Hindmarsh Shire Council - Policy - Purchasing
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Policy - Purchasing  Printer Friendly

COUNCIL POSITION


The Hindmarsh Shire Council aims to achieve maximum efficiencies in its operations and is committed to following a fair and consistent purchasing policy which allows for the procurement of goods and services that provide value for money.

 

LEGAL CONSIDERATIONS

 
In the purchasing process, consideration must be given to meeting all legislative requirements including “Best Value” legislation.

This legislation aims to encourage competitive behaviour in the market place and to ensure that customers and suppliers are protected from unfair market practices. It is, therefore, necessary that Council Officers, at all times:

  • act honestly and truthfully when dealing with suppliers.
  • compete fairly.
  • evaluate suppliers on the basis of the merits of the available goods and services, and not on unethical practices.

PURCHASING PROCESS


Hierarch

  • Under $10,000 – preferred supplier and documented.
  • $10,000 to $100,000 - at least 2 written quotes.
  • Over $100,000 - tender as per the Local Goverment Act.

Order Books

The following positions are holders of order books for the specific functional requirements:
  • Plant Superintendent
  • Mechanic - Nhill
  • Carpenter
  • Technical Officer/Operations
  • Aged & Disability/Services Co-ordinator
  • Risk Management Officer
  • Purchasing & Property Manager
  • Corporate Information Co-ordinator

Authorised Signatures

The following positions are authorised to sign orders up to the value as shown:
  • Finance Manager - $15,000
  • Operations Engineer - $15,000
  • Plant Superintendent - $5,000
  • Mechanic - Nhill - $1,500
  • Assistant Mechanic - Nhill - $1,500
  • Carpenter - $500
  • Corporate Information Co-ordinator - $1,000
  • Customer Services Co-ordinator - $1,000
  • Administration Officer - $1,000
  • Community Development Officer - $1,000
  • Environmental Health Officer - $1,000
  • Aged & Disability Services Co-ordinator - $1,000
  • Risk Management Officer - $1,000
  • Technical Officer/Operations - $1,500
  • Purchasing & Property Manager - $15,000
  • Senior Management Team in accordance with Budget and Council decisions

There are occasions where a purchase order or quotation/tender system serves no purpose and is therefore, not required.

These are:

  • Purchasing petty cash for non taxable items (maximum $20).
  • Provisions of water, gas, electricity, telephones from public authorities.
  • Salaries, wages, taxation, superannuation, and other direct wage payments.
  • Deposit refunds (tenders, security, maintenance, etc).

Payment of Invoices and Committal Accounting

The Chief Executive Officer, Director Assets, Director Corporate Services, Finance Manager, Operations Engineer and Property and Purchasing Manager are authorised and responsible to sign for the payment of invoices for their respective staff. All invoices must be authorised as per above, not just those without orders. It is noted that the Accounts Co-ordinator is authorised to approve standing payments (providing such payments are within the budget limits approved by Council). A standing payment includes:

  • Purchasing petty cash for non taxable items (maximum $20).
  • Salaries, wages, taxation, superannuation, and other direct wage payments.
  • Deposit refunds (tenders, security, maintenance, etc).

Committal accounting is the raising of the commitment at the time of placing the order for the goods or services. This commitment is then shown in all reports on the job and Managers are able to allow for these items even if they have not been invoiced or completed.

Purchasing module integrates with the general ledger. When an order is raised and entered into the purchasing module, it is shown as a commitment. When the goods and invoice are received it is matched with the committed order, which then transfers the amount committed into the actual balance.

The raising of the commitment at the time of placing the order gives a more accurate costing of the job at any given time. The orders are entered in the system on a weekly basis, but as at the day the order is placed.

Where there are discrepancies between the value of the original order and the invoice, the variance needs to be adjusted.


Set up of purchasing module for processing of orders over $500 at this stage.

Other items to be included in the purchasing system:

  • Quarterly library contributions.
  • Regular contract payments i.e. garbage collection.
  • Monthly pool contracts during Summer season.
  • Councillor payments.
  • Lease payments.
  • Haulage contractors.

Items to be included in Ledger in future:

 

  • Depreciation to be costed monthly.
  • Book value of Assets sold.
  • Annual Leave & LSL Provisions.
  • Known material changes in balance sheet items i.e. Jeparit Weir.

EMERGENCY WORKS

In instances where emergency works/repairs between $500 and $5,000 need to be carried out and it is not possible or practical to obtain formal approval and/or two quotes prior to the work commencing, the supervisor or responsible officer should proceed with the work based on the best options at the time and obtain formal endorsement of the works/repairs from the relevant Officer as soon as possible after the works have been commenced or completed.

CREDIT CARDS

Credit cards have been issued to the Chief Executive Officer, Senior Managers, Mayor and Councillors and are to be strictly used only in the following circumstances.

Credit cards may be used for the purchase of goods or services where these relate to the Councillor’s or employee’s duties and where this is more convenient than using Council purchasing systems. Credit cards are not to be used for the purchase of personal items or services.

Credit cards may be used for the provision of accommodation, reasonable meal and other out of pocket expenses that cardholders incur whilst on Council business. Where meals and/or accommodation are provided to a spouse or another party on behalf of Council, this should be authorised prior to the event, otherwise such cost will be refunded to Council on return from the trip.

The only circumstances where cash can be drawn on the credit card is in an emergency grant situation, e.g. to provide financial assistance to an individual or family in the event of a house fire.

Receipts are to be maintained for any purchases using the credit card due to G.S.T. implications. The receipts, together with the signed credit card slip, are to be submitted to the Senior Finance Officer to reconcile with the monthly credit card statement. All documentation should indicate the nature of the expense and purpose of the trip/conference/seminar.

Council has a total credit card limit of $20,000 with the National Australia Bank.

Current credit card holder limits:

  • Chief Executive Officer - $3,000
  • Director Assets - $3,000
  • Director Corporate Services - $3,000
  • Mayor - $1,000
  • Councillors - $1,000

Disclosure of Credit Card Numbers to Third Parties

A credit card number may only be disclosed to a third party for the supply of goods or services in accordance with Council’s approved objectives and budgets if:

  • A tax invoice is issued by the supplier; and
  • The supplier is known to Council or whose bona fides have been checked in a telephone book and/or trade supply directors or website which includes a street address.

The number of a card holder’s card is not to be disclosed to any person except an authorised Council staff member in connection with payment of the amount outstanding on the card or an authorised employee of the relevant Bank. Any PIN associated with the card is not to be disclosed to any person other than an authorised employee of the National Australia Bank.

 
Authorisation Process

 

The people occupying the positions listed below have delegated power to examine monthly credit card statements and approve payment within the dollar limits stated as follows:

Card Holder - Responsibility for reviewing and authorising payments

 

Mayor and Councillors - Chief Executive Officer with reference to the Audit Committee in the case of a dispute
Chief Executive Officer - Mayor
Director Assets - Chief Executive Officer
Director Corporate Services - Chief Executive Officer 

 

The review process is to address at least the following issues:

  • The amount spent is within the relevant limit listed below.
  • Accuracy and completeness of the tax invoices accompanying the statements.
  • Agreement of the amounts on the tax invoices with the credit card statements.
  • The amount spent is within Council's budget for that purpose or prior approval has been obtained from the Chief Executive Officer to incur that cost.
  • Propriety of each transaction in the light of Council's policies and the role and responsibilities of an elected Councillor in accordance with the Local Government Act 1989 (particularly Section 76C) and Council's Code of Coduct.
  • The accounting classification (account code) of each transaction to facilitate appropriate periodic reporting.

Reporting to Council

Council has approved reporting of the amounts incurred by each Councillor and Senior Executive to its Audit Committee on a quarterly basis. Where the Audit Committee considers there are matters in a report that all Councillors should be aware of, the relevant report may be distributed to all Councillors for consideration at the meeting of Council following immediately after the relevant Audit Committee meeting.

Independent Audit

At least quarterly, Council’s Internal Auditor shall conduct an audit of the transactions charged to each credit card to determine whether or not they have been approved, recorded and reported in accordance with this policy. The Internal Auditor shall report the findings, conclusions and recommendations from the audit to the Audit Committee on a timely basis.

MOBILE PHONES

Officers of the Council with mobile phones may at times need to use the mobile phone for personal reasons. Unless otherwise authorised by the Council, such personal use is to be restricted to not more than 25 calls in any one month. All costs associated with private mobile phone usage must be reimbursed.

HAZARDOUS GOODS

Purchase of goods that fall into the category of hazardous goods requires special consideration and adherence to the requirements of several Acts, these are:

  • Drugs, Poisons and controlled substances Act.
  • Dangerous Goods Act.
  • Environment Protection Act.
  • Occupational Health & Safety.
  • Health Act.
  • Any other legislation which may reference to the purchase, handling, storage, distribution and use of dangerous materials.  

Where Council is purchasing hazardous good for the first time, Material Safety Data Sheets are to be provided with the goods.

Reference must also be made to the Risk Management Officer and manufacture’s recommendations in relation to the handling and storage of these goods.


 

   
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