Developed by the City of Toronto

A purchasing policy is an organization’s systems for purchasing. In the absence of clearly defined purchasing policy, there is an increased possibility that unauthorized purchases could be made and paid for by the corporation. To ensure that the Board of Directors is properly controlling spending it is necessary to define who has authority to make purchases on behalf of the corporation. In addition, the Board of Directors should develop and authorize a set of procedures for how the organization manages its finances.

Whenever possible the activities of initiating, approving and recording purchases should be separated. If these activities cannot be separated, the Board of Directors should ensure that other internal controls are put in place to compensate.