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Purchases up to $2.000 Individual purchases up to $2,000 must be authorized by the Department Head. The item must be for a lawful public purpose and directly related to the provision of City services. The item may only be purchased if budgeted funds are available. The Department Head may pre-approve certain purchases to be made by other departmental employees as deemed necessary. These individual purchases are subsequently compiled on a list for review by the Council. This ensures that the Council remains informed of the types of purchases being made. Purchases from $2.001 - $5,000 Individual purchases from $2,001 -$5,000 must be authorized by the Department Head and Finance Director. A review by the City's Finance Director provides for greater scrutiny and a secondary test to ensure compliance with State Statutes and local ordinances, and City Purchasing Policies. As noted above, these purchases are subsequently compiled on a list for review by the Council. Purchases in excess of $5,000 Individual purchases in excess of $5,000 must be authorized by the Department Head, Finance Director and City Coulicil prior to making the purchase. A review by the City's Finance Director and Council provides for the same audit procedures noted above, and gives greater assurances that the purchases are consistent with the Council's spending priorities. As noted above, these purchases are subsequently compiled on a list for review by the Council. It should be noted, that the City's purchasing function and internal controls are subject to review and scrutiny by an independent financial auditor on an annual basis. The Auditor regularly tests for compliance with State Statutes, local ordinances, and City Policies, and subsequently shares the results of those tests to the Council on an annual basis. Purchasing Limits The designation of purchasing amounts as noted above, have been set by ordinance and Council- approved policies. The City Attorney has opined that the Council has the authority to place greater restrictions on the amount of purchases being made. However, the decision to implement greater purchasing restrictions will create impacts. When considering the appropriate level of audit controls, the Council is advised to consider the most fundamental principle that applies to this area, which is: The cost of providing audit controls should not ex�eed the benefit. As an example, it would be impractical for the City Finance Director to review every purchase the City makes. It is estimated that purchases made by Staff on a citywide basis accounts for well over 100 hours per week — an impractical time commitment for any one person. In addition, in some cases the staff review cost would exceed the amount of the purchase itself. In those cases, even if a purchasing error was detected, it would cost more to detect the error than the error itself — hence the cost of audit controls exceed the benefit. �