PROCURE-TO-PAY (P2P) VERIFYING JOB AID

VERIFYING IN P2P

TARGETED USER ROLE:

> Viewers who play a role in the verification process

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TABLE OF CONTENTS
1.0 P2P Overview 3

2.0 Verification of P2P Expenses

3.0 System of Record & Source Documents

4.0 Useful Reports for Verification & Lien Management

5.0 Steps for Verifying P2P Expenses

11

6.0 Steps for Reviewing Liens

19

7.0 Appendix: P2P Terminology

24

Look for these icons for special notes and tips: Note = Reminder = Tip = Go To =

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1.0 P2P OVERVIEW

P2P FLOW DIAGRAM
The P2P process begins when a Department creates a Requisition in the system, and ends when the Department verifies and reviews the General Ledger. This job aid focuses on Step 11 Department Verifies General Ledger.

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1.0 P2P OVERVIEW

With the implementation of P2P, Departments will now be making online purchases from P2P catalog vendors. Below is a list of the types of goods Departments will be able to purchase in P2P. All other purchases will be purchased as they are today.

With this move to online purchasing comes changes to the verification process. This job aid explains what has changed and gives guidance to Departments on how to verify P2P expenses.

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2.0 VERIFICATION OF P2P EXPENSES

GENERAL LEDGER VERIFICATION AND REVIEW The Controllers Office guidance strongly recommends three levels of ledger reviewverification, review, and acknowledgment. Below lists how each level of review is affected by the implementation of P2P.

Verification Responsibilities Provide reasonable assurance that financial transactions are valid and properly classified to the correct chartfields

Change in P2P World Identify P2P transactions on GL Transaction Detail report by the existence of a new Procurement Dept Code field. P2P transactions with the CORRECT Procurement Dept Code: These do not need further verification because they are confirmed through upfront P2P approval and 3-way match processes. However, they should go through a review process (see Review section), particularly if the assigned Verifier is also the Default Approver for the transactions. For P2P transactions with INCORRECT Procurement Dept Code: These require further investigation on a transaction by transaction basis. Key Changes for When P2P Transactions Include Correct Procurement Dept Code:

Review supplier invoices for accuracy

by comparing charges to purchase orders

Reviewed in P2P; 3-way match process in P2P compares PO, invoice and receipt information. Department no longer receives invoices. Verified in P2P; Receiver Role enters receipt in P2P to verify receipt of goods and authorize payment to vendor. Ensured in P2P; Default Approver role ensures accurate chartfields and available funding.

Verify that goods purchased have been

received

Perform monthly verifications of GL

ledger accounts payable transactions to ensure accuracy and timeliness of expenses and recording under correct chartfields.

Review for payments to employees and

vendors not recognized.

Employee payments are not part of P2P. For vendor payments, Default Approver and Ad Hoc Approver roles ensure that request to a specific vendor is appropriate; Receiver role must record receipt of goods prior to vendor payment. Less likely to happen for P2P transactions since vouchers are supported vouchers (e.g. assigned to POs) and due to the resulting matching rules process; Invoice must be tied to a Receipt and PO in order to get paid. This check should occur during the requisitioning stage by the Default Approver. No change to process; Review Weblinks Summary reports as usual. P2P Transactions that have not been paid will now be reflected in balance. Updated 8/5/2009

Look for duplicate payments

Check for expired grants or contracts

(fund years) Investigate any unusual changes in summary ledger balances

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2.0 VERIFICATION OF P2P EXPENSES

Review Responsibilities Ensure verification has been performed Review summary and detail financial reports for accuracy, appropriateness, and proper compliance Change in P2P World No change to process; Utilize Verification Checklist. Review Weblinks Summary reports as usual. For detailed financial reports, consider adapting how the Department reviews P2P transactions, keeping in mind that: 1. P2P Requisitions were reviewed for appropriateness and proper compliance during ordering process. 2. The 3-way Matching process ensures that payments are accurate. 3. Duties are segregated within the Department. If a Department does not use ad hoc approving such that only a Default Approver is approving a Requisition, and if that Default Approver is also verifying, then additional scrutiny is needed on the review process, with a focus on unusual vendors, high risk commodities and general sampling of transactions to mitigate opportunities for fraud. Confirm all reconciliation items will be researched and resolved on a timely basis (within 60 days) No change - Utilize Verification Checklist to track completion.

Acknowledgement Responsibilities Confirm that financial information has been reviewed and that reasonable assurance of the validity of the information has been provided by the fund owner Assess risk to determine if monthly, quarterly, or annual review and acknowledgement is required

Change in P2P World No change.

No change.

The Controllers Office Verification Checklist can be found at http://acctg.ucsf.edu/internal_controls/ sas112/key_controls/Verification_Checklist.doc.

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2.0 VERIFICATION OF P2P EXPENSES

Separation of Duties The Controllers guidance states that: Duties should be separated between verification, review and acknowledgement whenever possible. At a minimum, two individuals are required.

If separation is not feasible or practical due to staffing levels (e.g. the MSO may also be the Financial Administrator), it would be advisable to separate the verification and review function, with the reviewer signing off that the verification was performed, and monitoring if any reconciliation items are resolved on a timely basis. If the verification and review functions are combined, the acknowledger could sign off that both functions were performed. If the verification, review and acknowledgement functions are combined [into one person], an assessment should be performed to ascertain the level of risk and whether or not alternative detective controls are necessary.

Given the Controllers Office guidelines, below is a summary of which P2P Roles can be involved with the General Ledger review and verification process. As a rule of thumb, an individual who is creating or able to substantively change a purchasing transaction should never play a verify role. Because Buyers can issue Change Orders, and Self Approving Requesters can create Requisitions without approval, their ledger roles are limited to review only.

P2P Roles Requester and/or Receiver (without below roles) Self Approving Requester Default Approver alone Combined Default Approver/Buyer Buyer alone

SAS 112 Ledger Verification Roles Review or verify but ideally, not both Review only Review or verify but ideally, not both Review only Review only

Because the P2P system enables Default Approvers to edit Requisitions as part of their fiscal responsibilities, it is highly advised that for Departments where Default Approvers also play a Verifier role, that the Reviewer role be separate. In addition, random sampling is encouraged to mitigate opportunities for fraud and extra scrutiny is advised for unusual vendors and high risk commodities. We anticipate that the MSO, Department head or senior designee for Sponsored Funds will typically play the SAS 112 Acknowledgement role. We therefore didnt address that above.

The Controllers Office procedures for monitoring/verifying expenditures to meet SAS 112Key Control #13 can be found at http://acctg.ucsf.edu/internal_controls/sas112/index.htm.

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3.0 SYSTEM OF RECORD & SOURCE DOCUMENTS

Official System of Record

The PeopleSoft system (owned by the Controllers Office) is the official system of record. Any documentation attached to a Requisition becomes part of the official system of record.

Specific Source Documents Record retention of Requisitions and supporting documentation must conform to UCOP and agency policy on retention requirements (http://www.ucop.edu/ucophome/policies/bfb/rmp2.pdf)

Packing Slip CENTRALIZED Receiving: Physical receivers of goods sign and send packing slips to the Administrative Department for data entry into P2P by a central Receiver Recommendation: Central Receiver references packing slip number when inputting the receiving information in PeopleSoft, and then files the packing slip. Internal Audit has indicated the packing slip must be maintained for five years. Recommendation: Same as above. Departments need to define filing process for the packing slips, e.g. if each Requester should maintain their files or if a central departmental person will.

DECENTRALIZED Receiving: Requesters are also Receivers in the system for their own goods

PI Signature on Controlled Substances Requesting Controlled Substances Requesters scan the PI signed Requisition and attach it to online P2P Requisition Recommendation: Attachment is part of official system of record. Keep as supporting document only if copy was not attached to the online Requisition.

Verification Checklist Same as today

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4.0 USEFUL REPORTS FOR VERIFICATION & LIEN MANAGEMENT

Reporting Overview Along with the implementation of P2P comes a new Reporting Database that will provide information to help manage the people and activities associated with requesting, purchasing, receiving, and paying. Go to the Reporting Manual for more information on the specific reports and how to run them.

Summary of Reports Useful for Verification Process

WEBLINKS Reports GL Transaction Detail Most commonly used report for financial verification/review, including tracking encumbrance activities and expenditures. A new template has been prepared and issued by the Controllers office to facilitate the export and reconciliation of transactions. The WL Reconcile Voucher template is located on the Controllers website. Change in P2P world: o o Report shows line level liens/expenses reflecting individual line items on a PO/Invoice P2P transactions contain a Procurement Dept Code for easy identification

Summary Reports

Provide a view of the big picture for a Department, a DPA, or a Fund. Change in P2P word: o P2P transactions that have not yet been paid will now be reflected in the balances

REPORTING DATABASE Reports Voucher Document Status Provides information associated with Voucher, including Invoice ID, invoice date, and amount; Links to Requisition, PO, and Receipt documents associated with it.

Requisition Inquiry

Provides information associated with P2P Requisition, including Requester ID, request date, and items requested

PO Inquiry

Provides information associated with P2P PO, including vendor, amount, items, Buyer, and PO status

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4.0 USEFUL REPORTS FOR VERIFICATION & LIEN MANAGEMENT

Summary of Reports Useful for Lien Management

REPORTING DATABASE Reports (Continued) PO Accounting Entries Provides lien details for a specified P2P PO, including the month the lien was created and if and when the lien was relieved by a Voucher.

PO Details Including Liens

Provides list of current liens that can be run by Fund-DPA and date range.

Both Weblinks and Reporting Database will be refreshed with PeopleSoft data on a nightly basis.

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5.0 STEPS FOR VERIFYING P2P EXPENSES

There are several reports to help verify Department expenses. Here is a summary that shows which report to use for what.

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 1: RUN WEBLINKS GL TRANSACTION DETAIL REPORT
1. Sign in to Weblinks and select the GL Transaction Detail report from the Financial Detail menu. 2. Select appropriate report criteria. 3. Click [Start].

Go to OLFS Weblinks ManualChapter 3 for more details on how to run the GL Transaction Detail report.

3
GL Transaction Detail Report shows line level liens/expenses reflecting individual line items on a PO/Invoice.

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 2: EXPORT TO GL TRANSACTION DETAIL ROLLUP TEMPLATE.
From the report results page, click [Excel] to export report.

Go to http://acctg.ucsf.edu/OLFS/trainingarchives/jobaids.htm for complete information on exporting the GL Transaction Detail to the GL Transaction Detail Rollup Template.

P2P transactions are identified by existence of Procurement Dept

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 3: IDENTIFY QUESTIONABLE PROCUREMENT DEPT CODES
Create a list of Dept Codes in the Department/Division and use a reference.

Things to consider: Could this be a split-funded transaction, where the Department is paying for a portion of a shared item? Did the Requester recently move from another Department and his/her PeopleSoft ID was not deactivated from the previous Department? Because verifying P2P transactions depends largely on the Requesters Procurement Dept Code, remember to submit the PeopleSoft User Request Form when an employee transfers from one Department to another. http://acctg.ucsf.edu/peoplesoft/system_access/userrequestSubmit.htm

Questionable Procurement Dept Code

STEP 4: NOTE THE VOUCHER ID OF QUESTIONABLE TRANSACTION

For Accounts Payable transactions, Reference column is the Voucher Number that is assigned when the invoice is entered into PeopleSoft.

Voucher ID

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 5: SEARCH VOUCHER DOCUMENT STATUS IN REPORTING DATABASE

1. Sign in to the Reporting Database. 2. Navigate to Accounts Payable > Review Accounts Payable Info > Vouchers > Document Status. 3. Type Voucher ID. 4. Click [Search].

2 3

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 6: VIEW PO, RECEIPT, OR REQUISITION INQUIRY
5. View PO, Receipt, or Requisition details. a. PO Inquiry Click [DOC ID] Number next to the PO Document Type to view the PO details, including who is the PO Buyer and what are the PO items). A new browser window/tab opens. b. Receipt Inquiry Click [DOC ID] Number next to the Receipt Document Type to view the Receipt details, including who entered the Receipt. A new browser window/tab opens. c. Requisition Inquiry Click [DOC ID] Number next to the REQ Document Type to view the Requisition details, including who entered the Requisition and when. A new browser window/tab opens.

5a 5b 5c

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 6: VIEW PO, RECEIPT, OR REQUISITION INQUIRY
PO Inquiry shows:

Who is the Buyer?

What was purchased?

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5.0 STEPS FOR VERIFYING P2P EXPENSES

STEP 6: VIEW PO, RECEIPT, OR REQUISITION INQUIRY
Receipt Inquiry shows:

Click Header Details link.

Who entered Receipt and when?

Requisition Inquiry shows:

Who initiated Requisition?

Click [Requisition] ID to see additional Requisition details.

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6.0 STEPS FOR REVIEWING LIENS

Review liens on a regular basis to ensure that financial balances are accurate. Below is a summary of which report to run for what.

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6.0 STEPS FOR REVIEWING LIENS

STEP 1: RUN PO DETAILS INCLUDING LIENS
PO Details Including Liens is a useful query that provides a list of current P2P liens that can be run by Fund-DPA and date range.

1. Sign in to Reporting Database. 2. Navigate to eProcurement > Purchasing Reports > PO Details Including Liens. 3. Type Fund From, From To, DPA From, DPA To, Date From, and Date To. 4. Click [View Results].

4
Date From and Date To are required fields. If you type a Fund From, you must type a Fund To. The same goes for DPA From/To or NCA From/To. Otherwise, the results may come back without any data.

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6.0 STEPS FOR REVIEWING LIENS

STEP 2: REVIEW & IDENTIFY ANY QUESTIONABLE LIENS
Sort to identify old liens that need follow up or to be updated in P2P.

Sum for a lien total that can be added to financial projections.

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6.0 STEPS FOR REVIEWING LIENS

STEP 3: RESEARCH QUESTIONABLE LIENS IN PO ACCOUNTING ENTRIES
PO Accounting Entries is helpful to research partially paid POs or see the payment history of a PO. 1. Sign in to Reporting Database. 2. Navigate to Purchasing > Purchase Orders > Review PO Information > PO Accounting Entries

2
3. Type PO number to research in From PO ID . 4. Click [OK]

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6.0 STEPS FOR REVIEWING LIENS

STEP 3: RESEARCH QUESTIONABLE LIENS IN PO ACCOUNTING ENTRIES
PO Accounting Entries Example

Line 1 shows the initial PO lien amount of $240.00 on 19900-401901 in December 2007. Line 2 shows the lien reversal of -$240.00 by Voucher ID 02343422 in December 2007.

Line 1 Line 2 Screen Continued

PO Lien

Line 1 Line 2

PO Lien Reversal Fiscal Year 2008 = 7/07-6/08 Accounting Period 6 = December Voucher ID used to reverse lien

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7.0 APPENDIX: P2P TERMINOLOGY

Agreement Items Catalog UCSF managed catalog containing unique agreement items from department contracts. These catalog items are available to all departments. As new contracts are negotiated, and other contracts expire, the list of agreement items and vendors in this catalog will continue to change. Accounts Payable unit within the UCSF Controllers Office. Responsible for all campus vendor, employee reimbursement and non-Payroll payments. Set of goods made available by vendors electronically in P2P. There are 3 types of catalogs in P2P: Hosted (Perfect Commerce), Agreement Items, and Punch-Out (Office Max). Process of establishing and managing electronic catalogs. A change issued by the Buyer to modify or cancel a PO after it has been dispatched to a Vendor. Change orders are not created to increase order quantity or add items to a PO. Campus Procurement & Business Contracts department at UCSF. Responsible for delivering business and procurement contracts, transactions and advice and ensuring compliance with applicable policies, laws and regulations. All P2P documentation is available on the CPBC website at http://cpbc.ucsf.edu. The act of sending a PO or Change Order to a vendor. PeopleSoft electronically dispatches new Purchase Orders 3 times per day and Change Orders every hour, either by EDI, email or fax transmittal. Download the P2P Dispatch Schedule at http://cpbc.ucsf.edu. Set of standards for computer-to-computer information exchange. Refers to the way PO or invoice data is transmitted between UCSF and vendors. EDI transmissions require no manual intervention. Vendor invoices that arrive electronically in the UCSF PeopleSoft system. POs electronically delivered from the UCSF PeopleSoft system directly to a Vendors order management system. Fisher Scientific, VWR and Office Max are sample EDI PO Vendors. PeopleSoft module where users can create, manage and approve Requisitions, receive items, and manage favorites and templates. The ePro module, along with the Purchasing module and Accounts Payable module are what comprise P2P. A type of P2P catalog where the content is hosted by a third party provider (Perfect Commerce). Hosted catalogs include key vendors such as Fisher Scientific and VWR. Vendor document requesting payment after goods are shipped. UCSF receives invoices by U.S. mail and EDI. See EDI Invoice Vendors.
Updated 8/5/2009

AP

Catalog

Catalog Enablement Change Order

CPBC

Dispatch

EDI (Electronic Data Interchange) EDI Invoice Vendors EDI PO Vendors

eProcurement (ePro)

Hosted Catalogs

Invoice

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7.0 APPENDIX: P2P TERMINOLOGY

Matching and Match Exception PeopleSoft process to compare specific elements (i.e., price, quantity, etc.) on the PO, Receipt and Voucher. When all elements meet the matching rules, the Vendor is automatically paid. When items do not match, the system creates a match exception which must be managed before the Vendor is paid. Procure-to-Pay. An end-to-end solution for requisitioning and approving items, routing Requisitions based on sourcing rules, converting Requisitions into Purchase Orders, dispatching POs to vendors, recording receipt of goods, obtaining invoices, and paying vendors. Program Management Office. Responsible for the planning and implementation of selected academic, research, financial and student systems which support the mission of UCSF. See Hosted Catalogs. A written agreement between UCSF and a Vendor containing the essential terms and conditions under which items or services are to be furnished to UCSF. PO is part of the 3-way matching process. A type of P2P catalog where the content is managed externally by the vendor. The catalog is accessed by punching out to the vendors website through PeopleSoft. Example: OfficeMax Research Services Analysts. Responsible for pre-award and/or post-award grant activities and budgets. Also referred to as Analysts or Financial Analysts. An electronic record indicating receipt of goods from a vendor. Receipt is part of the 3-way matching process. An internal form used by departments to convey a need for acquisition of goods or services. P2P requisitions are created by Requesters, and routed electronically for approval. Once approved, the requisition is sourced and converted into a PO. Subject Matter Experts. With P2P, SMEs included purchasing experts across campus who provided input on the development of the P2P system and guidance on the business processes for the campus. The act of applying UCSF purchasing rules to convert an approved P2P requisition into a purchase order. The process of collaborating with vendors (aka, suppliers) for efficient and effective electronic trading. UCSF representation of the vendor invoice in PeopleSoft . Vouchers are automatically created from EDI invoices, but must be data entered by AP staff for paper invoices. Voucher is part of the 3-way matching process Organized list of specific pending actions for P2P Approvers and Reviewers.

P2P

PMO

Perfect Commerce Purchase Order (PO)

Punch-Out Catalogs

RSA Receipt

Requisition

SMEs

Sourcing

Supplier Enablement Voucher

Worklist

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