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Section 1: Internal Control

Monitoring Plan for Segregation of Duties and Reconciliation of Accounts

Effective Date:

03/26/09

Approved By:

Lenora Chapman, Associate Vice President, Financial Affairs

Last Revised On:

02/19/15

For Assistance Contact:

Associate Vice President for Financial Affairs

Assistant Vice President, Financial Affairs and Controller

PURPOSE/SCOPE

To establish the monitoring plans for internal controls to ensure that funds are expended and recorded appropriately on The University of Texas at San Antonio (UTSA) Annual Financial Report.

AUTHORITY

Required by UT System policy - UTS142.1- Policy on the Annual Financial Report.


UNIVERSITY GUIDELINES

Table of Contents

A. Responsibilities

Chief Administrative Officer: The Vice President for Business Affairs is the Chief Administrative Officer, and is responsible for certifying to the UT System Administration that UTSA’s financial statements are presented fairly, are materially accurate, and that any significant internal control deficiencies, material weaknesses and all known frauds have been reported and addressed.

Financial Reporting Officer:The Associate Vice President for Financial Affairs is the Financial Reporting Officer and is responsible for the development and update of a Monitoring Plan for Segregation of Duties and Reconciliation of Accounts (the Monitoring Plan). The Monitoring Plan should be risk-based but also include random monitoring of low-risk departments for the fiscal year. The Financial Reporting Officer, after consultation with the Institutional Audit Director, will provide the Monitoring Plan and any updates to the UT System Financial Reporting Officer by February 28 each year. The Financial Reporting Officer will certify annually that the Monitoring Plan was completed as approved. For more information on segregation of duties and reconciliation of accounts see UTSA Financial Management Operation Guidelines (FMOGs) Internal Control Overview, Monthly Financial Report Reconciliation Process, and Reconciliation of Student Financial Data.

Assistant Vice President, Financial Affairs and Controller: The Assistant Vice President, Financial Affairs and Controller (AVPFA/Controller) is responsible for certifying to the Financial Reporting Officer that the financial statements have been prepared accurately and that any significant internal control deficiencies, material weaknesses and all known frauds have been reported and addressed. The AVPFA/Controller is also responsible for implementation of the Monitoring Plan and reviews the Fiscal Management Sub-Certification responses to identify any potential issues with reconciliations and/or segregation of duties.

Department Managers: See section C, Management Certification and Fiscal Management Sub-Certification. For more information, see FMOG - Fiscal Accountability and Stewardship of University Resources.

Institutional Audit Director: The Institutional Chief Audit Executive is the Institutional Audit Director. The Institutional Audit Director validates that Quality Assurance Reviews (QARs) are performed annually and confirms that Fiscal Management Sub-Certification responses are a factor in determining those selected for QARs.



B. Monitoring of Key Financial Business Processes

The following systems and business processes are monitored and controlled to manage risk to an acceptable level:

1. Segregation of Duties

Certain duties should be performed by separate individuals to reduce the risk of fraud or concealment of errors, and no one individual should have responsibility for all aspects of a transaction.

In general, the following transaction-related duties are considered incompatible and should be performed by separate individuals:

  • Initiating

  • Approving

  • Record keeping

  • Custody of an asset

  • Reconciling the related accounts

EXAMPLE: An individual should not initiate an order for equipment and also approve the payment; or an individual depositing cash should not also perform the related bank account reconciliation.

Managers should be aware of duties that are potentially incompatible and arrange assignments so that no employee has incompatible duties. Managers of smaller departments where segregation of some duties may not be feasible must implement compensating controls such as detailed management review of reconciliations.

The chart below identifies some examples of transactions with guidelines for segregation of duties.

Type of Transaction

Initiates

Approves

Records

Reconciles

Custody

Purchase of Goods/Services

Purchase Request

 

 

 

Person A

Approves Payment

 

Person B

Accounting Records

 

Accounting Services

Monthly Financial Report

 

 

Person C

Receives Goods

 

 

Person A

Cash/Check Receipts

Opens mail (with a second employee to provide assurance that all cash/checks received by mail are properly logged and deposited), logs receipts, and endorses checks

 

Person A

Makes deposit

 

 

 

 

 

 

 

Person B

Accounting Records

 

 

 

 

 

 

Accounting Services

Monthly Financial Report

 

 

 

 

 

 

 

Person C

Instructs Bank

 

 

 

 

 

 

 

UTSA

 
2. Transaction Approval

Financial transactions require a minimum of one initiator, one approver at the departmental level and at least one approver at the central office, and journal entries are entered by the initiator but not posted in the administrative system until reviewed and approved at the next higher level of management to help ensure proper segregation of duties.

These processes will be automated within the current system with the anticipated addition of an automated work flow solution to the system.   

The following parties are involved in assuring internal controls are in place:

  • Department Managers
  • Department Supervisors
  • AVPFA/Controller
  • AVP for Human Resources
  • Purchasing Department
  • PeopleSoft Support and Sustainment Center
3. Receipt of Goods and Services

Receiving documents are completed by (1) Central Receiving when goods are received by Central Receiving, and
(2) departments when goods are received by the department. These documents are matched with corresponding purchase orders and invoices within the administrative system.  If there are discrepancies between documents, or if one of the documents is missing, payments cannot be processed.  All missing documents and discrepancies between the documents are investigated timely and appropriate action is taken. Prior to payment for services, the department must note that the services were provided as required.

On-the-job training is provided to all newly hired staff or position changes for purchasing and inventory. The Purchasing Office offers an online Purchasing Training course. Ad hoc training is also provided as issues arise. For more information on the Purchasing Training Course, see the Purchasing Office website.

The following parties are involved in assuring internal controls are in place:

  • Central Receiving
  • Department Supervisors
  • Department Staff

4. Reconciliations and Reviews

The Accounting Services Department performs monthly bank reconciliations (comparing cash balances/transactions per bank statements to accounting records) to verify the accuracy of accounting records and bank statements.  Discrepancies are investigated and appropriate action is taken to correct accounting records or bank records. 

This process will be enhanced by the automated reconciliation tool (Book to Bank) in the current administrative system.  When Book to Bank is fully functional, new desk manuals and training will be developed and provided to all employees involved in the reconciliation process.   

Department Managers are also required to review actual revenue and expenditures compared to budget on a regular basis to help ensure fiscal accountability and solvency.

Department Managers are also expected to demonstrate fiduciary responsibility and to act in the best interest of UTSA.

Each month, Department Managers download Monthly Financial Reports which include detailed transactions for all Cost Centers/Project IDs within their responsibility. For more information on Cost Centers and Project IDs see FMOG - Chart of Accounts

Reconciliation of Monthly Financial Reports must be completed each month. Evidence of the reconciliation must be supported by the signature of both the preparer and Department Manager.
The following parties are involved in assuring internal controls are in place:

For more information see FMOG – Monthly Financial Report Reconciliation Process and the Accounting Services website.  



5. Cash Handling and Security

Departments must follow all requirements listed in FMOGs Cash Handling and Management and Processing Cash Payments. This includes departmental cash security policies, segregation of duties and timely reconciliations.

The following parties are involved in assuring internal controls are in place:

  • Department Manager

  • Department Supervisors

  • Department Staff

On-the-job training is provided to all newly hired staff or position changes for cash handling. Ad hoc training is also provided as issues arise.


C. Management Certification and Fiscal Management Sub-Certification

Department Managers are required to complete the Management Certification and Fiscal Management Sub-Certification annually for their Cost Centers/Project IDs with $3,000 or more of activity, to include segregation of duties and timely reconciliations.  They also certify, among other things, that all significant internal control deficiencies and material weaknesses in internal controls that have been identified have been reported and addressed.

For more information, see FMOGs  Internal Control Overview and Fiscal Management Sub-Certification Work Plan.

Department Managers failing to submit a completed Management Certification and Fiscal Management Sub-Certification  for their Cost Centers/Project IDs with $3,000 or more of activity will be reported to the respective Vice President (VP), the Institutional Audit Director, the Financial Reporting Officer, and the AVPFA/Controller.

Responses in these certifications are included in the criteria used to select the Department Managers who will undergo a Quality Assurance Review. Additionally, the AVPFA/Controller will review the certification responses to identify any potential issues with reconciliations and/or segregation of duties.


D. Quality Assurance Reviews

Quality Assurance Reviews (QARs) are performed by Institutional Compliance and Risk Services, and are intended to provide management with assurance that departmental internal controls are in place and are operating effectively. For more information, see FMOG - Internal Control Overview.

QARs also verify the integrity of responses to the annual Management Certification and Fiscal Management Sub-Certification and help ensure that responses are in accordance with UT System financial accountability requirements.

QARS include a review of segregation of duties and reconciliation of Monthly Financial Reports.

A sample of Department Managers from each VP area is selected annually to undergo a QAR. Department Managers are selected based on a risk assessment including several criteria:

  • Level of expenditures and revenues
  • Fiscal Management Sub-Certification
  • Management Certification
  • Requests by VPs

During the UTShare/PeopleSoft transition period, all active Department Managers will be selected for a QAR using a risk assessment based on multiple criteria by January 2017. 

QAR results are provided to the Department Manager and immediate supervisor. Vice Presidents are provided a final summary of the results from all QARs performed in their area.

Institutional Compliance and Risk Services performs on-site follow-ups for QARs with a significant overall risk level 90 days after the respective VP is notified. Institutional Compliance and Risk Services contacts the Office of Auditing and Consulting Services for further action if deficiencies are not corrected.

Reports of all significant findings and related follow-up activities are given to the Institutional Fraud Officer (VP for Business Affairs) and the Financial Reporting Officer.

A summary report of all QARs is provided annually to the President.



E. Procard Audits and Reviews

The Procard/Travel Card Administration Office continuously monitors and reviews purchasing card (Procard) transactions, and utilizes management reports and periodic compliance audits and reviews to monitor departmental segregation of duties, reconciliations, and compliance with Procard requirements. Compliance audit results and recommendations are communicated to appropriate levels of management.  For more information see FMOG Procard Program and the Procard Training course.


DEFINITIONS

Term

Description

Department Manager

An individual with fiscal responsibility including Monthly Financial Report reconciliation and decision-making authority for UTSA resources who has approval access to commit funding using the institutional financial accounting system.

 

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS

None at this time.


REVISION HISTORY

Date

Description

02/19/15

  • Updated references to Statement of Accounts to Monthly Financial Report.
  • Updated Table of contents:.
    • Section B2 change from 'Security Access to Administrative Systems for Transaction Approval' to 'Transaction Approval.'
    • Section B4 change from 'Review of Budget and Expenditures' to 'Reconciliations and Reviews.'
  • Updated Section A. Responsibilities to include revision of Financial Reporting Office, Assistant Vice President, Financial Affairs and Controller, and Institutional Audit Director.
  • Update to Section B1. Segregation of Duties to change chart referencing Statement of Account to now reference Monthly Financial Report.
  • Update to Section B2. Transaction Approval, as per above on table of contents name change and includes:
    • Changes to parties that are involved in assuring internal controls are in place.
    • Including input that system processes are automated within the current system with regards to automated work flow solutions.
    • Revision of transactional security access leads and their responsibilities.
  • Update to Section B3. Receipt of Goods and Services to include:
    • Modified system of receipt of goods and services to include process of receiving documents and steps required to take to check for accuracy and avoid any discrepancies between invoicing documents and purchasing documents.
    • Clarified the use of the Purchasing training course to assist with any newly hired staff.
  • Update to Section B4. Reconciliations and Reviews to include:
    • Updated to match Table of contents revision.
    • Discuss bank reconciliations and what happens if any discrepancies are found.
    • Discuss process regarding automated reconciliation tool within current administrative system.
    • Updated various Statement of Accounts (SOA) references to Monthly Financial Reports.
  • Revised Section C. Management Certification and Fiscal Management Sub-Certification to include:
    • Update DEFINE to PeopleSoft terminology.
  • Update to Section D. Quality Assurance Reviews to incorporate the following changes:
    • Revisions to what QARs include.
    • Discussion of UTShare/PeopleSoft Transitional changes.
  • Changes to Section E. Procard Audits and Reviews:
  • Update to Definitions Section to change Statement of Accounts verbiage to Monthly Financial Report.
  • Update Reference/Links section with updated URL for the Management Assessment Tool.

10/01/14

Updating References/Links section with new purchasing with UTSHare/PeopleSoft Link.

05/01/14

Updated DEFINE information for transition to PeopleSoft.

01/15/14

Updated the Management Assessment Tool link and deleting two items from the QAR (Quality Assurance Reviews) list.

02/20/13

Update segregation of duties chart.  Update Section B, 4 regarding SOAs on what is being included. Updated Secion B,5 on update to cash handling and security policy. Updated Section C instruction on management certification and fiscal management sub-certification.   Update to "REFERENCES/LINKS" section with current links.

02/22/12

Revised Management Certification and Fiscal Management Sub-Certification section to include description about $3,000 threshold of activity.

06/22/11

Added subsection Segregation of Duties to section Monitoring of Key Financial Business Processes. Revised the Review of Budget and Expenditures subsection as the SOA reconciliation process must be completed monthly and added links to the Accounting Services website and Statement of Accounts (SOA) Reconciliation Process FMOG for instructions.

03/22/11

Conducted minor edits for consistency and provided links to referenced FMOGs.

01/28/11

Conducted document clean-up for consistency and removal of duplicate information found in other FMOGs.

10/18/10

Added revised copies of the Management Certification and Sub-Certification survey samples.

11/10/09

Guideline published.

 


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