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3.10.4 Appropriate Control PDF Print E-mail
Saturday, 05 September 2009 10:15

3.10.4     Appropriate Control

The institution exercises appropriate control over all its financial and physical resources.

Compliance Judgment

Compliance

Narrative

North Carolina Agricultural & Technical State University (NC A&T) exercises appropriate control over all of its financial resources. The Vice Chancellor for Business & Finance (VCB&F) [1] is the chief financial officer and has primary responsibility for control over the university’s financial resources. The VCB&F is responsible for establishing policies and communicating policies and procedures that ensure appropriate levels of control over financial resources. The overarching goal of the Division is to ensure fiscal integrity, internal controls, and accountability necessary to comply with State and Federal laws, sound business practices, and the policies of the Board of Trustees and the Board of Governors of the University of North Carolina.

The Departments within the Division of Business and Finance that share responsibility for monitoring controls are headed by three Assistant Vice Chancellors (AVC) and a Director [2]: the AVC for Finance and University Comptroller (University Accounting, Capital Projects & Improvements Accounting, Contract and Grant Accounting, Bursar/Treasurer, Accounts Payable, Payroll, Systems Development, and Travel) [3], the AVC for Budget & Planning [4], the AVC for Facilities (University Engineer, Physical Plant, Property Management, Purchasing and Contracts, Receiving, and Environmental Health and Safety) [5], and the Auxiliary Services Director (Athletics and Student Affairs Accounting, Bookstore, Mail Services, One Card, and Ticket Office), [6]. Additionally, the Vice Chancellor for Student Affairs (VCSA) oversees the University Department of Police and Public Safety. [7] [8]

Personnel that are responsible for safeguarding the financial resources of the university are screened before hiring by the Division of Human Resources (HR). [9] To ensure that qualified financial professionals staff these positions, HR verifies that these individuals have the skills, training, and education necessary to perform their jobs, and also performs a background check on individuals recommended for employment. As part of this process, resumes and transcripts are compared with written job descriptions. Employment documents for all personnel in supervisory positions are available with HR. All critical financial personnel have been found to have the requisite credentials to perform their jobs.

The Office of Internal Audit (OIA) [10] reports directly to the chancellor to ensure independence in carrying out its responsibility of promoting and supporting a culture of compliance and control consciousness. Regular audits are conducted of key operating and financial areas, information technology, university operations, compliance, and other areas requested by management. Audit reports and related findings and recommendations are presented to the Audit Committee of the Board of Trustees quarterly.[11] Follow-up regarding findings are reported to the Audit Committee regularly until all recommendations are implemented. More information regarding internal audits is included in the response to Principle 2.11.1. The university, under the guidance of the OIA conducts periodic risk assessments to determine areas of high risk or potential exposure. Examples of high risk areas are cash handling, account reconciliations, and purchasing cards. [12][13] Employees with signature authority over expenditures receive annual compliance training regarding effectively controlling risks. The Office also sponsors a third-party telephone hotline that enables university employees to anonymously report questionable or unethical practices. The reported incidences are then investigated by the OIA.

Financial Controls

Safeguarding Cash: By its very nature, cash handling is considered high risk. North Carolina law, Chapter 147-86.10 of the General Statutes, requires that "all agencies, institutions, departments, bureaus, boards, commissions and officers of the State... shall devise techniques and procedures for the receipt, deposit and disbursement of monies coming into their control and custody which are designed to maximize interest-bearing investment of cash and to minimize idle and nonproductive cash balances end. The University documents it’s procedures for complying with this statute in it’s “University Cash Management Plan” reviewed and approved by the NC Office of the State Controller. [14]

Key points of the University’s cash management plan are to assure that:

1) collections are properly identified, control totals are developed, and collections are promptly deposited intact; 2) bank accounts and cash on hand are subject to effective custodial accountability procedures and physical safeguards; 3) transactions are promptly and accurately recorded in adequate detail records and appropriate reports are issued; and 4) transactions are properly accumulated, correctly classified and summarized in the general ledger balances are properly and timely reconciled with bank statement balances.

There are no exceptions allowed to the State’s Daily Deposit and Reporting Act. However, in the normal course of business, credit card transactions must be settled through a payment processor. After settlement, these funds are deposited into the depository account within forty-eight (48) hours. In such case, the funds are reported to the State Treasurer once they are in the depository account. Monitoring takes place via internal audits and surprise cash counts by the Office of Internal Audit, annual State audits, and daily and month-end reconciliations by the University Treasurer and Director of Accounting.

Monitoring Expenditures: Controls over expenditures take various forms.

Budget: In fiscal year 2007-08, under the direction of the Vice Chancellor for Business and Finance, the University established the Budget Advisory Committee (BAC). [15] Lead by the Assistant Vice Chancellor for Budget & Planning, the BAC reviews University school and college recommendations and constructs a preliminary budget. The preliminary allocation is published for review and comment prior to the committee making the final recommendations to the Chancellor. The Chancellor makes the final decision about the budget allocation and approves the budget. The final budget is then approved by the UNC Board of Governors. [16]

The University Office of Budget and Planning regularly monitors State budgets [4] and provides the campus with a Basic Spending Guidelines manual. [17] Monthly, University budget reports must be submitted to the NC Offices of the State Controller and Budget and Management. The Offices of Contracts & Grants and Auxiliary Services monitor grants and auxiliary enterprise budgets, and various Business & Finance offices monitor financial transactions to ensure compliance with policies and procedures. The financial status of funds is available to all account managers, with appropriate security access, [18] on the institution’s Banner Finance System. [19] Training on the financial system is available on the web [20] and via periodic classroom training conducted by Business & Finance staff. Monthly procurement card account reconciliations are required to ensure the propriety of expenditure. Auxiliary Services holds a financial statements and budget review meeting quarterly that includes the Vice Chancellors for Business & Finance and Student Affairs to examine the operations and budgets of all auxiliary enterprise operations. [21]

Purchasing: Departmental purchase requesters are trained in purchasing policies and procedures via classroom training conducted by the Purchasing Office Staff. [22] The University complies with all State of North Carolina Department of Administration’s Division of Purchase and Contract rules and regulations. [23] Additional training and monitoring is conducted by the Comptroller’s Office to ensure appropriate controls over the University's purchasing card (p-card) program. New purchasing cardholders are provided training and a review of the Procurement Card Users Guide prior to receiving their cards, and additional training is given through out the year. [24] Purchasing card transactions are reconciled monthly by the cardholder, reviewed and approved by a person of higher authority, and and audited by the purchasing card compliance officer within the University Accounting Office. The p-card administrator monitors the p-card program and activities through various reports available from the card provider.

Contracts: The Chancellor and his designee Vice Chancellor for Business & Finance (VCB&F) sign contracts for the university. All contracts must adhere to the University Contract Policy and Procedures.[25] Vendors must sign a contract prior to the VCB&F approval. Department heads/deans must initial contracts for their department approval. Contracts are reviewed by the Purchasing Department and Office of Legal Affairs prior to approval by the VCB&F. Any unauthorized person that signs a contract and sends it to a vendor subjects themselves to being personally liable for the contract, including payment of any and all fees.

Endowments and Investments: NC A&T follows the endowment policies and procedures set forth in the UNC Board of Governors policy manual section 600.2.1 [26] as provided by N.C.General Statute 116-36, as well as university bylaws approved by its board of trustees. The University’s Board of Trustees of the Endowment Fund of North Carolina A&T State University assumes the responsibility for approving investments and liquidations, regularly monitoring the performance of fund managers, and directing the overall investment strategy of the endowment fund. The University Investments Committee, housed within the Division of Business and Finance, holds the responsibility for making suggestions to and acting upon operational requests from the Endowment Board.

The Investments Committee meets regularly throughout the year to monitor the status of endowments and and related policies and procedures. Investments and expenditure allocations for scholarships, professorships, department chairmanships, etc. are guided by the “Spending Policy and Guidelines for Investment of the Endowment Portfolio”.[27] Annually, the Investments Committee meets to allocate earnings per the policy, with unallocated income remaining invested in a quasi-endowment to protect the endowment corpus. Upon donor request, a report is distributed annually to keep the donor abreast of their endowment balance and the use of funds. [28].

Sponsored Programs Controls

Refer to section 3.10.5

Physical Resources Controls

Refer to section 3.11.1

External Audits

The NC Office of the State Auditor (OSA) fulfills the annual fiscal year-end audit requirement. The OSA provides audit services to North Carolina state agencies, including annual audits of state financial statements, and as a state agency NC A&T is included in those statewide audits.

The University works diligently to address audit findings as soon as they become apparent, and an independent review procedure is in place that involves the University’s Internal Audit and Business & Finance staffs, a representative from the UNC General Administration (UNC-GA), and the State audit team to assure that findings are addressed in a timely manner.

Additionally, the University athletics department is required by the NCAA to have an annual “agreed upon procedures” review performed by an independent certified public accountant. The department has contracted with an independent accounting firm, McGladrey & Pullen, LLC to conduct this annual review. The review reported no findings. [29]

Supporting Documents

[1] Division of Business & Finance website

[2] Division of Business & Finance Organization Chart

[3] University Comptroller Website

[4] Budget and Planning Website

[5] Facilities Website

[6] Auxiliary Services Website

[7] Division of Student Affairs Website

[8] University Department of Police & Public Safety

[9] Division of Human Resources Website

[10] Internal Audit Website

[11] Audit Committee of the BOT Meeting Agenda, Febuary, 2009

[12] Internal Audit, Year-End Treasurer's Office Cash Count

[13] Internal Audit, Surprise Cash Count

[14] A&T Cash Management Plan

[15]  A&T Budget Advisory Committee (BAC)

[16]  UNC BOG Website

[17]  A&T Basic Spending Guidelines Manual

[18]  Banner System, Security Access Form and Confidentiality Agreement

[19] Banner Finance System Website

[20] Banner Finance Campus Training Manual

[21] Financial Statements Review Meeting, Quarterly Auxiliary Services, Sample Minutes

[22] A&T Purchasing Office Websites

[23]  NC Division of Purchase & Contract

[24]  A&T Procurement Card Users Guide

[25] NC A&T Contract Policy and Procedures

[26]  UNC BOG Policy Manual: Endowents

[27] Spending Policy and Guidelines, Investment of the Endowment Portfolio

[28]  Donor Endowment Status Letter, Examples

[29] McGladrey & Pullen, LLC "Agreed Upon Procedures Review" of Athletics


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Last Updated ( Wednesday, 16 June 2010 07:41 )
 

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