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CITY OF SANTA MONICA HOUSING AUTHORITY

This Internal Control Procedures Manual is to provide the City of Santa Monica Housing Authority with a reference tool to use in establishing and maintaining effective internal controls over Housing Authority assets and accounting records.

Internal Control Policy and Procedures

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INTERNAL CONTROL POLICIES AND PROCEDURES

TABLE OF CONTENTS

INTRODUCTION............................................................................................................................................2

ORGANIZATIONAL STRUCTURE OF HOUSING COMMISSION

AND BOARD OF COMMISSION.................................................................................................................2

DEFINITION AND OBJECTIVES.................................................................................................................2

TASKS AND RESPONSIBILITIES................................................................................................................3

FINANCIAL STRUCTURE............................................................................................................................4

FINANCIAL OVERSIGHT.............................................................................................................................4

ACCOUNTS RECEIVABLE...........................................................................................................................6

ATTACHMENTS 1-17....................................................................................................................................8

Attachment 1: Travel and Meeting Expenses

Attachment 2: Purchasing Card Program

Attachment 3: Establishment and Administration of Petty Cash Funds

Attachment 4: Food Purchases

Attachment 5: Budget Administration

Attachment 6: Payment of Vendor Invoices

Attachment 7: Preparation and Submission of Purchasing Requisition

Attachment 8: Ordering Supplies from the Warehouse

Attachment 9: Conflict of Interest Policy

Attachment 10: Preparation of Employee Time Cards

Attachment 11: Collection of Delinquent Accounts due to the City

Attachment 12: Policies and Procedures for Internal Audits

Attachment 13: Bank Reconciliation Procedure

Attachment 14: Reimbursement Grants Drawdown Procedure

Attachment 15: Procedures for Check Deposits for Repayment Agreements Attachment 16: Check Run Policy

Attachment 17: Owner or Family Debt to Housing Authority.

Attachment 18: Wire Transfer Policy

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INTRODUCTION The purpose of this policy is to establish procedures for managing the assets and cash flow of the City of Santa Monica Housing Authority (Housing Authority). This includes identifying Housing Authority’s staff responsibilities for managing the successful execution of this Internal Control policy. The Housing Manager, who is hired and appointed by the Housing and Economic Development Division Director, is directly responsible for carrying out all the policies established by the Commissioners and is delegated the responsibility of hiring, training and supervising all Housing Authority staff. Staff manages the day-to-day operations of the Housing Authority to ensure compliance with federal and state laws, safeguard its assets and prevent and detect errors and fraud for all Housing Authority programs. Additionally, the Housing Manager’s duties include budgeting and financial planning for the Housing Authority. The Housing Authority’s mission is to promote adequate and affordable housing, economic opportunity and a suitable living environment free from discrimination. A. ORGANIZATIONAL STRUCTURE OF HOUSING COMMISSION AND BOARD OF

COMMISSION The Housing Authority was established pursuant to the State Health and Safety Code in 1941. The Housing Authority is a public entity organized under the laws of the State of California’s Health and Safety Code to provide housing assistance to low and moderate-income families at rents they can afford. Eligibility is determined by family composition and income in the City of Santa Monica. The Section 8 tenant-based Housing Choice Voucher (HCV) assistance program is funded by the U.S. Department of Housing and Urban Development (HUD) and administered by the Housing Authority for the jurisdiction of the City of Santa Monica in Los Angeles County. Administration of the HCV Program and the functions and responsibilities of the Housing Authority staff is in compliance with the City of Santa Monica’s Administrative Regulations, Personnel Policies and HUD’S HCV Regulations as well as all Federal, State and local Fair Housing Laws and Regulations. Formal actions of the Housing Authority are taken through written resolutions, adopted by the City Council and entered into the official records of the Housing Authority. State law also requires the establishment of a Housing Commission when the local legislative body (City Council) serves as the Housing Authority as is the case in Santa Monica. The Housing Commission serves as the advisory body to the Housing Authority/City Council on housing policies, programs, and projects. Two Housing Commission members are required to be participants in the Housing Authority’s HCV Program and must serve two-year terms. Additionally, one of the HCV Housing Commissioners must be 62 years of age or older. No Santa Monica City employee may serve as a member of any Board or Housing Commission. B. DEFINITION AND OBJECTIVES The Internal Control policy includes the plans, methods, and procedures used to meet the Housing Authority’s mission, goals, and objectives, and in doing so, support performance-based management. An Internal Control policy provides reasonable assurance that all Housing Authority objectives will be met.

Internal control is an integral part of the Housing Authority’s management and provides reasonable assurance that the following objectives are being achieved:

a) Effectiveness and efficiency of operations including the use of the City of Santa Monica’s resources.

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b) Reliability of financial reporting, including reports on budget execution, financial statements, and other reports for internal and external use.

c) The prevention of fraud and budget/financial errors.

d) Compliance with applicable laws and HUD regulations.

Internal control is a continuous built-in component of the Housing Authority operations. The responsibility for effective internal controls rests with all Housing Authority staff.

C. TASKS AND RESPONSIBILITIES Executive Staff The Director of Finance, directly responsible to the City Manager and the City Council, is responsible for instilling an expectation of agency-wide integrity and quality control.

The City Manager and Housing Authority management establishes and maintains internal control systems. This includes the effective functioning of all internal control components as defined under the definition and objectives section.

To assist management to fulfill its internal control responsibility, the Housing Authority retains an internal and external audit function to provide internal control and process evaluations, risk assessment, consulting, and recommendations. These internal and external audit functions directly ensure the effectiveness and efficiency of the Internal Control policy.

Internal compliance officers and external auditors have unrestricted access to the Housing Authority’s activities, data, records, property, computing systems and personnel required for the proper execution of auditing responsibilities.

The Housing Authority’s management is responsible for monitoring and resolving all audit findings and any other reviews.

Management ensures the following in the resolution of audit and monitoring findings:

• Corrects identified deficiencies; • Produces improvements; and/or • Demonstrates in a concise manner that the findings and recommendations do not warrant any

further management action. Employees All employees will assume responsibility for Internal Controls as an integral part of their duties and responsibilities.

Guidance To seek advice and guidance or to report any violations or suspected violations of this policy, employees should report to the following entities depending on the type of violation(s):

• Department Manager • Department of Finance • HUD Fraud Hotline

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• City Council

D. FINANCIAL STRUCTURE The basic accounting policies and practices of the Housing Authority are designed to conform with accounting and financial reporting principles established by the Governmental Accounting Standards Board (GASB). The GASB is the accepted standard setting body for establishing governmental accounting and financial reporting principles. Additionally, the Housing Authority abides by federal, state and local laws and regulations.

Accounting, Auditing and Financial Reporting The Housing Authority operates under the authority of the City of Santa Monica and its City Council as the Housing Authority. The Authority adheres to policies and procedures established by the City of Santa Monica’s Finance Department and adopted by the City Council.

The City’s budget is consistent with the Comprehensive Annual Financial Report (CAFR). Governmental funds are budgeted on a modified accrual basis with a focus on near-term inflows and outflows of financial resources. Revenues are recognized when they are measurable and available, while expenditures are recognized as soon as liabilities are incurred.

The Housing Authority maintains a complete and accurate set of books and records that follow HUD-prescribed accounting standards, permit timely and effective audits, and document annual contributions received and disbursed. In addition to the general requirements, the Housing Authority meets the standards as set forth in 24 CFR Part 82, which require PHAs to:

• Disclose accurate, current and complete financial results of HUD-assisted programs. • Adequately identify the source and application of funds provided for HUD-assisted activities. • Maintain effective control of and accountability for all assets, including accounting and

management activities. • Prepare a separate budget for each HUD-assisted program, based on HUD-prescribed categories. • Maintain source documentation and files that support the financial transactions recorded in the

PHA's books, providing an adequate audit trail. Budget Approvals According to the City Charter, the City Council is required to adopt an annual budget resolution on or before June 30 of each fiscal year for the General Fund and each special revenue fund (except the Rent Control Fund). The City Council also serves as the governing body for the Santa Monica Redevelopment Successor Agency, the Housing Authority, and the Parking Authority, which adopt budgets for the Redevelopment Successor Agency, the Housing Authority, and the Parking Authority Funds. To adopt the budget, a majority Council vote (4 of 7 Council members) is required. E. FINANCIAL OVERSIGHT The Director of Housing and Economic Development provides summarized periodic financial reports to the City Council delineating the actual financial performance of the Housing Authority. A more detailed financial report by program is presented to the City Council quarterly. The Director of Housing and Economic Development oversees the Housing Authority and other City of Santa Monica departments.

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The Director of Finance or his designee analyzes the monthly operating statements to identify any substantial financial variances. Additionally, an Independent Auditor performs annual financial audits of the Housing Authority as mandated by the US Office of Management and Budget (OMB) Circular A-133 and in compliance with HUD rules and regulations. The Finance Director presents the audit findings and reports to the City Council and ensures that department directors resolve findings related to their departments.

Internal Reporting To maintain financial control and consistent monitoring and reporting, the Housing Authority staff develops and provides the following monthly reports for the Housing Authority Management and Housing Commission review;

• Occupancy report • Financials prepared with budget comparisons and variances • Revenue forecast report • Status of repayment agreements with tenants • Status of FSS escrow accounts

Bank Accounts In order to prevent fraud, a formal reconciliation is performed monthly for each bank account by staff that does not have deposit or check writing responsibilities. The staff reconciling the bank accounts must receive the bank statement directly from the bank and prepare the reconciliation within two working days. The staff must reconcile the bank statements and ledgers in the following manner:

• Review the difference between the general ledger and the bank statement, and ensure accuracy.

• Report bank errors in writing to the bank immediately after reconciliation. All the reconciled items must be resolved within the next bank statement period.

• Staff must ensure that monthly reconciliation is reviewed and approved by an appropriate level of supervisor.

• Staff must maintain all cancelled checks, bank statements and monthly reconciliation must be retained for one year.

• Blank check stock must be stored in a restricted and secured location. • The signing of blank checks is strictly prohibited.

Segregation of Duties Segregation of duties is an internal control intended to prevent or decrease the occurrence of innocent errors or intentional fraud. In order to achieve segregation of duties, the Housing Authority ensures that no single individual has control over all phases of any financial transaction.

The Housing Authority’s accounts payable personnel adhere to the following segregation of duties:

• No single individual has the ability to access/enter or release payable, process journal entries, set up vendors, enter a purchase order, receive goods, and perform bank reconciliations.

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• No single individual should have both the ability to prepare checks and sign checks.

If the Housing Authority’s Management finds that current staffing levels prohibit proper segregation of duties, Director of Housing and Economic Development and the Housing Manager will take a more active role in achieving separation of duties and by reviewing the work performed by Housing Authority staff.

F. ACCOUNTS RECEIVABLE The Housing Authority has policies and practices established to monitor all account receivables on a timely basis. Receivables are primarily amounts due from HUD, other Housing Authorities and tenants.

Checks Received Processing

• Ensure a daily list of the checks immediately is prepared upon receipt. • As the checks are received, they are counted and verified by two employees. • Duplicate deposit slips and copies of checks are retained in the files up to one year. • Checks received are deposited in a timely manner. • A Journal entry is prepared to capture the proper accounting entry.

Participant Write-Offs Staff must ensure that the following criteria are met for HCV participant accounts to be considered as a write-off:

• The family has failed to make payments in accordance with any repayment agreement or is ineligible for a repayment agreement; and

• At least 90 days has expired since the balance or payment was due; and • The family is no longer participating in any PHA program; and • A reasonable attempt has been made in accordance with the Housing Authority’s repayment

policy and procedures to collect the debt, including from other adult members of the household; and

• A determination has been made that the debtor is judgment proof; and • The write-off has been reviewed and approved by the Housing Manager.

A record of all write-offs shall be maintained by resident name and ID number. This list shall be consulted when qualifying new admissions to any Housing Authority program to ensure past tenants terminated for outstanding debts are not readmitted into the program. Additionally, new admissions have no outstanding debts to this Housing Authority, any other Housing Authority, or any other governmental agency.

The Housing Authority will also write-off debts in any of the following circumstances:

• The participant is deceased. • The amount outstanding is so small as to be financially inefficient to collect, as determined

by the Housing Manger. • A court has decided in favor of the resident and denied PHA claim for the outstanding debt.

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Electronic Deposits and/or Transfers A schedule of all electronic deposits and transfers will be maintained and reconciled against the bank accounts on a monthly basis. The monthly schedule will also be verified against the bank account on the day after the scheduled payment was expected to arrive. Attachment 17: Wire Transfer Policy, delineates the written procedures for electronic deposits and/or transfers.

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CITY OF SANTA MONICA

INTERNAL CONTROL ATTACHMENTS 1-12 FINANCE POLICIES

TABLE OF CONTENTS

Attachment 1: Travel and Meeting Expenses (Approved)

Attachment 2: Purchasing Card Program (Approved)

Attachment 3: Establishment and Administration of Petty Cash Funds (Approved)

Attachment 4: Food Purchases (Approved)

Attachment 5: Budget Administration (Approved)

Attachment 6: Payment of Vendor Invoices (Approved)

Attachment 7: Preparation and Submission of Purchasing Requisition (Approved)

Attachment 8: Ordering Supplies from the Warehouse (Approved)

Attachment 9: Conflict of Interest Policy (Approved)

Attachment 10: Preparation of Employee Time Cards (Approved)

Attachment 11: Collection of Delinquent Accounts due to the City (Approved)

Attachment 12: Policies and Procedures for Internal Audits (Approved)


INTERNAL CONTROL ATTACHMENTS 13-17 FINANCIAL PROCEDURES

Attachment 13: Bank Reconciliation Procedure

Attachment 14: Reimbursement Grants Drawdown Procedure

Attachment 15: Procedures for Check Deposits for Repayment Agreements Attachment 16: Check Run Policy

Attachment 17: Owner or Family Debt to Housing Authority.

Attachment 18: Wire Transfer Policy

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Attachment 1

ADMINISTRATIVE INSTRUCTION SUBJECT: Travel and Meeting Expenses NUMBER: IV-2-1

EFFECTIVE DATE: July 23, 2009 (R) PAGE: 1 of 7

I. Purpose

The purpose of this administrative instruction is to set policy and establish procedures related to travel and meeting expense reimbursement. This administrative instruction is established to assure that travel and attendance at meetings are approved in advance and to assure that reimbursements to City employees related to travel and meetings are not reported to the IRS as additional compensation. Everyone who travels or attends meetings for City business purposes, or supervises someone who does, is responsible for knowing and following this administrative instruction.

II. Scope This administrative instruction sets the policy for reporting and requesting reimbursement for costs incurred by City employees while traveling on City business or attending meetings. This instruction is not intended to address every issue, exception or contingency that may arise in the course of travel or attendance at meetings. Departments may establish policies and procedures that are consistent with the intent of this AI in addition to those set forth in this administrative instruction.

III. Policy City Departments, recognizing the value of professional conferences, seminars and meetings, include in their budgets funds for costs associated with City employee attendance at conferences, seminars and meetings. The City will reimburse employees for the reasonable costs associated with approved attendance at conferences, seminars and meetings. Reimbursable costs are limited to the following general classifications of costs: A. Transportation by air, bus, taxi, or use of rental or personal vehicle. B. Reasonably-priced lodging. C. Meals and incidentals while attending meetings, seminars or conferences.

Incidentals are fees and tips given to baggage carrier, bellhops, and hotel maids, and transportation between places of lodging or meetings and places where meals are taken.



D. Other costs such as registration, parking, internet and phone charges. A more thorough discussion of each classification follows. Note that advance payment for airfare, lodging and registration may be made by using a City-issued purchasing card, a check or a personal credit card.

IV. Travel Costs A. Transportation

It is expected that the shortest and most direct routes will be taken. Employees traveling to the same event are expected to carpool whenever feasible. All travel outside the Southern California area will be by air at coach fares. Employees are expected to plan ahead to obtain the lowest priced airfare. Reasonable charges for ground transportation (taxi, train, bus or personal vehicle) between the airport and office or home will be reimbursed. When using a personal vehicle, long-term airport parking should be used for travel exceeding 24 hours. Use of a rental vehicle at the destination must be pre-approved by the department and will be allowed only if it is less expensive and more practical than other available transportation. If a rental vehicle is approved, the lowest cost vehicle should be selected. Employees shall not purchase optional insurance offered by the rental agency. Use of a City or personal vehicle will be allowed when it is evident that transportation via other means is not practical or when it is less expensive. For example, use of a personal vehicle may be less expensive if two or more employees travel together. The owner of the personal vehicle will be reimbursed at the current per mile rate established by the Internal Revenue Service. Mileage will be calculated from the employee’s residence or work to the destination, whichever is less. In other words, mileage from home to the destination should not exceed the mileage from the employee’s work location to the destination. A Mileage Reimbursement Claim form must be prepared to document use of personal vehicle and is available on eDesk.

http://desktop.private/



To drive a personal vehicle on City business, employees must possess a valid California driver’s license and carry the minimum liability insurance required by law. Any damage to the car or repair occurring on the trip will be the individual’s responsibility.

B. Lodging The City will pay for a single room (including taxes) for as many nights as necessary. The accommodations should be economical but practical. If travel is related to a professional conference, it is often preferable to stay at the hotel hosting the conference. If a credit card is needed to hold a reservation, use a City purchasing card or a personal credit card. The City will not reimburse an employee for unused reservations unless the employee’s supervisor determines that circumstances requiring the cancellation were beyond the employee’s control. When making reservations, be sure to ask about exemptions from the local transient occupancy tax. Some cities exempt travelers on City business. An employee may stay with a friend or relative while attending an out of town meeting or conference; however, the City will not reimburse the employee for any payment to the friend or relative for lodging or meals.

C. Meals and Incidentals The City uses the Domestic Per Diem Rates established by the U.S. General Services Administration (GSA). The GSA rates vary by destination and are available on the GSA website. See U.S. General Services Administration (GSA) web site for Domestic Per Diem Rates. Reimbursement for meals and incidentals shall be allowed for actual costs not to exceed the per diem allowance rates. Incidentals are fees and tips given to baggage carriers, bellhops, and hotel maids, and transportation between places of lodging or meetings and places where meals are taken.

http://www.gsa.gov/portal/category/21287



To calculate eligibility for meal reimbursements and to determine a per meal allowance when the employee is away for a partial day or when meals are provided as part of the conference or training registration, the following guidelines shall be followed: If employees are scheduled to begin their travel after the start of their regular work day, no allowance may be claimed for breakfast. If employees are scheduled to begin travel after their regular lunch break, no allowance may be claimed for lunch. No allowance for meals may be claimed if the conference sponsor or host of the meeting provides meals. For purposes of allocating the per diem, the following percentage of total per diem are established for breakfast, lunch and dinner: Allocate 20% of per diem to breakfast, 30% to lunch, and 50% to dinner. Meals, tip, tax, beverages (no alcohol), and incidentals are included in the per diem amounts. For example, if the conference host provides breakfast and lunch each day at a destination where the per diem is $64, the per diem allowed for dinner is 50% of the $64 per diem or $32. Each employee requesting reimbursement for meals must turn in an expense report substantiating the actual amount spent on meals and incidentals for each day. If actual amounts spent are less than the per diem, the lesser amount shall be paid to the employee. If actual amounts spent are more than the per diem, the per diem shall be paid.

D. Other Costs

Other costs incurred by an employee that may be eligible for reimbursement include, but are not limited to, registration fees, printed materials, tapes, training materials, costs associated with local meetings as either host or participant, and telephone or internet fees. Telephone and internet fees should be approved by the employee’s supervisor and are limited to $20 a day.



The City will not reimburse employees for fines for traffic violations or private auto repair, in-room movie charges, alcohol purchases, entertainment, or health club fees.

V. Meeting Costs

The City will reimburse employees for costs of attending local meetings. If pre-approved, employee may seek reimbursement for costs of transportation, parking, training materials, and meals. For local meetings where no out-of-pocket expense other than a registration fee and/or parking is incurred by the employee, reimbursement may be made without submitting a Travel and Meeting Expense Report.

VI. Accounting for Travel and Meeting Costs

The employee incurring the travel or meeting cost is responsible for having travel and attendance at meetings pre-approved by supervisor. Once travel is completed, the employee is responsible for submitting a detailed report with receipts or other documentation for all reimbursable costs. A Travel and Meeting Expense Report documenting the travel costs should be prepared and include amount, time and place, and business purpose. The Report must be submitted no later than 30 days after the expense is incurred. Receipts must be submitted for all reimbursable costs. The employee may not always have receipts for some meals and incidentals; in that case, the employee should note the reason for no receipt on Travel and Meeting Expense Report. Under no circumstances will a reimbursement for an individual expense of $30 or more be made without a receipt. Copies of receipts that cover expenses for more than one employee should be submitted with each employee’s separate Travel and Meeting Expense Report indicating the amount to be reimbursed to each individual employee. Prepare a Travel and Meeting Expense Report using the form posted on eDesk even if the employee used a City purchasing card for all travel costs thus requiring no reimbursement to the employee.

http://desktop.private/



Advance payment for costs associated with travel and meetings must be included on the Travel and Meeting Expense Report.

VII. Procedures and Responsibilities Procedure Responsible Party

1. Obtain approval for travel or attendance at meeting

Employee

2. Approve employee request for travel or attendance at meeting after confirming sufficient budget is available

Supervisor

3. Make reservations according to policies Employee

4. Maintain records of all cost incurred and obtain receipts

Employee

5. Prepare Travel and Meeting Expense Report and attach receipts and supporting documentation

Employee

6. Review and approve reimbursement to employee

Department Director or Division Manager

7. Submit request for reimbursement to Finance Department Accounts Payable Staff



VIII. Exceptions

Any exception to this policy must be pre-approved by the City Manager. Department Directors may request an exception by sending an e-mail request to the City Manager, explaining the exception and justification for the exception. If approved, an e-mail noting approval will be sent from the City Manager’s Office to the Department Director. Department staff should attach a copy of the e-mail approving the exception to the request for payment associated with the exception.

IX. Forms A. Travel and Meeting Expense Report

B. Mileage Reimbursement Claim Form

X. Authorized By _____________________________ P. Lamont Ewell City Manager

http://desktop.private/finance/forms/TravelandMeetingExpenseReport.xls

http://desktop.private/finance/forms/MileageReimbursementForm.xls

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Attachment 2

PURCHASING CARD PROGRAM POLICIES AND PROCEDURES MANUAL

PCard - Policies & Procedures 02/2013 1

I. OVERVIEW

The City of Santa Monica Purchasing Card Program is administered through Wells Fargo Commercial Credit Card Services and the instrument used for this program is a VISA Purchasing Card. The purpose of the City Purchasing Card Program is to establish an efficient, cost-effective method of making payments for non-routine small dollar transactions which include supplies, materials, equipment, books, subscriptions, seminars, travel, etc, (excluding services), registration fees, and travel-related expenses. A credit card purchase will not replace the normal purchasing procedures, but will instead be used when it is not advantageous or cost effective to issue a purchase order. Purchasing Guidelines and City policies and procedures will apply where applicable. The Purchasing Card shall not be used for the purchase of services.

II. DEFINITIONS

A. Billing Address – The billing address associated with all Purchasing Cards is:

1717 4th Street, Ste. #250, Santa Monica, CA 90401 and MUST be used as the billing address for all transactions. Transactions made with the Purchasing Card using another billing address may be declined.

B. Card Issuer – Wells Fargo Commercial Credit Card Services include issuing individual and division

VISA purchasing cards to City of Santa Monica, providing electronic transaction authorizations, and billing statements for all transactions made on the cards.

C. Cardholder – A permanent employee of the City who, at the discretion of the Department

Director and Division Manager, has been issued a Purchasing Card. Responsibilities of the Purchasing Card Manager are discussed in Section VII.

D. Department Director: City staff person whose signature is required on all Purchasing

Card applications. This person has the final authority to determine if a Purchasing Card should be issued to an employee or a division.

E. Default Account Number– The business unit, object code and sub-ledger (if applicable) assigned

to a cardholder and the corresponding Purchasing Card. All charges made with a Purchasing Card will be posted to the specified default account. Specific charges may only be reallocated to a different account number during the monthly reconciliation.

F. Division Liaison – City staff person assigned to reconcile a Cardholder’s charges, ensure that

purchases are charged to the proper accounts, forward original sales slips with reconciliations to the Purchasing Card Administrator, and retain copies of all transaction information. Responsibilities of the Division Liaison are discussed in Section VI.

G. Division Manager – City staff person whose signature is required on all Purchasing Card

applications. This person must approve an employee’s request for a Purchasing Card, designate card limits, assign the Division liaison, designate default accounts for purchases on the Purchasing Card, and after the application has been approved by the Department Director, submit the application to the Purchasing Card Manager. Approval by the Division Manager delegates transaction authority to the Cardholder.


H. Liability –

• City accepts liability for employees’ use of the cards and such will not reflect on the cardholder’s personal credit history.

• Cardholders are responsible for ensuring that the card is used for City business only and within the guidelines of the City’s Purchasing Card Policies and Procedures, Purchasing Guidelines and applicable Administrative Instructions.

I. Purchasing Card – A credit card issued to an individual employee of the City of Santa Monica for

the purpose of making authorized purchases on its behalf. The City is responsible for paying approved charges made with City-issued Purchasing Cards. The City also accepts liability for employees’ use of the cards.

J. Purchasing Card Administrator – City staff person responsible for the administrative portion of

the Purchasing Card Program, which includes but is not limited to, reconciling the monthly statement from Wells Fargo with the statements that have been reconciled by the Division Liaisons, and submitting an electronic file of the allocation of charges to Financial Reporting to be uploaded into the City’s accounting system. Responsibilities of the Purchasing Card Administrator are discussed in Section V.

K. Purchasing Cardholder Agreement – This agreement indicates that the cardholder understands

the intent of the program and agrees to adhere to the established guidelines, policies and procedures. Upon issuance of the Purchasing Card, this agreement is to be completed, signed and forwarded to the Purchasing Card Administrator. Failure to do so will result in temporary suspension of the card. Refer to Attachment 3.

L. Purchasing Card Manager – City staff person responsible for overall management of the

Purchasing Card Program, which includes but is not limited to updating the City’s information with the issuing bank (such as approved limit increases, new applications, changes in Cardholder information, etc.). This City staff person is employed in the Purchasing Section and acts as the intermediary between the City of Santa Monica and Wells Fargo Commercial Credit Card Services. Responsibilities of the Purchasing Card Manager are discussed in Section IV.

M. Vendor - The merchant from whom a Cardholder is making a purchase.


III. CONTROLS

The use of a Purchasing Card is a privilege granted to permanent employees by the City of Santa Monica. It is expected that it will be used responsibly and only for purchases related to City business. These purchases must comply with all City purchasing policies, procedures and Administrative Instructions. The City will seek reimbursement for any inappropriate charges made to the card. Fraudulent or intentional misuse of the card will result in revocation of the card and may result in disciplinary action. All transactions made against a City issued Purchasing Card are public information and are subject to internal and external audit.

The Finance Department reserves the right to ask the Cardholder and/or Division Liaison to provide an explanation for any transaction. The Cardholder and/or Division Liaison is required to respond promptly to such requests for information and is required to reimburse the City of Santa Monica for any charges considered to be inappropriate.

A. Spending Controls

The City of Santa Monica credit limit for each Purchasing Card issued is set at $5,000 or less per transaction with a maximum card limit per month, as determined by the Division Manager and approved by the Department Director. The City, through the Purchasing Section, will adjust limits as determined by the Division Manager and approved by the Department Director.

B. Prohibited Transactions and Activities

All prohibited transactions and activities will be documented on the Purchasing Card Violation Notification form (Attachment 4) and certain activities may result in suspension or immediate revocation of the card.

Prohibited card transactions include but are not limited to the items below:

1. Purchases that circumvent the City’s Purchasing Guidelines policies and procedures. 2. Routine purchases that should be paid against a blanket purchase order. 3. Purchase of IT or telecommunication equipment or related items without ISD authorization. 4. Splitting a purchase to intentionally circumvent the limitations of the Purchasing Card. 5. Using another Cardholder’s card to circumvent the purchase limit assigned to either the

Cardholder and/or the Purchasing Card. 6. Allowing the card to be used by another individual. 7. Purchase of services. 8. Purchase of alcoholic beverages or any substance or material that violates policies, laws and/or

regulations pertaining to the City of Santa Monica. 9. Personal or unauthorized purchases. 10. Any purchases associated with non-City sponsored events (birthdays, retirements, condolences,

etc.) which include, but are not limited to, the purchase of gifts, flowers, balloons, greeting cards, table settings, meals, décor, etc.

11. Purchase of entertainment (movies, shows, music, concerts, etc.). 12. Withdrawing cash, traveler checks, or money orders. 13. Accepting cash in lieu of a credit against the Purchasing Card account. 14. Card use, employee fraud. 15. Failing to provide the assigned Division Liaison with required itemized receipts. 16. Failing to provide, when requested, information about any specific purchase.


IV. PURCHASING CARD MANAGER RESPONSIBILITIES

The Finance Department will assign a Purchasing Card Manager who will be responsible for the overall operation of the Purchasing Card program. Responsibilities include but are not limited to:

A. Maintaining a master list of all Division Liaisons, Cards and Cardholders. B. Serving as the primary liaison between the City of Santa Monica and Wells Fargo Commercial Credit

Card Services. C. Utilizing Wells Fargo Commercial Credit Card Services to update the City’s information. D. Reviewing Department Director and Division Manager pre-approved applications for completeness

of required information. E. Designing all forms and other documents used for the Purchasing Card Program and obtaining

appropriate approvals as necessary. F. Submitting completed applications to Wells Fargo Commercial Credit Card Services to request new

Purchasing Cards. G. Activating new Purchasing Cards as required. H. Assisting Cardholders, Division Liaisons, vendors and others when necessary. I. Training Division Liaisons and Cardholders before releasing Purchasing Cards. J. Ensuring that the Cardholder signs the Purchasing Cardholder Agreement (Attachment 3) which

indicates that the City employee understands the intent of the program and agrees to adhere to the established guidelines, policies and procedures.

K. Handling disputed charges/discrepancies not resolved by Cardholder and/or Division Liaison. L. Initiating change of default account numbers upon request of Division Liaisons as approved by their

Division Manager. M. Securing canceled Purchasing Cards and updating information with Wells Fargo Commercial Credit

Card Services. N. Ensuring that lost/stolen cards have been blocked by Wells Fargo Commercial Credit Card Services. O. Assisting the Division Liaison and/or Cardholders with erroneous declines and emergency

transactions. P. Notifying Purchasing Agent and appropriate line of management of Cardholder violations or

fraudulent card use. Q. Assisting Cardholders with erroneous declines and emergency transactions. R. Make periodic audits of card use and charges for appropriateness through the use of Wells Fargo

Commercial Credit Card Services the online reporting system. Non-use of card by cardholders will also be monitored.

S. Maintaining the following documents: 1. Properly signed application forms. 2. Written documentation of any changes to the information that was previously submitted on the

original application (change of default account number, credit limit, etc.). 3. Signed Purchasing Cardholder Agreement. 4. Copies of forms submitted to Wells Fargo Commercial Credit Card Services.


V. PURCHASING CARD ADMINISTRATOR RESPONSIBILITIES

The Finance Department will assign a Purchasing Card Administrator who will be responsible for the reconciliation of purchase card transactions and for submitting monthly transaction reports to Financial Reporting. Responsibilities include but are not limited to:

A. Assisting Cardholders, Division Liaisons, vendors and others when necessary. B. Working with Wells Fargo Commercial Credit Card Services to resolve any erroneous charges to

the City. C. Distributing monthly reports to Divisions and notifying Division Liaisons of the deadline for

approvals and default account code changes. D. Reviewing all transactions to ensure that sales tax is properly accrued. F. Reviewing usage of

Purchasing Card data for appropriateness. E. Processing electronic upload of monthly statements to Financial Reporting. F. Preparing the monthly statement for payment and submitting it to Financial Reporting for

ACH payment. G. Reconciling the Wells Fargo Commercial Credit Card Services statement and the Wells Fargo

electronic file with the transaction totals posted to the City’s accounting system. H. Notifying Purchasing Agent and appropriate line of management of Cardholder violations or

fraudulent card use. I. Make periodic audits of card use and charges for appropriateness through the use of J. Maintaining the following documents:

1. Statements issued by Wells Fargo Commercial Credit Card Services. 2. Purchase Card Program Division Liaison Affirmation of monthly charges. 3. Original receipts/documentation of Purchasing Card purchases. 4. Written documentation of explanations for missing receipts, charges requiring additional

information, etc.


VI. DIVISION LIAISON RESPONSIBILITIES

Each Division Manager must designate one or more Division Liaisons for their division. The Division Manager will assign a Division Liaison for each Purchasing Card application approved for his/her employees. Responsibilities include but are not limited to:

A. Ensuring that the Purchasing Card is used only for City business and in accordance with all pertinent

policies, procedures, guidelines, etc. B. Not allowing those other than the Cardholders to use the respective Purchasing Card. C. Reviewing vendor receipts for purchases made against the Purchasing Card and retaining copies of all

Cardholder charge slips and receipts. D. Obtaining and reconciling all sales slips and register receipts from the Cardholder for reconciliation,

approval and allocation of transactions. The originals are to be uploaded and forwarded to the Purchasing Section after the month closes (the last day of each month).

E. Reviewing Cardholder monthly transactions distributed by the Purchasing Card Administrator and reallocating the charges to appropriate, allowable accounts.

F. Signing and sending the Division Liaison Affirmation (Attachment 2) to the Purchasing Card Administrator along with reconciliations of the monthly report.

• All monthly transactions must be reconciled and approved by the cut-off date established by the Purchasing Administrator.

G. Requesting that the Purchasing Card Administrator change charges to default account numbers for individual transactions by indicating the new account number for that specific transaction on the monthly Division reports prior to the monthly deadline established by the Purchasing Card Administrator.

H. Attempting to resolve disputes or billing errors directly with the vendor. Notifying Wells Fargo if the dispute or billing error is not satisfactorily resolved by faxing Wells Fargo the completed required Dispute Form (Attachment 1) and notifying the Purchasing Card Manager promptly.

I. Notifying the Purchasing Card Manager promptly if disputes with a vendor and/or Wells Fargoare not resolved by Cardholder.

J. Immediately reporting a lost or stolen card to Wells Fargo Bank Business Purchasing Service Center at 1.800.932.0036 (24 hours a day,365 days a year).

K. Immediately notify Division Liaison and Purchasing Card Manager of a lost or stolen Purchasing Card. L. Notifying Wells Fargo Bank Business Purchasing Service Center at 1.800.932.0036 and the

Purchasing Card Manager promptly of any known or suspected inappropriate or fraudulent use of a Purchasing Card.

M. Contacting the Purchasing Card Manager if a vendor does not accept Visa. N. Notifying the Purchasing Card Manager of erroneous declines and emergency transactions. O. Contacting the Purchasing Card Manager/Administrator immediately if employees change their name

or position so that necessary changes can be made. P. Requesting that the Purchasing Card Manager cancel a Cardholder’s card (e.g. terminated employees,

transferring divisions, loss of Purchasing Card privileges) as approved by the Division Manager. Q. Collecting canceled cards from Cardholders and forwarding them to the Purchasing Card

Administrator. R. Notifying the Purchasing Card Manager of erroneous declines and emergency transactions. S. Travel Expenses: If any, or all, of the expenses were prepaid using a City purchasing card, or the

Cardholder received a travel advance, these expenses need to be accounted for when the Statement of Travel Expense is submitted. Expenses paid in advance or charged to a City purchasing card will be deducted from total travel expenses to arrive at the amount due to the traveler, or the amount due back to the City. Please remember that if a City issued Purchasing Card was used to pay for any travel related expenses, receipts also need to be submitted to the Purchasing Card Administrator along with the monthly Purchasing Card reconciliation. Failure to provide receipts for charges could result in loss of purchase card privileges.


VII. CARDHOLDER RESPONSIBILITIES

The Cardholder must use the Purchasing Card for purchases related to City business only. Misuse of the card will result in disciplinary action in accordance with policies and procedures relating to disciplinary action and termination for cause.

The Cardholder shall:

A. Ensure that the Purchasing Card is used only for City business and in accordance with all pertinent

policies, procedures, guidelines, etc. B. Maintain the Purchasing Card in a secure location at all times. C. Not allow other individuals to use their Purchasing Card—DELEGATION OF USE IS NOT PERMITTED. D. Adhere to the purchase limits and restrictions of the Purchasing Card and ensure the total transaction

amount of any single transaction does not exceed $5,000. E. Never accept cash in lieu of credit against the Purchasing Card account. F. Never use the Purchasing Card to withdraw cash. The withdrawal of cash is blocked on all cards; any

attempts will be recorded and reported to the City of Santa Monica. G. Obtain and reconcile all itemized sales slips, itemized register receipts, and provide the same to

Division Liaison for reconciliation, approval and account allocation of transactions. The originals are to be forwarded to the Purchasing Section after the month closes (the last day of each month).

H. Reimburse the City of Santa Monica with a personal check (no cash) for charges determined to be inappropriate and forward the reimbursement to the Purchasing Card Administrator promptly.

I. Notify Division Liaison if the default account number should be changed on an individual transaction. J. Attempt to resolve disputes or billing errors directly with the vendor and notify Wells Fargo if the

dispute or billing error is not satisfactorily resolved by faxing Wells Fargo the required Dispute Form (Attachment 1) and notify the Purchasing Card Manager promptly if the matter remains unresolved.

K. Immediately report a lost or stolen card to Wells Fargo Bank Business Purchasing Service Center at 1.800.932.0036 (24 hours a day, 365 days a year).

L. Immediately notify Division Liaison and Purchasing Card Manager of a lost or stolen Purchasing Card. M. Notify Wells Fargo Bank Business Purchasing Service Center at 1.800.932.0036and the Purchasing

Card Manager promptly of any known or suspected inappropriate or fraudulent use of a Purchasing Card.

N. Return the Purchasing Card to Division Liaison upon terminating employment with the City or transferring Divisions within the City.

O. Contact the Purchasing Card Manager if a vendor does not accept Visa. P. Contact the Division Liaison immediately if the cardholder changes his/her name so that necessary

changes can be made. Q. Surrender Purchasing Card willingly upon termination of employment or upon change in

responsibilities that no longer require the employee to possess and use the Purchasing Card. R. Notify the Purchasing Card Manager of erroneous declines and emergency transactions. S. Agree to adhere to the established guidelines, policies and procedures of the Purchasing Card

Program by forwarding the signed Purchasing Cardholder Agreement to the Purchasing Card Manager upon receipt of the Purchasing Card.

T. Travel Expenses: If any, or all of your expenses were prepaid using a City purchasing card, or you received a travel advance, you will still need to account for these expenses when you submit your Statement of Travel Expense. Expenses paid in advance or charged to a City purchasing card will be deducted from total travel expenses to arrive at the amount due the traveler, or the amount due back to the City. Please remember that if you used a City issued Purchasing Card to pay for any of your travel related expenses you will also need to submit your receipts to the Purchasing Card Administrator along with your monthly Purchasing Card reconciliation. Failure to provide receipts for charges could result in loss of purchase card privileges.


VIII. CARDHOLDER ELIGIBILITY

A. Applicant must be a permanent employee of the City of Santa Monica. B. His/Her Division Manager and Department Director must approve the applicant’s request for a

Purchasing Card. C. Transaction thresholds must be established for each cardholder with written approval of the Division

Manager and Department Director. D. Applicant must be assigned a Division Liaison selected by his/her Division Manager. E. Employee must be aware of City and Purchasing Card policies and procedures before receiving their

Purchasing Card. F. Upon issuance of the Purchasing Card, each individual Cardholder must sign a Purchasing Cardholder

Agreement (Attachment 3). This agreement indicates that the cardholder understands the intent of the program and agrees to adhere to the established guidelines, policies and procedures. The completed and signed agreement shall be forwarded to the Purchasing Card Manager. Failure to do so will result in temporary suspension of the card.

IX. CARDHOLDER LIABILITY

The Purchasing Card is a City of Santa Monica charge card which will not affect the Cardholder’s personal credit. However, it is the Cardholder’s responsibility to ensure that the card is used for City business only and within the guidelines of the City’s Purchasing Card Policies and Procedures, Purchasing Guidelines and applicable Administrative Instructions relating to the expenditure of City funds. Failure to comply with program guidelines may result in reimbursement for purchases made by the cardholder, permanent revocation of the card, notification of the situation to management, and further disciplinary measures that may include termination.

X. CLOSING A CARDHOLDER ACCOUNT

The Purchasing Card Manager is required to close an account if: A. instructed by Finance, Division Liaisons, Division Managers and/or Department Heads. B. the Cardholder moves to a new job within the City in which a Purchasing Card is not required. C. the Cardholder terminates employment with the City. D. the Cardholder abuses or inappropriately uses the Purchasing Card.


XI. PURCHASING CARD SET UP, MAINTENANCE, INCREASING CREDIT LIMIT AND CLOSURE

All contact with Wells Fargo for Purchasing Card set up, maintenance and closure (except for reporting lost or stolen cards) will be handled by the Purchasing Card Manager, located in the City of Santa Monica Purchasing Section.

A. Obtaining a Card

1. Complete the appropriate Purchasing Card application (individual or division) which is available

on the intranet at: http://desktop.private/finance/purchasing/. 2. Submit it to your Division Manager and Department Director for completion and approval.

• Division Managers and Department Director are responsible for establishing monthly transaction limits and assigning Division Liaisons to the card and Cardholder as well as assigning the default account number for which transactions on the new card should be charged against.

• Department Director and Division Manager signature approvals delegate transaction authority of the Cardholder.

3. Send the approved application to the Purchasing Card Manager. 4. The new card request is submitted to Wells Fargo after review of the application by the

Purchasing Card Manager. 5. The Purchasing Card is activated by the Purchasing Card Manager upon receipt of the Purchasing

Card from Wells Fargo. 6. The newly activated card and Purchasing Cardholder Agreement are interofficed to the assigned

liaison. 7. The new cardholder must sign and return the Purchasing Cardholder Agreement to the

Purchasing Card Manager. Failure to do so will result in temporary suspension of the card. This agreement indicates that the Cardholder understands the intent of the program and agrees to adhere to the established guidelines, policies and procedures.

B. Card Maintenance

1. The Division Liaison shall submit all card maintenance requests to the Purchasing Card Manager. 2. Purchasing Card Manager shall submit all card maintenance requests to Wells Fargo.

C. Increasing Credit Limit Should the monthly credit limit on the card need to be increased, please contact the Purchasing Card Manager.

• Two types of credit limit increases may be requested a. Temporary (until the end of the billing cycle, which is at the end of each month). b. Permanent

D. Closure

1. Lost or Stolen Cards – The Cardholder must immediately report the lost/stolen card to Wells

Fargo Bank Business Purchasing Service Center at 1.800.932.0036. Cardholder must also immediately notify the Division Liaison and Purchasing Card Manager. The Purchasing Card Manager will follow up with Wells Fargo to ensure that the account has been closed.

http://desktop.private/finance/purchasing/


2. Terminated or Transferred Employees – The Division Liaison must obtain Purchasing Cards from terminated employees and employees who transfer to another division. The Division Liaison will immediately notify the Purchasing Card Manager regarding the termination or transfer. A request for closing the Cardholder account will be submitted to Wells Fargo by the Purchasing Card Manager within two (2) days of receiving the notification. All Purchasing Cards are to be returned to the Purchasing Card Administrator for disposal.

3. Other Card Revocation/Closures – The Purchasing Card Manager will notify Wells Fargo

immediately of all revocations and closures.

XII. LOST, MISPLACED OR STOLEN PURCHASING CARDS

Cardholders are required to immediately report any lost or stolen Purchasing Card to Wells Fargo Bank Business Purchasing Service Center at 1.800.932.0036 (24 hours a day, 365 days a year). The Cardholder must also immediately notify his/her Division Liaison and the Purchasing Card Manager about the lost or stolen card.

XIII. ERRONEOUS DECLINES

Should the Purchasing Card be erroneously declined by a vendor, the Cardholder should immediately contact the Division Liaison and Purchasing Card Manager for assistance. If the purchase is being made outside of normal business hours, the employee must find an alternate payment method or terminate the purchase and contact the Division Liaison and Purchasing Card Manager regarding the situation during normal business hours.

XIV. EMERGENCY TRANSACTIONS

A single emergency transaction over $5,000 may not be handled with the Purchasing Card. For any transaction which does not meet the spending controls assigned to the card, the Cardholder must contact the Division Liaison or Division Manager for assistance.

XV. CREDITS

Vendors will issue all credits to the individual Purchasing Card account for any item they have agreed to accept for return. This credit will appear on a subsequent statement. Under no circumstances should a Cardholder accept cash in lieu of a credit to the Purchasing Card account.

XVI. UNRESOLVED DISPUTES AND BILLING ERRORS

Disputes regarding charges must be resolved with the merchant as appropriate. Any refund or adjustment obtained from the vendor will be credited to the Purchasing Card that was charged in error. Under no circumstance should cash be accepted in lieu of credit to the Purchasing Card account.

If the matter is not resolved with the vendor, the Cardholder/Division Liaison should • contact Wells Fargo Bank Business Purchasing Service Center at

1.800.932.0036 directly for assistance. • notify the Purchasing Card Manager immediately if the dispute or billing error is not satisfactorily

resolved by faxing Wells Fargo the Dispute Form (Attachment 1). • contact the Purchasing Card Manager directly for assistance regarding resolution of the disputed

charge. The total amount billed by Wells Fargo will be charged to the default account and credits for disputed transactions will be posted to the default account when the credit appears on the Wells Fargo billing statement.


XVII. SECURITY AND STORAGE

Purchasing Cards - The Purchasing Card should be maintained in a secure location and the card account number should be carefully guarded. The only person entitled to use the card is the person whose name appears on the face of the card or for division purchasing cards, the person(s) designated as an authorized user(s) by their Division Manager. The card may not be loaned out to another person for any reason.

XVIII. RECONCILIATION, APPROVAL & REALLOCATION OF CHARGES, IF APPLICABLE

A. Receipt and Payment to Wells Fargo

1. At the close of the monthly billing cycle, the City receives a “master billing statement” from Wells Fargo for all Purchasing Card purchases made during that billing period.

2. Each billing cycle ends the last day of each month. 3. The Purchasing Card Administrator will review the monthly statement and payment in full will be

made to Wells Fargo via a debit ACH initiated by Wells Fargo on the 25th day after the end of the billing cycle.

B. Allocation of Purchasing Card Charges to Divisions

A default account number will be assigned (per the application submitted to the Purchasing Card Manager) to each Purchasing Card issued. Wells Fargo will submit an electronic file to the City of Santa Monica which will be used to charge all Cardholder transactions to the default account number unless adjustments are made as noted below:

1. Division Liaisons will assemble and retain copies of charge slips and itemized receipts. Original

documents will be uploaded and forwarded to the Purchasing Section. 2. Purchasing Card Administrator will change the default account number at the request of the

Division Liaison and then forward the division charges to Financial Reporting for account allocation to the individual departments.

3. The total amount billed by Wells Fargo will be charged to the individual division accounts. Credits for disputed or erroneous transactions will be posted to division accounts when the credit appears on the Wells Fargo billing.

4. Purchasing Card Administrator will reconcile the detailed electronic billing statement to the amount paid to Wells Fargo.


C. Reconciliation and Approval

1. Division Manager and Department Director must establish a process for reviewing all transactions for reasonableness and appropriateness. This review should be documented and completed on a regular basis.

2. Liaisons will have the responsibility of overriding the default account number for a particular transaction and for “approving” charges.

3. Cardholder and/or Division Liaisons match itemized receipts to monthly statement and change

account numbers charged as necessary. 4. At the close of each billing period (the last day of every month), the Purchasing Card

Administrator obtains a detailed report of all Purchasing Card transactions for that period.. The Division Liaisons will obtain original, itemized sales slips from their cardholders, charge the transactions to the appropriate account, uploadthe original receipts to the Purchasing Card Administrator prior to the established deadline. The Purchase Card Administrator reconciles all transactions in the Wells Fargo system and then forwards a final report to Financial Reporting.

The Purchase Card Administrator will review each transaction for appropriateness and follow up with Division Liaisons and Cardholders in writing as necessary. In addition, the Purchasing Card Administrator will also seek explanations of transactions for which an itemized receipt was not provided. Use (sales) tax will be accrued for applicable transactions in which sales tax was not applied and/or was not collected by an out of state vendor.

XIX. PURCHASING CARD DOCUMENTATION

The Division Liaison assigned to each Purchasing Card will maintain copies of the Cardholder’s vendor receipts/packing slips/charge slips. All original documentation related to the Purchasing Card program will be maintained by the Purchasing Card Administrator located in the Purchasing Section for a period of seven (7) years.

A. General

The Cardholder shall provide all documentation related to purchases made against the Purchasing Card to the Division Liaison who retains copies of the documentation and forwards the originals to Purchasing Card Administrator when requested.

B. No Supporting Documentation

When no other documentation exists, for example, a telephone purchase or a misplaced sales slip, the following information shall be documented to support the transactions: 1. Date of purchase 2. Vendor information (name, address, phone number, etc.) 3. Description of purchase 4. Amount 5. Name of the purchaser/authorized card user

The Division Liaison shall retain copies of this type of documentation and forward the originals to the Purchasing Card Administrator when requested.


C. Meal charges

The following information is required for purchases of meals: 1. Describe charge 2. Indicate all attendees 3. State the business reason for the charge 4. Attach itemized receipts 5. Change the account allocation if necessary 6. State where the business was conducted 7. State name of the purchaser/authorized card user

The Division Liaison shall retain copies of this type of documentation and upload the originals to the Purchasing Card Administrator when requested.


FREQUENTLY ASKED QUESTIONS

Q: What if I am not sure whether I can charge a particular item on the Purchasing Card, what should I do?

A: Please contact your Division Liaison or the Purchasing Card Manager before making the purchase.

Q: What if my supervisor instructs me to use the Purchasing Card to purchase balloons

and a cake for a co-worker’s birthday? A: Please refer to the section on Prohibited Transactions above—this would be considered

inappropriate use of City funds and is not considered City business and is therefore prohibited (Section III, B).

Q: What happens when I want to make single purchase over the $5,000.00 limit? A: The single transaction limit cannot be raised. The alternative is the use of a purchase order.

Q: What if I inadvertently used my Purchasing Card to buy a personal item? A: The purchase should be reimbursed in full to the City as soon as possible. After notifying the

Purchasing Card Administrator of the charge, the Cardholder must submit a personal check (no cash) payable to the City of Santa Monica and interoffice it to the Purchasing Card Administrator.

Q: What if the Finance Department requests more information (from the Division

Liaison) regarding a purchase and I have provided them with all documents? A: Contact the cardholder to determine if he/she has more information. Generally, requests for

information are for additional documentation and are relative to the nature of the charge. The Finance Department will keep written records of these requests and will keep them with the appropriate transaction report.

Q: What if I’m at the store and my credit card is declined? A: Contact the Purchasing Card Manager immediately, this matter is often resolved when a few

adjustments are made on the Administration side.

Q: What address should I use when making an online purchase? A: Use 1717 4th Street, Ste #250, Santa Monica, CA 90401 as the billing address. The ship to

address can be the physical address of where the item will actually be shipped to.

Contacts: Purchasing Card Manager: Kellee MacDonald 310-458-8797 Purchasing Card Administrator: April Hansen 310-458-8241


CARD MANAGEMENT AND ADMINISTRATION Responsibilities for the various aspects of managing and administering of the City’s Purchasing Card Program is delegated to the Purchasing Card Manager and Purchasing Card Administrator as follows:

Task

Responsibility

Purchasing Card Manager

Purchasing Card Administrator

Other Finance Staff

General administration of the Purchasing Card Program including maintenance of the Wells Fargo cardholder/user database and the record system for control and retention of

Training Division Liaisons and Cardholders on the use of Purchasing Cards

Receipt and retention of Cardholder Agreements and Card Application forms

Submission of Card Requests to Wells Fargo

Receipt of card details from Wells Fargo; issue of details to Cardholders

Notification to Wells Fargo of approved adjustments to card details (transaction limits, name changes, default account number changes)

Cancellation of cards

Support for unresolved inquiries with vendors; raising claims with Wells Fargo

Review of the City’s monthly summary Purchasing Card statement prior to payment

Distribution of Cardholders’ monthly Purchasing Card activity to the appropriate staff

Reconciliation of the City’s monthly Purchasing Card statement to the monthly activity already reconciled by City staff

Review all transactions to ensure that sales tax is properly accrued

Allocation of charges to the City’s accounting system

Troubleshooting Monitoring and review of purchases made on Purchasing Cards


Attachment 1

Authorized By:

Wells Fargo Bank Business Purchasing Service Center

1.800.932.0036Attn.: Commercial Card Services

Cardholder Statement of Disputed Item

CompanyName: CardholderName: Cardholder Account Number:

Statement Date Transaction Date Merchant Name/Description

Amount Posting Date Reference Number

Check the description most appropriate to your dispute. If you have any questions, contact Bank of America.

1. Alteration of Amount: The amount of the sales draft has been altered from $ to $ . (Please include copy of sales draft)

2. Unauthorized Mail or Phone Order:

I certify the charge listed above was not authorized by me or nay person authorized by me to use this account. I have not ordered merchandise by phone or mail, or received goods and services as represented above.

3. Cardholder Dispute:

I did participate in the above transaction, however, I dispute the entire charge, or a portion, in the amount of $ because:

4. Credit Not Received: The merchant has issued me a credit slip for the transaction listed above, however, the credit has not posted to my account. The date on the voucher is between 30 and 90 days old. (Please include a copy of the credit voucher.)

5. Imprinting of Multiple Slips:

The above transaction represents multiple billing to my account. I only authorized one charge from this merchant for $ . I am still in possession of my card.

6. Merchandise Not Received:

My account has been charged for the above transaction, but I have not received this Merchandise. I have contacted the merchant.

7. Merchandise Not Received:

My account has been charged for the above transaction, but I have since contacted this merchant and canceled the order. I will refuse delivery should the merchandise still be sent.

8. Merchandise Returned:

My account has been charged for the transaction listed above, but the merchandise has been returned. Provide a description of the circumstances. (Please include postal receipt if applicable.)

9. Inadequate Description/Unrecognized Charge:

I do not recognize this charge, Please supply a copy of the sales draft for my review. 10. I am no longer disputing this charge.


Attachment 2

PURCHASING CARD PROGRAM (Division Liaison Affirmation)

Division Liaisons:

Please perform the following tasks, sign and return this form to APRIL HANSEN (interoffice mail or email at [email protected]):

1 – Collect all purchase receipts from the cardholders.

2 – Review the receipts to make sure all transactions are legitimate City of Santa Monica purchases. Provide a brief justification for all purchases.

3 – Confirm or change the default account allocations.

4 – Return all receipts with the affirmation and statements.

I, , as the Division Liaison for Division(s)/Department

have performed the responsibilities listed above and hereby confirming that the purchase card

transactions for the period of through were thoroughly reviewed,

inspected and approved as legitimate City of Santa Monica purchases.

Signature Date


Attachment 3

PURCHASING CARDHOLDER AGREEMENT You are being entrusted with a City of Santa Monica purchasing credit card, issued by Wells Fargo Bank. The card is provided to you based on your need to purchase materials for City of Santa Monica. It is not an entitlement nor reflective of title or position. The card may be revoked at any time without your permission. Your signature below indicates that you have read and will comply with the terms of this agreement. 1. I understand that I will be making financial commitments on behalf of City of Santa Monica and will strive to

obtain the best value for City of Santa Monica.

2. I have read and will follow the Purchasing Card Policies and Procedures. Failure to do so could be considered as misappropriation of City of Santa Monica funds. Failure to comply with this Agreement may result in either revocation of my use privileges or other corrective action, up to and including termination.

3. I understand that under no circumstances will I use the Purchasing Card to make personal purchases, either for myself or for others. Using the card for personal charges could be considered misappropriation of City of Santa Monica funds and could result in corrective action, up to and including termination of employment.

4. I agree that should I violate the terms of this Agreement and use the Purchasing Card for personal use or gain that I will reimburse City of Santa Monica for all incurred charges and any fees related to the collection of those charges.

5. The Purchasing Card is issued in my name. I will not allow any other person to use the card. I am considered responsible for any and all charges against the card.

6. The Purchasing Card is company property. As such, I understand that I may be periodically required to comply with internal control procedures designed to protect City of Santa Monica assets. This may include being asked to produce the card to validate its existence and account number.

7. If the card is lost or stolen, I will immediately notify Wells Fargo Bank by telephone at 800-932-0036 and the Program Administrator.

8. I will receive a monthly statement, which will report all purchasing activity during the statement period. Since I am responsible for all charges (but not for payment) on the card, I will reconcile the statement and resolve any discrepancies by either contacting the supplier or Wells Fargo Bank.

9. I agree to surrender the Purchasing Card immediately upon termination of employment, whether for retirement, voluntary, or involuntary reasons.

Employee Name (Print) Purchasing Card Account Number

Employee Signature Date

Attachment 4

PURCHASING CARD PROGRAM

Violation Notification • This form will be used to document and report any action that violates the Purchasing Card Policies and Procedures which

is posted in the Purchasing Section on Edesk and will be kept on file in the Finance Department. • An accumulation of 4 points or more in a 12 month period will result in the immediate revocation of the card. • Points will be removed from the Cardholder’s account 12 months after receiving the violation(s). • Additional actions, including suspension of the card may be taken if necessary.

Date: Department/Division: Last 4 Digits of Card: Cardholder Name: Division Liaison Name: Violation Notification Issued to (circle one): Cardholder Division Liaison

Details of Violation (if associated with a purchase):

Transaction Date : Transaction Amount: $ Merchant Name:

Description of Purchase:

Violation Violation Points

Submitting paperwork after the established deadline 1 Failure to include proper documentation or information 1 Routine purchases that should be paid against a blanket purchase order 1 Purchase of IT or telecommunication equipment or related items without prior approval by ISD 2 Purchase of printing services without prior approval by the Print Shop 2 Splitting a purchase to intentionally circumvent the limitations of the Purchasing Card 3 Purchase of services 3 Purchase of alcoholic beverages or any other substance that violates policies, laws, etc. Susp/Rev Allowing the card or card number to be used by another individual 4/Rev Purchase associated with non-City business (and not reimbursed by employee) Rev Withdrawal of cash, travelers checks or money orders Rev Accepting cash in lieu of a credit against the Purchasing Card account Rev Card abuse/employee fraud Rev Other

Additional Actions

Suspension of this Cardholder’s card for month(s). Revocation of this Cardholder’s card. Other

Description Points Points Expiration Date Total points this period: Points from previous period(s)

Total points to date:

Cardholder/Liaison Signature Date Department Director Signature Date

Purchasing Card Administrator Signature Date Purchasing Card Manager Signature Date


Attachment 5


PURCHASING CARD APPLICATION (Individual Cards)

Department:

Division:

Division Liaison:

Liaison Phone: Liaison Fax:

Cardholder Name

Division

Work Phone

Monthly Limit

Default Account Number

Note

Approved By: Division Manager: (Signature) Date:

Department Director: (Signature) Date:


Attachment 6

PURCHASING CARD APPLICATION (Department/Division Cards)

Department:

Division:

Division Liaison:

Liaison Phone: Liaison Fax:

Cardholder Name

Division

Work Phone

Monthly Limit

Default Account Number

Note

Approved By: Division Manager: (Signature) Date:

Department Director: (Signature) Date:

11

Attachment 3

Petty Cash Voucher

Voucher #

Request Date:

Payee Info

Name: Extension:

Reimbursement Info

Date Description Amount Account Number

Total Reimbursement:

Please paste receipt(s) below:

Approved By (Signature) Entered By (Signature) Receipt of Above is Hereby Acknowledged

sandra.garcia

Text Box

IV-2-2 Page 4 of 4

12

Attachment 4

ADMINISTRATIVE INSTRUCTION SUBJECT: Food Purchases NUMBER: IV-2-3

EFFECTIVE DATE: May 1, 2009 PAGE: 1 of 3

I. Purpose

The purpose of this Administrative Instruction is to set policy related to City-paid food purchases.

II. Scope This administrative instruction sets policy for City-paid food purchases. This policy should be reviewed in conjunction with the City’s travel and meeting expense reimbursement policy, petty cash policy and Purchase Card Program Policies and Procedures. These policies and procedures all set guidelines for appropriate expenditures. Water and coffee service purchases and food purchased for resale are not covered by this administrative instruction and purchases should be handled by purchasing staff.

III. Definitions Food purchases include any purchase of food, beverages, and snacks.

IV. Policy A. City-paid food purchases are generally prohibited except when employees incur

meal costs associated with travel while conducting City business or while attending meetings, conferences and training.

B. Departments may provide light snacks and refreshments at public meetings and City-sponsored events. Community and Cultural Services Department may provide snacks for community program participants. These expenditures should be reasonable and should be reflected in a department’s annual budget request.

C. Departments may sponsor recognition, team building, and celebratory events that include food purchases as long as the total expenditures for the events for the fiscal year do not exceed $30 per budgeted employee. Each department should maintain documentation of these expenditures.

ADMINISTRATIVE INSTRUCTION SUBJECT: Food Purchases NUMBER: IV-2-3

EFFECTIVE DATE: May 1, 2009 PAGE: 2 of 3

D. Departments may provide food for City staff and Boards and Commission members in situations where meetings or activities are held at lunch time or before or after regular working hours. City staff working lunches should be limited to situations where it is not possible to hold the meeting during regular working hours.

E. City-paid food purchases, other than those associated with travel should be charged to object 522825 - Food Purchases. The business purpose for the food purchase should be noted on all requests to pay food invoices or to reimburse staff for food purchases.

F. Do not charge food purchases of any kind to a capital project.

G. Departments may sponsor training and hold meetings with staff from other cities and agencies, and may provide snacks and meals as part of the training or meeting in order to keep all participants together. Human Resources Department may host raters for oral panels and may provide snacks and meals.

H. Departments may reimburse employees for meal costs incurred while attending training outside the City limits when the training (including travel time) spans the normal meal period. For example, if training is held outside of the City limits from 9:00 AM to 10:30 AM at a location that is an hour away from the City, meal costs for lunch would not be reimbursable. However, meal costs for lunch under similar circumstances where the training is held from 9:00 AM to 3:00 PM would be reimbursable. If meals are included in the cost of registration for training, no reimbursement is allowed.

I. Reimbursement for all meal costs, no matter what the purpose, is subject to the City's meal per diem guidelines outlined in the Travel and Meeting Expense Reimbursement Administrative Instruction.

J. No City-paid purchase of alcohol is permitted.

ADMINISTRATIVE INSTRUCTION SUBJECT: h o d Purchases NUMBER: IV-2-3

EFFECTIVE DATE: May 1,2009 PAGE: 3 of 3

Exceptions

Any exception to this policy must be pre-approved by the City Manager. Department Directors may request an exception by sending an e-mail request to the Assistant to the City Manager for Management Services explaining the exception and justification for the exception. If approved, an e-mail noting approval will be sent from the City Manager's Office to the Department Director. Department staff should attach a copy of the e-mail approving the exception to the request for payment associated with the exception.

VI. Authorized By -

City ~ b r 6 ~ e r

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Attachment 5

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Attachment 6

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Attachment 7

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Attachment 8

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Attachment 9

ADMINISTRATIVE INSTRUCTION

SUBJECT: Conflict of Interest Policy NUMBER: IV-4-4

EFFECTIVE DATE: February 11, 2008 (R) PAGE: 1 of 2

I. Purpose

The purpose of this Administrative Instruction is to set forth the conflict of interest policy to ensure that the procurement process for the City of Santa Monica is conducted in a fair and impartial manner.

II. Scope

This Administrative Instruction applies to all procurements of goods and services through purchase orders, contracts, and professional service agreements pursuant to S.M.M.C. Section 2.24 et seq. This Administrative Instruction applies to all City employees involved in any aspect of the procurement process through all stages of procurement beginning with the planning of the procurement and continuing through the solicitation process, award of contract, contract administration up through and including the completion of the contract and contract close-out.

III. Policy

A. Avoidance of Conflict of Interest. All employees shall avoid any and all conflicts of interest, as well as the appearance of a conflict of interest, in connection with any procurement for goods or services for the City of Santa Monica. A conflict of interest exists when there is an actual or an appearance of impropriety where an employee or a Related Family Member (as defined herein) has a financial interest or economic interest in the bid, bidder or entity selected for the contract. A conflict of interest, or an appearance of a conflict of interest, also exists when the activities, interests, investments, close personal friendships, outside employment or personal enterprises of an employee or a Related Family Member may compromise the employee’s duty of loyalty, or otherwise conflict with, or appear to conflict with his or her job performance, objectivity, impartiality, or ability to make a fair business decision in the best interest of the City. The phrase “Related Family Member” means and refers to any of the following: (i) a spouse or partner of an employee; and (ii) any other familial relationships of the employee by blood, adoption or marriage.

@ ADMINISTRATIVE INSTRUCTION 7.

$ SUBJECT: Conflict of Interest Policy NUMBER: lV-4-4

EFFECTIVE DATE: February 1 1,2008 (R) PAGE: 20f2

B. Obligation to Notrfy and to Disqualify. Any employee who may have a conflict of interest shall, at the earliest possible time, advise his or her supenrisor of the possible conflict of interest. Such employee shall also disqualify himself or herself from making, participating in the making, or in any way attempting to use his or her official position to influence the City decision in which he or she knows, or has reason to know, that he or she has a conflict of interest or appearance of a conflict.

C. Whistleblower protection. The Clty is committed to the fair treatment of all its employees and recognizes the responsibility under state and federal law to protect from punishment and harassment any person who reports a potential ethics issue, whether or not the allegation is found to have merit. The City shall not take any action or threaten any action against any employee as a reprisal for making a report under this section unless the report was made or the information was disclosed with knowledge that it was false or with willful disregard for its truth.

IV. Authorized BY

a m o n t E W ~ I I ( City Manager

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Attachment 10

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Attachment 11

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Attachment 12

ADMINISTRATIVE INSTRUCTION SUBJECT: Policies and Procedures for

Internal Audits NUMBER: IV-7-1

EFFECTIVE DATE: October 4, 2010 PAGE: 1 of 4

I. Purpose

The purpose of this administrative instruction is to establish policies and procedures for Internal Audits.

II. Scope This administrative instruction establishes the policies for internal audits and the responsibility of the Department, Division, or Program being audited and those of the Internal Audit Division.

III. Definitions Internal Audits are fiscal, operational, and performance examinations conducted by the City’s Internal Audit Division that result in a formal report distributed to the City Manager and Executive Management for the purpose of improved operations.

IV. Policy A. Internal Audits are conducted to assist the City in the efficient use of municipal

resources. Internal Audits serve to ensure effective use of financial and other resources and to assist City employees by providing analysis and recommendations for improved operations and stronger internal controls.

B. Departments, Divisions, and Programs are required to cooperate fully and provide timely responses to the Internal Audit Manager during the audit process.

C. Unless specifically prohibited by law, the Internal Audit Division has unrestricted access to any of the City’s records, physical properties, and personnel relevant to an internal audit.




V. Procedures and Responsibilities

Procedures Responsible Person(s) 1. An Internal Audit Workplan, authorized

by the Director of Finance and approved by the City Manager, is prepared annually.

Internal Audit Manager

2. An Entrance Conference is the first step of

the audit process. The Department Director, Division Manager, Program Manager, Director of Finance, and the Internal Audit Manager meet to discuss the general scope of the audit to be performed.

Department Director, Division Manager, Program Manager, Director of Finance, and Internal Audit Manager

3. Next, an overview of relevant operations to

be examined is provided. All requested records, data, information, and personnel necessary to complete the audit fieldwork are made available to the Internal Audit Division.

Department Director, Division Manager, Program Manager, and Operational Representatives.

4. The Internal Audit Manager periodically

updates the Department Director, Division Manager, Program Manager, Director of Finance, and the City Manager’s Office regarding audit fieldwork results and recommendations for improvements.





Procedures Responsible Person(s) 5. An Exit Conference marks the completion

of most of the audit fieldwork. The Department Director, Division Manager, Program Manager, Director of Finance, and the Internal Audit Manager meet to verbally discuss major concerns noted during the audit fieldwork and the progress made toward implementing recommendations for improvements. All concerns discussed will have been previously noted in the Internal Audit Manager’s periodic updates.

A written outline of the key issues to be discussed at the Exit Conference will be distributed to the Department Director and the City Manager’s Office prior to the actual meeting.

Internal Audit Manager Internal Audit Manager

6. A Draft Audit Report will be prepared and

distributed to the City Manager’s Office, the Department Director, and the Director of Finance. Audit Reports will vary based upon size and complexity of the subjects examined.

Additionally, a Draft Audit Report will be forwarded to the City Attorney’s Office for a liability review.

Internal Audit Manager Internal Audit Manager




Procedures Responsible Person(s) 7. Within ten business days, the Department

Director and Division Manager:

a. Reviews the Preliminary Draft Audit Report and provides comments directly to the Internal Audit Manager;

b. Completes the Action Taken by Management and Estimated Completion Date columns of the Executive Summary of Recommendations in the Draft Report; and

c. Prepares a response that will be included in the appendix of the Final Draft Audit Report

Department Director and Division Manager

8. Finalize Internal Audit report within ten business days and distribute to the City Manager’s Office.


VI. Authorized By _____________________________ Rod Gould City Manager

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Attachment 13: BANK RECONCILIATION PROCEDURE

Monthly bank reconciliations of all SMHA accounts should be prepared by the Senior Financial Analyst. The employee does not have check-writing or deposit responsibilities.

• Senior Financial Analyst receives bank statements.

• Senior Financial Analyst documents the un-cashed checks by check number, payee, dollar amount and date issued.

• Using SMHA bank reconciliation excels spreadsheet Senior Financial Analyst reconciles bank statement with GL cash account, and files reconciliation.

• Housing Administrator, who oversees the senior financial analyst and housing specialists, reviews the reconciliations; and any discrepancies are investigated for correction and rectified.

• Copies of bank statements and bank reconciliations are sent to the City’s Finance department on a monthly basis.

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Attachment 14

Reimbursement Grants Drawdown Policy

Purpose: SMHA currently operates six Continuum of Care (CoC) Grants: Main, Step Up on Second, Step Up on Fifth, Expansion, New and SIP. Therefore, the Housing Authority must submit appropriate paperwork to HUD to request the funds for tenant rents and administrative costs based on the actual expenses.

Drawdown Procedure: Administrative Analyst completes HUD-27053-B form indicating the actual number of units leased and the expenses for the month for each of the six grants. The print outs of the GLs from the JD Edwards serve as the backup for the monthly expenses. Senior Administrative Analyst then reviews the prepared paperwork for accuracy and completeness.

The prepared forms are submitted to an Accountant at the Santa Monica Finance Department for additional review. After the review the Accountant submits the request for the drawdown through LOCCS system.

When the drawdown request has been submitted after the grant cycle has ended, the Housing Authority will submit a letter to HUD confirming that the requested funds were expensed prior to the expiration of the grant and request the release of the funds.

Once the Accountant in the Finance Department submits the drawdown requests to HUD, staff scans the paperwork and emails it back to the Housing Authority Administrative Analyst for record keeping.

Once the funding is received, the treasury department prepares a journal to properly debit and credit the accounts based on the email from Housing Authority Administrative Analyst and notifies the Housing Authority regarding the receipt of the funds.

Covering Expenses Prior to Reimbursement: Since CoC grants are reimbursement grants based on the actual monthly expenses, the general city fund initially funds the monthly expenses and once the funding is received from HUD, the Housing Authority reimburses the general fund for the expenses.

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Attachment 15 Procedures for Check Deposits

Repayment Agreements and Port in Fee

1. At the end of each day the Housing Authority Administrative Analyst collects all the checks from lockbox, and logs the information into the Deposits ledger

a. The deposit ledger contains the name of the tenant, repayment agreement amount, settlement amount, and balance owed.

b. The deposit ledger also contains a list of port in tenants and fees received. 2. Each check is logged and stamped with an endorsement stamp. 3. Once all checks are entered, at the end of the week, Administrative Analyst prepares tape with the

total amount for the batch. 4. Administrative Analyst delivers the checks to Administrative Staff Assistant for depositing utilizing

the Wells Fargo Desktop Scanner. 5. Once the checks are scanned a report indicating the amount deposited is printed out and given to

Administrative Analyst. 6. The printout from the desktop scanner and Administrative Analyst calculated total for the check

batch must match and reconcile. 7. The check batch is then given to the Administrative Staff Assistant for entering into HAPPY TARs

module. 8. On a bi-weekly basis, using the information logged on the deposits ledger, the Administrative

Analyst creates a deposits journal for all the checks that have been deposited to be posted in JDE Edwards.

9. The journal, the reports from Wells Fargo Desktop Deposits and a copy of the deposit slip for those checks that could not be scanned are emailed to the treasury department.

Checks that Do Not Scan: The checks that did not scan properly will be delivered to the treasury department every week in a bag and with a deposit slip for manual depositing.

Keeping Track of Checks: 1. Each check batch is given a number commencing with #1, including those that are submitted to the

treasury department for manual deposit. 2. Administrative Staff Assistant keeps a log with all the check batch numbers. 3. Once a deposits journal is created the journal batch number is attached to the check batches associated

with it. 4. The scanned checks are stored in a locked cabinet for 12 months. After the 12 month period, the checks

are shredded and destroyed.

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Attachment 16

CHECK RUN POLICY/ PROCEDURES FOR GENERATING HAP PAYMENTS

Personnel to Inquire with - Yelena Solovyeva, Administrative Analyst, Housing and Economic Development INRODUCTION The Housing Assistance Payment (HAP) contract is a written agreement between the Housing Authority and the owner of a unit occupied by a Housing Choice Voucher (HCV) program participant. The HAP contract must be in the form prescribed by HUD. The Housing Authority enters into a HAP contract with the owner in order to provide housing assistance payments for eligible families. The Housing Authority makes housing assistance payments to the owner in accordance with the HAP contract, for contract units leased and occupied by eligible families during the term of the HAP contract. The Housing Authority uses the most recent HUD-approved form of the HAP contract. Under the HAP contract, the Housing Authority agrees to make housing assistance payments to the owner on behalf of a specific family leasing a specific unit. The Housing Authority uses its payment standard schedule to calculate the monthly HAP payment to the owner. Prior to Housing Authority approval of the assisted tenancy and the execution of a HAP contract, the PHA ensures that the following program requirements have been met:

• Owner is eligible • Unit is eligible • Unit has been inspected by the Housing Authority and meets Housing Quality Standards (HQS) • Lease includes the tenancy addendum • Rent charged by the owner is reasonable

Upon approval of the assisted tenancy, the owner and the Housing Authority execute the HAP contract. 1. OWNER HAP CONTRACT OBLIGATIONS By execution of the HAP contract, the owner certifies:

• The owner is and will maintain all contract units in accordance with HQS;

• The owner is providing all services, maintenance, equipment and utilities as agreed to under the HAP contract and in the leases with assisted families;

• Each contract unit is leased to an eligible family and the lease complies with the HAP contract and

HUD requirements;

• Members of the assisted family reside in the contract unit and it is their only residence;

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• The owner is not a relative of any member of the assisted family by blood or operation of law;

• The amount of the housing assistance payment is the correct amount due under the HAP contract;

• The rent to owner for each contract unit does not exceed the rent due to owner for any comparable,

unassisted unit;

• The owner will not receive any other payments beyond the tenant rent and housing assistance payments for the contract unit; and

• The family does not own or have any interest in the contract unit.

2. PAYMENTS TO OWNER [24 CFR 983.351] The Housing Authority will make HAP payments to the owner in accordance with the HAP contract for the months in which the contracted unit is leased to and occupied by an eligible family. Except for discretionary vacancy payments described below, the Housing Authority will not make any payments for any month after the month in which the family moves out of the unit. In order to continue receiving HAP payments, the owner must comply with all provisions of the HAP contract, including HQS. The HAP is due to the owner on the first day of each month. The owner’s right to receive Housing Assistance Payments is contingent on compliance with all the provisions set forth in the HAP contract. The owner’s endorsement of the HAP check signifies that the owner has agreed to and is in compliance with the terms of the HAP contract. No payments may be made to the owner after the family moves out of the unit or the lease term ends. A. NON-RECURRING HAP PAYMENTS In addition to the regular monthly Housing Assistance Payments to owners on the first day of each month, on occasion the Housing Authority has one additional check run for special circumstances. The additional check run covers actions taken between the regular check cut-off date and the end of the month. HAP payments are processed on a monthly basis. Periodically, there is a mid-month run due to lost checks or stop payments. The PHA closely monitors and controls all check processing. B. PRE-CHECK GENERATING PROCESS Upon HAP Contract execution, the Housing Authority initiates the processing of payments to the owner. Payments are made by the first of each month. The Housing Authority Housing Specialist prepares the invoices (transactions) from the system. Two days prior to the check run, six reports are generated by the system:

• Zero-HAP report: indicates individuals who no longer receive assistance but remain in the program. • Zero-Income report: individuals who report zero monthly income.

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• Hold and Abate report: payments being held and tenant units that did not pass inspection. • Pending Vouchers report: vouchers issued but not yet leased. • Manual Checks report: one time payments made for adjustments or corrections from prior periods. • Reconciliation report: a report indicating the change in payments made to owners compared to the

previous month. The reports are distributed to all the Housing Specialists, Inspector, Housing Application Assistant and the Technical staff for review, corrections and approval. Upon approval, the reports are distributed to the Administrative Analyst and to the Housing Authority Administrator to ensure the accuracy of all reports. The Housing Authority Manager provides final approval. Once all the approvals have been obtained, a check run is administered by the administrative analyst at the end of the month. C. CHECK GENERATING PROCESS The checks are processed utilizing the HAPPY Housing Software. During the generating of checks, direct deposit files and positive pay files are created to be sent to the bank. Additionally, paper checks are printed for the owners who do not participate in direct deposit. Once the checks are generated, a check register is printed to be reviewed, verified and approved by the Housing Authority Administrator and Housing Authority Manager. 3. SEPARATION OF DUTIES/INTERNAL CONTROL The PHA has ensured separation of duties during the check process by:

• Housing specialist creates the payment in the HAPPY Housing software. • The reports are generated and distributed for review, verification, and approval by the Housing

Authority Administrator and Manager. • Administrative Analyst runs the checks • Checks are printed by the Finance Department under the supervision of the Disbursement

Supervisor • ACH/Direct Deposit is transmitted via bank portal, number token used for transmission is

maintained by the Housing Authority Administrator/Manager • Checks are signed by City Controller

4. VACANCY PAYMENTS [24 CFR 983.352] If a family moves out of a contract unit, the owner may keep the payment for the full calendar month in which the family moves out. The owner may not keep the payment if the Housing Authority determines that the vacancy is the owner’s fault. The Housing Authority may provide for vacancy payments to the owner not to exceed two months following move out. The vacancy payment may not exceed the amount of monthly rent under the assisted lease, minus any rent received by the owner, including any available amount from the tenant’s security deposit.

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Vacancy payments may only cover periods the unit is actually vacant. The Housing Authority will only make vacancy payments to the owner if:

• The owner gives prompt, written notice to the Housing Authority certifying that the family vacated the unit, including the date the family moved out, and certifies:

• The vacancy is not the fault of the owner and the unit was vacant during the period claimed;

• The owner has taken every reasonable step to minimize the likelihood and length of the vacancy.

The owner must then submit a form requesting vacancy payments and provide the amount of the tenant’s security deposit with any amount available to reimburse unpaid rent. The form must accompany receipts substantiating any damages the owner claims from the security deposit. The owner must certify on this form that no other payments were received for the unit during the period vacancy claimed. 5. HAP PAYMENTS AND CONTRACT TERMINATIONS [24 CFR §982.311] When a HAP contract terminates, the Housing Authority makes payments in accordance with the HAP contract and depending on the reason for the contract termination. In cases involving a tenant notice to move or a mutual termination, not involving an eviction action, the Housing Authority pays the owner for the entire last month that the family was in the unit regardless of the actual day of the month that the family moved out. The Housing Authority may also pay HAP on behalf of the family for the new unit in the same month. However, while the Housing Authority can pay a subsidy for two units in a given month under these conditions, the family may only have physical possession of one unit at a time. A family will be considered to have physical possession of a unit if they still have belongings in the unit and the key to the unit. Under such cases, the family will be required to pay the full rent for one of the units in its possession and the family’s portion for the other unit [24 CFR §982.311(d)]. In cases involving evictions, the Housing Authority continues to pay the HAP until the day the family moves out or is evicted [24 CFR §982.311(b)]. In cases involving termination of assistance due to insufficient funding, families receive a minimum of 30 days’ notice of termination of assistance. In cases involving termination of assistance for reasons other than insufficient funding, the Housing Authority notifies the owner and the family of the proposed termination date. If the family does not request a hearing or the hearing is decided in the Housing Authority’s favor, the HAP payments will terminate in accordance with the notification. If a family continues to occupy the unit after assistance is terminated, the family is responsible for the total amount of rent due to the owner.

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If HAP payments are released to the owner for periods of time beyond the dates set forth above, the owner is required to return all monies to the Housing Authority within 30 calendar days or within the time specified in any approved repayment agreement. The Housing Authority also reserves the right to deduct any monies from other HAP payments being made to the owner by the Housing Authority. If the owner fails to repay the HAP, the account will be forwarded for further action. 6. HQS OR HAP CONTRACT VIOLATIONS [24 CFR 983.207] The Housing Authority makes any HAP payments to the owner during any period in which the contract unit does not comply with HQS or any other HAP contract requirement. Remedies for HQS violation include abatement or reduction in HAP payments, reduction of contract units, and termination of the HAP contract.

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Attachment 17 OWNER OR FAMILY DEBTS TO THE HOUSING AUTHORITY

This attachment describes the Housing Authority’s policies and guidelines for the recovery of debts and the use of repayment agreements. Before a debt is assessed against a family or owner, the file must contain documentation to support the Housing Authority’s claim that the debt is owed. The file must further contain written documentation of the method of calculation, in a clear format for review by the owner or the family, as appropriate. When families or owners owe money to the Housing Authority, every effort will be made to collect the debt. A variety of collection tools to recover debts may be used including, but not limited to:

• Requests for lump sum payments

• Repayment agreements

• Abatements

• Deductions

• Collection agencies

• Credit bureaus

• Civil suits REPAYMENT AGREEMENTS FOR FAMILIES [24 CFR §792.103] A Repayment Agreement as used in this plan is a document entered into between the Housing Authority and the person who owes a debt to the Housing Authority. The Repayment Agreement contains:

• Reference to the paragraphs in the family obligations whereby the person is in non-compliance and may be subject to termination of assistance; and

• A statement that the monthly retroactive rent repayment amount is in addition to the family’s regular rent

contribution and is payable to the Housing Authority; and

• An acknowledgment by the person of the debt in a specific amount; and

• The terms of repayment; and

• Any special provisions of the agreement. The terms of the repayment agreement may be renegotiated if there is a decrease or increase in the family’s income. Late and missed payments constitute default of the repayment agreement and may result in termination of assistance; and

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Late Payments A payment will be considered to be in arrears if the payment has not been received by the close of the business day on which the payment was due. If the due date is on a weekend or holiday, the due date will be at the close of the next business day. If the family’s repayment agreement is in arrears, the Housing Authority may do one or more of the following:

• Require the family to pay the entire arrearage plus current month's payment in order avoid loss of assistance;

• Require the family to pay the balance in full in order to avoid losing assistance;

• Pursue civil collection of the balance due; and/or

• Terminate the housing assistance. Requests to Move If the family requests to move to another unit and has a repayment agreement in place, the family will be required to pay the balance in full prior to the issuance of a voucher, regardless of whether or not the family is current with its payments. Under special circumstances indicated below, the Housing Authority may make an exception and allow a family to move without paying the entire balance of the debt if the family is current or can become current with its payments:

• HAP contract is terminated due to owner non-compliance

• A natural disaster

• The unit is uninhabitable or has major HQS deficiencies that are not the result of a family action or inaction.

• A life-threatening situation such as the family is a witness to or a victim of a crime and must move for safety reasons. The family will be required to provide proof in such cases.

Guidelines for Repayment Agreements The Housing Authority, at its sole discretion, will determine on a case-by-case basis whether or not to offer a family a repayment agreement for monies owed to the Housing Authority. The offer of a repayment agreement does not constitute an agreement to continue the family’s assistance. However, the Housing Authority will propose termination of the family’s assistance upon refusal by the family to enter into a repayment agreement. Repayment Agreements will be executed between the Housing Authority and the head of household or other adult family member. Monthly payments may be decreased in cases of hardship with the prior notice of the family, verification of hardship, and the approval of a Housing Authority Manager. If the Housing Authority offers a repayment agreement, the family has the option to repay retroactive rent balances as follows: 1. In a lump sum amount; or 2. A monthly payment; or

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3. A combination of a lump sum and monthly payment. The Housing Authority will usually ask that the family pay an initial lump sum (in an amount determined by the Housing Authority) with the remaining balance to be paid in equal payments over a period of time not to exceed 12 months for amounts under $2,400 or 24 months for any amount in excess of $2,400. In determining the initial lump sum, the Housing Authority will consider the total amount owed, the ability of the person to make the remaining payments and the percentage of the total sum owed. In most cases, the Housing Authority will ask the family to pay a significant initial lump sum as part of entering into a Repayment Agreement to help ensure full payment to the Housing Authority and to reduce the monthly payment. These terms will be negotiated with the tenant. Additional Debt Incurred If the family has a Repayment Agreement in place and incurs an additional debt to the Housing Authority, the Housing Authority may choose, at its discretion, to agree to more than one Repayment Agreement at a time with the same family. If a Repayment Agreement is in arrears more than 30 calendar days, any new debts must be paid in full. FAMILY DEBTS OWED FOR UTILITY REIMBURSEMENT PAYMENTS Families must repay Utility Reimbursement Payments (URP) made by the Housing Authority for periods in which the family was not entitled to the URP. If the amount of the URP owed to the Housing Authority is $50 or less, the tenant will be required to pay the debt in full. FAMILY DEBTS DUE TO FRAUD/NON-REPORTING OF INFORMATION [24 CFR §792.103] HUD’s Definition of Program Fraud and Abuse: A single act or pattern of actions that constitutes false statement, omission, or concealment of a substantive fact, made with intent to deceive or mislead, and that results in payment of Housing Choice Voucher Program funds in violation of Housing Choice Voucher Program requirements. Family Error/Late Reporting Families who owe money to the Housing Authority due to the family’s failure to report income or change in allowances or deductions will be required to repay in accordance with the guidelines set forth in the Repayment Agreements for Families section. Program Fraud At the Housing Authority’s discretion, families who owe money to the Housing Authority due to program fraud will be required to repay the debt, and may be required to accept a repayment agreement in accordance with the guidelines set forth in Repayment Agreements for Families section. In addition, the case may be referred to the Inspector General and/or the Housing Authority may refer the case for criminal prosecution.

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FAMILY DEBTS PAID IN FULL If the Housing Authority determines not to enter into a Repayment Agreement, or if the Repayment Agreement is breached and the Housing Authority demands payment of the balance in full, the family must pay the full amount due and owing in one lump sum. If the family fails to pay, the Housing Authority will terminate the family’s assistance and may pursue collection through a collection agency or a civil action and may notify credit agencies of the debt. Whether or not the amount is paid, the Housing Authority does not waive its right to take other action including termination of assistance or referral for criminal prosecution in appropriate cases. OWNER DEBTS TO THE HOUSING AUTHORITY If the Housing Authority determines that the owner has retained Housing Assistance or Claim Payments the owner is not entitled to, the Housing Authority may deduct the amounts owed from future Housing Assistance or Claim Payments owed the owner for any units under contract. If future Housing Assistance or Claim Payments are insufficient to reclaim the amounts owed, Housing Authority may do one or more of the following:

• Require the owner to pay the amount in full within 30 calendar days;

• Agree to a repayment agreement with the owner for the amount owed. Repayment period may not exceed 12 months;

• Pursue collections through the local court system;

• Pursue collections through a collection agency; or

• Restrict the owner from future participation;

• Agree to a repayment agreement with the owner for the amount owed. Repayment period may not exceed 2

months; however an owner may appeal to the Housing Manger in writing for additional time. Owner Debts Due to Fraud If the landlord has been overpaid because of fraud, misrepresentation or violation of the contract, the Housing Authority may terminate the contract and arrange for restitution to the Housing Authority and/or family as appropriate. The Housing Authority will make every effort to recover any overpayments made as a result of landlord fraud or abuse. Possible remedies available to the Housing Authority include:

1. Recovering monies owed from payments otherwise due to the owner; 2. Setting up a repayment agreement; 3. Referring the debt to a collection agency; and/or 4. Pursuing the matter in a civil court.

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A determination on the course of action to be taken will be based on the nature of the violation and the amount of the money owed. Generally, if the owner is cooperative, is willing to pay back all monies owed, and all monies will be repaid within 2 months, the Housing Authority will offer the owner the opportunity to enter into a Repayment Agreement. However, in cases where the owner knowingly and willfully violated program rules, the Housing Authority may seek full repayment in one lump sum.

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Attachment 18: PROCEDURES FOR COMPLETING WIRE TRANSFERS

Contact Personnel: Patrick Gregorian, Sr. Administrative Analyst, Housing and Economic Development, Housing Authority INRODUCTION The primary goal of this policy is to establish a procedure for all internal wire transfer transactions between the City of Santa Monica Housing Authority (Housing Authority) and the City of Santa Monica Finance Department. Personnel initiating wire transfers must adhere to the following policies and procedures. Definitions Wire transfers: Wire transfers typically transfer funds from one bank account to another. The Housing Authority processes both recurring and non-recurring wire-transfers to transfer funds from various accounts. These recurring and non-recurring wire-transfers capture monthly funding received from HUD and the occasional FSS payouts and forfeitures.in the proper bank account.

A. Recurring wire transfers: All routine transactions which will be conducted on a monthly basis.

B. Non-recurring wire transfers: Transactions that are not conducted on a regular basis Key Accounts The Housing Authority utilizes the following four bank accounts for all types of wire transfers. HUD Depository Account - Wells Fargo City of Santa Monica General Account – Wells Fargo FSS Savings Account – Wells Fargo Custodial Account – Union Bank Recurring Wire Transfers There are five types of recurring wire fund transfers processed: HAP Vouchers: Housing Assistance Payments (HAP) are due to the owner on the first day of each month. The HAP vouchers are initially funded by the General Account. During the month end reconciliation process, the Housing Authority determines the housing assistance payments associated with all vouchers. This HAP amount is transferred to reimburse the General Account from the HUD Depository Account. Section 8 HAP Admin Fee: Administrative fees are paid on the basis of units leased as of the first day of each month; this data is extracted from the Voucher Management System (VMS) at the close of each reporting cycle. The administrative fees are transmitted from the HUD depository account to the general account to cover administrative expenses.

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Family Self-Sufficiency (FSS): HUD funding for FSS Coordinator salaries is awarded on an annual basis but distributed on a monthly basis through the HUD depository account. The wire transfer transmits the funds from HUD depository to the general account to cover FSS Coordinator salary. FSS Escrow: For the tenants enrolled in the FSS program, the Housing Authority is required to deposit all escrowed funds into a single depository account. The amount of the escrow credit is based on increases in the family’s total tenant payment resulting from increases in the family’s earned income during the term of the FSS contract. The Housing Authority then makes deposits to an escrow account in the appropriate amount .the wire, transfers funds from depository Account to FSS Savings Account for Monthly FSS Escrow Fraud Recovery: When a fraud is discovered, the Housing Authority pursues the tenant for repayment of the funds. These repayments are referred to as fraud recoveries. Housing Authorities s are allowed to retain 50 percent of fraud recoveries. The other 50 percent is returned to HUD. The wire will move the funds from the general account to the depository account. Senior Vouchers: Senior vouchers are initially funded by the General Account. During the reconciliation process, the Housing Authority determines the cost associated with all senior vouchers. This senior voucher amount is transferred with a wire to reimburse the General Account from the Union Bank Custodial Account. Non-recurring Wire Transfers There are two types of non-recurring wire fund transfers processed at any time:

1. Non-compliance/FSS forfeitures: A family’s noncompliance with the FSS contract will result in termination of the FSS program and forfeiture of the FSS escrow account. Termination from the FSS program will immediately result in any accrued FSS escrow funds to be forfeited by the family and funds are treated as program income and become part of HAP equity. These funds are then transferred to the HUD depository account.

2. FSS Program Completion/final disbursement: Upon the successful completion of all FSS program requirements, a payout is processed from the general account. The wire transfers the funds from the FSS Escrow Account to the General Account.

3. Interim Disbursement: At the Housing Authority’s discretion, a portion of these escrow funds may also be available to the family during the term of the contract to enable them to complete an interim goal such as education, job training, business start-up expense, etc. the procedure of this payout is similar to the final disbursement. The wire transfers the funds from FSS Escrow account to the General Account,

Required documents The provides a completed “REQUEST FOR WIRE TRANSFER” form which includes payment information, wire

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transfer information with corresponding dollar amounts to the Finance Department to process any wire fund transfer. Supporting documents for each request:

a. Section 8 HAP Vouchers Expenses: Copy of the Rev/Expense spreadsheet which displays total HAP expenditures.

b. Section 8 Admin: a copy of the bank statement for HUD depository account which has the total amount deposited by HUD.

c. Family Self-Sufficiency (FSS) Coordinator: a copy of the bank statement for the HUD depository account, which documents total amount deposited by HUD.

d. FSS Escrow: Copy of the FSS Escrow spreadsheet which documents total deposits as well as a copy of the report generated from HAPPY Software.

e. FSS Payouts: A copy of the request for payout along with a copy of the AP Summary showing the payout amount.

f. FSS forfeitures: FSS escrow spreadsheet which documents the amount forfeited. g. Senior Vouchers: Printout of the GL documenting the expenses for the month.

Segregation of Duties/Approval Process The wire transfers are initiated by the Housing Authority Senior Administrative Analyst. Wire transfers are reviewed and authorized by the Housing Administrator and approved by the Department Manager. The wire transfer requests are then forwarded to the Treasury Department for processing. Time Frame Upon the completion of the journal corresponding to a wire at each month close, the Housing Authority prepares the wire transfers based upon the expenditures incurred for the month. The wire transfers are prepared and approved by the Housing Authority administration and are then be forwarded to the Treasury Department. Wire transfers are processed and completed by the Treasury Department within two working days from the day of receipt of wire transfer documents from the Housing Authority. Notification of Completion The Finance department informs the Housing Authority Senior Administrative Analyst upon completion of all transfers. Record Retention All wire transfer documents are scanned and filed by the Housing Authority on the departments share drive.

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