CM-PE-904 Procedure for Project Accounting Vendor and Subcontractor Invoice Control and Release for Payment

Table of Contents

1. Purpose
2. General
3. Responsibilities
4. Procedure
5. Flowchart
6. References
7. Attachments

1. Purpose

To establish a uniform method for processing and paying vendor and subcontractor invoices

2. General

This procedure applies in general to all projects, for which accounts payable is included in the scope.

3. Responsibilities

Project Accounting is responsible for verifying vendor/subcontractor invoices with terms and conditions stipulated in purchase orders and relating project instruments, and payment, if required.

4. Procedure

4.1 Purchase Order Registration

The responsible Project Accountant shall enter all home office purchase orders in a computerized accounts payable system.

4.2 Purchase Order File

For each purpose order a physical file shall be maintained by the responsible Project Accountant containing all documents such as copies of purchase order, invoices, MRR’s, OS&D’s, bank guarantees, correspondence etc.

4.3 Invoice Check

Upon receipt of vendor/subcontractor invoices, the responsible Project Accountant shall immediately date stamp and check these invoices for:

• original document
• correct address
• VAT
• Chain Liability Act data, if applicable
• purchase order/subcontract reference
• computer reference number
• purchase order item number

Incorrect invoices shall be returned directly to vendor/subcontractor and must be registered.

4.4 Invoice Logging

Correct invoices shall be control stamped and logged in the Accounts Payable Register by the responsible Project Accountant. The register shall contain the following information:

• document no.
• vendor name
• invoice no.
• invoice amount
• VAT
• payment dat

4.5 Invoice Control

Registered invoices will be verified on vendor’s/subcontractor’s compliances to purchase order, or subcontract conditions.

This verification shall a.o. include the following checks:

• Is invoice covered by purchase order commitments? if not, request for purchase order or amendment shall be sent to the Project Manager. Approval from Project Manager of Client (through Project Manager) may be obtained to release or approve the invoice for payment.
• Are quantities/amounts correctly calculated and in accordance with purchase order terms? if not, vendor shall be requested to issue a credit note for the difference(s).
• Are vendor drawings and documents received and approved? If not approved, vendor shall be notified of invoice disapproval within 7 days after receipt of the invoice.
• Note: The responsible department/section shall advise project accounting immediately upon receipt and acceptance of vendor drawings and documents. Project Accounting shall expedite the status of outstanding invoices on a weekly basis.
  
• Has material receiving report been received? If accompanied with over/short/damage report, vendor shall be notified in writing of an estimated amount for short/damage which will be deducted from the invoice amount. In case of minor oversupplies the relating amount can be approved. The amount of oversupplies shall be listed separately to issue a request for amendment to purchase order later, after consultation with Procurement.
• Major oversupplies can only be approved after signed acceptance by the Project Manager, after which a Purchase Order Amendment request must be made.
• Are liquidated damages to be applied? Project Accounting shall advise the amount of the penalty in writing to vendor and shall request a credit note.
• Has bank guarantee been received? If so, check correctness of beneficiary, amount and validity. Original bank guarantee to be kept in safe (except for pass-through jobs). One copy of bank guarantee in purchase order file and one copy of bank guarantee to be filed in separate file in time order to monitor request for extension.

The required documentary evidence and the necessary approvals and information will be obtained in writing from:

4.6 Invoice Approval

After verification, the responsible Project Accountant shall complete the control stamp (Attachment 1) on the original invoice and submit the invoice to the Manager Project Accounting or Supervisor for approval.

The approved invoice amount shall be entered as expenditure in the Accounts Payable System.

This system contains a.o. the following information:

• vendor details
• expenditures (multi currency)
• payment status
• commitments
• standard reports, such as aging, payment history, commitments vs expenditures, etc.

4.7 Payment

The Project Accountant shall prepare payment orders and submit these together with original and updated purchase order file to the Supervisor Project Accounting, for approval.

Approved original invoices shall be processed for payment. The Project Accountant shall prepare payment orders and submit these together with the original invoice, job cost journal entry and update purchase order file to the Manager Project Accounting or Supervisor.

The Manager Project Accounting or Supervisor shall approve payment by signing or initialing the payment order.

5. Flowchart

6. References

6.1 JDE/AP Procedure

7. Attachments

1. Invoice Control Stamp