Fund Management Business Manager Curriculum February 2014 Facilitators: Ron Sanders Ken Smith

1. Fund Management BusinessManager Curriculum February 2014 Facilitators: Ron Sanders Ken Smith Laura Williams

2. Agenda • Introduction • High-level overview of Fund Management • Roles and Responsibilities • Financial Objectives • Steps to Manage Funds • Budget Review and Reconciliation • Discussion of how objectives apply to you and your department • Roundtable discussion • Compilation of Best Practices • Wrap-up

3. Objectives By the end of this training, you should: Be able to identify objectives of fund management Be equipped to manage and reconcile your department’s finances Be able to identify key issues related to fund management, analyze why these issues exist, and determine potential solutions

4. Financial Management What does good financial management look like? Presented by: Ron Sanders, General Accounting

5. Financial Services Department Business Affairs

6. Roles and Responsibilities Fiduciary Responsibility Manages designated funds Adhere to policies applicable to job duties

7. Delegation Criteria Dept. Heads who delegate responsibilities to a Fund Manager must: Prior to delegation -- • Consider the circumstances: condition of funds, competence of potential fund managers, and degree of supervision that will be required. • Communicate clearly and completely. • Verify the delegate’s understanding of responsibilities. During delegation -- • Retain fiduciary responsibility for accuracy and compliance and retain management-level decision making. • Retain open communication with delegate. • Regularly monitor and assess each delegate’s performance.

8. Financial Objectives Each University department requires financial resources to perform its role according to the University’s mission of education, research, and public service. Departments are responsible for meeting financial objectives on an ongoing operational basis to ensure proper stewardship of University resources (will be covered on Fund Management slides).

9. General Guidelines – Financial Activity • Planning • Evaluate financial consequences of activities • Evaluate anticipated costs and benefits • Transactions • Comply with policies, regulations, grant terms, etc. • Recorded accurately and timely • Proper authorization and internal controls • Training and Competence • Corrective Actions • Timely • If frequent, assess need for preventive controls, additional training, and/or sanctions

10. Fund Management Departments are responsible for managing their funds as follows: Provide accurate financial reporting Spend money wisely in accordance with the University’s goals Safeguard assets Safeguard confidential and sensitive information Manage finances effectively Avoid financial penalties Avoid fraud

11. Fund ManagementObjective 1: Accurate Financial Reporting/Analysis Department level financial management and analysis must be completed at least monthly for the following reasons: • Banner output is used as the basis for management decisions. • Accounting must be accurate and timely in order for management to evaluate the status of budgets, funds, cash flow, etc. • Budgeted labor and expenditure balances by fund and account must remain positive to ensure that reporting and certifications are submitted on time to the state and budgeted cash flow is not disrupted. • Cash flow problems may have a negative impact on vendor relationships and create complications that affect multiple departments. • Monthly analysis and validation enable more efficient month-end and year-end close processes since corrections and other entries are made timely.

12. Fund ManagementObjective 1: Accurate Financial Reporting/Analysis Monthly financial monitoring steps: • Review revenues and expenses in summary at the end of each month, as well as a sampling of transactions. • Ensure staff are trained on appropriate expense account code use! • Identify trends and areas of concern/interest • Examine causes of significant errors, deviations, or exceptions • Including: deviations from regulations or from the budget • Reconcile departmental subsystems and transactions to the administrative system of record (Banner). • Ensure postings such as those processed through FUPLOADs are accurate • Check and account for open encumbrances on at least a monthly basis to assist when reconciling internal balances to those posted in Banner. • For encumbrance balances >$5, departments must review their funds to determine how to close out the encumbrance. • Take corrective actions if errors or exceptions are revealed before the next cycle ends

13. Fund ManagementObjective 1: Accurate Financial Reporting/Analysis Corrective Actions: If reporting exceptions continue to occur, control procedures must be implemented to correct the situation. Examples of corrective actions include: • Revise plan or budget to reflect changed circumstances, • Change or eliminate activities, • Obtain additional funding, • Modify goals or objectives, • Correct transaction errors, • Alter future budget assumptions, • Implement new control procedures, or • Document managerial decisions that depart from the budget. Document any corrective actions taken.

14. Fund ManagementObjective 2: Spend Money Wisely All purchases and payments must be: In compliance with University spending policies and Within budgetary constraints. A thorough review of all charges should occur in accordance with UNIVERSITY POLICY 601.8, APPROPRIATE USE OF UNIVERSITY FUNDS to ensure that costs are allowable and charged appropriately. Other documents that should be referenced for applicable requirements include: University PURCHASING MANUAL University TRAVEL PROCEDURES MANUAL UNC Charlotte PURCHASING CARD MANUAL Any documents governing grant and contract terms

15. Fund ManagementObjective 3: Safeguarding University Assets Cash Handling • All cash, checks, and cash equivalents in excess of $250 are to be deposited by noon of the next day in accordance with the North Carolina Daily Deposit Act (NC G.S. 147-77). Exceptions to this requirement are rare. • If a department receives cash and/or equivalents that cannot be readily identified for a purpose, the department needs to contact General Accounting for direction immediately. These funds are still subject to the Daily Deposit Act. • All petty cash and change funds must be authorized by the Controller’s Office. All cash shortages and excesses must be promptly reported to a supervisor, who must investigate them immediately. See the Petty Cash and Change Fund Procedures

16. Fund ManagementObjective 3: Safeguarding University Assets Physical Assets • A physical inventory of all equipment must be conducted on an annual basis. All discrepancies must be promptly reported and investigated. See the Fixed Asset Guidebook. • All thefts of University assets, including cash, must be reported to the police. Financial Records • Adjustments to asset records must be documented and approved. • Access to any forms or online resources that can be used to alter financial balances must be restricted to only those employees requiring such access to perform their University duties.

17. Fund ManagementObjective 4: Safeguarding Sensitive Information • Determining what information is being collected and stored, and whether there is a business need to do so and ensuring any sensitive information is stored securely. • Limiting access • Ensuring proper information security awareness and training • Regularly reminding employees of security policies • Knowing how to handle a breach. See Policy 311.5 See SANS Security Awareness training information at: http://itservices.uncc.edu/security/security-awareness When dealing with University financial information, proper safeguards must be in place to ensure the security of confidential and sensitive data, as defined in Policy 311, Data and Information Access and Security. Department heads should assess and address risks to in all areas of their operation. Simple steps include:

18. Fund ManagementObjective 5: Recording of Transactions Financial management includes maintaining adequate levels of cash to meet operational and capital requirements. Most related responsibilitiesremain with Financial Services. Department management and support staff are responsible for ensuring that transactions are recorded as accurately as possible on a timely basis, i.e., as soon as the transaction occurs, and with the proper authorizations. Accuracy, timeliness, and obtaining proper approvals will minimize the need for correcting entries. Supporting documentation and records must be retained in accordance with the University’s record retention policy. As a general rule, documentation over and above the official policy should not be maintained.

19. Fund ManagementObj. 6 & 7: Avoiding Financial Penalties and Fraud Department management and support staff are responsible for having sufficient knowledge of applicable financial and internal control policies, standards, and regulations, and for compliance with these to foster an environment where financial penalties are avoided and fraud is prevented.

20. Fund ManagementObj. 6 & 7: Avoiding Financial Penalties and Fraud Example: The University has been granted additional financial and administrative authority as a “special responsibility constituent institution” (SRCI) under G.S. 116-30.1. If we were found to be negligent or non-compliant with how we spend funds, we would lose this designation. Things we must do to keep this designation: • Maintain appropriate admin staffing, procedures and internal controls • Resolve significant audit findings within 3 months • Support the ability to carry out BOG-defined educational mission with our (General Fund) GF budget • Obtain BOG approval to establish new academic, research, public service or financial aid programs in the GF • Measure impact on student learning and development • Submit monthly GF budget reports to governing agencies

21. Budget Review and Reconciliation How do I review and reconcile my department’s budget? Presented by: Ken Smith, Budget Office

22. General Guidelines – Budgets Principles are applicable to all fund types General Fund budgets are maintained by Budget Office and allocated annually at the divisional level. Division management establishes unit budgets at the fund level. For all other fund types, budgets are the responsibility of Department Heads and Fund Managers.

23. General Guidelines – Budgets Budgets should be… • Tools to: • Define annual spending limits • Measure financial performance • Help discover errors • Detect substantial changes in business conditions • Help avoid unnecessary costs by ensuring that expenditures are reasonable, necessary, and adequately supported • Realistic, reasonable, attainable • Based on thorough analysis (of unit’s goals and objectives, etc.) • All budgets must support the University’s goals. • Monitored against Actual financial results regularly

24. Budget Management – General Funds Available Budget Balances should not be less than $0 at any point. Each department must review their funds and make the necessary entries to ensure that available budget balances are positive by the end of the month.

25. Budget Management – General Funds Monthly Review If a negative Available Budget Balance or incorrect posting is found, the Fund Manager must do one of the following, depending on the situation: • If the budgeted amount for an account or budget pool is inadequate, request an increase to the budget (See Budget Revisions), • If a transaction was entered incorrectly, submit a Journal Entry to correct the expense account that was used (See Journal Entry Guidelines), or • If an expense can be better classified within a different budget pool that has an adequate available budget, reclassify the expense to the more appropriate account (See Journal Entry Guidelines).

26. Budget Management – General Funds Monthly Review Budget Pools See Appendix 2 of the Financial Management Guidelines Banner Forms The most common Banner forms that the Budget Office recommends to identify negative budget balances in funds: • FGIBAVL (to see Operating Ledger [OL] Balances at the budget pool account level) • FGIBDST (to see OL Balances at the expenditure account level) • FGITRND (to see OL Detail) Instructions on how to use these forms are located in Section X of the Financial Management Guidelines.

27. Budget Management – General Funds Budget Revisions Net zero process -- any change to a budget must not change the Requirements portion of the Authorized Budget, e.g., an increase in the budget of one account must be offset with the decrease of the budget in another account. To change the existing budget of a General Fund account, the departmental representative must submit the change request on one of two budget forms: • Budget Revision Form (BD606) • Budget Flexibility Form (BD607) Forms can be obtained from the Financial Services Forms website. Budget revisions are due to the Budget Office by the 25th of each month.

28. Budget Management – General Funds The requirements of using a BD606 are as follows: • The funds being increased and decreased must have the same Program Code (check via FGIBAVL or FGIBDST). • Accounts must be regular expense accounts (92xxxx-99xxxx), not personnel or fringe benefit accounts (91xxxx) or the following accounts: • Library (949xxx) • Utilities (923xxx) • Financial Aid (96xxxx) • Signature authorization at a Department/Unit level (not Vice Chancellor) When verifying that BD606 information was keyed correctly into Banner, the Document Type used in FGITRND will be B15T.

29. Budget Management – General Funds A Budget Flexibility form (BD607), or long form, must be used to increase the budget in an account when the requirements to use the BD606 cannot be met, i.e.: • Increasing and decreasing funds are in different Program Codes. • One of the affected accounts is a personnel (911xxx, 912xxx, 913xxx, 914xxx, 915xxx) account. • One of the affected accounts is a fringe benefit account (916xxx – 919xxx). Signature authorization is needed at the Vice Chancellor (or delegate) level. When verifying that BD607 information was keyed correctly into Banner, the Document Type in FGITRND will be B14P or B14T.

30. Important Takeaways • Manage funds by: • Providing accurate financial reporting • Spending money wisely in accordance with the University’s goals • Safeguarding assets • Safeguarding confidential and sensitive information • Managing finances effectively • Avoiding financial penalties • Maintaining proper control environment/Avoiding fraud • Responsible to NC taxpayers • Departments are responsible for meeting financial objectives on an ongoing basis to ensure proper stewardship of University resources, which are needed to carry out the University’s mission.

31. Website/Contact Information • Controller’s Office: • General Accounting website: http://finance.uncc.edu/controllers-office/general-accounting • Ron Sanders, Assistant Controller, 7-5786 • Laura Williams, Compliance Manager, 7-5002 • Budget Office: • Budget Office website: http://finance.uncc.edu/budget-office • Ken Smith, Assistant Budget Director, 7-5599

32. The following slides are for Reference Only Financial Management Journal Entries, Encumbrances, Record Retention, Financial Management Guideline Resources

33. Journal Entry Guidelines • Transfers • Must be two-sided • To correct prior year expenses, use transfer accounts • Supporting documentation • Should be clear, concise, and relevant • When submitting supporting documentation for corrections, include a screen print of the transaction activity in Banner (e.g., in FGITRND) that shows the Document Number of the original transaction(s) • See full JE guidelines on General Accounting website: http://finance.uncc.edu/controllers-office/general-accounting UNC Charlotte - Financial Services

34. Journal Entry Guidelines Checklist to complete the Journal Voucher form: • Fill in Effective Date. • Select “Journal Entry” as the Type. • Select Chart of Accounts. • Enter and double-check Fund and Account Codes. • Enter short descriptions for debit and credit of entry. For corrections and reclassifications, include the Document Number of the original transaction. • Enter debits and credits, and ensure debits equal credits! • Provide an explanation for the entry that is clear, relevant, and concise. • In Banner, check fund balances to ensure availability of funds affected by the entry, and check that correcting entries have not already been initiated. • If a transaction is being reclassified or corrected, capture a screen print from Banner Form FGITRND and highlight the applicable transactions. • Sign and date by Preparer and Approver and include phone numbers. • Forward the JV to the appropriate contact along with supporting documentation. UNC Charlotte - Financial Services

35. Reviewing for Encumbrances Being able to check and account for open encumbrances on at least a monthly basis will assist departments when reconciling internal balances to those posted in Banner. How encumbrances are closed/liquidated: • Normally, encumbrances are liquidated when an invoice related to the PO is entered into 49er Mart, matches the PO and Receipt(s) and integrates to Banner. • Any open encumbrances should be closed out as they are determined to be no longer needed. • Encumbrance balances <$5 will be eliminated automatically every Friday night. • For encumbrance balances >$5, departments must review their funds to determine how to close out the encumbrance. UNC Charlotte - Financial Services

36. Reviewing for Encumbrances How to check for open PO encumbrances that have not yet posted: Banner Form FGIOENC – Organizational Encumbrance list • Query by Organization or Fund code • Lists open PO encumbrances • Can drill down on specific encumbrance to FGIENCD to see any invoices that have been applied against the encumbrance 49er Mart Document Search • Query on your department’s POs not fully matched (‘Partially Matched’ or ‘No Matches’) • Can customize and save search criteria To close the PO, email your Purchasing Agent. (A comment can be emailed directly from the PO in 49er Mart; this helps for future reference purposes.) A Purchasing Agent Departmental Listingis on the Purchasing website. UNC Charlotte - Financial Services

37. Records Retention • Current UNC Charlotte Financial Services Records Retention Schedule (draft) • Developed from authoritative guidance: UNC-GA Schedule (adopted 2007), NC State Agency Schedule (adopted 2009) • Related guidance: • NC G.S. §121 & 132 • UNC Charlotte Policies 101.8 (personnel), 311 (security), 402 (FERPA), 605.2 (HIPAA), 605.3 (University Records) • UNC-GA schedule: https://legal.uncc.edu/sites/legal.uncc.edu/files/media/UNCGeneralSchedule.pdf UNC Charlotte - Financial Services

38. Records Retention Organized by - Categories (Series): • Administrative • Financial • Accounting • Budget • Purchasing • Payroll • Student Accounts • AP/Travel • Foundation/Trust Fund/Endowment • Administrative System Records • Departmental Personnel Records • Tax Guidance – What to do with the documents: • Description • Items/Examples • Disposition method • Original and Reference copies • Years to retain • Compliance Citation • Record Custodian UNC Charlotte - Financial Services

39. Document Type Matrix To investigate a transaction, a department may need to contact the Financial Services department that keyed the entry. Below is a matrix that contains frequently used Document Types and the associated contact. UNC Charlotte - Financial Services

40. Other Resources in Financial Mgmt. Guidelines P.19 - Other Banner and ePrint Forms and Reports that may be helpful P.21 - Information on Banner Finance Training, which provides an overview of Banner forms and reports related to financial management Available in Moodle2: https://moodle2.uncc.edu/login/index.php P.22 – Contacts, Websites, and Further Resources (Start at finance.uncc.edu!) P.25 – Appendix 1: Contacts for Fund Use Guidance P.28 – Appendix 2: Budget Pool Accounts P.29 – Appendix 3: Components of Internal Control UNC Charlotte - Financial Services

41. Also see University Policies: 102.2, Conflicts of Interest and Commitment 311, Data and Information Access and Security 601.8, Appropriate Use of University Funds 601.11, Purchasing Policy 601.15, Control of Equipment and Other Property 602.3, Petty Cash and Change Fund Policy 602.4, Handling Cash, Checks, and Other Receipts 603.1, Authority to Sign Contracts and Other Official Documents University Manuals: Financial Management Guidelines Journal Entry Guidelines Statewide Guidance: North Carolina Budget Manual