Resolution No. 2024-19 Updating the Accounts Payable and Disbursement Policy - Approved 121024Page 1 of 2
RESOLUTION NO. 2024-19
A RESOLUTION of the City of Bainbridge Island, Washington,
Updating the Accounts Payable and Disbursement policy.
WHEREAS, the City formally adopted an accounts payable and disbursement policy via
Resolution No. 2024-06 on May 14, 2024; and
WHEREAS, during the City’s most recent audit by the Washington State Auditor’s
Office, the auditors recommended internal control improvements over electronic funds transfers;
and
WHEREAS, the City desires to update the internal control over accounts payable and
disbursements.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BAINBRIDGE
ISLAND DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council hereby adopts the updated accounts payable and
disbursement policy included as Attachment A.
Section 2. Severability. If any one or more sections, subsections, or sentences of this
resolution are held to be unconstitutional or invalid, such decision shall not affect the validity of
the remaining portion of this resolution and the same shall remain in full force and effect.
Section 3. Effective Date. This resolution shall take effect and be in force immediately
upon its passage.
PASSED by the City Council this 10th day of December 2024.
APPROVED by the Mayor this 10th day of December 2024.
Joe Deets, Mayor
ATTEST/AUTHENTICATE:
Christine Brown, MMC, City Clerk
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FILED WITH THE CITY CLERK: December 6, 2024
PASSED BY THE CITY COUNCIL: December 10, 2024
RESOLUTION NUMBER: 2024-19
Attachment A: Accounts Payable and Disbursement Policy
Exhibit A to Resolution No. 2024-19
City Accounts Payable (AP) and Disbursement Policy
Department of Finance and Administrative Services Prepared by: Accounting Manager Karl Shaw Reviewed by: Finance Director DeWayne Pitts Initial Development: 4/9/2024 Update: 11/14/2024
Table of Contents
Policy ................................................................................................................................................................... 3
Policy Statement ............................................................................................................................................. 3
Purpose ........................................................................................................................................................... 3
Scope ............................................................................................................................................................... 3
Goal ................................................................................................................................................................. 3
Authoritative Guidance ................................................................................................................................... 3
Responsibilities ................................................................................................................................................ 4
Department Responsibilities ....................................................................................................................... 4
Finance Department Responsibilities .......................................................................................................... 5
Procedures .......................................................................................................................................................... 5
Vendors ........................................................................................................................................................... 5
Payments Directly to Vendors Highly Preferred ......................................................................................... 5
Vendor Payment Terms ............................................................................................................................... 5
Statements .................................................................................................................................................. 5
IRS Form W-9 Required ............................................................................................................................... 5
Advance Payments to Vendors ................................................................................................................... 5
Vendor Information Changes ...................................................................................................................... 6
Expenditure Documentation ........................................................................................................................... 6
Invoices ........................................................................................................................................................ 6
Packing Slips ................................................................................................................................................ 7
City of Bainbridge Island – Accounts Payable Policy
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Meals, Food, and Beverages purchased on-island (non-travel) .................................................................. 7
Travel and Other Reimbursements to Employees ...................................................................................... 7
Coding ............................................................................................................................................................. 7
Review and Approval ...................................................................................................................................... 7
Separation of Duties .................................................................................................................................... 8
Sales and Use Taxes ........................................................................................................................................ 8
Purchase Orders (POs) .................................................................................................................................... 8
Council Approval ............................................................................................................................................. 8
Vendor Payments: Automated Clearing House network (ACH) and the Printing & Distribution of Checks ... 9
Unallowable Expenditures .............................................................................................................................. 9
Petty Cash ........................................................................................................................................................ 9
Definitions ..................................................................................................................................................... 10
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Policy
Policy Statement
The City of Bainbridge Island (City) expends funds in pursuit of its mission. Each City department is
responsible for following policies and procedures to ensure City expenditures are reasonable,
necessary, and for a public purpose.
Purpose
This policy promotes stewardship of City funds by providing guidelines for the appropriate and legal
use of funds in support of the City’s mission. This policy also promotes consistency and accuracy in
financial reporting, safeguarding of City assets, maintenance of cost controls, and management of
cash flow. The City receives, from a variety of sources, funds with restrictions on them. Inherent in
these restrictions is the responsibility to comply with federal, state, and local laws and regulations
and to follow generally accepted accounting principles (GAAP). This policy’s intent is to ensure a
uniform method of initiating, approving, processing, and accounting for City expenditures.
Scope
This policy applies to all City Funds and Departments.
Goal
The City has four core values: “stewardship, professionalism, connection and balance”. To fulfill the
core value of stewardship, the City must safeguard assets and to properly classify and expend City
funds. A thorough and effective accounts payable and disbursement policy and procedures, also
helps the City comply with federal, state, and local regulations and provide accurate financial
reporting.
Authoritative Guidance
Governmental Accounting Standards Board (GASB)
The GASB is an independent organization created to establish and improve accounting and financial
reporting standards for U.S. state and local governments.1 While the GASB is not a governmental
agency and does not have enforcement authority, compliance with GASB is enforced through the
Washington State Auditor’s Office annual audit of the City’s financial statements.
Code of Federal Regulations (CFR) Part 200 – Uniform Guidance
This CFR includes consistent and uniform cost principles among Federal agencies, of grants and
cooperative agreements with state, local, and federally recognized Indian tribal governments.
Washington State Auditor’s Office
1 “Facts about GASB”, published by the Governmental Accounting Standards Board and available online at
www.gasb.org/aboutgasb.
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The Washington State Auditor’s Office prescribes budgeting, accounting, and reporting for local
governments in the State of Washington under the authority of the Revised Code of Washington
(RCW) 43.09.200.2
RCW 42.24.180
This RCW requires the City to meet certain conditions before it can issue vendor payment prior to
approval by the City Council.
BIMC 2.08.040
This code section requires the director of finance, the auditing officer and all other employees who
have signature authority to have bonding set at certain minimum levels. Current bonding coverage
requirements are met under the Washington Cities Insurance Authority Crime and Fidelity policy
and includes all City employees.
Responsibilities
Department Responsibilities
Departments expend City funds to achieve their operational goals. Therefore, the responsibility to
ensure expenditures are reasonable, necessary, and for a public purpose belongs at the
department level rather than at a centralized finance or executive function. Department Directors
may delegate this responsibility to one or more specific individuals within their department. Their
responsibilities include:
• Verify the goods or services received were the goods or services ordered and arrived in
satisfactory condition.
• Review and approve invoices in a timely manner to verify charges are legitimate, accurate, and
should be paid. Compare items and quantities billed to evidence that the goods or services
were received at the prices and quantities ordered.
• Ensure that prices and quantities charged are following any existing contract specifications and
do not exceed total contracted amounts authorized.
• Confirm the invoice is not a duplicate.
• Ensure the invoice “package” includes all documentation necessary to prove the validity of the
expenditure and its public purpose.
• Check that sales tax or use tax is appropriately applied, if applicable.
• Proper coding of all invoices.
• Ensure the invoice “package” reaches the Finance Department in a timely manner, either by
emailing it to AccountsPayable@bainbridgewa.gov or saving it in the “Send Invoices to AP”
folder or some other agreed upon repository required by Finance..
Department responsibilities also include ensuring expenditures of funds are consistent with any
outside restrictions imposed by other agencies, grant agreements, loan documents, etc.
2 “Budgeting, Accounting, and Reporting System (BARS)” Manual, published by the Washington State Auditor’s Office
and available online at www.sao.wa.gov. “RCW” refers to the Revised Code of Washington.
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Finance Department Responsibilities
The Finance Department is responsible for timely payment on invoices properly documented,
approved, and coded. Finance will review each invoice prior to data entry. The initial review is done
by the Senior Accounting Technician (AP), the second by the Accounting Manager prior to posting.
AP will also maintain a scanned file of all disbursements, related invoices, and other attached
documentation. The Finance Director, the Auditing Officer and all other employees with signature
authority shall be furnished a fidelity bond that meets the requirements of BIMC 2.08.040 at the
expense of the City.
Procedures
Vendors
Payments Directly to Vendors Highly Preferred
To the greatest extent possible, City expenses (except travel and expense reimbursements) will be
paid to vendors rather than reimbursed to employees. To facilitate this, certain employees in each
department have City issued credit cards.
To be issued a city credit card an employee must first sign a Credit Card User Agreement and obtain
written authorization from their supervisor and the Finance Director, then return the form to AP. It
is AP’s responsibility to obtain the monthly credit card statement and email it to all employees who
have charges on the month’s statement.
AP will process credit card statements in a timely manner and make sure the credit card vendor is
paid on time to avoid late fees.
Vendor Payment Terms
It is important for the City to maintain good credit standing and favorable pricing with vendors and
to take advantage of prompt payment discounts, when available. Vendor invoices must be
submitted to Finance in time to meet the vendor’s payment terms or contract requirements. The
Finance Department has established payment terms of 30 or 60 days from receipt of the vendor’s
invoice. A deviation from this may be warranted in cases of billing disputes.
Statements
AP reviews vendor statements, when available, to guarantee there are no missing invoices. AP will
reach out to vendors for copies of any missing invoices on the statement. Payments to vendors will
only be made with appropriate invoices. Payments shall not be made on statements.
IRS Form W-9 Required
It is the City’s policy that all vendors submit a completed IRS Form W-9 to the Finance Department.
Payments to vendors may be delayed if vendors fail to meet this requirement. Refusal to submit a
W-9 will result in the withholding of federal income taxes at the rate required by the IRS.
Advance Payments to Vendors
State law (RCW 42.24.080) requires vendors to be paid only after receipt of goods and services.
Exceptions are allowed for the following:
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• Newspapers and periodicals
• Maintenance service contracts
• Membership dues
• Class, seminar, and conference registrations
• Rents and leases
• Advance payments if specified in contracts
Vendor Information Changes
It is the City’s responsibility to make sure vendor changes are legitimate before making changes in the AP
system. Changes include, but are not limited to, payee name, payment address, payment type, and bank
account information. The following steps must be used to determine if a change is legitimate:
• Make changes to vendor information only after reviewing and corroborating the change(s) through
other sources.
• Clear out duplicate vendor information in the vendor master file whenever possible.
• Do not give out vendor information over the phone.
• When verifying vendor changes, especially ones in an email or letter requesting the change, use a
phone number (or email) already in the vendor record. Do not use a phone number or email
included in the initial request for change.
• Follow up with vendors who have made changes to verify the information is correct.
• If vendors call to verify information, have them verify their information rather than volunteering the
information in the City’s records.
Expenditure Documentation
Documentation for the purchase of goods and services must provide support for the public purpose
of the expenditure, or if not obvious, include an explanation of the public purpose.
Invoices
Appropriate documentation includes an invoice containing the date of purchase, vendor name and
address, description of goods and services, quantity, unit price, taxes, freight, any other required
approval documents, and the grand total of expenditures. Original invoices represent confirmation
from an outside third-party that a product or service was provided to the City. Proper
documentation for online purchases includes a confirmation email or web acknowledgement or
other documentary evidence an actual purchase was made. Certain transactions may require other
documentation such as conference registrations, order forms, class or seminar completion
certificates, membership dues statements, etc.
Any errors on invoices must be clearly marked although every effort must first be made to obtain a
corrected invoice from the vendor.
Bank account numbers, social security numbers, driver’s license numbers, etc. must be redacted.
If a copy of the invoice needs to be mailed with the payment, an invoice copy must be attached and
clearly marked. Other original documents that need to accompany payment, such as legal
documents, registrations, license renewal forms, etc., must also be clearly marked.
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Packing Slips
When available, packing slips must accompany the invoice to Finance. Packing slips must have the
item(s) ordered checked off to document each item ordered was received. They then need to be
signed and dated by the employee who checked the goods. This verifies the item(s) received were
the item(s) ordered and they arrived in good condition.
Meals, Food, and Beverages purchased on-island (non-travel)
Below are two examples of how food and beverages, not related to travel, are normally incurred. In
both situations, an explanation of the public purpose of the meal and a list of City employees,
officials, and volunteers attending is required. The purchase of alcoholic beverages with City funds
is prohibited. Customary tips up to 20% are an allowable expense. More information can be found
on this topic in the employee personnel policy manual section 3.18 for employees.
• Example 1: Local restaurant meeting. A detailed meal receipt must be obtained including
the name and address of the restaurant, the date of the meal, a detailed listing of
food/beverages purchased and tip. A list of those whose meal was paid for must also be
attached.
• Example 2: Catered meals at City Hall or elsewhere. An itemized invoice must be obtained
including the caterer’s name and address, date of service, location of event, a list of
food/beverages served, any tip included, and a list of those whose meals were paid for.
Travel and Other Reimbursements to Employees
See the City’s Travel Policy. In general, detailed receipts and proof of payment are both required.
Redacted copies of cancelled checks or credit card statements showing the charge may substitute
for proof of payment, provided a detailed receipt is also attached.
Tips are allowable up to 20%; alcohol and other personal entertainment expenditures are not. The
public purpose of the trip must be clear. If not, a statement as to the public purpose must be
attached.
Coding
It is the department’s responsibility to ensure invoices are properly coded. The Finance
Department may correct coding if it determines an error has been made.
Review and Approval
To document approval, each invoice must be signed (initials are OK) and dated by an authorized
department employee. Approvers must be granted approval authority by their Department
Director in writing on a form supplied by Finance. Because Department Directors are ultimately
responsible for their departmental budgets, they have authority to set their own approval levels
within their departmental limitations authorized by the City Manager. Expenses must not be
approved by the individual solely benefiting from the expense, or by the individual’s subordinate.
The approver has the responsibility to ensure the following:
• All processing and review steps have been properly followed.
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• There is no apparent conflict of interest on the part of the approver or other individuals
involved in the transaction. NOTE: Where a real, or even apparent, conflict of interest exists
a higher level of approval is required.
• The transaction complies with City policies and procedures and contains appropriate
documentation to support the expenditures’ public purpose.
• They are an authorized department invoice approver, the purchase is authorized, and it
does not exceed their approval level.
A properly authorized invoice received by the Finance Department signifies the approving
department has validated the public purpose, legality, and all data on the invoice.
Separation of Duties
Effective internal controls and proper separation of duties are essential and required at all levels.
Departments must consider the staffing of each role involved in the process. The same employee
must not place an order, receive the goods or services, approve, and then process the associated
invoice. Accounts payable personnel are not authorized to approve any invoices for payment.
Sales and Use Taxes
The City is not exempt from Washington State sales and use tax. Sales tax will usually be charged by
vendors located in Washington State or by out-of-state vendors who remit sales tax to the State of
Washington.
Vendors who omit sales tax do not save the City money. The Finance Department is required by
state law to calculate the proper alternative use tax and remit it to the State of Washington. The
applicable department’s budget will be charged the additional tax.
Purchase Orders (POs)
The City does not require the use of POs although some vendors may require them. In addition,
certain contracted purchases of goods or services may be easier to track in the City’s software
using the PO or contract module.
Council Approval
State law (RCW 42.24.180) allows disbursements prior to Council approval when certain
requirements are met. It is the intent of this policy to ensure those requirements are met.
If, at a Council meeting, while reviewing accounts payable and payroll disbursements made prior to
Council approval, the Council does not approve a disbursement, City staff will cause the
disapproved disbursement to be recognized as a receivable and pursue collection diligently until it
is collected, or the Council is satisfied and approves the claim.
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Vendor Payments: Automated Clearing House network (ACH) and the Printing &
Distribution of Checks
The preferred payment method for vendors will be via ACH. It is the responsibility of AP to obtain
ACH information from vendors. AP does not have to obtain ACH information for one-time vendors.
All ACH payments will require onetwo City employees to initiateexecute the payment at our bank
and another to authorize. Before authorizing transactions, City staff will review each disbursement
on the bank’s website. Each City employee initiating or approving bank transactions must have a
separate user ID. All payments to vendors, whether by check or ACH, will incorporateuse payee
positive pay with our bank.
Regular check runs are printed and mailed every Wednesday.
All checks require two signatures. Checks under $50,000 will receive digital signatures.
Checks for $50,000 or more will need two wet signatures before they can be mailed.
If a check is lost, stolen, or destroyed AP will send an Affidavit of Lost Check Form to the vendor.
The form must be completed, notarized, and sent back to AP before the original check is voided
and a new check issued. AP will then issue a stop payment for the original check.
Unallowable Expenditures
Expenditures with any of the following characteristics do not reflect proper stewardship of City
funds and will be considered unallowable regardless of the source of the funds:
• It does not support the City’s mission.
• It is extreme, excessive, illegal, or is not an ordinary and necessary cost incurred in the
conduct of official City business.
• It represents a personal expense that is not business-related nor required in carrying out an
individual’s job responsibilities. Examples include fines and penalties, alcohol and
amusement, entertainment and social activities not directly connected to City functions and
purposes.
• It is a duplicate payment for goods or services already rendered.
Petty Cash
The Finance Department shall designate appointed custodians of the petty cash fund. The
custodians will be responsible for maintaining and distributing the petty cash fund. The funds will
be checked periodically to guarantee no discrepancies with the amount of authorized cash on
hand.
The custodians have the responsibility to ensure the following:
• The petty cash fund should be locked in a secure place.
• Access to petty cash should be restricted to the custodians.
• Reconciling the petty cash fund account
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• Any shortages/overages in the fund should be investigated, analyzed, and documented.
Definitions
–
1. “Approver” is an individual with the authority to approve an expense or transaction.
2. “Conflict of Interest” is a situation in which an individual or any of his or her family or
associates either 1) has an existing or potential financial or other material interest that
impairs, or might appear to impair, the individual’s independence and objectivity of
judgment in the discharge of responsibilities to the City, or 2) may receive a financial or
other material benefit from knowledge of information confidential to the City.
3. “Documentation” consists of original invoices, packing slips (if available), copies of cancelled
checks (properly redacted), original credit card receipts, and/or other documents describing
and substantiating a City transaction.
4. “Payment Terms” is the timeframe within which the City will issue payment for vendor
invoices. The most common vendor terms are 30 days from the date of the invoice although
some vendors offer a prompt payment discount.
5. “Purchase Order” is the basic procurement contract between the City and a vendor for
goods and/or services. This contract legally binds the vendor and the City.