UCR Policies and Procedures

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Policy Title:                      Invoice Processing of Purchase Orders


Policy Number:               200-59


Responsible Officer:

Associate Vice Chancellor of Business & Financial Services and Controller

Responsible Office:

Business and Financial Services-Accounting Office

Origination Date:


Date of Revision:


Date of Last Review:



Guidance Concerning Processing of Invoices

I.        Introduction

This is the campus policy and procedure related to processing vendor invoices received in response to purchase orders. Invoices may be either paper or electronic. Generally, the campus makes payment to vendors by check or Electronic Funds Transfer (EFT).  

Note:  This policy does not cover direct charges, employee reimbursements, or procurement card transactions.  

II.        Billing Address

 The official billing address for the University of California, Riverside is:

University of California

Accounting Office – 002

Riverside, CA 92521-0123


III.        Definitions

*  Low-Value Purchase Authorization (LVPA): The LVPA program is designed to provide timely and cost-effective procurement action through efficient utilization of personnel in both Procurement Services and the participating department. Departments with proper authorization from Procurement Services can place orders up to $2,500 per transaction. These purchases are initiated through the eBuy application. For more information about LVPA program, log on to the UCR P&P 750-39.  

*  Department Authorized Purchase Order (DAPO):  Transactors use a DAPO to procure Low-Value Purchases for miscellaneous supplies and services from any responsible vendor offering reasonable prices and terms, valued up to $2,500 per transaction.

*  Purchase Order (PO):  An order initiated by Procurement Services for goods/services that are not low-value in nature. The departments use electronic Purchase Requisition in the eBuy application to submit requests for purchases of goods/services (excluding those items which are available from the Storehouse, Printing & Reprographics or Equipment Management's Excess and Salvage Program). The campus procedure for Purchase Requisition is covered under UCR P&P 750-60. Procurement Services uses the eBuy application to process these requests.

*  Blanket Order: The Procurement Services uses "blanket orders" to delegate procurement authority to departments. Blanket orders authorize the expenditure of funds for materials and/or services that are repetitively purchased from the same or similar vendors. Blanket orders are implemented to reduce order processing costs without loss of fiscal control.  A blanket DAPO is used in the same manner as the LVPA DAPO except transaction limits may be much greater. For more information about Blanket Orders, log on to UCR P&P: 750-03.


IV.        Sales and Use Taxes

The University is subject to sales and use taxes imposed by the State of California for the privilege of consuming tangible personal property in California. Therefore, the appropriate sales and use tax amount must either be paid or accrued, based on information contained in the purchase order or invoice.  A California vendor is a vendor that has registered with the State of California to sell goods in this state. For sales of tangible personal property at retail by a California vendor, the sales tax is the responsibility of the retailer (Section 6015).


An out-of-state vendor is a vendor that has not registered with the State of California to sell goods in California.  Use tax is required to be accrued and remitted to the State for items purchased for consumption from an out-of-state vendor.  For more information on the application of California Sales and Use Tax regulations to University purchases, refer to the University of California Sales and Use Tax Manual, which is located at the following web site address: http://www.ucop.edu/financial-accounting/_files/sutm.pdf.


V.        Payment of Invoices – Less Than $10,000

Invoices that are less than $10,000 are processed immediately upon receipt provided that the goods/services are marked as “received” and “okay to pay” in the purchasing systems.           

A.      Auditing

Accounts Payable processors will make sure all invoices are reviewed to verify item descriptions, unit prices, quantities invoiced, discount terms and applicable taxes.  In addition, the A/P processor will verify that the vendor name and remit-to address are correct.  Use tax will also be accrued for Non-California Vendors that have not charged sales tax.         

B.      Verification and Processing

For an invoice to be paid, a three-way match process comparing the invoice, PO/DAPO, and receiving information must be successfully performed.  Match exceptions that cause an invoice not to be paid include:

*  PO/DAPO not marked “Encumbered” and “OK To Pay.”

*  Invoice line item value exceeding PO/DAPO line item value more than ten percent (10%).

Invoice line item value exceeding PO/DAPO line item value more than one hundred dollars ($100).

Note:  PO/DAPO in a “SAVED” status will fail the match process. Therefore, it is critical to mark each PO/DAPO “Encumbered” and “OK to Pay” as soon as possible. When there is a match, the system will schedule the invoice for payment on the due date.  

           C.          Match Exceptions

If there is no three-way match, the A/P processor will research the discrepancy with the department for DAPOs and PO’s.  The following items will be looked at in resolving discrepancies:   

                            1.        Saved Status

This indicates that POs/DAPOs are not finished and completed in the eBuy applications.  A PO/DAPO in the "Saved" status within the eBuy application is not passed on to PeopleSoft Accounts Payable until it is marked "Encumbered.”  An invoice for "Saved" a PO/DAPO will reject when entered in the PeopleSoft Accounts Payable system. The PO Aging application will notify the SAA by e-mail a list with each PO/DAPO on “Saved” status and open for five days or more.  A transactor will need to use the eBuy application to “Encumber” the order so the information can be transferred to the PeopleSoft Accounts Payable system. This action requires immediate attention.  

                            2.        Encumbered But Not Received

This indicates that the PO/DAPO is not marked “received” and “Okay to Pay.” The PO Aging application was created to indicate a condition in which Accounts Payable unit has processed an invoice for a PO/DAPO that is marked “Encumbered” but not marked “received” and “okay to pay.” In most cases, when this condition exists, the goods/services have been “received.” PO Aging application will notify the transactor by e-mail with a list of PO/DAPO numbers that failed the matching process because the orders have not been marked “Received” and “Okay to Pay.” The e-mail will identify the PO/DAPO requiring attention and explain the actions required. 

                            3.        Miscellaneous

a) unit price (b) quantity (c) F.O.B Point (d) others such as shipping terms, shipping charges, special handling charges, UPS charges, etc. that do not align with the terms of the initial PO or DAPO.           

D.        Post Audit Notification (PAN) 

                            1.        PAN for Procurement Services:  A PAN e-mail is sent out to the Reviewer when orders are placed through the eBuy application. If the Reviewer discovers any error(s) on the requisition or DAPO, the Reviewer should contact the transactor immediately to have the requisition or DAPO changed or canceled.  

                            2.        PAN when invoices are Vouchered:  Generally, a PAN notice would not be generated when an invoice is vouchered for payment. In the event that PAN for Procurement Services is not activated (turned on), a PAN notice will be generated when invoices originating from PO/DAPO are vouchered for payment. If the Reviewer discovers any error(s) on the notice and wants the transaction(s) canceled or stopped, the Reviewer should contact the Accounts Payable (AP) unit immediately at x23305. Give the AP processor as much information as possible (e.g., PO/DAPO number and Invoice number).


VI.        Payment of Invoices – $10,000 and Over

AP unit will send copies of invoices that are $10,000 and over to the department for approval. Original invoices will always remain in the AP unit. The department is highly encouraged to approve or not approve the invoice and return it back to the AP unit within five working days.  Follow these procedures before approving the invoice.

*  Verify vendor name, remit address, item descriptions, units price, quantities invoiced, discount terms and applicable taxes. 

*  Compare Invoice to the Purchase Order.

*  Verify that the goods/services have been received. Use the appropriate purchasing system to mark the good/service “Received” and “Okay to Pay.”

When the approved invoice is returned to the AP unit, the procedures described in Section V. apply.


VII.        Internal Controls          

     A.         Accounts Payable

As a general rule, vendor checks will not be returned to the department. However, AP unit may allow exceptions.    

           B.         Department

The employee who has been delegated as the PAN reviewer for purchased transactions should carefully review all PAN notices generated when the purchase transactions are initially entered (i.e. commitment to the vendor is made) into the eBuy application.

Departments should ensure that payments charged to their accounts are valid by establishing appropriate internal control procedures, such as assigning a staff member to review payments. The departmental reviewer should not be assigned any responsibility for requisitioning, ordering, or certifying that goods or services were received.   

The department business officer should periodically review the PO Aging report to gauge the level of orders awaiting payment (outstanding accounts payable).  


VIII.        Responsibilities


           A.            PAN Review
The employee who has been delegated as the PAN reviewer for purchased transactions should carefully review all PAN notices generated when the purchase transactions are initially entered (i.e. commitment to the vendor is made) into the eBuy application.

           B.            Approval of Invoice
The individual certifying that goods and services were received and approving the invoice for payment must have a signature authorization on file in the Accounting department.  Invoices that require approval ($10,000 and over) must be returned to Accounts Payable promptly in order to prevent loss of discounts and to maintain satisfactory relations with the vendor.

           C.          Receiving Procedures
The department must certify that the goods and services were received in acceptable condition, in the quantity ordered.

           D.           Invoice Review
The department should review invoices $10,000 and greater prior to payment, in accordance with the procedures outlined in this chapter.

           E.           Accounts Payable Review
The department business officer should periodically review the PO Aging report to gauge the level of orders awaiting payment (outstanding accounts payable).


VIII.        References

D-371-12.1 UCOP Accounting Manual - Disbursements: Accounting For and Tax Reporting of Payments Made through the Vendor System

UCR P&P 750-03 – Blanket Orders and DAPO’s

UCR P&P 750-39 – Low-Value Purchase Authorization Program

UCR P&P 750-60 – Purchase Requisitions

UCR P&P 750-63 – Purchase Authorization