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Sec. 1 Purpose
Establish internal control and reconciliation responsibilities and requirements.
Sec. 2 Principles
2.1 Adequate controls, including checks and balances, must be in place to ensure the integrity of financial information.
2.2 Management is responsible for ensuring that adequate controls are being employed. If they are not, action must be taken to develop and implement appropriate corrective actions.
2.3 A mechanism must be in place to identify discrepancies and to ensure that corrective actions are taken.
2.4 Each department must ensure that all financial transactions are recorded correctly. Correct transactions must:
a) reflect the actual amount involved,
b) contain sufficient detail for proper identification and classification,
c) include evidence of appropriate authority and approval,
d) be posted on a timely basis in the proper accounting period,
e) comply with applicable regulations or laws,
f) be readily retrievable for inquiry or reporting, and
g) be safeguarded against improper alteration.
Sec. 3 Segregation of Duties
A system of data integrity controls must not allow one individual complete control over key processing functions for any financial transaction. The functions include:
a) recording transactions directly or through an interfacing system,
b) authorizing transactions,
c) receiving or disbursing funds,
d) reconciling financial system transactions, and
e) recording corrections or adjustments.
If insufficient personnel within the department requires that one person perform all of these functions, the department must assign a second person to review the work for accuracy, timeliness, and integrity.
Sec. 4 Cost Center/Project Reconciliation
Reconcile all active cost centers and projects for each accounting period/month within 45 days after month-end. Reconciliation may be less frequent than monthly (e.g. quarterly, annually) for certain exceptions identified based on type or frequency of activity and as coordinated with the Controller’s Office.
a) Verify amount, account classification, description, and proper accounting period in the financial record.
b) Reconcile transaction to supporting documentation ensuring accuracy and proper approval/authority for the transaction.
c) Resolve any discrepancies, including documenting and preparing any necessary corrections.
Sec. 5 Training
Any employees performing, reviewing, or approving reconciliations shall attend training provided by the Controller’s Office and acknowledge an understanding of their responsibilities.
Sec. 6 Monitoring
6.1 Department Head. Review all assigned cost centers and projects and ensure reconciliations are completed on a timely basis. Provide an Annual Financial Certification to the Financial Reporting Officer.
6.2 Controller’s Office. Monitor SAHARA for status of account reconciliation completion and required training, on a quarterly basis.
Active Cost Center or Project - A cost center or project that has any completed (final approved) transaction posted during the month.
Financial Reporting Officer - The Financial Reporting Officer is the person with direct responsibility for the establishment of efficient and effective internal controls over the preparation of the annual financial report. The Financial Reporting Officer at UT System is the Associate Vice Chancellor and Controller.
Internal Controls - The practices performed by departments to provide management with reasonable assurance that assets are safeguarded, and transactions are authorized, valid, complete, and accurate.
Annual Financial Certification - Annual Financial Certification is signed by the Department Head after the close of each fiscal year. These certifications provide assurance to the Financial Reporting Officer that all cost centers and projects, and ultimately the financials of UT System, are accurate and without material errors or known fraud. Annual Financial Certifications are used to complete UT System’s annual financial certification.
Reconciliation - The process of comparing information which exists in two systems or locations, analyzing differences and making corrections so the information is accurate, complete, and consistent in both systems and locations. For departmental purposes, the process includes comparing the supporting documentation retained by the department to the information recorded in the Account Reconciliation Application (SAHARA).
Review - The process of examining financial information for accuracy and reasonableness. If determined to appear inaccurate or unreasonable, further investigation is warranted.
Segregation of Duties - The concept of having more than one person required to complete a task. To create a good segregation of duties, the individual steps of a task that should be separated between multiple employees include authorization, custody, record keeping, and reconciliation.
Verification - The process of examining information contained in a cost center/project, report, or system to ensure it is accurate and complete.