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20 NCAC 03 .0409 EXEMPTION FROM PREAUDIT CERTIFICATE REQUIREMENT FOR <br />(a) To qualify for an exemption from the preaudit certificate requirement in G.S. 159-28(al) or G.S. 115C-441(al) <br />for electronic payments, a local government, public authority, or local school administrative unit, herein referred to <br />as "the unit,' shall do the following: <br />(1) The unit's governing board shall adopt a resolution authorizing the unit to engage in electronic <br />payments as defined by G.S. 159-28 or G.S. 115C-441; <br />(2) The unit shall have an "encumbrance system." As used in this Rule, an "encumbrance system" <br />means a system of written policies and procedures for tracking obligations. The system may be <br />manual, maintained as part of the units accounting system, or a combination of the two; <br />(3) The unit's governing board, or finance officer if authorized by the unit's governing board, shall <br />adopt a written policy outlining procedures for preauditing obligations that will be incurred by <br />electronic payments. The written policy and the procedures shall provide internal controls that <br />shall ensure the following: <br />(A) there is a budget, project, or grant ordinance appropriation authorizing the expenditure; <br />(B) that sufficient budgeted monies remain within the appropriation to cover the amount that <br />is expected to be paid out during the current fiscal year if accounted for in the budget <br />ordinance, or to cover the entire amount if accounted for in a project or grant ordinance; <br />and <br />(C) that the amount of the transaction is recorded in the unit's encumbrance system; <br />(4) The unit shall provide training to all personnel about the written policy and the procedures that <br />shall be followed before undertaking an electronic payment; and <br />(5) Each quarter, the unit shall provide its governing board a budget -to -actual statement that includes <br />the following: <br />(A) budgeted accounts; <br />(B) actual payments made; <br />(C) amounts encumbered, including electronic obligations; and <br />(D) the amount of the budget that is unobligated for all major funds. <br />(b) Units that comply with Subparagraphs (a)(1) through (5) of this Rule shall not be required to affix the preaudit <br />language required in G.S. 159-28 (al) or G.S. 115C-441 (al) to electronic payments transacted with: <br />(1) charge cards; <br />(2) credit cards; <br />(3) debitcards; <br />(4) gas cards; <br />(5) procurement cards; or <br />(6) electronic finds transfers. <br />History Note: Authority G.S. 159-28(0(3); 115C-44169(3); <br />Eff. November 1, 2017. <br />Attachment number 3 \n <br />F-7 Page 360 <br />