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Finance Department

20. Expenditure

20.1 General

The Treasurer is responsible for making payments to suppliers of goods and services to the University.

20.2 Scheme of delegation/financial authorities

20.2.1 The Budget Officer is responsible for purchases within his or her department. Purchasing authority may be delegated to named individuals within the department. In exercising this delegated authority, budget holders are required to observe the University’s purchasing policies and financial procedures.

20.2.2 The Treasurer shall maintain a register of authorised signatories and Budget Officers must supply her with specimen signatures of those authorised to commit the University to goods or services or to certify documents for payment.

20.2.3 Under procedures agreed by the Treasurer, central control shall be exercised over the creation of requisitioners and authorisers and their respective financial limits within any electronic requisitioning system.

20.2.4 The Treasurer must be notified immediately of any changes to the authorities to commit expenditure.

20.2.5 Budget Officers are not authorised to commit the University to expenditure without first ensuring that sufficient funds are available in an approved budget to meet the cost.

20.3 Procurement

20.3.1 The University requires all staff authorised to procure goods or services, irrespective of the source of funds, to achieve value for money when obtaining supplies, equipment and services – i.e. by securing the lowest possible cost consistent with quality, delivery requirements and sustainability, and in accordance with sound business practice (see also Section 14.5). Factors to be considered in determining best cost are noted in the Procurement Policy (Finance Department : Procurement Policy - Durham University).

20.3.2 The Director of Procurement is responsible to the Treasurer for:

    • ensuring that the University’s purchasing policy is communicated to all staff in the University with purchasing authority;
    • advising on matters of University purchasing policy and practice;
    • advising and assisting departments where required on specific departmental purchases;
    • developing appropriate standing supply arrangements on behalf of the University to assist budget holders in meeting their value for money obligations;
    • issuing purchase orders for all capital purchases over £10k;
    • the drafting and negotiation of all large-scale purchase contracts (generally in excess of £25,000) undertaken by the University, in collaboration with the responsible department;
    • ensuring that the University complies with EU regulations on public purchasing policy.

20.4 Purchase orders

20.4.1 The ordering of goods and services shall be in accordance with the University’s detailed procurement policy. (Finance Department : Procurement Policy - Durham University)

20.4.2 Official University purchase orders must be placed for the purchase of all goods or services, except where an agreed exception is applicable (including charges for public utilities and purchases made using purchasing cards, travel cards or petty cash). In exceptional circumstances, emergency orders may be given orally, but must be confirmed by an official purchase order endorsed ‘confirmation order only’ not later than the following working day.

20.4.3 The University will not accept responsibility for meeting or reimbursing the cost of goods or services purchased in any other circumstances.

20.4.4 All purchase orders must be printed using the official purchase order template and be signed by a designated Budget Officer in accordance with the scheme of delegated authority.

20.4.5 When transferring goods or services between departments, an internal trading form must be used.

20.4.6 It is the responsibility of the Treasurer (through the Director of Procurement) to ensure that all purchase orders refer to the University’s conditions of contract (see Finance Department : Terms & Conditions - Durham University ).

20.5 Purchasing cards

20.5.1 The operation and control of the University’s purchasing cards is the responsibility of the Treasurer.

20.5.2 Holders of purchasing cards must use them only for the purposes for which they have been issued and within the authorised purchase limits. Cards must not be loaned to another person, nor should they be used for personal or private purchases. Unless a delegated budget holder, cardholders should obtain approval prior to purchase in written form from the relevant budget holder who should ensure that there is sufficient budget available to meet the costs. The Treasurer shall determine what information is required on purchases made with purchasing cards from cardholders and deadlines for receipt in the finance section to enable financial control to be maintained and cardholders must provide that information.

20.5.3 Details of the operation of the scheme are set out in the Procurement Policy, (Finance Department : Procurement Policy - Durham University)

20.6 Tenders and quotations

20.6.1 Budget Officers and delegated budget holders must comply with the University’s tendering procedures contained in the University’s procurement policy which are applicable as follows:

    • under £250 excluding VAT – the purchaser shall have the discretion to decide whether or not to obtain quotations, but value for money must always be obtained;
    • from £250 to £2,000 – the purchaser shall be required to obtain two oral quotations;
    • from £2,000 to £10,000 – the purchaser shall be required to obtain at least three written quotations;
    • from £10,000 to £25,000 – the purchaser shall be required to obtain at least four written quotations. For items with an estimated value of over £15,000 and all capital equipment, the Procurement Service should be contacted - (see Procurement Policy Section 1, para 3.4);
    • over £25,000 – all items will be subject to a formal tendering procedure carried out by the Procurement Service;
    • the award of contracts over certain value limits shall be conducted in accordance with EU procurement regulations.

20.6.2 The University’s procurement policy may be found at Finance Department : Procurement Policy - Durham University

20.7 Post-tender negotiations

Post-tender negotiations (i.e. after receipt of formal tenders but before signing of contracts) with a view to improving price, delivery or other tender terms can be entered into, provided:

  • the tender does not fall under the requirements of the EU Public Procurement Regulations;
  • it would not put other tenderers at a disadvantage;
  • it would not affect their confidence and trust in the University’s tendering process.

20.8 Contracts

20.8.1 Building contracts are the responsibility of and are administered by the Director of Estates & Buildings.

20.8.2 Proposals will normally be initiated by the Director of Estates & Buildings in respect of planned replacements, general improvement schemes, space planning or in response to requests from departments.

20.8.3 Adherence to cost limits approved by the appropriate committee will be monitored and reported by the Director of Estates & Buildings who will report any actual or anticipated variances, together with the reasons, to Finance and General Purposes Committee.

20.8.4 Issue and receipt of tenders is by the Procurement Service, who will also be involved in the evaluation of bids and formal contracts award.

20.8.5 Consultants may be appointed if the project is too large or too specialised for estates department resources. Consultants will normally be selected from amongst those listed in the University’s framework agreement, or else appointments shall be subject to tendering and other procedures.

20.8.6 Proposals for capital projects shall be presented in the form of a Business Case including where appropriate an investment appraisal which should comply with appropriate HEFCE guidance. There is an approved format and procedure for such Business Cases. If agreement for funding is secured from HEFCE, its procedural rules should be followed.

20.8.7 The achievement of value for money will be an objective in the letting of all contracts. No contract will be placed for a period beyond which a budget has been approved unless specifically approved in writing by the Treasurer.

20.9 EU regulations

20.9.1 The Director of Procurement is responsible for ensuring the University complies with its legal obligations concerning EU procurement legislation. EU procurement regulations apply to written contracts for all forms of procurement, purchase or hire (whether or not hire purchase) with a total value exceeding a threshold.

20.9.2 The Director of Procurement will advise Budget Officers on the thresholds that are currently in operation. A breach of these EU regulations is actionable by a supplier or potential supplier.

20.9.3 It is the responsibility of Budget Officers to ensure that their members of staff comply with EU regulations by notifying the Director of Procurement of any purchase that is likely to exceed the thresholds. This will need to be done well in advance in order to permit advertisements in journals such as the Official Journal of the European Community (OJEC).

20.9.4 The Director of Procurement is required to submit to HEFCE annually details on expenditure which exceeds the threshold.

20.10 Receipt of goods

20.10.1 All goods shall be received at designated receipt and distribution points. They shall be checked for quantity and/or weight and inspected for quality and specification.

20.10.2 All goods received shall be entered onto an appropriate goods received document or electronic receipting system on the day of receipt or as soon as practicable thereafter. If the goods are deemed to be unsatisfactory, the record shall be marked accordingly and the supplier immediately notified so that they can be collected for return as soon as possible. Where goods are short on delivery, the record should be marked accordingly and the supplier immediately notified.

20.10.3 All persons receiving goods on behalf of the University should be independent of those who negotiated prices and terms and placed the official order.

20.11 Payment of invoices

20.11.1 The procedures for making all payments shall be in a form specified by the Treasurer.

20.11.2 The Treasurer is responsible for deciding the most appropriate method of payment for categories of invoice. Payments to UK suppliers will normally be made by BACS transfer or computer cheques each week.

20.11.3 Budget Officers are responsible for ensuring that expenditure within their departments does not exceed an approved budget.

20.11.4 Suppliers should be instructed by the purchase order to submit invoices for goods or services to the invoice approving location. Where approved for payment locally, invoices must be passed to the Accounts Payable department as soon as they have been authorised and input.

20.11.5 Care must be taken by the delegated budget holder to ensure that discounts receivable are obtained.

20.11.6 Payments will only be made by the Treasurer against invoices that have been approved for payment by the appropriate procedures.

20.11.7 Payment in advance of the receipt of goods or services shall not be made except with the prior approval of the Treasurer.

20.11.8 Approval of an invoice for payment will ensure that:

    • the goods have been received, examined and approved with regard to quality and quantity, or that services rendered or work done is satisfactory;
    • where appropriate, the invoice is matched to the order;
    • invoice details (quantity, price discount) are correct;
    • the invoice is arithmetically correct;
    • the invoice has not previously been passed for payment;
    • where appropriate, an entry has been made on a stores record or departmental inventory.

20.12 Petty cash

20.12.1 Where a single item is for less than £50 it may be paid from departmental petty cash. It must be supported by receipts or vouchers where available.

20.12.2 The Treasurer shall make available to departments such imprests as she considers necessary for the disbursement of petty cash expenses. However, it is important for security purposes that petty cash imprest floats are kept to a minimum.

20.12.3 Requisitions for reimbursements must be sent to the Treasurer, together with appropriate receipts or vouchers, before the total amount held has been expended, in order to retain a working balance pending receipt of the amount claimed.

20.12.4 The member of staff granted a float is personally responsible for its safe-keeping. The petty cash box must be kept locked in a secure place in compliance with the requirements of the University’s insurers when not in use and will be subject to periodic checks by the Budget Officer or another person nominated by him or her.

20.12.5 Periodically, a certificate of the balances held should be completed by the member of staff responsible for the float and counter-signed by the Budget Officer.

20.12.6 Petty cash floats should not be used to reimburse personal expenses of staff which should always be processed by the expenses payment system.

20.13 Other payments

20.13.1 Payments for maintenance and other items to students on behalf of sponsoring organisations shall be made on the authority of the Treasurer, supported by detailed claims approved by the Budget Officer.

20.13.2 Any other non-trade payments should be requested in a form prescribed by the Treasurer and be authorised by the appropriate Budget Officer.

20.14 Late payment rules

The Late Payment of Debts (Interest) Act 1998 was introduced to give businesses the right to charge interest on late payments from large organisations and public authorities. In view of the penalties in this Act, the University’s policy is that invoices must be authorised for payment as soon as they are received, unless there is valid reason to withhold approval, and paid within the suppliers terms.

20.15 Leasing

20.15.1 Lease agreements for buildings must be approved and signed by the Treasurer.

20.15.2 Equipment may be acquired under an operating lease but not under a finance lease. Operating leases must be signed by the Director of Procurement or her deputy.

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