This article continues the discussion about the importance of sufficient segregation of duties. This is an essential aspect of maintenance of the master vendor file. Segregation of duties in this area should ensure employees that create, authorize or process vendor payments are not also able to add, modify, and delete vendors. Some districts assign roles and responsibilities for creation and maintenance of the vendor file records to select individuals in the purchasing department. A small enrollment district may assign review and approval of proposed changes to vendor master file records to an executive management-level employee in the curriculum area. Also, the school district’s business office is sometimes pressed to immediately pay a vendor upon completion of work by issuing a manual check, which serves to bypass various important business processing controls, and accordingly, should be avoided with the exception of select emergency situations.
All districts should use a checklist to ensure consistency and accuracy in vendor file management processes. In addition to routine workflow items, the district’s vendor file process checklist(s) should include:
- Vendor Record Change Order form (your district probably has another name for this form) is completed and approved
- Vendor review and approval:
- Vendor File Change Order form is complete and authorized;
- Qualified vendor list, if applicable;
- Certificate of interested parties (HB1295 form) is completed and filed with Ethics Commission, as applicable;
- Conflict of interest/related parties disclosure form designed by district is complete;
- Felony conviction notice;
- Background check clearance;
- IRS W-9 Form;
- Employer TIN-Matching;
- Bonding requirements, if applicable;
- Contractors licensed or registered with applicable agencies;
- Debarred Vendor Verification (applicable to federal grant contracts);
- SAMS number for federal projects;
- Correct vendor code assignment; and
- Insurance requirements, if applicable, including workers’compensation coverage
An additional internal control for the vendor master file is to keep your house in order by periodically deleting inactive vendors from the master file. In summary, adequate segregation of duties over the master vendor file helps minimize the risk of fraud and various kinds of conflict of interest issues.