Following the procedures described below will accomplish many best business practices. To further develop best practices, department administrators should understand some internal control concepts, including:
- Consistency, efficiency and effectiveness
- Segregation of duties
- Authorization and training
- Review and approval
- Safeguarding assets
- General tips
- Financial reports
- Cash receipts
- Payroll and related expenses
- Other expenses and expenditures
Apply the general tips below to improve the operations in your department.
You can use our Internal Control Assessment Tool (please download a copy to your desktop) to evaluate your departmental internal controls in more detail. If you have questions regarding the assessment tool, please contact Mary Hill at 774-2030 or firstname.lastname@example.org.
CONSISTENCY, EFFICIENCY AND EFFECTIVENESS
If you don't have time to do it right, when are you going to have time to do it over?
Consistent performance increases the reliability of operating transactions. Accounting operations are considered effective when they get the job done. Efficient procedures accomplish the objectives in an accurate and timely fashion using minimal resources. Best practices eliminate duplicated efforts, streamline processes, increase productivity and employ a variety of means to achieve consistent, efficient and effective processes.
Written departmental procedures document business processes, personnel responsibilities, and departmental operations. They promote uniformity in executing and recording transactions and serve as training tools for employees. When used effectively, they help to reduce processing errors, inconsistent practices among employees, inaccuracies and unreliable financial information.
While accuracy is important, timeliness is another key requirement to achieve efficiency. Employees should analyze their work flows and identify ways to work smarter and save time. Timely processing in the department helps the payable accounting and accounting services departments to work more efficiently.
The system of checks and balances that assists the complete and accurate recording of transactions is known as the system of internal control. This system provides assurance that recorded information is correct and complete.
SEGREGATION OF DUTIES
Segregation of duties is a primary concept in a system of internal control. Duties within a department should be segregated so that one person does not perform processing from the beginning to the end of a process. One person should not be in the position to authorize a transaction, execute the transaction, record the transaction and provide the sole review of the transaction. Reconciliations should be performed by a person independent of the basic process. For example, one person should not be able to accept cash, record deposits, make the bank deposits and reconcile the bank account. Segregation of duties helps to reduce the risks of inaccurate financial reporting and improper use of funds.
AUTHORIZATION AND TRAINING
In order to accomplish accurate posting of transactions, employees should be properly trained and authorized to perform accounting and cash handling functions. Only authorized personnel should have access to automated accounting systems, cash storage, original accounting documentation and sensitive information. Proper training should include an understanding of the essential need for timeliness in processing transactions. Errors and omissions should be identified and corrected on a timely basis.
REVIEW AND APPROVAL
When a process is performed within a department, there should always be another level of review and approval performed by a knowledgeable individual independent of the process. The reviewer should be able to identify errors and omissions. The approval should be documented to verify that a review has been done. Review and approval help to reduce uncorrected errors, irregularities and inaccurate or incomplete information in accounts and reports.
University assets are economic resources that are expected to be of benefit in the future. Assets include cash, office supplies and equipment, among others. Physical protection of assets is a primary goal. Cash should be stored in a fire-proof safe. Office supplies should be kept at reasonable quantities. Equipment should be stored in secure, locked areas. Keeping accurate lists of equipment helps to reduce the risk of misplacing the equipment or of someone converting the equipment to personal use.
- Keep written procedures for your department's cash handling and accounting functions. These procedures should specify who does what and should be updated as needed.
- If you are a principle investigator, comply with the sponsor's requirements for accountability.
- Use only original signatures to approve documents.
- Fulfill your responsibility yourself.
- Do not delegate your accountability functions.
- In the case of a mistake, submit appropriate documents to correct the mistake as soon as possible or no later than 90 days from the date of the occurrence. If the fiscal year end is approaching corrections should be submitted immediately.
- Reconcile the monthly SAP financial report to transaction documents. Call Accounting Services 2571 for assistance.
- Have an appropriate person review the monthly SAP financial report and reconciliation.
- Prepare your budget with your best estimate of how the department's funds will be earned and expended during the year.
- Compare actual results to the budget and follow up on significant variances.
- Endorse checks with "for deposit only" immediately when received.
- Safeguard cash and checks against loss. Maintain accountability for cash with appropriate documentation of cash transfers.
- Deposit receipts within 24 hours, or, if less than $250, within 72 hours. Do not retain funds for any purpose.
- Keep a cash receipts journal, a duplicate receipt copy or another suitable record when accepting payments.
- Retain cash receipts documentation in accordance with the records retention rules.
PAYROLL AND RELATED EXPENSES
- Submit approved time sheets promptly.
- Reconcile payroll distribution reports to SAP.
OTHER EXPENSES AND EXPENDITURES
- Follow university policies and procedures.
- Review and edit purchasing card statements promptly.
- Use SDOL to distribute purchasing card expenditures promptly.
- Do not sign contracts on behalf of the university unless you are specifically authorized in writing to do so. Contact purchasing for more information on contracts.