IRIS staff will ensure that cash is disbursed only upon proper authorization, for valid business purposes, and that all disbursements are properly recorded.
This policy establishes the requirements for record keeping related to the accounts payable function of the organization and how cash disbursements are processed. Managing the accounts payable process includes receipt, approval and payment of vendor invoices.
This policy applies to all accounts payable and cash disbursements used in the conduct of IRIS’s research programs and other activities.
IRIS Financial Services maintains the IRIS accounts payable department and management of all cash disbursements from the organization. It is responsible for recording all cash disbursement transactions and retaining supporting documentation for such disbursements. All cash disbursements are paid through the Financial Services Department located at headquarters from IRIS’s corporate bank accounts (see Cash and Cash Management policy for explanation of these accounts).
Program Managers (and other authorized IRIS employees) have signature authority to approve vendor invoices for payment (see Signature Authority policy for individual signature authorities).
Procedures Vendor Invoice Processing
The Senior Project Accountant, opens all mail related to Financial Services (Accounting Manager, serves as backup). Each invoice is date stamped and sorted into mailboxes based on the employee responsible for coding the type of invoice.
A/P Accountant – non-PO invoices, shipping invoices for HQ and DMC, travel advance requests
Purchasing Accountant – PO invoices
Senior Accountant – travel expense reports, expense reports, PASSCAL shipping invoices, UATP invoices, hotel invoices, all other travel-related expenses
Senior Project Accountant – consultant and subaward invoices
Coded invoices are placed in the Accounting Manager’s mailbox for initial review. All award-related invoices are then forwarded to the Senior Project Accountant for confirmation of coding. Coded invoices are batched and distributed weekly to the respective Program Managers who are responsible for verifying the coding to their budget(s) and approving payment. The Program Managers, or other management staff, are responsible for the proper approval for payment of invoices for goods and services purchased by IRIS. In approving a vendor invoice for payment, the appropriate criteria should be considered depending on the type of procurement arrangement.
The approved invoices are then returned to Financial Services for payment processing. When the approved invoices are returned to Financial Services, the A/P Accountant separates the invoices by type of payment: check, wire transfer (international payments and if requested by vendor) and ACH (for payments to employees with an ACH authorization form on file).
IRIS processes payments immediately upon approval of invoices. Two check runs and one ACH batch process are prepared per week.
The Purchasing accountant enters PO invoices through the Material Management module and creates the A/P vouchers for payment against a purchase order.
The A/P accountant enters non-PO invoices/vouchers, reviews PO vouchers, and prints checks or processes ACH payments, as applicable. Payments by wire transfer are forwarded to the CFO for payment (and later entered as manual disbursements).
The Accounting Manager reviews A/P reports prior to posting for accuracy in data entry and checks that invoices have been approved for payment. Once the reports have been approved, the A/P Accountant requests the check stock. A small batch of check stock is withdrawn from the locked cabinet and the check numbers, first and last, are logged in. check stock not used in the check run is returned to either the Director of Finance or Senior Project Accountant, who verifies the checks used, logs the unused check stuck and returns it to the locked cabinet.
The check signer confirms that documentation properly supports the payment. The following policies apply to the signing of checks drawn on IRIS accounts:
Each signer will review the check and associated supporting documentation prior to signing the check.
All checks will be signed by one authorized signer. Designation of authority to sign checks is outlined in a separate policy.
All signature will be manually placed; no signing equipment will be used.
No blank checks are signed. Checks are not made out to “cash,” except to replenish the petty cash account at IRIS headquarters.
Upon return of the signed checks, the A/P accountant mails checks with remittance advices and files invoices with check copies in the A/P files.
B. Wire Transfers Once the batch of invoices to be paid by wire is compiled, it is forwarded to the Director of Finance & Accounting. She reviews the invoices and determines that adequate funds are available in IRIS’s operating account.
The Director of Finance & Administration calls the bank to initiate the payment. After providing all of the necessary information, the bank provides a wire transfer confirmation number, which is noted on the invoice. Later, the Director of Finance & Administration logs on to the bank’s website to verify that the payment was processed. The Director of Finance & Administration notifies the payee that the payment has been processed.
After processing the wire transfer, the Director of Finance & Administration places the invoice packet in the President’s bank folder, for transaction review. The bank mails a paper confirmation to the President of IRIS, which is placed in the President’s bank folder, unopened, upon receipt. The President compares the bank confirmation letter to the invoice and supporting documentation and, if satisfied, initials the invoice.
Once the President has approved the wire transfer, the invoice packet is returned to the A/P Accountant for recording in the accounting system. Each transaction is assigned a discrete, system-generated voucher number, which is recorded on the invoice. All transactions are recorded prior to month-end close.
C. ACH Payments Any IRIS employee wishing to receive travel and other reimbursements via ACH payment must complete an ACH Authorization form. Once the completed, signed form is submitted to the Business Office, the employee is establish in the accounting system, and in the on-line banking system, as an ACH payee. Recipient banking information is recorded in both systems. Once the batch of invoices to be paid by ACH is compiled, each is entered into the accounting system. The accounting system, noting that the “vendor” is a designated ACH payee, generates an EFT file. The A/P Accountant prints out a Voucher Report listing the ACH transactions.
The A/P accountant then logs on to the on-line banking system, enters her personal user id and password, and uploads the EFT file. She logs off the banking system. Then, the A/P Accountant forwards the Voucher Report, along with the associated invoice packets to an approved ACH releaser (the Director of Finance & Administration or the Accounting Manager).
Upon receipt of the report and packets, the Director of Finance & Administration or the Accounting Manager logs into the online banking system, using a personal user ID and password. After reviewing each ACH transaction prepared in the banking system, ensuring that the transaction agrees to the supporting invoice, the releaser approves the transaction in the system, releasing the transaction. The releaser then prints a report detailing the released transactions, and records the bank-assigned batch ID number.
The batch is then returned to the A/P Accountant who prints an advice from the accounting system for each transaction, and attaches it to the front of each invoice packet.
D. Voided Checks and Stop Payments Checks are voided for many reasons, including errors made in the course of preparing a check, inadvertent duplicate payments made to vendors, and stop payments issued on lost or disputed checks. As part of the bank reconciliation process, Business Office staff follows up with vendors on long outstanding checks to determine the appropriate handling.
Where the physical check is available, the check is prominently marked “void” and placed in the voided check file. If the physical check is not available, a stop payment is placed on the check by the A/P accountant, through the on-line banking system. The accountant prints the confirmation that the stop payment was recorded by the bank and files the confirmation in the voided check file.
Where a replacement check is needed, the A/P accountant prepares a new voucher package, which is processed with other vouchers through the accounts payable process.
E. Reconciliations Monthly, the Business Office staff reconciles the general ledger Accounts Payable balance to the Open Accounts Payable report.
All payment transactions, whether check, ACH or wire, are subject to the month-end bank reconciliation process.