Purchase to Pay Process

‘Purchase to Pay’

Process

Contents

MAIN CHAPTERS

Chapter Description

Page

No.

1.

Purchase to Pay (General)

...3

2.

Purchase To Pay – Tendering Process...28

3

.

Purchase to Pay – Specific Topics ...38

4.

Capital Projects

and

Property Transactions ...44

APPENDICES ………

Additional Information Re;

Chapter 1, Purchase to Pay (PTP)

………

Chapter 2 Tendering

………

Chapter 3 Non Order Payments

………

Chapter 4 Capital Projects & Property

…………

GLOSSARY OF TERMS

………

Refer Chapter 5 Topic 3 for Purchase to Pay Capital Specific Provisions

Ver 4.0 12/20/2013 Page 2 of 133

PTP - SUMMARY OF MAIN STEPS

1. 2. 3. 4. 5. 6.

Identify Need Validate Need

Classify spend

at some point from up to PO generation

Comply with local Purchasing Arrangements Complete Standard Requisition Form Submit Requisition Form to Budget Holder

/ Nominee

1. 2. 3.

Receive confirmation of

availability of funds

Resolve any regulatory issues ( e.g tax clearance, licensing, statutory permissions)

Maintain readily available record of formal confirmation

1. 2. 3. 4. 5. 6. 7

Check goods held in Storage

Check existing valid contracts

Invite 3rd Party Supplier to Supply

Refer to Central Procurement if appropriate

Select Appropriate Sourcing Option.

Complete Quotation/ Tender process as

appropriate

Select supplier

1. 2. 3. 4. 5. 6.

Complete purchase order/ requisition form

Prepare relevant documentation

Obtain approval for purchase order/

requisition

Issue purchase order / requisition

Send purchase order/requisition to

relevant parties

Maintain record of all relevant documentation

1. 2. 3. 4. 5.

PHYSICAL RECEIPT

accept goods 'subject to inspection

POD

ensure 'Stores Issue' or 'Proof of Delivery' documentation is

received

CUSTODY

maintain safe custody of goods

INSPECTION

inspect & check goods received (as soon as possible after

delivery)

Verify & record actual delivery of goods*

GRN

make and record decision to sign off

receipt

GRN Approval

manager confirms that goods can be paid for on receipt of a valid payment

request

GRN - RECORDING

recognise liability to pay for goods by inputting into

accounting system.

record expenditure against relevant Budget Holder

Receiving process is now complete

A PHYSICAL RECEIPT AND CUSTODY OF GOODS & SERVICES

B DOCUMENTATION AND RECORDING OF RECEIPT AND CUSTODY OF GOODS & SERVICES RECEIVING & SIGN-OFF PROCESS - SUMMARY

4 EXPENDITURE APPROVAL AND ISSUE OF PURCHASE ORDER

PURCHASING PROCESS - SUMMARY

3 SOURCING OF SUPPLIERS TO PROVIDE GOODS & SERVICES

2 CONFIRMATION OF AVAILABILITY OF FUNDS & APPROVAL TO SPEND 1 IDENTIFICATION AND NOTIFICATION OF NEED

Legend; PoD – Proof of delivery, GRN – goods received note .

Note ; The above is a representation which illustrates the PTP process, some are set out in more detail within further on in the document. The number, timing/sequence and details of these steps may not apply to all transactions.

1

Purchase to Pay (General)

The key requirements of the financial regulations are contained within the main chapters. However, this should be read in conjunction with additional information set out in the more detailed elements of the regulations, contained within the respective appendices (by chapter).

2a. Scope

2b. Objective of the Financial Regulations in respect of the

‘Purchase to Pay’ Process. below

2c. Purchase to Pay regulations are Minimum Requirements on page 4

2d. Purchasing Process – Main Requirements on page 6

2e Receiving Process – Main Requirements on page 19

2f Payment Process – Main Requirements on page 25

APPENDIX - More Information re. Chapter 2 Topics on page 55 to 74

2a.

Scope

The regulations within this section are intended to set out the Primary Financial Control requirements for all non-pay expenditure (i.e. expenditure not processed through the payroll system).

Summary of Purchase to Pay

2b.

Objective of the Financial Regulations in respect of the ‘Purchase to

Pay’ process.

2.1. The objectives of the Financial Regulations in respect of the Purchase to Pay Process are to ensure the HSE, its Budget Holders, Managers and Staff;

Obtaining expenditure approval,

Sourcing of appropriate goods / services from 3rd parties or Stores to meet identified service needs. Formally requesting the selected 3rd party to provide specified goods or services by issue of PO or

contract.

1. PURCHASING

Receipt and checking / inspection of goods and services.

Confirmation that they are fit for purpose, and match what was ordered or contracted for. Approval that Goods/Service can be paid for upon receipt of an appropriate request for payment 2. RECEIVING ( receipt of goods or services)

● For goods and services – generally on foot of invoices or other payment requests.

● A Key control within this process is the checking and verification of the invoiced price of good or services to the purchase order price.

Ver 4.0 12/20/2013 Page 4 of 133

Comply with Government and EU Procurement requirements and ensure that the procurement process is open and competitive.

Properly assess the HSE procurement requirements on a periodic basis to enable

proper procurement planning.

Demonstrate full accountability and probity as well as the highest ethical standards in respect of the public funds expended in the purchasing process.

Acquire goods and services that are most appropriate and represent best value for

money for the health service in terms of full life-cycle costs.

Make best use of the purchasing power of the HSE by entering into contracts

including national contracts, wherever appropriate. Aggregate Gidemand to optimise purchasing power.

Obtain formal approval from the appropriate Budget Holder or their nominee before requesting the provision of any goods, services or works.

Do not engage in purchasing above the limits of the budget available.

Operate the 'Purchase To Pay' process in an efficient and effective manner that facilitates the timely production of accurate and comprehensive Annual Financial Statements (AFS).

Properly manage their contacts with suppliers and provide full clarity to suppliers as

regards what is expected of them in relation to all aspects of the process.

Consistently apply high standards with respect to evidencing and recording of

‘Receiving’ of Goods/Services and custody of goods.

2c.

Purchase to Pay regulations establish PTP Minimum Requirements

purchase to pay process including:

1. Number of quotes / tenders required. (details on page 51)

2. Value thresholds for different sourcing options. (details on page 51)

3. Approval levels. (details on page 52)

4. Time periods for receipt of quotes / tenders.

2.3. The requirements set out in this chapter relate to Non Pay expenditure. In addition, there are other requirements that arise due to the specific nature of expenditure and which are governed by separate protocol. These include;

2.3.1. Capital Projects – Project Approval is governed by Capital Projects Approval Protocol.

2.3.2. Property Transactions - is governed by the Property Transaction Protocol - ‘Protocol for the Acquisition and disposal of Property’.

2.4. It is a requirement that managers operating these regulations will apply higher than the minimum control level (e.g. next level up authorisation) if this is necessary to ensure the objectives set out above at 2.B. are consistently achieved.

Example:

A manager may decide that in the case of purchase of routine medical consumables for one of his/ her hospitals he/she needs to get a Grade Vl to approve any purchase between €5,000 and €10,000 (see Table 2 - normally a Grade V can approve expenditure up to €10,000 for routine expenditure) because of any one or a combination of the following:

He needs a tighter level of financial control for the remainder of the financial year in order to clear an overspend earlier in the year

He does not have a sufficiently experienced Grade V

He decides that the complexity of the equipment or its purchasing process warrants it.

2.5. The actual steps, the number of steps and the sequencing of steps in the process that is being referred to as “Purchase to Pay” will vary depending on a number of factors including:

Type and complexity of goods or service being acquired. For more complex

services, works and equipping, third party sign-off shall be required at each stage of the Purchase to Pay process.

Frequency of purchase of specific goods / services

Value

The source of the goods or services

Specific service unit or area acquiring the goods / services etc The level of computerisation within the process

Ver 4.0 12/20/2013 Page 6 of 133

2d.

PURCHASING/PROCUREMENT; MAIN REQUIREMENTS

2.6. Definition

For the purpose of these regulations purchasing includes all activities up to the point where:

A supplier(s) has been selected

The supplier(s) has been formally requested to provide goods /services.

2.7. FOURKEY ELEMENTS for each Purchasing Transaction

It is clear that each and every purchasing transaction will have the following elements:

1

Identification and notification of need.

2

Confirmation of availability of funds and approval to spend.

3

Sourcing of supplier(s) to provide goods or services.

4

Expenditure Approval and Issue of Purchase

Order or Contract to Supplier

2.8.

General Application of Purchasing Regulations

These regulations cover the entire HSE which is a large and very diverse organisation. It is not practical to cover all potential situations or differences that may exist regarding:

2.8.1. Exactly by whom or in what manner a need for goods or services is identified and communicated.

2.8.2. At what precise stage or by whom the approval to spend available funds is decided.

2.8.3. Exactly how the supplier of goods or services is to be sourced in each specific case. Use of HSE standard procedures should be availed of where appropriate.

2.8.4. The precise manner and by whom the formal request to the supplier to provide the goods or services is made.

2.8.5. Budget Holders must ensure that there are documented Purchasing Arrangements in place for Managers and Users for each respective location /main category of spend.

2.9. Application of Purchasing Regulations to Bodies funded by the HSE

2.9.1. Where works and related service contracts are being awarded by external organisations and are funded more than 50% the requirements of these regulations as regards sourcing of suppliers are applicable.

2.9.2. Budget Holders must ensure that relevant voluntary, not for profit or other such organisations are aware of this requirement and it should be included as part of any service agreement or other contract with such organisations.

2.9.3. Refer toNFR-31 Grants to Outside Agencies for further details

MANDATORY CONTROLS WITHIN PURCHASING.

These regulations prescribe the following mandatory controls within the Purchasing process:

I. Segregation of Duties within Purchasing Ref asbelow

II. Procurement Planning Ref on page 8

III. Identification and notification of need Refon page 9

IV. Confirmation of Availability of Funds and Approval to Spend Ref on page 10

V. Sourcing of Suppliers to Provide Goods and Services Ref on page 11

VI. End of Purchasing Stage; Approval & Issue of Purchase Order Ref on page 16

(

I

)

Segregation of Duties within Purchasing

2.10. Appropriate segregation of duties is a key element of any financial control framework. In the context of the purchasing process the following requirements are mandatory;

2.10.1. At some point between initial identification of need and the issue of a purchase order or contract at least one other staff member in addition to the final decision maker must be involved in the process.

This must be evidenced by signatures appearing on purchasing documents e.g. requisition, purchase orders.

2.10.2. No manager (or staff) should have the final decision regarding the issue of a purchase order or contract for any goods or service that is for their own day to day use.

2.10.3. There must be a clear separation of tasks between the person raising a Purchase Order and Recording the ‘Receipt’ of the respective goods/Service.

2.10.4. There is a mandatory requirement to obtain appropriate professional procurement input where the value of purchases exceeds €25,000.

2.10.5. Decisions to authorise expenditure (i.e. to issue purchase order or contract) above

€25,000 must be formally written and recorded.

These decisions must be recommended by a manager at least at Grade V who must not be the same person that has 'signed off' the initial decision.

2.10.6. A minimum of two staff one whom must have expenditure authority equal to estimate value of contract or otherwise approved by Assistant National Director of Portfolio & Category Management must be involved in both the opening and evaluation of all tenders. (see Table 2: Purchase Order/Contract Approval-Financial Limits by Grade,)

Ver 4.0 12/20/2013 Page 8 of 133

2.10.7. Managers responsible for evaluating tenders (i.e. above €25,000) must not have the final decision as regards selection of the successful tenderer and / or approval to issue the purchase order or contract.

2.10.8. Procurement must be notified of andco-ordinate all tenders above the EU threshold except those tenders relating to Capital Projects which are the responsibility of the Estates Office.

2.10.9. Procurement is responsible for the ‘Commercial Evaluation’ of all EU Tenders (other than ‘Works’ agreed specialist supplies). The person responsible for procurement shall co-ordinate procurement process and prepare tender analysis report for purchase approver/budget holder’s evaluation.

2.10.10. The Budget holder/Purchase approver makes the ‘decision’ to proceed /’sign-off’ a tender based on tender report prepared by Commercial Evaluator.

2.10.11. Budget holders must maintain a list of ‘Commercial evaluators’ N2 for the Tender

process

2.11. Segregation of duties (SOD) within purchasing should be read in conjunction with Segregation of duties within receipt/receiving of Goods and Services.

(

II

)

Procurement Planning

2.12. Budget Holders must, within twelve months of the coming into force of these regulations, ensure that they have reviewed and analysed their likely purchasing requirements over the following 3 years.

2.13. They must put in place a procurement plan, in conjunction with procurement/ Materials Management/ Estates/ICT as appropriate to address:

2.13.1.

Appropriate categorisation and rationalisation of suppliers.

2.13.2. Contracts to be renewed or terminated/allowed to lapse and their timeframes

2.13.3. Additional contracts to be put in place

2.13.4. Main service developments (new services, service expansions, service reductions) likely to impact on procurement over the following 12 months.

2.13.5. Any other relevant matters.

2.14. Procurement plans should be updated annually and replaced every three years. Given the need for obtaining value for money and making best use of scarce staffing resources there is a requirement to co-ordinate and aggregate procurement plans.

N 2

Commercial Evaluators provide support through the procurement process by (a) Co-ordinating the procurement process (b) provide commercial tender analysis (c) ensure purchase systems and procedures are implemented, (d) procure supplies in line with current purchasing policies and procedures.

2.14.1. Specific Assistant National Director(s) delegated by a National Leadership Team Member must take the lead in the procurement planning process with appropriate professional procurement input.

2.14.2. It is a mandatory requirement that procurement plans identify any likely purchases which will require the use of a tendering process or the EU Procurement Procedure, based on the value thresholds.

2.14.3. Account must be taken of the full likely HSE requirement for the goods or service in deciding which value threshold and related sourcing option is appropriate.

(

III

)

Identification and Notification of Need

2.15. Managers and staff who identify and communicate needs for goods and services must satisfy themselves and be in a position to demonstrate that the need:

2.15.1. Is genuine and is appropriate to their service.

2.15.2. Takes account of prevailing policies and constraints (including statutory compliance requirements) together with resource constraints under which their service is operating .

2.15.3. Person Approving expenditure must be aware of cost/value of items/service required and knowledge of budget.

2.15.4. Has been identified following a review of existing goods and services that may already be available to the service

2.16. There is a requirement to obtain appropriate professional procurement input where the value of purchases exceeds €25,000i.e. for purchases in excess of €25,000 the procurement function should be contacted and guidance sought.

2.17. In communicating the need for goods or services to the relevant Budget Holder, or their nominee, the manager or staff member must:

2.17.1. Fully comply with the formal documented purchasing arrangements N3put in place by or on behalf of the Budget Holder.

2.17.2. Fully comply with any requirement of their own manager

2.17.3. Clearly communicate, in written form, unless otherwise permitted, the following:

Date of Request

Specification of goods / services required

Name/source of request

Purpose for which goods / services required Cost Centre / Internal Order

Material Code / GL

Preferred delivery address Timescales within which required

Likely cost if known & quantity /duration etc

N3

Budget Holders need to be pragmatic in drawing up the mandatory formal documented purchasing arrangements described at 1.above as regard (a) Value of goods and services and (b) Routine versus non-routine goods and services

Ver 4.0 12/20/2013 Page 10 of 133

2.17.4. The normal requirement is for requests for the purchase of goods or services to be submitted on a standard pre-formatted sequentially numbered requisition form.

2.17.5. Such standardised requisition forms are particularly important where a purchasing location receives a high volume of requests from a number of remote locations.

2.17.6. Requisitions must be submitted using the financial information system where required by the relevant Budget Holder.

2.18. Adequately record the request so that it is readily available for future reference or inspection / audit.

(

IV

)

Confirmation of Availability of Funds and Approval to Spend

2.19. Depending on the specific circumstances of any particular purchasing transaction confirmation of availability of funds may be required:

2.19.1. Before a need is communicated to the manager or staff nominated to source suppliers and issue purchase orders or contracts to same,

or

2.19.2. At the same time and/or by the same manager with authority to issue requests to suppliers to provide goods or services (i.e. the person who approves purchase orders or contracts)

2.20. Expenditure approval thresholds

set out in Table 2; Purchase Order/Contract Approval – Financial Limits by Grade(page52)

2.21. Mandatory Requirements

It is not intended to prescribe the detail of this element of the purchase process, however the following are mandatory requirements:

2.21.1. Budget Holders must document purchasing arrangements for their area to ensure there is clarity in respect of:

1. The point at which approval to spend is confirmed

2. By whom approval to spend is confirmed

2.21.2. Formal confirmation of available funding and approval to spend must be obtained

prior to issuing a purchase order or contract to provide goods or services to a Third party supplier.

2.21.3. Regulatory issues must be resolved prior to the issuing of a purchase order or contract. Such issues may include the following which is not intended to be an exhaustive list:

1. Any licensing issues

3. Tax Clearance Certificates /Tax status issues N4

2.21.4. A record must be readily available whether by reference to the Financial Information System (FIS) Gii record, signature on copy purchase order or other means.

2.21.5. Exceptions are only allowed where they can be clearly demonstrated as necessary to prevent material adverse impacts:

• To clients • To members of the public • To staff • To the service generally • To property or other assets of the Health Service Executive

2.22. All exceptions must be clearly recorded for future audit and must be rectified by obtaining the necessary approval on the next available working day.

( V ) Sourcing of Suppliers to Provide Goods or Services

2.23. Budget Holders responsibility in relation to Sourcing

2.23.1. Monitor their purchasing activity on an ongoing basis. They must identify opportunities for appropriate extension of centralised contracting. These opportunities should be pursued with Procurement.

2.23.2. Document their sourcing procedures as part of their formal local purchasing arrangements and all such sourcing procedures must comply with the National Financial Regulations.

2.23.3. Have regard to the need to avoid ordering excess quantities of goods– it is important to balance the requirement to ensure goods are available when needed against the issues associated with over ordering including:

1. Lack of appropriate storage

2. Excess goods may not last and have to be scrapped

2.24. These requirements should be addressed in the context of meeting the need for procurement planning as set out above.

Source from Stock or Existing Contract

2.25. It is a specific responsibility of each Budget Holder to ensure that:

to the greatest extent practicable and

where consistent with achieving value for money

as many purchases of goods and services are from :

N4

A Tax Clearance Certificate(TCC) is a written confirmation from Revenue authorities that a person's tax affairs are in order at the date of issue of the certificate. Under Section 1095 of the Taxes Consol. Act,199, it is mandatory that all vendors in receipt of €10,000 or more(inclusive of VAT), within any 12 months period, produce either a valid C2 certificate or a general Tax Clearance

Certificate. Such contracts can involve the purchase, hiring, leasing of goods, services property. The requirement applies even where

Ver 4.0 12/20/2013 Page 12 of 133

(i)

Stock

(Stores)

(ii)

Contracts

2.26.

Requirement to Utilise Contracts that are in place and still valid.

2.26.1. “ It is incumbent ………… to establish whether an existing contract is already in place and, if so, to utilise this contract” (Health Service Procurement Policy)

2.26.2. The terms of any given contract must make clear the extent to which the HSE commits to purchasing from the suppliers who have been awarded the contract.

2.26.3. In the negotiation of any contract care must be taken to very clearly state the terms upon which the HSE agrees to any exclusive use of the supplier and their goods or services.

2.26.4. Particular consideration must be given to HSE locations or services that may have low volume or low value requirements or may be geographically remote.

2.26.5. The following should be the over riding factor in Putting in Place contracts; 1. the achievement of value for money including the use of scarce staff resources

(within procurement and service delivery)

2. At all times, one must fully comply with Public procurement requirements.

2.26.6. The non-use of a relevant existing valid contract, other than as clearly provided for the contract, must be approved by the specifically delegated Assistant National Director (delegated by National Leadership Team Member) or by the Head of Procurement. The Head of Procurement must be notified in all cases.

2.26.7. Where contracts have already been negotiated this simplifies the purchasing process. It should enable the relevant staff member to focus on selecting the required goods from the contract list or catalogue.

2

required preference;

Invitation to 3rd Party Supplier to supply

General

2.27. If goods or services cannot be sourced from stock or by calling off an existing contract then it will be necessary to source a supplier(s) directly.

2.28. It is a mandatory requirement of these regulations that a competitive process should be used unless there are justifiably exceptional circumstances..

2.29. Where HSE funds external organisations;

2.29.1. which are awarding works or related services contracts and

2.29.2. HSE is funding these contracts by 50% or more then

2.29.3. these organisations must comply with the sourcing requirements in these regulations.

2.30. This provision applies to both commercial and voluntary / not for profit organisations funded by HSE

2.31. Every manager sourcing a supplier has an obligation to ensure that they are in a position to accurately and clearly specify their requirements to potential suppliers, regardless of value threshold.

2.32. Value Thresholds for Sourcing of Suppliers- General

2.32.1. The value of the likely purchase is the major factor in choosing the required method for sourcing the supplier.

2.32.2.

All values should be applied excluding VAT unless otherwise stated.

1. Goods – The threshold should be applied in respect of the need for the same or similar goods for the remainder of the current financial year. 2. Services (including construction related services) - The threshold should be applied in respect of the need for the same or similar services for the remainder of the current financial year.

3. Works – The threshold relates to the specific construction works. Authorisation of Capital Projects, and the related Expenditure Approval and Sourcing of Supplies and Services must be undertaken and managed by Estates Function.

2.32.3. In applying the value thresholds for sourcing managers must take account requirements for the same or similar goods or services in as wide an area of the overall HSE service as possible.

2.33. Prohibition on “Splitting of Purchases” to avoid value thresholds

“Splitting of Purchases” occurs where a staff member separates what is in effect one requirement into two or more separate lots for the purpose of applying a lower than appropriate value threshold.

This practice represents a very serious breach of the Financial Regulations and is

prohibited.

2.34. Value Thresholds for Sourcing represent the minimum acceptable control levels.

A Budget Holder must, if they believe it appropriate, require the use of the more open methods of sourcing suppliers even where the expected value does not make this mandatory. Such an approach would be required, for example, if they deem it necessary to:

Ensure proper controls are in place Achieve best value for money

Ver 4.0 12/20/2013 Page 14 of 133 2.35. SOURCING OPTIONS THAT COMPLY WITH THIS FINANCIAL REGULATION

2.35.1. Table 1; A summary of main requirements with regard to Sourcing of Suppliers is set out in Table 1 on page 51. This includes the Methods of Sourcing, Number and form of quotes/tenders and minimum time for receipt of quotes/tenders allowed by these regulations for different bands of spend.

2.35.2. The following options may be utilised in cases where either acquiring from stock or from an existing contract are not possible:

1. Direct approach to one or more potential suppliers seeking quotes – see variations below but operates within €1to €25,000range, excluding VAT. 2. Public Invitation of Tenders (Non EU) – see variations below but

operates between € 25,000 to € 200,000, excluding VAT for goods / services € 5,000,000for works).

3. EU Public Tender – see variations below but operates for anything over the thresholds listed at 2 above.

2.36. If there is any uncertainty as to which value range the required goods / services fall into then the next highest range should be assumed and the sourcing options required for that value range are to be utilised.

2.37. Budget Holders and their nominees are required to use the sourcing options required by the higher value ranges where it is probable that this will yield better value for money. They must satisfy themselves that any additional expense and / or additional time involved can be justified.

2.38. Authorisation to seek quotes / tenders N5

2.38.1. Each Budget Holder or their nominee must set out the appropriate authorisation to be obtained prior to seeking quotes or tenders. This must be covered in the formal documented purchasing arrangements that is required to put in place.

2.38.2. As a minimum the following must be complied with:

1. Grade VI or higher must approve in advance any proposal to seek tenders (above €25k) up to the EU threshold levels

2. Grade VIII or higher must approve in advance any proposal to seek tenders requiring EU tendering procedures.

2.38.3. The ‘General Requirements’ with regard to Tendering are set out on page 35 and include Tender Receipt, Custody and Opening, Tender Evaluation, Tender Award, Notification of Results and Documentation.

2.39. Please refer to section ‘Professional Input to Tendering’ which details the requirements to obtain appropriate professional procurement input where the value of purchases exceeds

€25,000.

2.40. Issue of Tender Forms / Documentation

A record must be kept of each request for tender documentation detailing when received, when responded to and documentation issue.

N5

Quotations/Quotes (for the purpose of these regulations) refers to values up to €50,000, the term ‘Tender’ or ‘bid’ refers to a more formal submission by a supplier to supply goods or services greater than €50,000.

2.41. Minimum time to be allowed for receipt of quote/tender.

(

2.41.1. The times specified are the minimum allowed. Managers are required to allow additional time where doing so could be considered reasonably necessary.

2.41.2. Additional time should be allowed if it is considered necessary to secure the minimum number of quotes / tenders or to achieve best value for money.

2.41.3. Real time constraints that may exist around meeting service needs must be taken account of when considering allowing additional time.

2.42. Receipt of less than the required number of quotes

Above the €25,000 threshold the receipt of less than the minimum required number of quotes means that there is a requirement for the next level up of authorisation to approve the resulting purchase order or contract.

For example - ordinarily these regulations provide that a Grade V can approve purchase orders up to €10,000 for routine expenditure but in the event that only 2 quotes are obtained for goods costing €9,000 then the approval of a Grade VI is required.

2.43. The relevant manager is required to consider whether the objective of achieving best value for money would be better served by restarting the quotation process in an effort to achieve the required minimum number of quotes.

2.44. All potential suppliers must have equal access to information

2.45.1. All potential suppliers must be informed in a consistent way as to any criteria that may be used to evaluate their quotes or tenders.

2.45.2. HSE staff must not give any real or perceived advantage to any potential supplier.

2.45.3. It is essential that any information or clarification provided to one supplier is provided in the same format and at the same time to all potential suppliers regardless of whether they have requested it or not.

2.50. Evaluation of Quotes and Tenders

The general principles regarding evaluation of tenders must be applied to the quotation process. Evaluation of quotes must involve the use of objective and fair criteria that are consistently applied.

2.50.1. The Most Economically Advantageous Tender (MEAT)Giii or Lowest Price

achieved must be accepted.

2.50.2. As the value threshold for quotes is lower than for tenders (quotes up to €25k, Tenders thereafter) it is expected that the quotation process will be less formal than the tender process and will require less documentation.

2.50.3. A clear record should be kept of the evaluation of all quotes and tenders - in particular where the lowest priced quote is not accepted the reasons for this must be recorded for future audit.

Ver 4.0 12/20/2013 Page 16 of 133

(

VI

)

End of Purchasing Stage

Expenditure Approval

and Issue of Purchase Order or Contract.

Once an appropriate supplier has been sourced, the final stage in the tendering/Selection process is to obtain approval for the expenditure and then to formally request the supplier(s) to provide the required goods, services or works. This is normally done through the issue of a purchase order or letter of offer to the supplier.

2.51. Expenditure Approval - Fundamental Requirement of these Regulations

It is a fundamental requirement of these regulations that expenditure approval;

2.51.1. is obtained prior to any request being issued to a supplier to provide goods or services (via Purchase order or contract etc).

2.51.2. can only be issued once availability of funding has been confirmed.

2.52. Expenditure Approval - Financial Limits by Grade

2.52.1. Expenditure approval is a key control within the Purchase to Pay process

2.52.2. Table 2 ‘Purchase Order/contract Approval – Financial Limits by Grade, on page 52 sets out the approval levels for ranges of expenditure based on a hierarchy of grades.

2.52.3. Expenditure approval is based on hierarchy of grades utilising the main clerical/administrative grades to represent the standard approval levels.

2.52.4. Persons approving expenditure must be a formally appointed budget holder or must be nominated by a budget holder.

2.52.5. Non clerical/Administrative grades can be nominated by budget holders as expenditure approvers.

2.53. Responsibility of Managers who approve expenditure

It is essential that every manager who signs off on expenditure is fully aware of the meaning of that action as they will be held accountable for same.

2.53.1. This applies to any form of expenditure approval including approval for:

The issue of a purchase order. The issue of a contract.

Expenditure by any other means.

2.53.2. In effect the manager is confirming that he has taken all reasonable steps to assure him/herself that:

1. The expenditure is appropriate to meet the need.

2. Proper procurement has taken place.

3. The expenditure is within the available budget.

4. The Financial Regulations have been complied with.

5. It is in order to request supplier to provide goods/services.

2.53.3. In assessing whether sufficient budget is available to cover any proposed purchase the manager must take account of all expenditure to date including commitments and known additional expenditure to the end of the financial year.

2.54. It is a mandatory requirement that requests to suppliers are in writing in the form of:

System Purchase Orders

Manual Purchase Orders Contracts

Other written format approved by the relevant Assistant National Director

of Finance

2.55. Purchase orders must actually be sent to suppliers once issued.

Where there is a necessity to place orders verbally the appropriate purchase or other written request as approved, must be issued to the supplier on the next available working day and must be clearly marked “confirmation of verbal order dated xx/xx/xx”.

2.56. Information regarding the acceptance of any tender can only be given to unsuccessful tenderers after the relevant Budget Holder has approved the expenditure and the award of the contract.

2.57. Value thresholds are applied to determine the level of managerial approval required in respect of any given purchase order / contract or expenditure.

2.58. Splitting of Expenditure Approvals – Prohibited

Expenditure approvals must not be artificially divided up or “split” so as to avoid the proper application of the expenditure approval limits set out in Table 2 on page 52.

2.59. Purchases extending over a number of months

2.59.1. The approval of expenditure for goods or services to be provided over an extended period of time should be treated as one expenditure approval and requires the appropriate grade of manager to approve.

2.59.2. This applies for example to grants to outside agencies (s.65’s etc) – the approval of the annual grant for the year and any subsequent adjustments to that grant are deemed to be expenditure approval decisions.

2.59.3. The processing of the monthly / quarterly grant payments are not expenditure approval decisions but do require appropriate validation and sign-off in terms of satisfactory receipt of services.

2.60. Departure from the Financial Limits by Grade

2.60.1. Where it can be shown that there is a pressing need individual staff members can be authorised to hold the expenditure approval limit of the next grade above them.

2.60.2. Contingency arrangements Giv should be prepared to ensure that short term gaps that require temporary departure from financial limits. For example procedures to be put in place to address holiday and sickness cover.

2.60.3. The relevant Assistant National Director/ Hospital Network Manager must approve such arrangements. These do not take effect until they are notified to the relevant Assistant National Director of Finance.

Ver 4.0 12/20/2013 Page 18 of 133

2.60.5. Such departures must be treated as exceptional and must be reviewed at least annually and formally re-approved if they are required to continue.

2.61. Requirement for Written Decisions – General

There is a mandatory requirement to ensure that sufficient documentation is retained to facilitate any necessary future review of the rationale behind any expenditure approval.

2.61.1. For purchases below € 25,000 appropriately filed and accessible copy letters, requests, quotes etc will provide sufficient documentation to meet this requirement. The approval of the appropriate manager must be clearly noted and dated above their signature on a purchase order or other relevant documentation.

2.61.2. For expenditure above € 25,000 a formal written decision must be retained along with other written decisions of the relevant manager.

2.62. Expenditure Approval on Financial Information System /Accounting System

Whenever practical the aim should be to facilitate the streamlining of the expenditure approval process without any reduction in financial control. This aim can be achieved by ensuring that managers approving the issue of purchase orders / contracts e.g. do so using accounting system directly. Transitional arrangements will operate for those locations with accounting systems with insufficient functionality to allow on-line approval.

2e.

RECEIVING; MAIN REQUIREMENTS

Definition

The receipt / receiving process for goods or services cover the following activities: 1. Checking and recording that the goods or services received match the specification of what was ordered or contracted by the HSE.

2. Checking and recording that the goods or services that have been received are in good order and are deemed to be fit for the purpose for which they were supplied.

The receipt / receiving process are complete when 1. to 2. are complete.

2.63. The Key control within the Receiving process is to ensure that the quantity and quality of goods specified have been satisfactorily delivered to meet the customer requirements. 2.64. At this stage it is appropriate to record the accounting entries in the Financial Information

System (FIS) to:

i) recognise the liability to pay for the goods, services or works ii) record the expenditure against the relevant Budget Holder This is achieved by inputting a Goods Received Note (GRN) onto the FIS.

It is important that the receiving process is completed efficiently and without undue delay to ensure that the HSE recognises its liabilities and records expenditure at the earliest appropriate time.

2.65. Receipt / Receipting –Key Control Stage

Receipt / receipting is the second and final key control stage in the purchase to pay process. Once this stage has been appropriately reached what remains are important but lesser control points around invoice checking.

2.65.1. When a manager makes a decision that the receiving process is complete they are in effect making a decision to pay for the goods and services provided an appropriate payment request (invoice) is subsequently received..

They may never see the invoice unless their personal involvement is required to address any mismatch between the invoice and the goods received.

2.65.2. These regulations support the need to move away from the inefficient process of having invoices circulating around the HSE to be certified.

2.65.3. This is becoming increasingly unnecessary with modern financial systems that can automate the matching of invoices against purchase orders and delivery documents (Goods Received Notes).

Ver 4.0 12/20/2013 Page 20 of 133 2.45.

General Application of Receipt / Receiving regulation

These regulations cover the entire HSE and, given the diversity inherent in the HSE, variations may occur in the detail around:

2.65.4. Exactly by whom or in what manner goods or services are received.

2.65.5. At what precise stage or by whom the checking of what has been received against the price, quantity and specification of what was ordered or contracted for will be carried out.

2.65.6. The precise manner and by whom it will be decided that it is in order to pay for the goods or services upon request.

2.65.7. Who exactly performs the related accounting entries involving inputting what FIS refers to as a Goods Received Note that has the effect of :

Recording a liability in the accounts of the HSE

Recording the expenditure against the budget of the relevant

Budget Holder.

It is not intended to prescribe the detail of exactly how the receipt / receiving process will operate in specific locations, however, the following are mandatory requirements:

Mandatory Controls within Receiving.

A. Segregation of Duties within Receipt / receiving of goods and services Page 21

B. Procedures for receiving to be put in place by Budget Holders Page 21

C. Delivery of Goods/Services to Nominated Receipting Location Page 22

D. Inspection, Checking and ‘Matching’ of Receipt Page 22

A.

Segregation of Duties within Receipt / receiving of goods and services

sign-off on the receipt of the goods or service

2.67. There must a clear separation of duties between the Purchase Ordering and Receiving. 2.68. Required Sign-off on receipt of goods orservices :

1. Up to €5,000, receipt must be approved by grade III 2. Up to €25,000, receipt must be approved by grade lV

3. Above €25,000,receiving must involve at least 2 managers one of whom must be at Grade V or above.

2.69. Example of Receipt of Goods greater than €25,000. Example A:

Staff member A initially receives the goods and physically inspects and signs off that the goods are in order etc and can be paid for when invoiced. A separate staff member must carry out the accounting entries i.e. by recording the receipt on the system.

Example B:

Staff member A initially receives the goods and carries out all the inspection checks etc. Staff member B signs off that receipt is complete and it is in order to pay for goods once invoice received.

Two people have now been involved in the process so either staff member can complete the accounting entries or a third staff member can do so.

2.70. No manager can have the sole sign-off on receipt of goods or services that are intended primarily for his or her own day to day use.

B.

Procedures for Receiving to be put in place by Budget Holders

2.71.1. Receiving of good or services may occur at designated receiving points e.g. hospital stores or a health centre within community care. The purchase order should state the designated point of delivery.

2.71.2. Responsibility rests with the relevant Budget Holder to ensure appropriate receiving procedures are in place to enable compliance with these regulations.

2.71.3. Budget Holders must put in place clearly documented procedures for the efficient operation of the main elements of the receiving process outlined above.

2.71.4. A key control is ensuring that issues with goods or services received are identified as soon as possible after receipt and notified to the supplier.

2.71.5. The receipt / receiving arrangements put in place must be formally reviewed and updated at least annually and the output of these reviews must be held available for future audit.

Ver 4.0 12/20/2013 Page 22 of 133

C.

Delivery of Goods/Services to Nominated Receipting Location

2.72. Initial Receipt of Goods / Services

The person who initially physically receives the goods or services may not be the person who carries out any or all of the checking referred to above.

The mandatory requirement is that all staff who initially receives goods or services on behalf of the HSE is aware that their minimum obligation is to:

i) Accept the goods/services provided that they have not been formally precluded from doing so

ii) Accept the goods or services on a “subject to inspection / confirmation basis only” if they are not in a position to carry out the necessary checking while the deliverer waits. iii) They must clearly mark this on any documentation they are signing for the deliverer. iv) Obtain and retain a copy of any delivery documentation including anything signed by

them for the deliverer and pass it to the appropriate staff member.

v) Maintain safe custody of the goods until they are brought within whatever local inventory / asset management arrangements are in force for that location.

vi) Immediately, or as soon after as is practical, notify the appropriate staff who is

responsible for carrying out the remaining or next step in the process. 2.73. Derogation ;

Budget Holders may, with the approval of the Assistant National Director/Hospital Network Manager or equivalent salary grade (or nominee) co-signed by the relevant Assistant National Director of Finance put in place alternative arrangements.

Such arrangements may involve random sample verification or other measures not involving full confirmation of delivery for each specific direct delivery prior to payment.

There is a balance to be struck between the value of the goods or services and the cost of verifying their receipt.

D.

Inspection, Checking and ‘Matching’ of Receipt

2.74. Procedure following Initial Physical Receipt

Goods or services must be inspected and checked on a timely basis. This should take place at the time of delivery or if not, then as soon as possible after actual delivery of goods or services. Delivery of goods or services must be inspected and checked in respect of:

i.

ii.

iii.

2.75.1. There is a mandatory requirement to inspect goods and services as soon as is practical following delivery.

2.75.2. It is important that Budget Holders ensure that this aspect of the receipting process is carefully managed to ensure the HSE does not suffer any loss due to late checking of goods or services received.

2.75.3. Suppliers generally have set time periods within which they must be notified of any problems with goods or services delivered by them.

2.75.4. In respect of services this requirement is particularly important given that services can generally not be “returned”.

2.76. 1a. Matching to purchase order specification

2.76.1. Discrepancies against the original purchase order or contract must be identified and a decision made as to what action, if any, is required to resolve the issue.

2.76.2. All material discrepancies and action taken to resolve must be recorded.

2.76.3. Where some of the goods do match what was ordered then a decision must be taken and recorded as to whether these goods will be accepted or whether the entire delivery should be rejected.

2.77. Return of Goods to the Supplier

2.77.1. Faulty or excess goods or goods that do not match what was ordered should be returned immediately or as soon as possible to the supplier.

2.77.2. The HSE should not suffer the cost of returning goods to any supplier where they are defective or do not match what was ordered.

E. Authorisation and Sign-off for Receipt of Goods and Services.

2.78. Sign-off on Receiving Process

It is a mandatory requirement that at the conclusion of the receiving process a decision is made and appropriately recorded.

2.78.1. Managers must be pragmatic around how this is achieved and in most cases a note on the purchase order or delivery document signed by a manager at the appropriate level will suffice.

2.78.2. The signing off on the satisfactory receipt of a good or service is an important control. It represents the “point of no return” in respect of most purchases. However, it is a lesser control than that required to authorise expenditure in the first place.

2.79. Professional Input to Receipting Goods/Services over € 25,000

2.79.1. Depending on the nature of the goods or services (remembering that services includes building services) it may be necessary to obtain professional and / or technical advice internally or externally as to the receipt of goods or services.

Ver 4.0 12/20/2013 Page 24 of 133

2.79.2. The provisions above within Purchasing as regards obtaining professional / technical input to expenditure approval above €25,000also apply to signing off on satisfactory receipt of goods or services above the threshold.

2.80. Written Decisions for Receipts of Goods, Services and Works.

2.80.1. A written decision signing off on the satisfactory receipt of goods or services is required where the value received is in excess of €100,000 for Non Routine expenditure.

2.80.2. This decision must summarise the steps taken to validate that the goods or services received matched what was ordered/contracted for and were free from obvious defect.

2.81. Responsibility of Managers who sign-off on receipt of Goods/Services

2.81.1. It is essential that every manager who signs off on receipt of goods or services is fully aware of the meaning of that action as they will be held accountable for same.

2.81.2. In effect, once a Goods Receipt Note has been created on the system which matches to a purchase order, the person who has approved the GRN has triggered a decision to pay, subject to receipt of a valid invoice.

2.82. Managers who sign-off on the receipt of the goods or services are confirming the following:

. That all steps in the receiving process up that point whether carried out by them or on

their behalf or otherwise

Are to the best of their knowledge, having taken all reasonable steps to assure

themselves of same, fully compliant with these Financial Regulations.

And are fully compliant with any other relevant requirements that are in force at that time.

2f

PAYMENT PROCESS; MAIN REQUIREMENTS

The release of payment, following receipt and matching of a payment request (usually an invoice) to what was ordered and satisfactorily received.

2.83.1. Payment is the final stage of the ‘Purchase to Pay’ process.

2.83.2. Payment should only occur after proper sign-off of the satisfactory receipt of goods, services or works.

2.83.3. Authorised Payment requests for specified payments in advance.

2.83.4. Payment clears the HSE liability to the supplier.

2.84. Payment - General

The controls around the payment element of the purchase to pay process are essential but not as fundamental as those covering Purchasing and Receipt. The focus of controls currently around invoice certification/approval those within Purchasing and Receiving.

2.84.1. By the time the purchasing and receipt stages have been properly completed the HSE has:

i.

i.

2.84.2. The control issues at payment stage are around confirming that the above have taken place and that the payment request (usually an invoice) agrees with same, particularly in terms of price.

2.85. These regulations require that the HSE move as quickly as possible to a situation where the bulk of payment requests (invoices) are;

received centrally within the shared services centre or equivalent

automatically matched to the purchase order and GRN

automatically approved for payment once a three way match is achieved (3 way match = 1. Purchase Order + 2. Goods Receipt Note + 3. Invoice )

routed electronically to the relevant staff member for resolution if auto matching fails 2.86. Information to Appear on Invoices – Minimum requirement

It is the responsibility of each Budget Holder to manage relationships with suppliers, either directly or through the staff operating the procedures to ensure that invoices are received promptly and contain all the necessary prescribed information.

Ver 4.0 12/20/2013 Page 26 of 133 2.87. An invoice must contain the following information;

Supplier Name and Address

Invoice Number and Invoice Date/ Tax point (date which VAT applies) Purchase order number or equivalent agreed number.

Delivery details, reference number, delivery date and delivery address

Description of Goods or services being purchased Supplier VAT and Registration number

Vat Exclusive Amount, Vat amount by Vat Code and total invoice amount

Certification information required e.g. engineering certification of work. Unit Price

2.88. Tolerance Levels - (When Matching Invoices to PO/GRN)

These regulations permit a general price tolerance level of €25or 2% (whichever is the lower) when matching the total value of an invoice to the relevant amount on the purchase order / GRN.

2.88.1.

Quantity differences

Quantities delivered in excess of the Purchase order quantity should not be accepted and should be taken back by the supplier at no extra cost to the HSE.

2.88.2.

Price differences

All matching differences above €25 or 2% require the invoice to be referred to the appropriate local staff member for resolution.

2.88.3. Budget Holders must review these reports and report on a quarterly basis to the relevant Assistant National Director of Finance as regards any trends in the occurrence of matching differences.

2.89. Importance of timely receipting (

entry of GRN

) on the Fin. Info. System(FIS)

2.89.1. It is essential that goods/services are properly ‘Good Receipted’ on the financial information system (FIS) when actually provided/delivered by the supplier.

2.89.2. This will ensure that any mis-match between the purchase order and goods received is quickly identified and resolved. This will simplify the process of matching the invoice to the already matched purchase order/Goods Receipt Note.

2.89.3. Prompt entry of the goods receipt notes (GRNs) on the FIS is also essential to ensure expenditure is recorded at the proper time, i.e. when it is incurred.

2.90. Authorisation Levels for Payment

2.90.1. Provided the purchasing and receipt stages of the process have been carried out in full compliance with these Financial Regulations it is not a requirement to assign any particular authorisation grade level to the payment stage of the process. This is largely due to the fact that this stage is seen as appropriate for automation.

2.90.2. It is crucial therefore that the importance of the purchasing and receipt stages is fully understood by all relevant managers and staff.

2.91. Prompt Payment of Interest

Budget Holders must ensure that in designing, implementing and monitoring their purchasing arrangements they are fully aware of and compliant with the requirements of the prompt payment legislation.

2.92.2. The key prompt payment issue (relating to the purchasing process) is to ensure that there is clarity as to what payment terms apply in respect of any purchase order or contract issued to any supplier.

2.92.3. The HSE standard payment terms in respect of normal suppliers or what are often referred to as “Traders” are within a range of 30 to 45 days from receipt of invoice or delivery of goods / services whichever is the later.

2.92.4. The payment terms should be quoted on all documentation issued to suppliers including tender documentation, purchase orders etc.

2.92. There will be cases where payment terms requiring less than 30 days are appropriate however, these require the specific or general approval of the relevant Assistant National Director of Finance unless encompassed within the following:

2.92.5. Public Utilities (e.g. Eircom, Bord Gais etc.)

2.92.6. Grants to outside agencies – no invoice, paid in accordance with contract or agreement.

Ver 4.0 12/20/2013 Page 28 of 133

3.

Purchase To Pay – Tendering

The essential requirements of the financial regulations are contained within the main chapters. However, these should be read in conjunction with additional information contained within the respective appendices (by chapter).

3.1.

TENDERING

. ..

(A Tendering process is required for all purchases of Supplies or Services above €25,000

unless available from stock or on contract) 3.2. General

3.2.1. The general purchase to pay regulations must be fully complied with in relation to

tenders unless specifically provided for in this section.

3.2.2. This regulation is intended to expand on and clarify the general purchase to pay

regulations in relation to tendering and must always be read in conjunction with those regulations.

3.3. Professional Input to Tendering

3.3.1. Every manager sourcing a supplier has an obligation to ensure that they are in a

position to accurately and clearly specify their requirements to potential suppliers, regardless of the value threshold.

3.3.2. Appropriate and necessary procurement input and / or technical / clinical input must

be obtained by the manager sourcing suppliers for values above €25,000.

3.3.3. This input applies to the various stages of the process which can be summarised as:

i) Identification of need and specification of requirements to meet that need ii) Assessing and evaluating potential suppliers

iii) Conduct of tendering process

iv) Evaluation and award of tender plus notification to unsuccessful tenderers v) Supervision of supply of goods, services or works (in some cases project

management)

vi) Sign-off on satisfactory receipt / completion of goods, services or works

3.4. Works - Tenders for Construction Works and Related Services

3.4.1. It is a mandatory requirement that the provisions of the purchase to pay process

regulations be fully complied with as regard works and related services unless specifically indicated otherwise in this section.

3.4.2. It is also a mandatory requirement that the provisions of Capital Projects regulations

are fully complied with regard to Works and related services, unless specifically indicated otherwise in this section.

Public Advertisement

3.4.3. Compliance with the requirement for public advertisement involves publication on

the government tendering web site www.etenders.gov.ie. Other advertising media such as national newspaper should be utilised in addition to the web site if considered necessary to attract a sufficient number of tenderers.

3.4.4. Only the relevant specially delegated Assistant National Director(s) can approve a

departure from the requirement for public advertisement (above €25,000 for goods/services or above €500,000 for works), but only in exceptional circumstances as detailed on page 55.

3.4.5. This approval must be co-signed by the Head of Procurement.

Aggregation of Tenders/ Tender Coverage

(Source ; Regional Material Management’s “Procedure for Tender/Contract Approval”)

3.4.6. It is the policy of the HSE to move to a situation where the level of aggregation of

purchasing is increased consistent with full compliance with EU Procurement requirements and achievement of Value for Money.

3.4.7. These regulations require that pending the completion of the change process

outlined above, the following “Procedure for Tender/Contract Approval (issued in March 2005 by Regional Materials Management Group ) will apply.

3.4.8. This pre-tender procurement Aggregation process (Tender/Contract Approval

procedure) applies to proposed tender process with an estimated contract value in excess of the high values (currently €25k) defined in the procurement policy.

3.5. Dealing with uncertainty around likely tender values

3.5.1. The thresholds for EU Procurement have been set out on page 51. These values are

based upon the VAT exclusive value of expected spend.

3.5.2. Reasonable estimates must be used when estimating the likely value of a tender to

determine whether the EU thresholds will be reached.

3.5.3. The estimates must be:

i) Properly arrived at

ii) Based on appropriate professional / technical input iii) Properly documented and recorded

3.5.4. In the event that an estimate was used to decide that EU Procurement Procedures

were not necessary and this subsequently turns out to be incorrect, the procurement process remains valid provided the original estimate was reasonable in all respects and stands up to scrutiny.

3.5.5. If there is a reasonable expectation that the EU threshold will be reached there is a