Internal Control Assessment Tool€¦ · Web viewInternal Control Assessment Tool Please complete the assessment tool by placing an “X” in the appropriate box below. Answer “Yes”

Internal Control Assessment ToolPlease complete the assessment tool by placing an “X” in the appropriate box below. Answer “Yes” only when all of the sentences in a group can be answered in the affirmative. If a statement does not apply to the department, place an “X” in the “N/A” box. Please use the Notations field to supply any necessary explanatory information. This field will expand as needed when you enter data. For information related to internal controls, please refer to the Best Practices guidelines available on the Accounting Services and Internal Audit websites:

http://www.controller.cmich.edu/Accounting/Bestpractices.htm orhttp://www.ia.cmich.edu/internal.htm

Call Sue Parsons at 774-7358 if you have any questions or need assistance in completing this checklist.

Department: Educational Materials Center Date: April 30, 2012

General Business and Management Practices The department has an up-to-date organizational chart that depicts the responsibilities and reporting relationships of each employee.

Yes No N/A Notations

X Org charts are maintained by ProfEd HR and are accessible on the ProfEd intranet.

The department has written department-specific policies and procedures for conducting the business and financial operations of the department.


X

There are some policies (e.g., Pricing) plus procedures for each position. Johnnie Boughner is responsible for keeping procedures updated. Incumbents also update procedures for their own positions. The policies and procedures are on the share drive and the archive drive.

These policies and procedures designate approval (signature) authority and review responsibilities and cover necessary “how to” instructions, the opening and distribution of mail, key control, confidentiality issues and access to documents, information, software and equipment.


X The procedures cover these areas CMU contracting authority is maintained on the Purchasing intranet site.

The department maintains current written job descriptions for all staff members.


X These are available on the CMU Online Personnel Transaction System.

Internal Control Assessment Tool Page 1

http://www.ia.cmich.edu/internal.htm

http://www.controller.cmich.edu/Accounting/Bestpractices.htm

The department has clearly communicated the delegation of duties when an employee is absent.


XThe procedures for each position define who is the backup for each position. Personnel are cross-trained where they serve as the backup.

The department regularly communicates updates and reminders of policies and procedures to faculty and staff.


XEMC is a small organization of 8 full time employees and approximately 6 student workers. Communication is informal or during monthly staff meetings.

The department’s employees are given appropriate training and supervision for their job functions.

Yes No N/A NotationsX

Departmental staff and management are familiar with the university’s policies and procedures as detailed at http://www.cmich.edu/gencounsel/manual/default.htm and http://www.cmich.edu/trustees/policy-manual/policymanual.asp.


X

The university does an excellent job of familiarizing employees with policies and procedures as part of new employee orientation, CMU Today, and other emails to the entire university.

The department has periodic staff meetings or other means of ensuring that relevant information impacting the department’s business is communicated throughout the department.


X Monthly staff meetings; monthly one-on-one meetings with each employee.

The department’s management monitors and reviews the department’s compliance with university as well as departmental policies and procedures.



http://www.cmich.edu/trustees/policy-manual/policymanual.asp

http://www.cmich.edu/gencounsel/manual/default.htm

A specific individual is responsible to reconcile monthly SAP financial reports to supporting receipt and expenditure documentation on a timely basis. This reconciliation is documented by signing and dating the monthly report. See http://www.controller.cmich.edu/Accounting/Policies/ReconDeptAccts.htm for details.


X

EMC is in the process of defining reconciliation procedures for SAP and the internal financial application called TurningPoint. This reconciliation is complicated by timing differences between the two systems.

Based on the reconciliation of monthly financial reports, differences and discrepancies are identified within 30 days and corrected within 90 days.

Yes No N/A NotationsX See above.

The department chair, director or other supervisor reviews and approves the report within 30 days. Approval is documented with a signature and date.

Yes No N/A NotationsX See above.

One or more specific individuals have responsibility to monitor budget line amounts in order to meet financial obligations and to reduce invalid transactions.


X

Additional work is underway to define procedures in this area. EMC differs from most other CMU organizations in that it is a revenue generating unit. There is a budget for operating expenses(e.g., wages and benefits, university overhead, etc.) but not for revenue or product-related costs.

The department has an organized filing system in place to store and to retrieve financial documents, supporting documentation, sponsored projects files and other business files.


X

Matched requisitions, invoices, and check voucher sets are filed by cost center. Customer order files are maintained in “open” and “closed” status, in both hard copy and electronic formats, and archived at the close of each fiscal. Project production files are tracked and maintained in a job jacket system.


http://www.controller.cmich.edu/Accounting/Policies/ReconDeptAccts.htm

Documents are retained for the appropriate time period in accordance with the University Record Retention Schedule. See http://www.ia.cmich.edu/recordretention.htm for details.


X

When EMC is out of space in the office area, documents are moved to Merrill Hall storage. Documents are retained longer than the retention schedule requires.

When no longer required in the departmental files, documents are disposed of or maintained as a part of the university archives in accordance with the University Record Retention Schedule.


X EMC does not shred obsolete documents that no longer need to be retained on a regular basis.

At the end of the year a review of the department’s financial records is completed to ensure there are no material errors or violations of expenditure authority.


XEMC relies on signatures of the Director on each transaction up to $10,000. There is no year end review process.

Cash Handling and Cash ReceiptsChange funds are established and increased only as authorized by the Coordinator of Payable Accounting and not through the retaining of unrecorded receipts. See Payable Accounting policies for details.

Yes No N/A NotationsX EMC does not handle cash.

The department has a safe or cash box.


A limited number of essential employees have safe combinations and/or keys to cash boxes.


X

EMC does not handle cash. EMC does have a safe. The combination to the safe is known to four staff members (Director plus three who are primarily responsible for, or back up to those, receiving checks that may need to be secured overnight.)


http://www.ia.cmich.edu/recordretention.htm

Safe combinations are changed periodically and after turnover in personnel assigned direct responsibility for the combinations. The date the combinations were last changed was ____________.

Yes No N/A Notationsx The safe has a combination and it is not changed.

The department has bank accounts of its own and receives a bank statement for those accounts.


Change funds are used only as intended: Checks and money orders are not accepted for more than the amount of the transaction (i.e., no cash back option). The department does not cash checks.


Change funds are not used as petty cash funds. There are no cash refunds, except in the case of returned merchandise.


Checks and money orders are made payable to Central Michigan University.


X The EMC order form asks that checks be made payable to “Educational Materials Center, CMU”

A restrictive endorsement is immediately placed on incoming checks and money orders when they are received.


Incoming checks and money orders are deposited within 24 hours of receipt.


X

Jennifer Conroy, the financial specialist, takes checks to SASUB in the UC every day. Occasionally, a check is received at EMC after this delivery. Such a check is placed in the safe.

Refunds are approved by someone other than the employee processing the refund.


X Check refunds are processed by Jennifer and requested by Sharon or Johnnie.


The person who opens the mail prepares a daily log of cash, checks and money orders received in the mail.


X Sharon is responsible for preparing a log of payments received.

For funds received in person, where the department does not use a cash register, the department issues a standardized receipt. Receipts are prepared immediately when funds are collected.


Each cash register drawer or change fund box is secured when not in use.


Each cash register drawer or change fund is the sole responsibility of only one person at a time. If the fund is passed from one person to another, an appropriate transfer of custody is completed on the change fund form.


Voids processed on cash registers are authorized by the processing employee’s supervisor as evidenced with a signature.


At the end of each shift, the person responsible for the change fund counts the fund and prepares a close-out sheet or other statement to reconcile the sales receipts to the sales documentation, which includes all supporting documentation (detail cash register tape, void authorization, credit card report, sales report, sign-in sheet, etc.).


The person responsible for the sales receipts prepares a bank deposit slip (if applicable), and/or a cashier’s receipt and deposits all received funds within the time allowed by the University policy.

Yes No N/A NotationsX This process is handled by SASUB.


All funds collected are secured until deposited.


X

Checks are secured in the safe only if they are kept at EMC overnight. Jennifer keeps checks received in the morning in her desk until she takes them to SASUB in the early afternoon.

The cashier’s receipt accurately records overages and shortages.


At the end of each shift, a supervisor reviews the supporting documentation and approves the cash received/ sales reconciliation (close-out sheet).


Change funds are verified on a regular, unannounced basis by an individual other than the fund custodian.


The supervisor verifies that all checks received in the mail have been properly transacted. The supervisor assures that all appropriate supporting documentation is filed and retained with a copy of the deposit slip.


At least monthly, receipts for recurring revenues or for accounts receivable are reconciled to assure that all receipts and revenues are accounted for.

Yes No N/A NotationsX EMC does not have recurring revenues.

Duties of opening mail, processing cash received by mail, and accounts receivable reconciliation are segregated among several individuals. There is no one individual who is responsible for two or more of these activities.


X Sharon opens the mail and records a list of checks received. Jennifer performs the A/R reconciliation.


Duties of collecting cash in person, making deposits, and monthly accounting reconciliation are segregated among several individuals. There is no one individual who is responsible for two or more of these activities.


XEMC is a very small office, and the same person handles processing checks received by mail and the A/R reconciliation. No cash is received by mail.

The department has documented procedures and has assigned responsibility for pursuing payment for checks returned for insufficient funds.


XEMC does not deal with checks returned for insufficient funds. Most sales are via credit card or are sales to public institutions.

Credit card transactions are processed in accordance with the bank’s credit card standards, including verification of identification and signature comparison.


XEMC uses the university online credit card system or school districts call in an order using the school district purchasing card.

Credit card refunds are reviewed and approved by a second individual, as evidenced with a signature.


XThere is currently no procedure to require a second signature for a credit card refund. Refunds are processed by Johnnie or Sharon.

At the end of the year, the department’s revenues and cash receipts are reasonably stated in its financial records. No material errors have been left uncorrected.


X EMC is in the process of implementing a review and reconciliation process to detect material errors.


Restricted Gifts

The department receives restricted gift funds in its accounts.

Yes No N/A NotationsX The READY Gift Account only.

If yes to above, you are notified by Development of the donor intent of gift funds.


X In the last 8 years, the only donors were two EMC employees.

The expenditure of the gift funds are reviewed and approved as evidenced with a signature for compliance with the donor intent.


X EMC hasn’t spent any of the restricted gift funds at this time.

Petty CashThe department has a petty cash fund.


Payable Accounting is notified when there is a change of custodian.


Petty cash funds are frequently reconciled to ensure that the cash on hand equals the authorized bank less the sum of the un-reimbursed expenditures.


Disbursements from petty cash funds are documented with detailed, original receipts which are submitted to Payable Accounting for reimbursement.


The petty cash fund custodian does not use the fund to make loans.



Petty cash funds are kept locked in a secure location except when being used to transact business (i.e., a locked drawer out of public view during business hours).


Reimbursement of petty cash funds are recorded on a timely basis, not less often than quarterly.


Petty cash funds are verified on a regular, unannounced basis by an individual other than the fund custodian.

Yes No N/A Notationsx

General ExpendituresThe department’s management monitors and reviews expenditure records in order to ensure that all departmental expenditures are made in compliance with the university policy and are for valid departmental business purposes.


X The Director signs a physical copy of a requisition or indicates her approval by email.

The department’s accounting and management employees are familiar with the signature approvals required by the university policy, including those required for travel and credit card expenditures.


X All EMC staff know that the Director is required to sign off on purchases.

Specific individuals are responsible to verify that budgeted funds are available for each purchase requisition initiated in the department, as well as for any payment requests and expenditure transfers and corrections.


Department employees refuse gifts from vendors.



The department has clearly designated which employees are authorized to use the departmental purchasing card and reviews this list periodically.

Yes No N/A NotationsX Only the EMC Director has a CMU business card.

Statements for credit cards are reviewed and signed by the individual’s supervisor who has confirmed that each purchase is properly charged and supported with appropriate documentation.


Staff members who are assigned university credit cards secure the cards to prevent unauthorized use.


X The Director’s CMU business card is stored in the EMC safe.

The department’s management employees review the selection of independent contractors to ensure that the process is appropriate and that the department is aware of any potential conflicts of interest.


X EMC works with CMU Contracts and Purchasing to select contractors/vendors.

The department has clearly communicated the prohibition against personal long distance phone calls to its staff members.


Requests for reimbursements made for purchases using personal funds are approved by the requesting individual’s supervisor.


The department verifies that purchases of inventoriable equipment have been added to the department’s fixed asset listing.


X The accounting specialist keeps a list of inventoriable equipment.


Payroll, Leave Records and Human ResourcesThe department’s management monitors and reviews leave and payroll records in order to ensure that leave record and time keeping are made in compliance with the university policy.


XThe Payroll Group in Global Campus > Financial Operations ensures that EMC follows CMU policy for record and time keeping.

The department’s management has assured that employees are knowledgeable about relevant policies and procedures for payroll and human resources.


Time records are signed by an employee’s supervisor or another individual designated by the department, who has specific knowledge regarding the hours worked by the employee.


XThe Director and accounting specialist use the standard electronic forms developed by Global Campus for time sheets.

The department keeps records of any variable work hours in order to properly compute leave earned, leave taken, compensatory time earned and compensatory time taken.


X

The Director requests that employees use Compensatory Time in the same pay period as it is earned so that no recordkeeping for Comp Time is required.

The department has designated responsibility for ensuring that keys, equipment, credit cards and other university property items are returned when a staff member separates from the department.


X The Director is responsible to the return of keys and equipment from terminating employees.

The department has obtained authorization for any department-specific employee benefits provided and has given complete information to the payroll department for determination of the taxability of such benefits.



The department’s payroll and human resources files are kept secure and confidential.

Yes No N/A NotationsX Files are electronic and kept centrally by HR.

The department has procedures to protect all social security numbers from unauthorized access.


The department’s management has assigned responsibility for timely submission of new hire documentation, terminated employee documents, changes to payroll and human resource documents.

Yes No N/A NotationsX The Director is responsible for these procedures.

Failure to comply on a timely basis is noted in annual evaluations.


Safeguarding Assets

The department has assigned equipment inventory duties to a designated individual in the department who is responsible to ensure that purchased inventoriable equipment is tagged with an inventory number on a timely basis and that equipment transfers and other dispositions are documented in the department’s files.


X

New equipment is sent to Receiving or Global Campus IT for tagging. Global Campus IT is responsible for keeping and reconciling the inventory of tagged equipment.

The department has assigned an individual to maintain the list of sensitive equipment (including computers, cameras, calculators, audio-visual equipment, etc), ensuring that all such purchases are added to the list.


The department safeguards university assets (including computers, cameras, calculators, audio-visual equipment, etc) through use of appropriate key control and physical security measures.


X

The last EMC staff person to leave each day locks the door. EMC has limited control over the shared warehouse space including the computers located in that area.


The departmental equipment inventory manager documents university equipment removed from the department for off-campus work-related activities.


A designated department individual uses a checklist for each separating employee to assure that all university property items on loan to the employee (e.g., keys, credit cards, computers, cameras, cell phones, etc.) are returned prior to the employee’s termination date or before transferring to another department.


X The only equipment an EMC staff person has is keys and computers.

The department annually performs a physical inventory of the equipment listed on the university’s fixed asset listing for the department.


Individuals, who are not the responsible custodians, conduct the inventory and are given sufficient time to conduct a complete and accurate inventory.


Surplus property is disposed of in accordance with university rules. The department’s property manager ensures that items removed for disposal are removed from the equipment listing.



Information Technology Management Each person in the department with system access uses a unique (not shared) user ID for all log-in sessions.


Staff members in the department keep their computer log-in passwords secret and change them on a regular basis.


X Global IDs are not required to be changed, and are often not changed regularly.

Department management approves each request for system access by any staff member and regularly reviews the continuing need for the level of system access assigned to each staff member.


The department maintains the appropriate individual/site licenses for each piece of program software that is installed or used on department personal computers.


XGlobal Campus IT is responsible to obtaining and monitoring licenses for standard software such as Office.

If yes please complete the next item.

Please list any external software packages currently in use:Microsoft OfficeTurning Point server and client (Red Wing is vendor)Adobe CS2, CS4, and CS5

To the extent possible, the department keeps important files on file servers that are maintained by the university’s IT department.



Files on personal computers or departmental file servers are backed up on a regular basis and are adequately protected.


X EMC uses Altiris backup software. Director is not sure it is working properly.

The department has adequate guidelines for storing and encrypting important, confidential or sensitive information on personal computers.


X X There are guidelines for storing information but not for encrypting it.

The department stores social security number data on personal computers.


Access to departmental systems is removed for terminated or transferred faculty, staff and students in a timely manner.


There are additional areas that the department feels may be at risk and would like assistance.


Please identify the individual responsible for completing this assessment tool.

_____________Patricia A. Davison_______________________ ___4/24/2012_______________Name Date

Director of Financial Planning & Operations, CMU’s Global Campus___________________Title

[email protected]_______________________________________________________________Preferred contact information (please enter your email address or phone extension)
