LUTON BOROUGH COUNCIL
LMS FINANCE TEAM
Purchase Cards for Schools
Scheme Notes and Procedural Guide
1. General Background to the Scheme
The purchase cards for schools scheme is co-ordinated by the LMS Finance Team.
The processes covered on behalf of schools are: Card issue, card re-issue (on
expiry); returned cards; amendment of limits and Merchant Category Groups (which
can be used to restrict types of purchases) for cardholders.
Schools‟ local bank accounts are debited monthly by Royal Bank of Scotland (RBS)
with the cost of that month‟s transactions. Expenditure processing on FMS6 is a
matter for the schools, but should be carried out on a timely basis upon receipt of a
statement and before the monthly bank returns are submitted to the LMS Team.
There is a range of security checks that are in operation. The checks will help schools
to control the use of their own cards.
2. The RBS Purchase Card Scheme for Schools
The purchase card scheme is available to all local bank account schools. Schools
wishing to join the scheme should ensure that approval is sought from their governing
body before completing an application form for each cardholder and a direct debit
mandate. Both of these forms should be signed by two authorised local bank account
signatories. (Please see application form instructions). Completed forms should be
returned to the LMS Finance Team.
Upon receipt, forms will then be forwarded to the Head of Revenues and/or Chief
Accountant for authorisation. Cards will be sent directly to schools from RBS.
There are established procedures and forms that have been adapted for schools to
The basis of operation from the cardholder‟s perspective is as follows
The cards are personal and are issued to a member of staff who has the
responsibility for its use.
The card is signed by the cardholder who is given a welcome pack, including
a copy of procedures for use of the card, at the point of issue.
Monthly purchasing limits and single transaction limits are prescribed.
Cardholders are restricted to a standard set of Merchant Category Groups
which will give schools control over purchases made by staff. (Limits and
Merchant Category Groups may be changed on written request from the
school to the LMS Finance Team). Subject to some overall limitations,
schools are in control of their own cards.
Purchases are made by the cardholder, on the phone, over the Internet or face to
face. All card receipts and VAT receipts must be retained.
The LMS Finance Team is the focal point for the administration of the scheme and is
the single point of contact to resolve problems, review card limits and Merchant
RBS will set up each school with a separate account under the umbrella of Luton
Borough Council. RBS will then issue a direct debit request for each account and the
school‟s bank account will be debited individually on a monthly basis as purchases
At the end of the month a statement for each cardholder is sent to the school for the
attention of the Bursar. The statements have a dual purpose: firstly they will be used
to verify the direct debit taken by RBS; secondly, they will be used by the cardholder
to reconcile the purchase receipts to the statement. The cardholder then completes
an expenditure log form which is used by the School‟s financial staff to update local
The advantages to schools are that the scheme offers a low cost entry option; they
will use a scheme already established in other Local Authorities who have been
audited and it can therefore be used with assurance.
3. Security Issues
There is a range of security checks that are in place as follows:
Requests for the issue of applications must be in writing from the Head
Teacher or the Chair of Governors if the Headteacher is a recipient of a card.
The card limits are set at a low level, which can be increased if a
case is put forward to the LMS Team.
There is a standard set of Merchant Category Groups assigned to all
cardholders, others may be added on written request and others are barred. -
See Appendix A for details.
There is a set of instructions issued with the card.
Schools are pre-warned by RBS of the direct debit amount that will be taken
from the school‟s bank account
The school‟s budget holder countersigns expenditure log forms, completed by
RBS confirm the following:
On the subject of faulty goods, the cardholder must take up the issue with the
supplier. If no progress is made, RBS will take up the matter on behalf of the
cardholder. This is rare.
Fraud - Where third party fraud takes place as a result of stolen or counterfeit
cards, providing the card is reported lost/stolen as soon as the loss/theft is
discovered a school will be liable for the first ?25.
4. Advantages and Disadvantages of Using Charge Cards
? Simpler Administration from the cardholder‟s point of view
? Convenient purchase of goods and services over the phone – many suppliers are
geared towards payment by purchase card
? With hotel pre-booking, hotels often expect rooms to be held by a card.
? Convenience of school staff not having to use their own money for purchases and
then having to go through laborious procedures (petty cash reclaim) or to wait for
? Ideal for low-value purchases, urgent purchases, one-off purchases and
purchases from the retail sector.
? Purchasing over the Internet is allowed providing the cardholder follows advice
drawn up with the assistance of Internal Audit
? Purchases may not all be followed through with a VAT receipt given/posted to the
cardholder. Without a VAT receipt, VAT cannot be recovered by the school.
? Loss of commitment accounting. This is a major drawback if a school values
commitment accounting. Purchases may take up to six weeks from the point of
purchase to the time expenditure is entered into the general ledger.
5. Number of Cards
The maximum number of cards issued to a primary school will be three and to a
secondary school will be five.
There is an annual administrative charge of ?20 per annum per card from the LMS
Team to cover the scheme administration.
7. Application Form Instructions
The application form must be completed by the person who wishes to hold the card.
ONLY BOXES WHICH ARE NOT GREYED OUT SHOULD BE COMPLETED.
The address must be the one for the school‟s finance officer who will initially receive
The card limit is set at ?1,000 and the transaction limit at ?500 (unless schools have
submitted a case for a higher limit to the LMS Finance Team and this has been
agreed). Limits can be changed at a later date.
Cardholders will automatically be granted the standard set of Merchant Category
Groups, please see Appendix A for details. Please make a case if other optional
MCGs are required. Cardholders cannot have access to those which are marked „B‟
as they are barred.
8. Cardholder Procedures
The card must be used in accordance with the instructions for cardholders as issued
by Luton Borough Council and accepted by the cardholder when signing the
„Employee Undertaking‟. (See Appendix B for details). Cardholders will also be
given a copy of the cardholder‟s instructions (See Appendix C).
The card number can be quoted over the phone to pay for goods and services
authorised by the school. Neither the number nor the card can be given to anyone
else to use.
If the card is presented personally by the cardholder, then obviously only the
cardholder can sign for goods purchased.
thOn receipt of the monthly statement (issued on the 20 of each month) the
cardholder must check all payments against the statement and contact the supplier
within 5 working days if there are any discrepancies.
The cardholder must attach all VISA slips and VAT receipts to the statement,
ensuring that every transaction is supported by both. Note : an appropriate VAT
receipt must be supplied with all purchases in order for the school to claim refund of VAT.
All purchases must be analysed on the RBS Transaction Log Form – Luton Borough
Council. It is recommended that this is completed as soon as practicable after
individual purchases are and passed to the finance officer.
Private use of the card is strictly prohibited. Cardholders will be required to
reimburse Luton Borough Council with the amounts of any unauthorised
transactions and cards will be withdrawn should this occur.
The user must pass the log form (a copy to be retained by the user if they so wish),
the monthly statement and all supporting VISA slips and VAT receipts to the school
finance office within 3 working days of receipt of the statement.
9. Lost/Replacement Cards
Any loss or theft must be reported immediately upon discovery of the loss or theft to
RBS and must be notified in writing/e mail to the LMS Finance Team.
Cardholders must sign a new employee undertaking form upon receipt of their
10. Disposal of Cards
Any expired cards, or cards reported as lost/stolen which subsequently are found,
should be cut up and disposed of appropriately by the school.
11. Finance Office Procedures
On receipt in the finance office the Headteacher (or other authorised signatory of the
local school bank account, note this must not be the Headteacher in cases of their
own claim) must countersign the log form as authorisation to the purchases made
and posting of the transactions to the local school accounting system.
thThe direct debit charge will be made to the local school bank account on the 7 day
after the statement date. The finance officer must check the direct debit charge
matches the statement total. Any discrepancies must be notified to the LMS
Finance Team (01582 548072) and remedial action will be agreed.
Once the direct debit is agreed the charge must be posted to the local accounting
FMS6 Cash Book Journal
Narrative : RBS „CARD NUMBER‟ „MONTH‟ „YEAR‟
(last 8 digits)
e.g. “RBS 12345678 April 2007”
All paperwork must be retained in a clearly marked folder giving an audit trail to the
entries posted on the school accounting system.
12. Framework For Internet Purchasing With RBS Purchase Cards
? This framework is in addition to the normal rules governing purchasing.
? If you have previously used a company some of these rules may not
? There must be a requisition system in place before purchasing online.
? Only use UK sites as there are VAT implications for trading overseas.
? If goods are vatable, telephone the company to make sure that a paper
VAT receipt is issued. If the company cannot provide this then do not
purchase from them.
? Keep a record of the retailer‟s contact details which should be a physical
location rather than PO Box and a non-mobile telephone number
? Read the delivery and returns policy before completing an online
transaction. Check you can return any unsatisfactory items and whether
you will get a refund or a merchant credit.
? Check the privacy and security policies to ensure your details are safe, i.e.
that there is an encryption facility. When entering a secure area (i.e. when
disclosing purchase card number) you should see all or some of the
following: „http‟ of the web address changes to „https‟, a padlock icon
appears on screen, and/or a security message alert. Additionally, traders
who subscribe to an online code will display a recognised logo, i.e.
TrustUK Hallmark denotes an approved webtrader.
? Ensure you are fully aware of the payment commitments you are entering
into, including whether you are entering into a single payment or series of
recurring payments, and whether the price includes tax, packaging and
? Use the form at Appendix D as a checklist
Merchant Category Groups – Schools
1 Building Services O 2 Building Materials O 3 Estate and Garden Services O 4 Utilities and Non Automatic Fuel B 5 Telecommunication Services B 6 Catering and Catering Supplies S 7 Cleaning Services and Supplies O 8 Training and Educational S 9 Medical Supplies and Services O 10 Staff - Temporary Recruitment O 11 Business Clothing and Footwear O 12 Mail Order/Direct Selling O 13 Personal Services B 14 Freight and Storage B 15 Professional Services B 16 Financial Services B 17 Clubs/Associations/Organisations S 18 Statutory Bodies B 19 Office Stationery S 20 Computer Equipment/Consumables S 21 Print and Advertising S 22 Books and Periodicals S 23 Mail and Courier Services S 24 Miscellaneous Industrial/ B 25 Vehicles, Servicing Spares O 26 Automotive Fuel S 27 Travel - Air/Rail/Road O 28 Auto Rental B 29 Hotels and Accommodation O 30 Restaurants and Bars B 31 General Retail and Wholesale S 32 Leisure Activities O 33 Miscellaneous B 34 Cash (ATM/Branch) B
Status S - Standard
B - Barred
O - Optional
RBS PURCHASE CARDS
Employee Undertaking (Schools)
New / Replacement Cards
I declare that:
I have received my Purchasing Card and will keep it in a safe place at all times;
I have received a copy of the Instructions for Cardholders and have read and
understood the content.
I agree to comply with its requirements particularly:
that the number or the card will not be given to anyone else to use.
I will comply with the Internet Purchasing Framework if goods and services are
purchased over the Internet.
I undertake to use the Purchasing Card solely for Luton Borough Council
FAILURE TO COMPLY WILL RESULT IN YOUR CARD BEING WITHDRAWN
If this is a re-issue, it is your responsibility to return your old card to the finance
LUTON BOROUGH COUNCIL
ROYAL BANK OF SCOTLAND
PURCHASE CARD SCHEME
INSTRUCTIONS FOR CARDHOLDERS
LMS FINANCE TEAM
Basic Procedures within the Scheme The card can be used to purchase anything that would normally have been purchased via an official order or from an imprest account, subject to the following restrictions: 1. Purchases must be less than ?500 (inc VAT) per individual transaction (unless your school has agreed a higher limit) 2. A monthly limit will be applied depending on an individual’s estimated use. 3. Purchases can only be within a limited range of goods and services defined in the purchase card scheme. 4. Card holders must not exceed their personal limits. 5. Private purchases are strictly prohibited. 6. Purchases can only be made from suppliers who accept Visa. 7. The card cannot be used to withdraw cash. 8. The purchase amount must be known before the card number is given. 9. THE CARD ISSUED IS FOR THE USE OF THE CARD HOLDER ONLY
‘Face to Face’ Purchases The card will be used in the same way as any personal credit card. It is presented at the point of sale to the supplier‟s assistant who will produce a Visa voucher, which must be signed and retained. A VAT receipt must also be requested and retained . This is essential for correct VAT treatment and to enable the school to reclaim any VAT. NOTE: Some suppliers provide a combined till receipt/VAT receipt. Telephone Purchases Placing a telephone order will require the card number, expiry date and name of the cardholder. It is essential that a VAT receipt is obtained from the supplier. To aid your own budget monitoring process each cardholder should make a note of telephone orders placed and submit these to the bursar/finance officer. When the goods are delivered, the Visa voucher and Vat receipt must be retained. Settlement of Credit Card Invoice Each month (20th) RBS will send statements to the School‟s Finance Officer and a summary will be sent to Luton Borough council. The school‟s Bank Account will be direct debited within seven working days. Processing the Statement Each Month The procedure for processing the transaction entries on your statement is contained on the reverse of the Transaction Log Form.
Loss of Card
Should a card be lost you must immediately notify the LMS Finance Team, during office hours, or directly contact RBS on 0870 6000459 at any other time, confirming the loss to the LMS Finance Team on the next working day.
All Other Queries Please contact your School Financial Adviser in the first instance.