Extension Internal Control Plan.doc.doc

The University of Wisconsin-Extension Internal Control Plan September, 2007

TABLE OF CONTENTS

Introduction 1

Control Environment 2

- Mission and Strategic Planning- Governance- Organizational Structure- Code of Conduct- Financial Statements- Audit- CEO’s Statement of Support

Risk Assessment 5

- Transaction Cycles- Transaction Subcycles- Weighting of Risk Factors

Control Activities 6

Information and Communication 7

Monitoring 8

Attachments

A. UW-Extension Organization Chart – Executive Level 9B. UW-Extension Administration and Financial Services Org. Chart 10 C. UW-Extension Business Services Organization Chart 11D. UW-Extension Chancellor's Statement of Support for Internal Control 12E. Transaction Subcycles 13F. Risk Assessment Instructions 16G. Example of Completed Risk Assessment 17H. Control Objectives for Revenue Cycle 19I. Control Objectives for Payroll Disbursement Cycle 21J. Control Objectives for Non-Payroll Disbursement Cycle 23K. Control Objectives for Financial Reporting Cycle 25L. Evaluation of Controls Over Academic Student Fees Worksheet 26M. Evaluation of Controls Over Auxiliary Operations Revenue Worksheet 29N. Office of Financial Administration Home Page 32O. UW-Extension Home Page 33P. UW-Extension Business Services Home Page 36


Introduction

This Internal Control Plan is prepared in accordance with the delegation agreement signed between the University of Wisconsin-System Administration and the University of Wisconsin-Extension entitled “Cooperative Agreement on Accounting, Auditing, and Internal Control Activities.” The agreement is an extension of the delegation from the Department of Administration to the UW System as authorized by section 16.53 of the Wisconsin Statutes. For the most part, the processing of UW-Extension financial transactions takes place at UW-Extension and most of the relevant controls are exercised at that level. UW-System Administration will sign a delegation agreement with UW-Extension that is similar in content and format to the delegation agreement UW-System has signed with the State Controller. This Internal Control Plan follows the model outlined in The University of Wisconsin System Internal Control Plan.

The plan that follows is divided into five sections:

Control environment: This section describes the mission, governance structure and strategic planning process followed by the UW System and UW-Extension as well as the organizational structure for UW–Extension. Systemwide and UW-Extension codes of conduct are referenced and information is provided relative to the preparation of financial statements and the conduct of financial and management audits. The Chancellor's statement of support for internal accounting controls is provided in Attachment D.

Risk Assessment: This section lists the eight major processing cycles that have been identified by the UW System institutions; typical subcycles within each of these major cycles are listed in Attachment E. The UW System institutions have adopted a common approach to assessing risks that is described in this section. The detailed instructions for completed the risk assessment are presented in Attachment F and an example of a completed risk assessment for UW-Extension's revenue and disbursement subcycles is included as Attachment G.

Control Activities: As described in this section, internal control objectives have been defined for the revenue, disbursements and financial reporting cycles; the objectives for these three cycles are presented in Attachments H, I and J. The UW System institutions have adopted a common approach to documenting internal controls that specifically identifies the control activities that are designed to meet each internal control objective and evaluate their effectiveness. This format for documenting internal control activities will be adopted as an adjunct to such documentation as may exist at present in procedure manuals, audit workpapers and other forms. UW-Extension has documented control over its major source of revenue and over its local checkwriting process in this internal control plan.

Information and Communication: This section describes the major means by which information about the internal control environment is communicated throughout the UW System.

Monitoring: This section describes the process for monitoring the functioning of internal control systems.

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Control Environment

The University of Wisconsin-Extension (UWEX) is part of the University of Wisconsin System (UWS) which was created on October 11, 1971 by Chapter 100, Laws of 1971, which combined two public university systems of the state under a single board of regents. The University of Wisconsin System consists of 13 universities, 13 two-year colleges, the University of Wisconsin-Extension and System Administration. The control environment for the UW System and UW Extension is described below.

Mission and Strategic Planning

As established by section 36.01(2) of the Wisconsin Statutes the mission of the University of Wisconsin System is:

“ … to develop human resources, to discover and disseminate knowledge, to extend knowledge and its application beyond the boundaries of its campuses, and to serve and stimulate society by developing in students heightened intellectual, cultural, and humane sensitivities; scientific, professional, and technological expertise; and a sense of purpose. Inherent in this mission are methods of instruction research, extended education, and public service designed to educate people and improve the human condition. Basic to every purpose of the system is the search for truth.”

The mission of the University of Wisconsin-Extension is to provide, jointly with the UW institutions and the Wisconsin Counties, an extension program designed to apply University research, knowledge and resources to meet the educational needs of Wisconsin people, wherever they live and work. This mission includes the programs of the four UWEX programmatic divisions, Cooperative Extension, Outreach and E-Learning Extension, Broadcasting & Media Innovations, and Business and Manufacturing Extension in teaching, applied research, public broadcasting and communications and statewide program leadership, coordination, and accountability. Long range planning and future developments are carried out in accordance with this mission.

Governance

As provided in Chapter 36 of the Wisconsin Statutes, primary responsibility for the governance of the system is vested in the Board of Regents which is responsible for establishing policies and rules for governing the system, planning to meet future state needs for collegiate education, setting admission standards and policies, reviewing and approving university budgets and establishing the regulatory framework within which the individual units are allowed to operate with as great a degree of autonomy as possible.

Organizational Structure

The Board of Regent appoints the president of the system, the chancellors of the 13 universities, UW-Extension and UW-Colleges and the deans who head each of the 13 colleges. The President and Chancellors are charged with implementing regent policies and with administration of the institutions. System Administration is responsible to the president and assists the Board of Regents in establishing policies, reviewing the administration of policies and planning the programmatic, financial and physical development of the system. As executive heads of their respective faculties and institutions, the Chancellors are responsible for the administration of their units including curriculum design, degree requirements, academic standards, grading system, faculty appointments, auxiliary services and budget management. Faculty, academic staff and students share in the governance of the institutions as provided by law subject to the responsibilities and powers of the board, the President and Chancellors.


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The Chancellor of the University of Wisconsin - Extension is served by a Vice Chancellor/Provost, an Assistant Chancellor, an Assistant for Equal Opportunity and Diversity Programs, an Assistant for University Relations and the Secretary of the Faculty. Directors of Information Systems, Human Resources, and Public Information as well as the Internal Auditor also serve the Chancellor. A Dean of Outreach and E-Learning, a Dean for Cooperative Extension, a Director for Broadcasting and Media Innovations and a Director of Business and Manufacturing Extension also serve the Chancellor. Each of these individuals is responsible for formulating, interpreting and implementing policies within his/her assigned area of responsibility.

Responsibility for the major business functions of the UW-Extension is assigned to the Assistant Chancellor who also is the Chief Business Officer. The Assistant Chancellor is responsible for budgeting, accounting, cashier services, purchasing, extramural support, facilities management, risk management, mail services and the Extension Conference Centers. The Budget Director, Controller, Conference Center Director and the General Services Director report directly to the Assistant Chancellor. The Internal Auditor reports both to the Chancellor and the Assistant Chancellor. See Attachment A for a high-level UW Extension organization chart. An organization chart for the Assistant Chancellor's Office is provided in Attachment B.

The UW-Extension Director of Business Services/Controller directs and has overall supervisory responsible for general accounting, budgetary controls, accounts payable, accounts receivable, cashier, purchasing, capital assets, surplus property operations and the administration of extramural funds. The Controller directs and is responsible for UW-Extension accounting practices, maintenance of fiscal records and preparation of institutional financial reports. This includes assuring that accounting activities are in compliance with Generally Accepted Accounting Principles and with University of Wisconsin System and State of Wisconsin laws, rules and regulations. The Controller is responsible for developing polices and procedures that provide a strong system of internal control to assure compliance with governing regulations and polices, safeguards institutional resources and insure the integrity of all financial systems and data bases. An organization chart for the Controller's Office is provided in Attachment C.

While responsibility for the major business functions are dispersed throughout UW-Extension, responsibility for the fiscal integrity of the UW-Extension resides with the Chief Business Officer and the Controller.

Code of Conduct

Chapter 19.45 Wisc Stats governs university employes’ standard of conduct. It is further codified by Wisconsin Administrative Code, Rules of the Board of Regents – UWS 8; and chapter 24 of Employment Relations Merit Recruitment and Selection manual. Chapter UWEX 8 of the UWEX Faculty and Academic Staff Policies and Procedures Manual sets forth Extension's unclassified staff's code of ethics. A code of ethics for classified staff is included in the UW-Extension Classified Staff Handbook.

Financial Statements

The University of Wisconsin System publishes an Annual Financial Report containing statements prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board and the American Institute of Certified Public Accountants’ guide Audits of Colleges and Universities. These financial statements are audited by the State of Wisconsin’s Legislative Audit Bureau. Additionally, the University of Wisconsin System, as a member of the National Association of College and University Business Officers (NACUBO), complies with their accounting standards and practices. UW-Extension's balance sheet and revenue and expenditures by fund information is included in the University of Wisconsin System Annual Financial Report. Specific information by Institution will be available on the University of Wisconsin System website. Expenditures by Source of Funds and by Division are reported in the UW-Extension Annual Report.


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The financial statements published in the Annual Financial Report include the accounts of the Wisconsin State Colleges Building Corporation and the Wisconsin University Building Corporation. These corporations were legislatively established for the purpose of issuing debt to fund the construction of various UW System facilities prior to 1970.

The financial statements do not include the accounts of various legally independent and fully self-governing support organizations such as booster clubs and alumni groups; funds contributed to the UWS by these organizations are reported at the time they are received and expended. Post-retirement benefit plans for UWS employes are administered by the State of Wisconsin’s Department of Employe Trust Funds. The assets and liabilities of these programs are reported by the State of Wisconsin and not by the UWS.

Audit

The financial statements of the UW System are audited by the Legislative Audit Bureau (LAB). Additional audit work may be performed on UW System financial records if required in the audit of the State of Wisconsin’s Comprehensive Annual Financial Report. In addition, the LAB performs an organization-wide audit of the UW System in compliance with the federal government’s requirements under OBM Circular A-133.

UW System Administration’s Office of Internal Audit is responsible for providing objective review and analysis to assure that UW System programs, policies and practices are conducted in accordance with state and federal law and Board of Regents policy. Reporting through the Vice President for Finance the Director of Internal Audit is responsible directly to the Board of Regents and provides regular reports to the Audit Subcommittee of the Business and Finance Committee. In recent years the Office of Internal Audit has, at the direction of the Board of Regents, concentrated on programmatic and management audits.

UW-Extension's Internal Audit Department is an independent appraisal activity established to conduct reviews of operations and procedures and to report findings and recommendations as a service to UW-Extension management. It examines and evaluates the adequacy and effectiveness of UW-Extension's system of internal control and the quality of performance in carrying out assigned responsibilities. Extension's Internal Audit reports administratively to the Assistant Chancellor for Administration, but may report audit matters directly to the Chancellor and UW System Administration. Internal Audit recommends procedures to improve controls and operational efficiencies, provides assurance to UW-Extension management that necessary financial and management controls are present to safeguard assets, recommends controls to prevent and detect fraud and misappropriation of assets and performs liaison functions with various audit agencies.

By agreement with the Vice President for Finance, the institutional auditors perform certain financial audits formerly performed by UW System Administration’s Office of Internal Audit. UW System Administration’s Office of Internal Audit coordinates training opportunities for auditors located at the UW institutions and works with the institution auditors to ensure audits are performed in certain core areas, including cash handling and auxiliary operations.

Chief Executive Officer’s Statement of Support

The Chancellor of the UW-Extension’s Statement of Support for Internal Accounting Controls is included as Attachment D.


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Risk Assessment

Transaction Cycles

The institutions of the University of Wisconsin System have identified the following major transaction cycles pertinent to their operations:

Revenue Cycle Disbursements Cycle Cost Allocations Cycle Property Control Cycle Cash and Investments Management Cycle Budget Management Cycle Debt Management Cycle Financial Reporting Cycle

Transaction Subcycles

Typical subcycles within each of these major cycles are listed in Attachment E.

Weighting of Risk Factors

UW-Extension has performed a risk assessment for its own revenue and expenditures subcycles using a common methodology which is based on weighting of five different factors:

1. The materiality of the dollars associated with that type of transaction (40%);

2. Known problems such as inadequate separation of duties, prior audit findings, etc. (20%);

3. Time elapsed since last audit coverage of the subcycle (10%);

4. Management/process factors such as complexity of the operation, recent changes in process, personnel turnover, management quality, prior history, quality of internal controls (to the extent known), source of input, degree of automation, impact of inadequate controls, etc.; (20%) and,

5) Public factors such as political sensitivity the potential impact of adverse publicity; regulatory or compliance concerns (10%).

For each subcycle a rating from one to five is assigned to each of these risk factors where 1 is “essentially no risk,” 2 is “little risk,” 3 is “average risk,” “4 is high risk,” and 5 is “maximum risk.” The ratings assigned are then weighted by the percentages shown above to determine an overall measurement of risk.

UW-Extension has completed a risk assessment for its revenue and disbursement subcycles. See Attachment F for instructions from UW-System on risk assessment and Attachment G for Extension's assessment of the revenue and disbursement subcycles. These assessments will be updated on an ongoing basis. Risks will be similarly assessed and documented for other cycles in future internal control plans.


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Control Activities

Most of the relevant controls associated with processing the financial transactions of UW-Extension take place at UW-Extension. In some cases, additional controls are exercised either by the UW Processing Center (which posts transactions originating at individual UW institutions to a systemwide transaction database) or by UW-System Administration (particularly, as it relates to setting policy).

Control objectives have been established for revenue, disbursement and financial reporting cycles. 1 Revenue cycle control objectives are identified in Attachment H. Disbursements cycle control objectives have been segregated into payroll subcycle, Attachment I and non-payroll subcycle, Attachment J. Financial reporting control objectives are identified in Attachment K. The other major cycles will be documented in future internal control plans.

To assess and document the internal control objectives, the UW institutions have agreed upon a format with categories for Control Objective, Risk If Objective Is Not Met, Control Activities, and Evaluation and Conclusions. For this initial control plan, UW-Extension has documented its internal controls over its major sources of revenue and over its local checkwriting process in this format. See Attachment L for an example of one institution’s format for evaluation of controls over academic student fees.

This format for documenting internal control activities will be adopted as an adjunct to documentation that may exist in procedure manuals, audit workpapers and other forms. Clearly, given the number of subcycles that have been defined, documenting internal controls in a prescribed format will be a significant undertaking for each UW institution. This will be accomplished by institution internal auditors during the course of their normal audit schedule and will be undertaken with a view toward the overall risks associated with each subcycle as identified in the Risk Assessment section of the plan.

Future internal control plans will report on newly documented subcycles and on updates to previously documented subcycles.

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1 The Arthur Andersen publication A Guide for Studying and Evaluating Internal Accounting Controls (January 1978) was used extensively as an aid in identifying these internal control objectives for these cycles.


Information and Communication

Information related to internal control is communicated primarily via the Internet. UW-System Administration has produced various documents including the Preaudit Manual; Financial and Administrative Policies; Financial Reports; Financial Reporting Due Dates; information on the UW System Shared Financial System; as well as links to other external financial sites and has made this information available on the UW-System web site (see Attachment M at http://www.uwsa.edu/fadmin/).

UW-Extension has posted on its web site a variety of documents that relate to internal control. These include a policy and procedure manual, the purchasing card manual, electronic forms and travel related information. A SFS Web Inquiry System (WISDM) user manual has also been developed and distributed to users. See Attachment N at http://www1.uwex.edu/ for the front page of the UW Extension web site and Attachment O at http://www1.uwex.edu/gea/bussvcs/ for Extension's Business Services web site.

Financial administrative policies addressing internal control issues include:

The Extramural Support Procedures Manual Procurement Polices and Procedures Processing of Financial Transactions Procedures Accounts Payable Procedures Cashier Services Policy and Procedures Manual UW-Extension Internal Control Plan

http://www1.uwex.edu/gea/bussvcs/

http://www1.uwex.edu/

http://www.uwsa.edu/fadmin/


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Monitoring

Once every three years, in accordance with the Cooperative Agreement on Accounting, Auditing and Internal Accounting Control Activities between UW System Administration and the University of Wisconsin-Extension, the Chief Business Officer for the University of Extension will certify to the UW System Vice President for Finance that Extension's internal accounting controls have been reviewed and that any material weaknesses in these controls have been corrected. Plans to correct weaknesses will also be communicated to the UW System Vice President for Finance.

Internal Controls will also be monitored during the course of UW-Extension internal audits, and are routinely subject to assessment by external audit entities.


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The University of Wisconsin-Extension Attachment AInternal Control Plan September, 2007

UW Colleges & UW-ExtensionSenior Leadership Organization Chart - All UWC Deans and UWEX Deans/Directors will reportjointly to the Chancellor and their Provost.

David WilsonChancellor

Teri VenkerExecutive Director

Univ. Relations

VacantSpecial Asst. for

Legislative Affairs

Vallerie MauriceDirector Workforce Equity

& Diversity

Willie D. LarkinSr. Special Asst. to the

Chancellor

Marsha HenferChief Information

Officer

David PruchaDirector Human

Resources

UW Colleges Deans/CEOs

Greg LampeInterim Provost

and VC fir Academic Affiars

Steve Wildeck VC Administrative &

Fin. Serv ices

Sue SchymanskiAssoc. VS Admin.

& Fin. Services

Marv Van Kekerix Vice Chancellor

& Extension Provost

UW-Extension Deans/Directors


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Wisconsin Humanities Council

Vice ChancellorAdministrative & Financial

ServicesInternal Audit

Budget Conference Centers Facilities & Mail Services

UW-ExtensionVice Chancellor, Administrative & Financial Services

September, 2007 -10-

Business Services(Controller)

• Annual Budget• Auxiliary Budget• Planning &

• Accounting• Cashier• Pre-Audit• Purchasing• Extramural Support

• Pyle Center• Lowell Center• Friedrick Center• Registration &

• Facilities Mgmt.• Capital Budget• Mail Services• Bulk Mail Center• Safety

The University of Wisconsin-Extension

Attachment AInternal Control Plan September, 2007

Attachment C

UW-Extension Business ServicesOrganizational Chart

Mark DornController & Directorof Business Services

1.0 FTE

PurchasingInventory

Surplus Property

AccountingServices

CashierServices

Extramural Support

Richard IntlekoferPurchasing

Agent0.8 FTE

Rhonda LogerPurchasing

Agent Senior1.0 FTE

Robert PriceFinancial Program

Supervisor1.0 FTE

M. Jean StorandtFin Spec 3

1.0 FTE

Jerry RosenauFin Spec 4

1.0 FTE

Janet WaldburgerFin Spec 4

1.0 FTE

Leon SoboleskiFin Spec 4

1.0 FTE

Nancy DahmenFinancial Program

Supervisor1.0 FTE

Kathy TravisFin Spec 31.0 FTE

Sue BallwegFin Spec 3

1.0 FTE

Sue McIntyreFin Spec 3

1.0 FTE

Dean WhitneyFin Spec 2

1.0 FTE

Teri AndersonFin Spec 2

1.0 FTE

James EricksonAccountant Senior

1.0 FTE

Suzanne SamuelsenAccountant Senior

1.0 FTE


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Attachment D

The University of Wisconsin - ExtensionInternal Control Plan

Statement of Support for Internal Accounting and Administrative Controls University of Wisconsin - Extension

Recognizing that a vital component of the UW-Extension's mission is to safeguard its assets and ensure the proper use of resources, the officers of the UW - Extension and the Chancellor accept responsibility for implementation and utilization of the internal control plan.

We affirm the University of Wisconsin Extension's total and ongoing commitment to implementing and maintaining appropriate safeguards over the financial assets placed in our care.

______________________ ______________________Sue Schymanski David WilsonVice Chancellor Admin & Fin. Srvs Chancellor


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Attachment E

University of Wisconsin -Extension: Typical Subcycles

Revenue Cycle:

Academic Fees SubcycleCredit InstructionNon-Credit Instruction

Auxiliary Operations SubcycleConference CentersCamps

Mail Services Instructional Communications Systems Publications WHA Radio - Annenberg Store WHA Television

Other

Sponsored Projects SubcycleFederal grants and contractsState grants and contractsPrivate grants and contracts

Contract Services Revenue Subcycle Learning Innovations Public Television Public Radio ADL Co-Lab

Instructional Communications SystemGeological & Natural History Survey

Gift Subcycle

Investment Income Subcycle


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Attachment E

University of Wisconsin -Extension: Typical Subcycles

Disbursement Cycle

Payroll and Fringe Benefits SubcycleUnclassified PayrollClassified/LTE PayrollStudent Payroll

Payroll Adjustments/Special Payrolls Fringe Benefits

Vendor Payments SubcycleCheck with orderPaid by state checkPetty cash fund disbursementsBlanket order purchasesProcurement card purchases

Cost Allocations Cycle:

Chargeback Operations

Indirect Costs/Overhead

Fringe Benefits Allocation

Property Control Cycle:

Land and BuildingsCapital Equipment Non-capitalized EquipmentOther Supplies Inventories

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Attachment E

UW System Institutions: Typical Subcyles

Cash and Investment Management Cycle:

Bank and Custodial AccountsDeposit AccountsChange and Petty Cash Funds

Budget Management Cycle:

Auxiliary BudgetOperating Budget

Capital Budget

Debt Management Cycle:

Capital LeasesInstallment PurchasesState of Wisconsin General Obligation Bonds

Academic Facilities (GPR supported)Self Amortizing (PR supported)

Financial Reporting Cycle:

Management ReportingGrant and Contract ReportingGAAP Basis Financial Reporting

Current Funds

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Attachment F

Risk Assessment Methodology

1.) Define revenue and expenditure subcycles for UW-Extension.

3. For each subcycle rank each risk factor from 1 - 5 where: 1 is "essentially no risk", 2 is "little

risk", 3 is "average risk", 4 is "high risk", and 5 is "maximum risk".

The individual risk factors are defined as follows:

Materiality - The relative magnitude of revenue or disbursements processed through the subcycle.

Known Problems - For example, known internal control weaknesses such as inadequate separation of duties or adverse prior audit findings.

Recentness of prior audit - A recent audit with a positive assessment of the adequacy and functioning of internal controls reduces the assigned risk factor (subject to known sub- sequent changes).

Management/Process Factors: Impact of inaccurate date, adverse activity, service delays Complexity of the operation Quality of internal controls Management quality Prior history Personnel turnover Recent changes in processes Sources of input Degree of automation Opportunities for improvements/cost savings Public factors Impact of adverse publicity Political sensitivity Regulatory/compliance concerns

3. Determine the overall risk factor for the subcycle by weighing the individual factors as follows: materiality 40%, known problems 20%, recency of prior audits 10%, management

and process factors 20%, and public factors 10%.

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ATTACHMENT GRisk Assessment for Revenue CycleUniversity of Wisconsin - Extension

Known Recency of Management/ Public Overall RISK AREAS MATERIALITY Problems Prior Audit Process Factors Factors Risk

40% 20% 10% 20% 10%REVENUE SUBCYCLES:Academic and Segregated Fees Credit Instruction 1 2 1 2 1 1.4 Outreach Instruction 4 3 1 3 1 3.0

Auxiliary Operations Parking 1 1 5 1 1 1.4 Camps 1 2 5 1 1 1.6 Other 2 1 5 1 1 1.8

Service Centers Mail Services 3 2 1 2 1 2.2 Instructional Communication Systems 2 2 1 2 2 1.9

Sales and Services of Educational Activities: Conference Centers 3 3 4 2 2 2.8

Sponsored Projects: Federal Grants and Contracts 4 2 1 1 1 2.4 State Grants and Contracts 2 2 1 1 1 1.6 Private Grants and Contracts 4 2 1 1 1 2.4

Contract Services Revenue: Dining 2 2 1 1 1 1.6

Gifts: 2 2 1 1 1 1.6

Investment Income 1 1 1 1 1 1.0-17-


Risk Assessment for Disbursement Cycle

University of Wisconsin - Extension

Known Recency of Management/ Public Overall RISK AREAS MATERIALITY Problems Prior Audit Process

FactorsFactors Risk

40% 20% 10% 20% 10%

DISBURSEMENT SUBCYCLES:

Payroll and Fringe Benefits: Unclassified Payroll 4 2 1 1 2 2.5 Classified/LTE Payroll 3 2 1 1 2 2.1 Student Payroll 2 2 1 1 1 1.6 Payroll Adjustments/Special Payrolls 1 2 1 1 1 1.2 Fringe Benefits 3 2 5 1 1 2.4

Vendor Payments: Check with Order 2 2 1 1 2 1.7 Paid by State Check 4 2 2 1 1 2.5 Petty cash fund disbursements 1 2 1 1 1 1.2 Blanket order purchases 2 2 1 1 2 1.7 Procurement card purchases 3 3 3 2 2 2.7

Financial Aid: 1 1 5 1 1 1.4

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The University of Wisconsin-Extension

Attachment AInternal Control Plan September, 2007

Attachment H

Revenue Cycle

Authorization objectives:

1. Customers should be authorized in accordance with management’s criteria.

2. The prices and terms of goods and services to be provided should be authorized in accordance with management’s criteria.

3. Adjustments to revenues, cost of sales, selling expenses, customer accounts, and account distributions should be authorized in accordance with management’s criteria.

4. Processing procedures should be established and maintained in accordance with management’s criteria.

Transaction processing objectives:

5. Only those customer requests for goods and services that meet management’s criteria should be approved.

6. An approved request should be required before goods or services are provided.

7. Each authorized order should be accurately shipped on a timely basis.

8. All, and only, shipments made and services provided should result in a billing.

9. Each billing should be prepared accurately and promptly.

10. Accountability for cash items received should be established before the cash can be misdirected.

11. Billings should be accurately and promptly classified, summarized, and reported.

12. Costs of goods and services sold and sales-related expenses should be accurately and promptly classified, summarized and reported.

13. Cash items received should be accurately and promptly classified, summarized and reported.

14. Adjustments to revenues, costs distributions, customer accounts and account distributions should be accurately and promptly classified, summarized and reported.

15. Billings, collections on account and related adjustments should be accurately applied to the proper customers’ accounts.

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Classification objectives:

16. Journal entries should be prepared each accounting period for billings, costs of goods and services sold and sales-related expenses, cash items received and related adjustments.

17. Revenue journal entries should summarize and classify economic activities in accordance with management’s plan.

18. Tax information derived from revenue activities should be accurately and promptly reported.

Substantiation and evaluation objectives:

19. Recorded balances of accounts receivable, and related transaction activity, should be periodically substantiated and evaluated.

Physical safeguard objectives:

20. Access to cash and cash items received should be permitted only in accordance with management’s criteria until control is turned over to the treasury cycle.

21. Access to shipping, billing, cash collection, and receivable records; critical forms; processing areas; and processing procedures should be permitted only in accordance with management’s criteria.


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Disbursements Cycle – Payroll


1. Employees should be hired in accordance with management’s criteria.

2. Compensation rates and payroll deductions should be authorized in accordance with management’s criteria.

3. Adjustments to payroll disbursements, employee accounts, and account distributions should be authorized in accordance with management’s criteria.



5. Only those requests to use labor that meet management’s criteria should be approved.

6. Labor used should be accurately and promptly reported.

7. Amounts due to, or on behalf of, employees and the accounting distribution of such amounts, should be computed accurately and recognized as liabilities promptly.

8. Each payroll-related disbursement of cash should be based upon a recognized liability, be accurately prepared, and be appropriately authorized.

9. Amounts due to, or on behalf of, employees should be accurately and promptly classified, summarized, and reported.

10. Payroll disbursements and payroll-related adjustments should be accurately and promptly classified, summarized and reported.

11. Compensation for labor services, payroll disbursements, and related adjustments should be accurately applied to the proper employees’ accounts and related subsidiary ledgers.


12. Journal entries for amounts due to, or on behalf of, employees, payroll disbursements, and related adjustments should be prepared each accounting period.

13. Payroll journal entries should summarize and classify economic activities in accordance with management’s plan.

14. Tax information derived form payroll activities should be accurately and promptly reported.


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15. Recorded balances of payroll-related accounts, and related transaction activity, should be periodically substantiated and evaluated.


16. Access to personnel, payroll and disbursement records; critical forms; processing areas; and processing procedures should be permitted only in accordance with management’s criteria.

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Attachment J

Disbursements Cycle—Non-Payroll


1. Vendors should be authorized in accordance with management’s criteria.

2. The types, estimated quantities, and prices and terms of goods and services needed should be authorized in accordance with management’s criteria.

3. Adjustments to cash disbursements, vendor accounts, and account distributions should be authorized in accordance with management’s criteria.



5. Only those requests of vendors for goods or services that meet management’s criteria should be approved.

6. Only requested goods and services should be accepted.

7. Goods and services accepted should be accurately and promptly reported.

8. Amounts due to vendors for goods and services accepted, and the accounting distribution of such amounts, should be computed accurately and recognized as liabilities promptly.

9. Each disbursement of cash for goods and services accepted should be based upon a recognized liability, be accurately prepared and be appropriately authorized.

10. Amounts due to vendors should be accurately and promptly classified, summarized, and reported.

11. Cash disbursement and purchasing-related adjustments should be accurately and promptly classified, summarized and reported.

12. Liabilities incurred, cash disbursements, and related adjustments should be accurately applied to the proper vendors’ accounts.

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13. Journal entries for amounts due to vendors, cash disbursements, and related adjustments should be prepared each accounting period.

14. Purchasing journal entries should summarize and classify economic activities in accordance with management’s plan.

15. Tax information derived form purchasing activities should be accurately and promptly reported.


16. Recorded balances of accounts payable, and related transaction activity, should be periodically substantiated and evaluated.


17. Access to purchasing, receiving, and disbursement record; critical forms; processing areas; and processing procedures should be permitted only in accordance with management’s criteria.

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Attachment K

Financial Reporting Cycle


1. Journal entries should be authorized in accordance with management’s criteria.

2. Financial reporting cycle processing procedures should be established and maintained in accordance with management’s criteria.


3. Only those journal entries that meet management’s criteria should be approved.

4. Journal entries should be prepared accurately and promptly.

5. Relevant disclosure data should be gathered accurately and promptly

6. Relevant disclosure data should be accurately summarized and reported.

7. All approved journal entries should be accurately posted to the proper general ledger accounts.

8. General ledger balances should be accurately and promptly reported.

9. Transaction and consolidation of financial reports should be accomplished accurately and promptly.


10. Financial reporting journal entries should classify economic activities in accordance with management’s plan.


11. Reports should be prepared accurately and promptly, be prepared on consistent bases, and fairly present the information the purport to display.


12. Access to accounting and financial records, critical forms, processing areas, and processing procedures should be permitted only in accordance with management’s criteria.

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Attachment L

UNIVERSITY OF WISCONSIN-EXTENSIONWORKSHEET FOR EVALUATING OBJECTIVES AND CONTROL PROCESS

Cycle: Revenue:

Sub cycle: Academic fees for credit and non-credit courses.

Objective 1: Only qualified students, based on management's criteria, are admitted.

Risk Factors: Failure to comply with faculty, UW System and Board of Regent policies. UW-Extension’s reputation could be damaged. Students may fail coursework at an unacceptable level. UW-Extension may violate federal and state regulations e.g., INS, Department of

Education, etc.

Control Process: Students are admitted based on criteria set for admission. Student credentials come directly from third parties. Students' credentials are reviewed.

Evaluation and conclusionsa.

Objective 2: All student fee schedules are properly authorized and approved. .

Risk factors: Failure to comply with faculty, UW System and Board of Regent policies. Students may be undercharged or overcharged. A liability and interest may accrue for amounts overcharged students. May not be able to collect undercharged amounts from students.

Control Process: Board of Regents must approve academic fees annually. Non-credit course fees are established and approved in accordance with Fee Policy

for Noncredit Continuing Education Programs.


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Objective 3: Fees are determined according to course loads and fee schedule.

Risk factors: University revenues may be over or understated for financial reporting purposes. Correcting individual student’s account may be time consuming and expensive. Collecting outstanding balance may be difficult resulting in bad debts.

Control Process: Approve academic fee schedule must be maintained current and available for

determining fees according to course loads and fee schedule. Students' course loads and fee schedule should be readily available in a database for

fees determining and review purposes. Fees due from students are reviewed before enrollment.


Objective 4: Remittances of students are properly recorded and credited to their accounts in a timely manner; resulting cash receipts deposited intact in a timely manner; and a liability for deferred revenue recognized, as appropriate.

Risk factors: Student remittances may be lost, stolen or credited to the wrong student. Students may not be admitted or permitted to register. The accounts receivable balance, cash or deferred revenue balances on the

University’s financial statement may be inaccurate. Students may be improperly assessed late charges. State may lose interest on funds not deposited on a timely basis.

Control Process: Duties of collections, recording, and maintaining students account should be

properly separated. An independent person processes all credit cards payments and opens and maintains

a log of incoming mail.


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The University of Wisconsin-Extension Internal Control Plan September, 2007Objective 5: All student fees are reconciled to the general ledger and recognized as revenue in the

appropriate period.

Risk factors: University financial statements may be inaccurate. Errors and omission may go undetected. Management may make inappropriate decisions.

Control Process: An individual is designated to reconcile general ledger and review transactions for

appropriateness. Reviews are performed to ensure revenues are recognized in the appropriate period.


Objective 6: Student records are adequately safeguarded.

Risk factors: Unauthorized access to student records may occur. Transactions may be processed against student accounts without proper approval

(e.g., adds, drops, refunds, adjustments, waivers). Student accounts may be fraudulently or accidentally changed. University’s financial statements (revenue and accounts receivable) may be

inaccurate.

Control Process: Proper separation of duties is maintained. Limited number of personnel should be authorized to add, change and modify

students’ records. Automated systems maintain a record of who made the change and when it was

made.

Evaluation and conclusions:a.

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Attachment M

UNIVERSITY OF WISCONSIN-EXTENSIONWORKSHEET FOR EVALUATING CONTROL OBJECTIVES AND ACTIVITIES

Cycle: Revenue

Subcycle: Auxiliary Operations

Objective 1: Revenues from auxiliary operations, such as boarding, lodging, conference planning, registration, AV rental, videos, production, program distribution, publications etc. are computed and charged in accordance with management policies, procedures, and criteria.

Risk Factors:

Failure to comply with management policies, procedures, and their established criteria.

University's reputation may be damaged. Inaccurate rates, fees, rentals, prices, etc. may be computed and/or charged. Failure to apply contractual rates, fees, rentals, prices, etc. Failure to comply with other contractual provisions and/or management criteria. Correcting customers accounts may be time consuming and inefficient. Collecting unbilled accounts may be difficult and costly.

Control process:

Management must establish written policies, procedures, and criteria for each of the revenue producing activities.

Adequate separation of duties is maintained. Duties of establishing rates, fees, rentals, prices, etc. must be separated from those who are computing and receiving or billing to customers.

Policies and procedures must be clear as to who can change, modify or waive fees, rentals, prices, rates, etc.

Policies and procedures must be explicit as to who can sign and negotiate contracts. Experienced and knowledgeable personnel should be hired and/or encouraged to stay

with the institution. Cross training of personnel should be provided.

Evaluation and conclusions:

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Objective 2: Revenues from auxiliary operations are collected, recorded, and deposited in accordance with management's established policies, procedures, and criteria.

Risk Factors:

Failure to comply with management's established policies, procedures, and their criteria.

University's reputation may be damaged. Customers' remittances may be lost, misappropriated or credited to wrong account. Uncollected accounts receivable balance may keep increasing. Accounts receivable balance, cash or deferred revenue balance on the university

financial statements may be inaccurate. Customers' may be improperly assessed late charges. State may lose interest on revenues not deposited on a timely basis.

Control process:

Management must establish written policies, procedures, and criteria for each of the revenue producing activities.

Adequate separation of duties is maintained. Duties of those collecting revenues must be separated from those who are recording and maintaining customers' accounts.

Revenues collected must be recorded and deposited in a timely fashion. Policies and procedures must be clear as to who can change, modify, waive, and or

write off customers accounts. Periodic aged analysis of accounts receivable and review thereof should be

performed and overdue accounts should be followed up. Periodic review of timely collections and deposits into state's treasury should be

performed.

Objective 3: Revenues from auxiliary operations are reconciled to the general ledger and recognized as revenue in the appropriate period.

Risk Factors:

Errors and omissions may go undetected. University's financial statements may be inaccurate. Management's decisions may be inaccurate due to erroneous financial statements.

Control process:

Revenues collected and deposited must be reviewed and reconciled with general ledger by someone who is not maintaining general ledger.

Periodic financial statements should be prepared and reviewed for large, unique, and unusual items, and significant fluctuations.

Evaluation and conclusion:

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The University of Wisconsin-Extension Internal Control Plan September, 2007Objective 4: Financial Statements serve as a management's decision making tool.

Risk Factors:

University's financial statements may be inaccurate. Institutions actual financial positions may be different from that shown in the

financial statements.

Control process:

Revenues from auxiliary operations are budgeted and periodically compared to actual. Large, unusual, and significant variations are reviewed, explained, and corrective actions taken, if needed.

Evaluation and conclusion:

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Documents

Extension Internal Control Plan.doc.doc