PO Authorization
Concept
A programmatic method that allows for three-way matching in order to prevent errors in paying vendors for service-type items (and optionally, for indirect material type items) and to ensure that the exact nature of the item, quantity and price match on all three documents (purchase order, receiving record and vendor invoice).
Application
The PO Authorization program accomplishes the following:
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The ‘Authorization for Payment' of Service-type Purchase Order Lines.
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Also, the 'Receipt and Authorization' of Indirect Material-type Purchase Order Lines, if the option on the PO Control Record is set to do so. Otherwise, Indirect Material-type Purchase Order Lines are handled as normal Purchase Order receipts, using the PO Receipts process.
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Provides for several selection options for the retrieval of all Purchase Order Lines that have not been previously 'authorized' (where the Vendor has been notified and the PO has not been fully 'authorized'):
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by 'Authorization ID', where the Authorized ID set on the PO Line matches the Authorized ID on the Manufacturing User ID record of the current User, or
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by 'Buyer', where the current User's ID matches the ID set on the PO Header as the Buyer, or
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by 'Executive Authorization ID', where the current Users' Executive Authorization ID matches that set on the requesting Organizational Department defined on the PO Header.
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Provides the ability to 'Authorize' using a password-protected Authorizing ID or Executive Authorizing ID, to ensure that only assigned staff member can perform 'PO Authorizations'.
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Once a PO Line Item is fully 'Authorized', it is no longer made available for further 'Authorization' unless reversed.
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PO Lines for Direct Material, Subcontract or Outside Operations, (which are received through the 'PO Item Receipts function'), are never made available for PO Authorizations.
- Provides a means of processing reversals of 'Authorizations', (and reversals of Indirect Material receipts, whether the receipts were processed using PO Receipts or PO Authorizations), using a 'Reversal Option' checkbox on the same Page Layout, as well as providing the ability to add User Comments on the reversal record.
NOTE Once a PO Line has been 'Authorized' or 'Received', and it has been 'Matched' to a Vendor Invoice using the PO-AP Match process, it cannot be reversed.
- Provides a comprehensive transaction audit trail. The User is provided visibility of past 'Authorizations' on a PO Line by hovering over the 'View' hyperlink under the column entitled 'Authorization Detail’.
Setup
Step 1: Determine if the 'Receipt and Authorization' of indirect material will be performed using the 'PO Item Receipt' or 'PO Authorization' function within a division.
Menu Path = Purchasing > PO Control Record
This selection is set on the PO Control Record for each division, using the field entitled 'Indirect Material Authorization Indicator)' via a drop-down menu with pre-defined values.
Step 2: Define and create the appropriate 'Authorizing ID's' (both Staff and Executive-level) by Division, along with a password.
Menu Path = System Setup > Authorizers
Authorizing ID's are created in System Setup using the 'Authorizers' program.
Step 3: Assign the appropriate 'Executive Authorizing ID' to the Organizational Department of each Division.
Menu Path = System Setup > Organizational Depts
Executive Authorizing ID is assigned in 'Organizational Department' program on the sub-tab entitled 'General Purchasing Approvals'.
Step 4: Assign the appropriate 'Authorizing ID' to the Organizational Department of each Division for both the 'Service Authorization ID' and 'Indirect Material Authorization ID'.
Menu Path = System Setup > Organizational Depts
Authorizing ID's are assigned in 'Organizational Department' program on the sub-tab entitled 'Purchase Order Authorizations' for the ' Service Authorization ID' and Indirect Material Authorization ID'.
Step 5: Assign the 'Authorizing ID's' (both Staff and Executive-level) to the appropriate users using the ‘Manufacturing Users’ program, tab entitled ‘Approvals’.
Menu Path = System Setup > Manufacturing Users
Authorizing ID's are assigned to users in System Setup using the 'Manufacturing Users' program on the sub-tab entitled 'Approvals'.
If the Super Authorizer box is checked, this Manufacturing User is able to Authorize PO’s across all divisions for all Authorization ID’s.
Processing PO Authorization
Key Data Elements
Division: Division in which the PO Authorization is being done
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NOTE If the default Division is not the division you wish to do authorizations for, you can change your Current Division using the slide out ‘Quick Menu’ in the upper-right of your browser window. Alternately, you can edit your Current User by going to your 'Manufacturing User' record. Change your Current Division and re-launch the PO Authorization program.
Selection Option: Upon entering the program, the system automatically displays the purchase orders the user is authorized to update, depending on the Authorization ID attached to the Manufacturing User record. However, if the user is a Super Authorizer (again, determined by the Manufacturing User record setting), all PO’s requiring authorization will be included in the list.
Alternatively, determine the 'Selection Option' from which you want to filter the unauthorized PO Lines for processing (below), provide Password, and choose the 'Select' button to retrieve PO Lines available for the Users' Authorization
Each selection will filter the available PO Lines for Authorization depending upon the Users 'Authorization' rights as an Authorizer or Buyer.
Action to Process: From the PO Line details, determine the action(s) that you want to process by selecting the appropriate checkbox
Quantities: Provide the appropriate values to process (e.g. TXN QTY, TXN AMT... certain fields are activated depending upon the Item and Service Type being processed). Choose the 'Submit' button to execute the function
Step 2 – ‘Submit’ Button
Enter the required password in the field on the header, then click ‘Submit’ to perform the authorization.
Processing a PO Authorization creates a General Ledger transaction (Journal) recognizing the expense and the associated liability.
NOTE the 'Expense Account' charged during the PO-AP Match process is either derived from the 'Expense Account' field on 'Item/Vendor' Master record or, if the 'Expense Account Override Indicator ' checkbox is 'checked' (default is 'unchecked'), the 'General Expense Account' defined on the 'Organizational Department' of the Division.
NOTE PO Line details provides visibility of past 'Authorizations' on a PO Line by hovering over the 'View' hyperlink under the column entitled 'Auth(orization) Detail.
Processing PO Authorization Reversal
Menu Path = Purchasing > Purchase Order Authorization
Step 1: Launch 'PO Authorization' program
Reverse a previous PO Authorization: To reverse a previously submitted PO Authorization, launch the 'PO Authorization' program and select the 'Reversal Option' checkbox to retrieve prior PO Authorizations that have not yet been matched to a Vendors' Invoice, based upon the previously discussed 'Selection Option'.
Step 2: Identify the PO Line to be reversed
From the PO Lines detail retrieved, located the Purchase Order and PO Line that you want to reverse and select the corresponding hyperlink entitled 'View'. This will display a list of previous PO Authorizations which you can reverse by selecting the 'Reversal' checkbox for the appropriate 'Receipt Number' and 'Seq No'. Once you close the 'View', a count of the number of 'Reversals Selected' will be displayed.
NOTE If more than one receipt transaction was performed on this PO/Line, the ‘View’ window will display each receipt separately, allowing the user to choose which receipt authorizations to reverse. As the checkboxes are checked, the number to the left of the window will increase, displaying how many total receipt authorization transactions will be reversed. In the screen shot above, a single receipt authorization is being reversed, as seen by the single receipt in the View window and the number ‘1’ to the left of that window.
Step 3: Reverse by selecting the 'Submit' button after entering the correct Password in the Password field in the header area.
NOTE Similar to processing a PO Authorization, processing a PO Authorization Reversal DOES NOT record any General Ledger transaction reversing the recognition of the expense and the associated liability. It simply reverses or ('de-authorizes') the record so that it is not available to match to a Vendors' Invoice (which is when the expense and liability is recognized).
SEE ALSO
Purchase Order Authorization Info & Setup
Purchase Order Overview
Purchase Order Receipts
PO-AP Match Info and Set Up
