Page 14 - The Edge - Spring 2018

BY BOBBY WILLIAMS II AND GARY BARKMAN

What’s an A er-the-Fact Purchase

and Why Is it a No-No?

Bobby Williams II Gary Barkman

A er-the-Fact Purchase Orders could cause
your district to potentially lose funds! The
introduction to the Uniform System of Financial
Records (USFR) talks about why the USFR was
developed. e O ce of the Auditor General and
the Arizona Department of Education pursuant
to ARS 15-271 prescribe the MINIMUM internal
controls, policies and procedures to be used by
Arizona school districts.
The Arizona Legislature mandates the
USFR and prescribes the legal means by which
schools establish nancial and accounting legal
requirements. e State Board of Education is
the governing and policy making body of the
Arizona Department of Education. One of the
state board’s responsibilities is to “withhold state
funds from districts that are determined a er a
hearing to be in noncompliance with the USFR”
and are required to “adopt rules prescribing
procurement practices.”
School district governing boards are the
primary governing body of the Arizona public
school system. Major district accounting and ILLUSTRATION/maxkabakov
nance related duties and responsibilities of these boards include through many levels of central o ce personnel, to verify budget
“purchase, construct, manage, insure, rent and sell school buildings, capacity, etc., or be returned to the requisitioner or requisitioning
furniture, equipment, supplies and other assets.” Furthermore, department if having an insu cient budget capacity.
the O ce of the Auditor General is required by Arizona Revised Once the requisition hits the Purchasing Department, it travels
Statutes to perform duties such as “determine whether districts through the procurement process for pricing, delivery timeline,
have maintained an acceptable degree of compliance with the shipping charges, etc. e requisition is ultimately entered in
requirements of the USFR” and if the districts do not maintain the the district’s nancial system for approvals and the creation of a
degree of compliance, a 90-day letter will be written to correct those purchase order – the sequentially numbered purchasing document
de ciencies. created and used to help track or trace the documents that support
An example of a report found on the Auditor General’s website: the information recorded on the list.
Finding “District lacked adequate accounting and computer So, what happens when this process is not followed? at
controls to protect it from errors and fraud.” Recommendation depends on the process that is utilized. Although there could be
“ e district should ensure that it requires approval for all of its several processes to lead to the same result described above, one
purchases prior to the purchases being made and document that all process (or lack of process) that creates the biggest issue for districts
goods and services have been received prior to payment.” is the a er-the-fact purchase order. Why? Because there is no
One part of the internal controls for monitoring expenditures process for the a er-the-fact purchase order.
comes from the most basic aspect – the requisition and purchase What’s an a er-the-fact purchase order? Everyone should be
order, so let’s break down expenditure processing to its most basic aware of a er-the-fact purchases and some of the rami cations.
form. Requisitions for this example would be the sequentially A er-the-fact purchases are created when an individual commits
numbered purchasing document which is signed, dated and the school district to a purchase before a purchase order is issued.
submitted by the requisitioner or the department individual
authorized to approve the requisition. e requisition may go CONTINUED ON PAGE 15

14 THE EDGE SPRING 2018

THE EDGE |