Audits: How to Prepare and What to Expect

1. Audits: How to Prepare and What to Expect Council of Senior Business Administrators Focus Session April 21, 2004 James Laird Assistant Dean for Finance and Administration College of Science

2. Organization/Delegation • How are duties delegated within your unit’s business function? • Is there adequate segregation of duties in order to prevent one individual from solely completing a transaction? • This is very important in the area of cash handling/ revenue management and disbursements. • Are employees cross-trained in order to allow for backup of another’s responsibilities? • Does a “formal program or process to identify the continuing education or training needs of individual employees” exist?

3. Information Technology • Has your unit completed the ISAAC (Information Security Assessment, Awareness, and Compliance) risk assessment as required by the Texas Administrative Code? • How is access to computing systems controlled? • Formal process for granting or changing access to users • User access removed upon termination • Forced periodic password changes • How is sensitive data stored and access to it controlled? • Are your computing systems backed up periodically and are backups stored in an offsite location? • Do you have a documented and approved disaster recovery plan on file? Has it been tested to see if it is reliable? • How are computing assets safeguarded? • Do you have a formal ongoing security awareness and training program to promote computer security issues?

4. Procard Procedures • Do you maintain an updated list of all procurement cards in your department? • Have primary users (not just cardholders) of the Procards been to disbursement training? • How are the Procards secured? Is there a check out/in log for other users? • How are the purchases from the Procards reconciled? Are transaction logs maintained as purchases are made and are reconciliations completed in a timely manner (within 30 days upon receipt of the monthly Bank of America statement)? • What do you do when a receipt is given to you with tax or a card has been improperly used? • Are there written procedures or guidelines for the use of Procards made readily available to the users? • Have all unnecessary “house accounts” and credit cards with vendors been cancelled?

5. Cash Handling • Are employees involved in cash handling knowledgeable of System Policy 21.01.02 – Receipt, Custody, and Deposit of Revenues? • How is revenue accepted in your unit? • Are official pre-numbered receipts being issued to customers for each remittance received as required? • Do you have a logging procedure for receiving checks? • Are checks restrictively endorsed “ for deposit” immediately upon receipt? • Is the transfer of custody of funds from one person to another documented during the receipt to deposit process?

6. Cash Handling - cont. • Do you have a log for checking out receipt books to individuals in the department? • How timely are deposits made? Remember the 3 business day or $200 each day rule. • If a deposit is not immediately made, how are the funds kept secure? • Are keys or combinations to a safe properly issued and maintained? • How are deposits to FAMIS reconciled with your bookkeeping system and/or attendance lists? • Are there viable alternatives to collecting cash in your unit?

7. Purchasing and Disbursements • Are requisitions being prepared for purchases in excess of $5,000? • Are “reasonably foreseeable” payments to one vendor exceeding $5,000 per year? • Are large orders being split into smaller ones in order to circumvent the delegation of authority limit? • Are prompt payment reports reviewed for possible inefficiencies in accounts payable? • Are “good faith” efforts being made to utilize HUB vendors

8. Travel Procedures • How are travel disbursements handled in your operation? • Are all requests for foreign travel and Washington D.C. approved prior to the trip? • Are travel advances given in your department? If so, how do you manage the repayment of the advance and how do you insure timely repayment?

9. Inventory Management • Are all inventoried items tagged with a handwritten number (within 10 days after receipt) as well as a bar code sticker from FMS? • Are serial numbers being input to FFX upon receipt of the property? • How often are spot checks and/or updates made to your inventory? • Inventory management should not be a once-a-year project! • How do you control the movement of items from one location to another? • Is approved documentation on file for items checked out or located at employees’ homes or offsite locations? • Do non-controlled items have a “Property of Texas A&M” sticker affixed? • Is unused and unneeded equipment transferred to surplus in a timely manner?

10. Payroll • If possible, do you have separate people preparing biweekly and monthly payroll submissions? • Are timesheets submitted on a timely basis? • Are corrections to timesheets properly notated in ink and initialed by the employee? • Are checks distributed by someone other than the preparer of the payroll involved? • Are payroll checks properly secured? • Are timesheets for biweekly employees reconciled against leave records? • Are terminated employees removed from the payroll system in a timely manner?

11. Leave Records • How are leave records kept? (Manual vs. LeaveTraq) • Does a separate individual periodically audit records? • Is the leave recorder’s leave kept by a separate individual and associated records stored in a different location than all the other leave records? • Is medical information stored in a separate file from the leave records? • Are notifications of leave balances distributed to staff and faculty periodically? • Do all leave records contain the proper administrative approvals? • Are flex schedules properly documented and accounted for?

12. Account Reconciliation • Do you have an internal bookkeeping system and if so, how are the entries from that system reconciled with FAMIS accounting statements? • Are all account reconciliations current? • Are account reconciliations periodically reviewed by someone other than the preparer? • Who prepares the account reconciliations and is there adequate segregation of duties so that the person reconciling an account is not also preparing transactions for that same account? • Are unreconciled transactions taken care of in a timely fashion?

13. Performance Evaluations • Are annual performance evaluations done on each employee within the required timeframe? • Are probationary reviews being conducted as required? • Do employees have a current job description in their personnel file and is it reviewed by the employee and the supervisor during the performance evaluation process? • Are the performance evaluations documented on the prescribed form or a Human Resources certified form? • Are the evaluations complete and signed?

14. Audits: How to Prepare and What to Expect Council of Senior Business Administrators Focus Session April 21, 2004 James Laird Assistant Dean for Finance and Administration College of Science Email: james@science.tamu.edu Phone: 845-7388