Internal Control System
An adequate system of internal controls reduces exposure to business, financial, and accounting risks, with the following elements:
Authorization, Approval, and Accountability: Transactions are authorized by person(s) with delegated approval authority, with sufficient explanations and documentation to support post authorization review and audit. Unauthorized transactions are identified and central departments are informed if a loss of University assets or any material irregularity occurs.
Documentation of and adherence to policies, guidelines, and procedures, and the terms and conditions of gifts, grants, and contracts: University, department, and sponsor policies, procedures and restrictions are formalized and communicated to employees. Documentation and accessibility helps provide day-to-day guidance to staff and will promote continuity of activities in the event of prolonged employee absences or turnover. Adherence requires active promotion by management and empowerment of staff to escalate issues of non-compliance.
Physical Security: Cash, inventories, equipment, and other property are secured physically, counted periodically, and compared with control records; safeguards are provided for the loss or unauthorized use of University assets, including data.
Proper Management of Expenses: Expenses are monitored and controlled. Comparisons of actual expenses to budgeted amounts are performed on a regular basis, and all significant variances resolved.
Review and Reconciliation: Routine examination and reconciliation of transaction records to the University books of record is required to verify the accuracy of the records, the appropriateness of the transactions, and their compliance with policy.
Separation of Duties and Monitoring: Financial responsibilities are divided between different people to assure a single person does not perform every aspect of a financial transaction. Segregating responsibilities can reduce errors and prevent or detect inappropriate transactions. Based upon the level of separation of duties, management has the responsibility to monitor financial transactions and balances.
Training and Supervision: Employees receive appropriate training and guidance to ensure they have the knowledge necessary to carry out their job duties. Employees are provided with an appropriate level of direction and supervision and are aware of the proper channels for reporting suspected improprieties.