1 Purpose and Scope of the Manual 6


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8.5. Distribution of Documents

With reference to the procedure, the following shall be the documentation to be retained by the logistics department and the Accounts department, respectively. Copies of standard documentation are contained in Appendices.
Logistics Department Accounts Department

1. Purchase Requisition 1. Purchase Requisition

2. Competitive Bid Analysis 2. Comparative Bid Analysis

3. Local Purchase Order 3. Local Purchase Order

4. Contracts for Supplies 4. Delivery Note/Goods Received Note

5. Tender Committee Minutes 5. Supplier Invoice

6.Any other documentation, 6. Receipts for payments

supporting the decision to purchase

and the selection of supplier
Thus Accounts department will have documents supporting the financial transaction and logistics department will have documents supporting the procurement decision.

The audit trail of all documents can be followed through the requisitions having the same pre-designated serial numbering.

Goods and services will be purchased directly from properly registered manufacturing companies (where they are present) or their authorised dealers/agents. As far as possible, purchases and supply of services shall be ordered from properly registered businesses in order to ensure quality of goods and/or services and to take advantage of the lowest prices and any discounts. The ordering of supplies and services through middlemen is, therefore, discouraged forthwith.
8.6. Maintenance of Supplier Database

All suppliers dealing with KRCS have to be registered by the logistics department and should be on the approved supplier database.
8.6.1 Registration

Registration of a supplier is not a guarantee to get business or even to be selected to receive request for quotations. Registration merely ensures the suppliers have been pre-qualified for the goods or services registered.

i) A supplier may enter the database by applying for registration and through acceptance in the evaluation process

ii) Supplier application may be prompted by an advertisement in the media or any other means of communication

iii)The final approval of the supplier database entry is done by the tender committee. Suppliers applying for registration will be notified in writing of the results of the selection.

iv)The tender committee will give reasons of why a supplier was not selected
8.6.2 Selection of Supplier

i)This will be done by use a questionnaire sent to the suppliers by the logistics officer and shall contain details such as; full name, contacts, country of registration, business experience, 3 referees, line of business, copy of registration certificates, and any other relevant information that may be required by the tender committee.

ii) The application form must be signed by the authorized person to do business on behalf of the supplier.

iii) During the evaluation process, additional information may get obtained from other organizations eg the IFRC

iv) Failure to provide the required information may be grounds for disqualifying the potential supplier
8.6.3 Reviewing of the supplier database

i) To ensure the integrity of the database, the list will be reviewed regularly by the tender committee. This will be done every 6 months.

ii) Suppliers who have not received requests for quotes for an year, or ones who have not responded to at least 3 times, shall be deleted from the list.

iii) The logistics officer shall on a continuous basis monitor the performance of the suppliers in the list to be able to advise the tender committee regarding compliance to contracts and orders awarded

iv) In evaluating the suppliers, the following will be considered:

a) Quality of service or service provided

b) Compliance to agreed terms and conditions of contract

c) Delivery time compliance

d) Efficiency in responding to requests for information

e) Adherence to warranty provisions

f) Speed and co-operation in resolving problems and settlement of claims

g) Integrity of the supplier and information provided

h) Financial stability

i) Any litigation taken by the supplier against KRCS
8.6.4. Blacklisting

i) This decision will be made by the tender committee after reviewing the circumstances surrounding the dissatisfaction.

ii) This will be documented, giving reasons for the decision and filed

iii) The same will be informed to the supplier where a 30 days period is given for appeal to the tender committee
Branches

8.7. Procurement

All purchases are carried out on the approved plans and budgets. However, if an expenditure has to be incurred which was not originally budgeted for, approval has to be sought from the HQ.

The procurement procedure is managed by the BMCBC through an appointee in charge of purchases.
The following procurement procedure will apply:
8.8. Purchase Requisition Forms

Forms will be completed and submitted, normally 3 weeks in advance to enable the planning and procurement of the items/services in good time.

i)The requisitor fills a purchase requisition form. See Appendix 13

ii)He prepares the requisition, giving full details or specifications, desired delivery time etc, and its reviewed by the immediate supervisor.

iii)Then its reviewed by the treasurer to confirm for budget balance.

iv) If there is a budget balance, the requisition goes to the chairman for approval and then back to the originator.

v) If funds are unavailable or the budget is overspent, the treasurer will return the requisition to the originator with a note stating the same where the originator will seek authority to spend anyway, from HQ. There has to be a genuine need to overspend.

vi) The fully approved purchase requisition will be returned to the appointed person in charge of purchases

vii) Purchase requisitions should be consolidated as much as possible, to realize economies of scale

viii) Branches are hereby reminded that purchase requisitions should not be sub-divided so as to bypass the laid authority limits.
8.9. Request for Quotations

i) The appointed purchases person will obtain at least 3 quotations from using the request for quotations form. See Appendix 14

ii) The originator will be requested where necessary to provide additional information regarding suppliers to be used.

iii) If a sample is required, this will be clearly stated in the request for quotes

iv) Any quotation of a total value of over Ksh. 100,000 must be sent in a sealed envelope addressed to the chairman

v) All quotes must bear the name and signature of the supplier, otherwise they will be rejected

vi) Corrections or alterations on the quotes must be signed by the person who signs the bid

vii) If a supplier quotes for goods/services of inferior or exceeding quality, the appointed purchases person will have to consult the requisitor if the items may be accepted
8.9.1. Exceptions

Contracts/orders may be awarded without calling for quotations

This is acceptable when:

i) The prices are controlled/fixed by the government or any other regulatory bodies and the logistics officer has no control whatsoever

ii) Supplies have been standardized with publication and dissemination, thus rendering competition impracticable. The tender committee will review such a case before approval

iii) The case is dealing with such an emergency such that it would not allow time for bidding process. This must be dealt on a case-by-case basis, and has to be approved by the chairman before awarding the order/contract.

The appointed purchases person will however, examine the case and see if the order can be split, buy the first batch without the bids (emergency) and the other part will go through the bidding process.

iv) Supplies are available only from a monopoly.

v) There was a similar supply requested for and a bidding process was followed to award the order within the last 30 days.

If the above exceptions have to be applied, they must be documented, used genuinely and with caution.
8.10. Competitive Bid Analysis (CBA)

i) Based on the quotations received, the appointee will prepare a CBA. See appendix 15.

ii) This is prepared to ensure that the branch gets value for money.

iii) The CBA considers such variables like compliance with specifications, price, delivery time, terms of payment, after sale service, warranty, reliability, past experience, etc.

iv) When an alternative delivery point is offered by the supplier, other than the one the branch had proposed, the appointee will determine the extra cost of delivery and add it to the cost of goods to determine the full cost of supplies. The impact on delivery time will also be considered in selecting the supplier
8.11. Selection of Supplier

i)The appointee will recommend the most competitive supplier from the CBA.

ii)The CBA is approved as follows:

  • Prepared by the appointed purchases person

  • Checked by the the immediate supervisor

  • Approved by the chairman.


iii) Suppliers who are not selected but had been requested for quotes will be advised in writing of their non-selection and the reason why.

iv) In cases where a CBA is not done, the chairman should put a note explaining the reasons. These goods should be of a consumable nature and not fixed assets.
8.11.1. Tie Bids

i) When there is 2 or more quotes having same prices and terms, the decision maker is here required to look at other factors, however small, that make one bid more favourable than the other(s).

ii) However, the decision must be seen to be rational

iii) If no such favourable factor is seen, an acceptable random selection will be applied. This will be documented in the CBA.
8.12. Raising a Local Purchase Order (LPO)

The treasurer will raise an LPO to the selected supplier which will be serially numbered and is authorized by both the chairman and the secretary.
8.13. Contracts

In certain cases eg rental, constructions etc, it may be necessary to replace LPOs with a written agreement to ensure that the obligations and rights of both the buyer and the seller are adequately defined.

It is advisable that the branch enter into such contracts after consulting with the legal adviser.

The above procedure above applies.
8.14. Placing a Local Purchase Order

The original copy of the approved LPO is given to the appointee to send to the supplier, a copy left with treasurer to attach to payment documents and a third copy retained as book copy.
8.15. Receipt of goods

Upon delivery of the goods, the appointee will sign on the delivery note upon checking and certifying the quantity and specifications. The delivery note should be forwarded to the treasurer to awaiting invoice for agreeing to the LPO and invoice for subsequent payment.
8.16. Receiving Services

For services received, the officer supervising the activity will sign on the invoice for certification of services rendered eg hotel accommodation.
8.17. Discrepancies in delivery

i) Occasionally, there may be discrepancies between the physical goods delivered and what is in the suppliers delivery note and/or invoice.

ii) It is the responsibility of the appointee to resolve the issue by either requesting for replacement or a credit note thereof.

iii) The discrepancy will be indicated on the delivery note, notifying the treasurer how payment is expected to be done.

iv) In case of disputes in the invoice amounts, the appointee will advise the treasurer to pay the undisputed amount, for the time being to avoid undue delay in payments.
8.18. Returning Items to the Supplier

i) When it becomes necessary for items to be returned to the supplier after delivery, the appointee will contact the supplier and advise on the proposed action.

ii) He will give reference to the LPO and the specific items being returned and for what reason(s).

iii) He will negotiate the manner in which the issue will be resolved, whether the supplier will give a credit note, replace or refund if payment is already made.

iv) He will also agree with the supplier if the cost of transport back to the supplier will be borne by the supplier or the branch.
8.19. Accruals

The delivery notes will form part of the source document to do the month end procedure of accruing liability if the invoice has not been received.
8.20. Payments of Invoices

The following steps are followed:

i) Invoice is received by the chairman and is forwarded to the treasurer for checking against the delivery note. For services rendered, invoice will be forwarded to the respective branch officer to certify for services received.

ii) The treasurer will then raise a serially numbered payment voucher and a cheque. This will be attached to

- Purchase requisition,

- CBA

- LPO and

- Delivery note.

iii) The payment documents and the cheque will then forwarded to the BMCBC for approval and signature

iv) After the cheque is fully signed, it is then dispatched to the supplier.

v) The treasure will record all dispatch cheques in a register, for the supplier or his agent to sign on collection.
8.21. Authority Limits

To ensure proper controls are put in place, the following authority limits exist in the procurement procedure. This depends on the estimated single order value.
8.21.1. KRCS Headquarters

Individual purchase requisitions that are estimated to be above Ksh. 500,000 the branch will seek the approval of the HQ.
8.21.2. Branch Management Committee

The BMCBC will process purchases for individual requisitions that are estimated to be below Ksh. 100,000.

CHAPTER 9
9 FIXED ASSETS

Fixed assets will include items such as vehicles, capital equipment, buildings, furniture and fixtures. Assets costing more than Ksh. 15,000 shall be recognised in the accounts as fixed assets. Fixed assets, like any other asset of the Society, must be physically safeguarded from possible loss, damage or misuse.
9.1. Fixed Assets in Core

Fixed assets are capitalised and recognised at cost or valuation. Depreciation is calculated to write off the cost or valuation of fixed assets on a straight-line basis over the expected useful life of the assets concerned. The annual rates used for this purpose are:


Item

Depreciation Rate (%)

Useful Life(Years)

Motor vehicles

20

5

Furniture, Fixtures and Fittings

10

10

Computer hardware/software

30

3

Freehold land

N/A

N/A

Buildings

2

50


Fixed assets purchased through program funds are expensed in the year of purchase in the program accounts and they are then recorded as donations to KRCS core accounts and maintained in the balance sheet.
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