Fiscal Management @ UGA:. My Responsibility. Fiscal Management @ UGA. Awareness of UGA’s current audit performance AND Recognition that we all have a role and responsibility to improve audit performance and internal controls at UGA. Today’s Goal. When Is UGA Subject to Financial Audits?.
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Awareness of UGA’s current audit performance
Recognition that we all have a role and responsibility to improve audit performance and internal controls at UGA
Why Should I Care How
UGA Performs in Audits?
Fiscal Irregularities Do Occur at UGA:
PurposeThe University of Georgia is committed to maintaining the highest professional standards in its administrative operations, promoting ethical practices among its faculty and staff, and ensuring a level of accountability appropriate for a public institution. This policy and related procedures for the investigation, reporting and resolution of fiscal irregularities are established as an integral part of the university's efforts to ensure that all faculty and staff conduct themselves in accordance with high ethical standards and that university performance with respect to these matters is consistently applied.
Administrators, faculty and staff who know or suspect that other employees are engaged in theft, fraud, embezzlement, fiscal misconduct or violation of University financial policies have a responsibility to report it to their supervisor and the Controllers Office.
Each accounting and financial employee at UGA plays a vital role in the overall health of the University’s financial statements and system of internal controls.
Fiscal Management @ UGA is our collective responsibility.
UGA internal audits were graded as follows:
Independently Verify Cash Receipts
Deposit Cash Receipts in a Timely Manner
Establish Effective Accounts Receivable Record
Restrictively Endorse Checks
For Deposit Only
The University of Georgia
Maintain Accurate Property Records
Adequately Document Deferred Income and Encumbered Funds
Control of Petty Cash Accounts
P-card Purchase Weaknesses
Prepare Written Authorization for the Delegation of Signatory
Signature authority may be delegated to other staff of the unit; however, responsibility for funds and transactions remain with the Director. It is therefore necessary for a policy to be in writing to ensure that the delegation is authorized.
Independently Monitor Expenditure Transactions
We recommend that Department Head receive adequate information from the Office manager about the transactions processed through the Department’s accounts. As part of this review, we recommend that the Department Head or his designee approve the monthly reconciliation of the ASR.
Properly Approve Time Sheets
Retain Employee Eligibility Verification Forms
I-9) revealed several were not on file and could not be located.
I-9 for employee who transferred from another University unit was not obtained from the original unit nor was a new I-9 form completed when the employee transferred to the new unit (either would have been acceptable).
Complete Annual Performance Evaluation for Classified Employees
Properly Approve Personnel Activity Reports
Information Technology (the non-technical issues)
Petty Cash vs. PCards
Internal Controls and Best Practices
What Does It Mean for UGA?
NACUBO believes that institutions of higher education should look at the SOX Act as a framework to help evaluate overall financial risks, and not simply comply with stewardship responsibilities and public obligations they face.
Source: NACUBO Advisory Report 2003-03
UGA utilizes “after-the-fact” confirmation of personal service expenditures charged to direct and indirect cost activities. This is achieved through the Personnel Activity Report or PAR which confirms or corrects the distribution of activity that represents a reasonable estimate of effort performed on a particular project/activity or indirect cost category so that the appropriate account is charged the correct portion of salary and benefits.
So Why Should I Care if the PAR Is Returned on a Timely Basis Or Not?
UGA procedures state that completed PARs are to be returned to the Accounting Department by the established cutoff date of the month following the pay period for which the PAR is applicable. Each month campus units are provided reports of past due PARs and there are a series of subsequent contacts made to collect the outstanding PARs.
The FY2005 A-133 audit revealed that 255 PARs with federal projects were past due as of 6/30/2005 and therefore called into question the University’s ability to adhere to and enforce its procedure regarding timely return of PARs. Evidence of the 255 past due PARs has resulted in a federal A-133 audit finding for UGA.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2005
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES
Research and Development Cluster Program
Noncompliance with University Policy
Undocumented Time and Effort Reporting
Questioned Cost: $621,249.75
Finding Control Number: FA-518-05-01
There were numerous Personnel Activity Reports (PARs) for the fiscal year under review that were still outstanding as of the end of the fieldwork, which was at least 120 days after the last fiscal year 2005 pay period. The individual University Departments were notified of outstanding PARs by the Finance and Administration Office and efforts to collect these PARs were unsuccessful.
The University has not complied with due dates for PARs to be received by the Finance and Administration Office as stated in the University PAR Procedures.
Since there is no PAR on file in the Finance and Administration Office for a number of employees funded by Research and Development awards for certain pay periods during fiscal year 2005, the personal services have not been confirmed through the after-the-fact confirmation process as described in OMB Circular A-21. This results in $621,249.75 in unconfirmed personal services distributions to Research and Development awards (exclusive of fringe benefits and indirect costs).
State audit testing disclosed instances where departments split large P-card purchases into two transactions. While this may not be an intentional tactic to avoid purchasing “red-tape”, in the absence of explanation, these split purchases result in audit points and findings which conclude that UGA does not comply with purchasing policy.
No single purchase shall exceed $4,999. The practice of splitting a large order into two or more orders, as well as purchasing the same items from two or more vendors may well be considered an attempt to evade the limitations of the P-card and could lead to revocation of the individual’s card.
Source: UGA Procurement Card Manual
Department “A” made three separate P-card purchases from the BD Supply Co. on 3/31/2005
Total purchased from BD Supply Co. on 3/31/2005 was $10,972
How Can We Improve?
How Do We Correct This?
Per Board of Regents Business Procedures Manual Section 10.0 Accounts Receivable:
By following generally accepted accounting procedures regarding revenue recognition, we achieve:
UGA has a similar issue with deferred revenue
Departments may defer revenue when they have collected payment from the customer, but the services have not yet been provided.
“Z” Best Institute could not substantiate the need to defer $330,000 of deferred revenue at year end.
“My department provides or sells educational activities and services to external customers, and we have departmental sales accounts . . . what am I going to do?”
If you deal with departmental sales accounts, you should attend.
Departmental Sales and Revenue Recognition
Departmental Sales and Revenue Recognition
Choose One Session to Attend:
March 20, 2006 - 9:00am to Noon
March 27, 2006 – 1:00pm to 4:00pm
The Bursar’s Office records interest income earned on short-term investments.
This interest income must be used by each year end or it lapses to the state.
Interest income is budgeted for unexpended plant funds and used for capital outlay purposes.
The Bursar’s Office must account for interest income on an accrual basis so the financial statements reflect earnings for the fiscal year, even if they have not yet been received.
The amount of accrued income is crucial so that the Budget Office can expend or obligate those earnings in the current fiscal year, and income is not lapsed.
On Nov 1, 2005 UGA purchases short-term discount notes which pay interest semi-annually in February and August.
ACCRUAL ACCOUNTING REQUIRED
February 2006 Interest Payment
Interest Income $1,000,000
June 30,2006 accrual entry
Interest Receivable $666,667
Interest Income $666,667
August 2006 (FY07) Interest Payment
Interest Receivable $666,667
Interest Income $333,333
Feb 2006 cash receipt $1,000,000 +
June 30, 2006 accrual of $666,667
“What can I do to improve internal controls in my unit and improve overall compliance with policy and procedures?”
Today’s Goal: Awareness of UGA’s Current Audit Performance
Recognition That We All Have a Role and a Responsibility to Improve Audit Performance And Internal Controls at UGA
Achieve Excellence in Audit Performance
Actualize Compliance With Internal Controls, and
Adhere to Philosophy That Fiscal Management @ UGA is Everyone’s Responsibility
Thank you for your interest. We look forward to working with you as we move through our goals for Fiscal Management Training and Improved Audit Performance and Internal Controls.