Part 6: Goods and services expenditure

Controlling sensitive expenditure: Guidelines for public entities.

This Part applies to obtaining, disposing of, or using goods and services that are not covered by terms and conditions of employment.

Sale of surplus assets to staff

As part of normal business, entities will from time to time dispose of assets. Typically, this is when the assets have become obsolete, worn out, or surplus to requirements. The procedures that entities follow when disposing of the assets need to be transparent and fair.

Issues and principles

We expect entities not to sell assets at a discounted rate to staff if a greater value could be realised by an alternative method of disposal.

The principles of preserving impartiality and integrity are particularly relevant. We expect staff disposing of assets not to benefit from the disposal. Disposal ought not to benefit staff such that their personal judgement or integrity is compromised.


We expect entities to:

  • recognise the value of the asset and any potential for actual or perceived undue benefit by staff;
  • maximise the return to the entity if disposing of assets to staff; and
  • ensure that all assets identified for disposal to staff are valued and subject to a tender or other process that is appropriate to the value of the asset.

Loyalty reward scheme benefits

Loyalty reward schemes provide a benefit to the customer for continuing to use a particular supplier of goods or services. Generally, the rewards tend to be given in the name of the individual who obtains the goods or service, regardless of who has paid for them.

Prizes received from a free competition entry obtained while undertaking an entity’s business are also considered a loyalty or reward scheme for the purposes of the following advice. So are air points schemes. In situations where receiving a prize or loyalty reward could be perceived as inappropriate, even if the entity rather than the individual would benefit from it, we expect the prize or reward to be declined.

Issues and principles

The principles of preserving impartiality and integrity are particularly relevant. We expect that staff making procurement decisions would not personally receive any loyalty rewards as a result of those decisions. Controls and clear guidance about expectations are necessary for all involved, so that to the maximum extent possible the entity as payer for the goods or services benefits from the rewards.


We expect entities, to the extent that it is practically possible within the requirements of the law, to:

  • treat loyalty rewards accruing to staff carrying out their official duties as the property of the entity;
  • apply, as far as practicable, those loyalty rewards only for the benefit of the entity;
  • ensure that staff keep a record of loyalty rewards accrued and applied for the benefit of the entity, and regularly supply the entity with a report of this record; and
  • require staff leaving an entity with unapplied loyalty rewards to transfer the benefits to the entity or buy the unapplied rewards from the entity at the market rate. Where neither of these is practical, we expect arrangements to be made with the supplier to cancel the unapplied rewards.

Private use of entity assets

Any physical item owned, leased, or borrowed by an entity is considered an asset for the purpose of the guidance below. This includes photocopiers, telephones, cellphones, means of accessing the Internet, and stationery.

Issues and principles

The principles of transparency, and moderate and conservative expenditure, are particularly relevant. Private use for personal purposes may be permitted in defined limited circumstances.


We expect entities to have policies that identify what, if any, private use of entity assets is acceptable, the level of use (defined in terms of quantity), and the circumstances under which costs will be recovered. Generally, costs of private use should be recovered, unless it is impractical or uneconomic to separately identify those costs1. We expect the use of entity assets in any private business that any employee may operate to be prohibited.

Guidance on personal calls on an entity cellphone and use of access to the Internet at work is given under “communications technology” (see paragraphs 8.13-8.18).

Entity use of private assets

Sometimes an entity decides that reimbursing staff for use of private assets is appropriate for reasons such as cost, convenience, or availability. An entity may decide to do this in circumstances where it would not fully use an asset of the same type if it acquired it directly. Examples include private motor vehicles, private cellphones, and private computers.

Issues and principles

The main issue associated with an entity’s use of private assets is the risk of the entity paying or reimbursing amounts that inappropriately benefit the provider of those assets.

The principles of a justified business purpose, and preserving impartiality and integrity, are particularly relevant.


Staff members must not approve or administer payments to themselves for the entity’s use of their private assets. We expect public entities to have controls, and monitoring and reporting, to ensure that this is the case.

Private use of an entity’s suppliers

If an entity enables staff to obtain goods or services from a supplier on the same or similar basis to the entity, and staff are thus able to obtain the goods or services at a discounted price not otherwise available to them, this is private use of official procurement processes.

Issues and principles

If staff have access to an entity’s suppliers on the same basis as the entity, they may receive preferential access to goods or services, and potentially at a preferential price, that is not available to the public. The risk is that the availability of the discount to staff will influence the choice of suppliers to the entity. Private use of suppliers must not be taken into account when choosing suppliers.

The main issue is that staff should be moderate in their use of any preferential access to goods or services through an entity’s supplier.


We expect entities to have a policy regarding staff use of preferential purchasing. Entities should ensure that the selection of suppliers is in the entity’s interest, and is not affected by the availability or possibility of purchasing privileges for staff.

Entities that allow staff purchasing directly from suppliers should set value and quantity limits, and monitor their use to avoid any risks to future procurement decisions involving that supplier.

The entity’s policy should state that staff cannot use purchasing privileges on behalf of any third party, such as family members or friends, staff pay in full, and an entity must not be used as a source of credit by the entity’s staff.

1: The Crown Company Monitoring Advisory Unit’s Crown Company Directors’ Fees and Reimbursement Guidelines provides further information in relation to directors of Crown companies.

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