value orders to $300 / Section heads or delegated authority.
$301 to $4,999 / Manager, chairperson, or department head
$5000 to $49,999 / Director, dean, or controller
$50,000 to $99,999 / Provost or vice president
$100,000 and Up / President

In addition, all reimbursement for personal expenses should be approved by the employees’ supervisor. No authorized person should approve a transaction that they are personally involved in, even if that transaction is within their authorized approval range. In all such cases approval should be made by the employees’ immediate supervisor.

  1. Invoice hold on any one invoice from a supplier will not preclude the accounts payable section from processing other outstanding invoices from the same supplier unless the invoice hold is due to supplier performance.

E.Payment Distribution

Acceptable methods of payments are: checks, electronic funds transfer (e.g., direct deposit). Accounts payable will determine the appropriate method of payment. Payments to employees for reimbursements will be made through checks or direct deposits.

At AUB, checks are not mailed. Beneficiaries come to AUB and receive their checks. If a check issued by the University is lost or stolen, the payee or the department should contact accounts payable to request a stop payment.

  1. Checks to replace lost or stolen checks are issued after the University places a stop payment and receives confirmation from its bank that the original check has not cleared the University's bank account.
  2. Payees should return damaged checks to the accounts payable for voiding and issuance of replacement check.
  3. Invoices to purchases made in compliance with the University's purchasing policy will be paid 30 days after the invoice date unless there are favorable discount terms offered to the University. Invoices for food purchases are made 21 days after the date of the invoice. Invoices to travel agents and contractors are paid seven days after the date of the invoice.
  4. The University will apply supplier credit memorandum, issued for returns or over-billed invoices, against future open invoices.
  5. Original receipts are required for all reimbursement expenses over $25.
  6. If a request for a reimbursement does not conform to stated university policies, or if a receipt is lost or missing, an "exception" memorandum, approved by an authorized signatory should be sent to accounts payable explaining why this exception is warranted, and, if necessary, describing missing documentation. However, every effort must first be made to obtain a copy of the lost or missing receipt.
  7. Within the guidelines of university policy, minor expenses, will be paid out of petty cash whenever possible.
  8. Departments must make use of the University's tax-exempt status. The accounts payable section will not pay any taxes from which the University is exempt.
  1. Please refer to the travel policy for policies governing travel and personal expense reimbursements.

F.Payments to Non-Resident Aliens

  1. All non-employee related payments made to or on behalf of a non-resident supplier are covered by this policy. Payments include, but are not limited to:
  2. Honoraria
  3. Consulting fees
  4. Speaker fees
  5. Travel and living allowances
  6. Awards and prizes
  7. Scholarships, fellowships, and stipends
  8. Contract fees
  1. A non-resident Lebanese tax (7.5 percent) must be withheld on all payments made to or on behalf of a non-resident supplier, unless he/she declares his own taxes as self-employed.
  1. The Comptroller's Office must determine and inform payroll and accounts payable of the percentage of taxes to be withheld.
  1. VAT

Accounts payable recalculates VAT owed by AUB on every invoice and ensures accuracy and compliance to VAT rules and exemptions.

H.Travel

See travel policies on AUB web site.

I.Petty Cash

  1. All new petty cash funds and increases in existing petty cash funds must be approved by the University Comptroller's Office. Requesting department must use a petty cash form for submitting the request.
  1. Establishing or increasing a petty cash fund:
  2. A department head may request the University Comptroller's Office to establish a petty cash fund if:
  3. There is an on-going need to reimburse employees for small, out-of-pocket non store expenses;
  4. There is no petty cash fund in close proximity that can be used by the department;
  5. The department has the capability to safeguard the petty cash funds.
  6. The size of the petty cash fund must be small enough to require replenishment at least once monthly, and large enough to require no more than three replenishments per month.
  7. The individual amount allowed for each petty cash fund will be determined by the Comptroller's Office on the basis of the department needs.
  8. If the need of the department changes to require more than three replenishments per month then the department head should submit a written request to the Comptroller's Office justifying an increase in petty cash fund. Special circumstances require prior approval by the Comptroller's Office.
  9. Petty cash funds will be limited to one per department. Departments that have different sections that are separate can have one petty cash per section.
  10. The department head must appoint an individual to be a custodian of the department's petty cash fund. The custodian is directly responsible for the safekeeping, disbursement, reconciliation and replenishment of the fund.
  1. Segregation of duties between the custodian and the reimbursement approver is required. The person approving the vouchers should not be the custodian of the Petty cash fund. Moreover cash custody has to be with the custodian at all times.
  2. Managing a petty cash fund:
  3. Expenditures reimbursed from petty cash fund must be made for the purposes for which the fund was established and must be supported by receipts. A petty cash receipt should be prepared for all expenditures.
  4. An individual who has signature authority for the department/account being charged must approve all expenses.
  5. The individual being reimbursed must sign the petty cash receipt slip.
  6. Petty cash funds must be kept in a securely locked compartment not accessible to anyone other than the fund custodian.
  7. The custodian is responsible for balancing the petty cash fund. At any time, the total cash on hand plus the total receipts should equal the original amount of the petty cash fund. The reason for any differences should be immediately determined. The head of the department has to perform twice a year count and control on the petty cash amount.
  8. Custodians are requested to get official VAT invoices from registered VAT suppliers.
  9. Petty cash purchases should not exceed the Petty cash advance, thus splitting of orders over several invoices is not allowed. Purchases in excess of the fund should be made via other than Petty cash.
  10. Irreconcilable differences are classified as losses due to error or losses due to theft. The custodian should immediately report losses to the department head, internal audit, Comptroller's Office. In addition, for losses due to theft, the Protection Department should also be notified.
  11. If losses were caused by custodian's carelessness, the department head will determine whether to replace the custodian.
  12. All losses are the department's responsibility and will be charged to the department.
  13. Replenishment requests must be supported by receipts and should be sent by the custodian to the Budget control and GGCP sections.
  14. All petty cash funds are subject to unannounced audits by the internal audit department.
  15. A department head may transfer the petty cash fund to a new custodian after notifying the Comptroller's Office in writing.
  16. Terminating and decreasing a petty cash fund:
  17. Funds can be terminated by:
  18. The department head, if the department determines there is no longer a need for a petty cash fund;
  19. The Comptroller's Office, if the fund is not operated in accordance with the university policies or if the fund has not been used for a year.
  20. Purchasing, if procurement cards will suffice as replacement for petty cash.
  21. If the needs of the department changes to require less than one replenishment per month then the department head must notify the University Comptroller's Office to decrease the petty cash fund.

3.Flows and Narratives

Click on the process to see the flow and narrative.

Supplier EntryProcess

Supplier Maintenance Process

PO Matching Invoice Entry Process

InvoiceApproval Process

Automatic Payment Process

Direct Invoice Entry Process

Prepayment Application Process

Prepayment Process

Manual Payment Process

Invoice Hold Release Process

Invoice Adjustment Process

Void Payment process

Credit Memo

Cancel Payment Process

Expense Report Process

Status Inquiry Process

TransfertoGeneral Ledger

PeriodClose Process