Guidance for Improvements in Financial
Controls
March, 2012
Self-Assessment of Financial Controls
Background
The university implemented the first internal self-assessment of financial controls in
all departments in 2008.
Refer to the FSD website for the most recent survey questions.
www.usask.ca/fsd/resources/documents/internal_controls/icq_selfassessment_2011.pdf
The university has established a goal to significantly improve financial controls by the
end of the current planning cycle in 2011/12. Refer to the FSD website for the most
recent university scorecard.
http://www.usask.ca/fsd/resources/documents/internal_controls/icq_results.pdf
General Suggestions for Control Improvements
Overview
Focus on the financial control processes that had prior year survey results that were
lower than their 2011 target results:
1. Selling/Revenue Activities
2. Reviews, Reconciliations and Other Activities
Desired Outcome: All departments/orgs achieve some improvement in their financial
control processes prior to the December, 2012 completion of the annual selfassessment survey.
If a unit was previously ‘Never’ completing a targeted control process, they should
complete it at least once this year.
Each unit should try to increase the frequency with which they perform a stated control
function if they currently do it less often than monthly.
Each department/org should have a documented plan to achieve the established
financial control targets, over the remaining current, and upcoming, planning cycles.
Specific Suggestions for Control Improvements
ICQ#4Recording
Sales Invoices
in UniFi
ICQ#8Procedure
For
Authorizing
Credit to
Customers
ICQ#9External NonCash Sales
Recorded as
Accounts
Receivable
All sales invoices should be recorded in UniFi.
Post all sales invoices to UniFi in a timely manner, ideally within one business day
of the sales transaction date (the date that the applicable goods and/or services were
provided to the customer).
Existing customer credit authorization procedure should be documented in writing,
whatever the current procedure is.
Where procedure does not currently exist, develop a documented customer credit
authorization procedure if you make sales to customers on credit.
Prepare sales invoices for all completed customer sales orders.
Refer to the university website for assistance on invoicing procedures:
1. External Sales Activity-Invoicing Procedures:
www.usask.ca/fsd/resources/documents/external_sales_activity.pdf
2. University’s Accounts Receivable Invoice template and ‘Help’
commentary: www.usask.ca/fsd/resources/forms/ar_invoice_template.xls
3. Accounts Receivable Invoice Guidelines & Procedures:
www.usask.ca/fsd/resources/guidelines/procedures/nonstudent_accounts_receivable_invoice_directions.php
All non-cash sales invoices should be recorded to accounts receivable in UniFi, by
journal voucher (see example below):
C
1
1
1
1
1
F
Your fund
Your fund
Your fund
100052
100134
O
Your org
Your org
Your org
Your org
Your org
A
11001
56001
56002
20101
20103
P
Program
Program
Program
Program
Program
Total
Debit
1,100
Credit
1,100
1,100
500
500
50
50
Receivable
Product Sale
Service Sale
GST collected
PST collected
Refer to FSD website for assistance in preparing a journal voucher in UniFi
U of S - Financial Services Division - College/Depts/Research - UniFi - UniFi
Manual
ICQ#11-Aged
Accounts
Receivable
Trial Balance
prepared and
reconciled to
UniFi
Prepare a monthly aged accounts receivable trial balance (see suggested format
below):
Customer
Customer1
Customer2
Customer3
Total
0-30
Days
100.00
100.00
31-60
Days
850.00
61-90
Days
91-120
Days
120+
Days
Total
85.00
50.00
35.00
1,178.69
950.00
1,228.69
120.00
935.00
85.00
1,178.69
2,298.69
ICQ#12Receipt of
advance
payments
recorded as
Deferred
Revenue
Reconcile/agree the month-end aged accounts receivable trial balance total to the
month-end balance in the applicable UniFi fund account #11001.
If this control procedure is being performed less frequently than monthly, begin to
increase the frequency of completion on a monthly basis, prior to the end of the
2012-13 fiscal year.
Definition: ‘Deferred Revenue’ represents monies received from customers for
which the applicable work (sale of goods and/or services) has not been performed
or provided prior to the date of receipt of the monies. It is recorded in a separate
liability account as the university could be required to return the monies if it is
unable to provide the customer with the goods and/or services.
Cash receipts of this nature should be recorded on the Daily Cash Report as a credit
to UniFi account # 22002 (Deferred Revenue) in the same fund as the revenue
would be recorded.
When the applicable goods and/or services are supplied to the external customer a
journal voucher should be processed in UniFi to move the cash receipt from
Deferred Revenue to the appropriate sales category.
C
1
1
1
1
1
F
Your fund
Your fund
Your fund
100052
100134
Total
O
Your org
Your org
Your org
Your org
Your org
A
22002
56001
56002
20101
20103
P
Program
Program
Program
Program
Program
Debit
1,100
Credit
1,100
1,100
500
500
50
50
Deferred revenue
Product Sale
Service Sale
GST collected
PST collected
ICQ#46Documented
Unit-Specific
Business
Processes and
Procedures
Document all unit-specific business processes and procedures, and ensure that they
are readily available to all unit staff for reference.
Documented unit-specific processes and procedures may include: mail opening,
daily cash report reconciliation, equipment inventory, invoicing, accounts
receivable reconciliation, authorization of credit to external customers, monthly
transaction review and reconciliation, month-end supervisory review, etc.
If procedural documentation has not yet been developed in the unit, plan to
document one specific process or procedure. Create a work plan to schedule the
development and documentation of additional business processes and procedures,
prior to the end of the 2012-13 fiscal year.
ICQ#48Reconcile SubLedgers to
UniFi Account
Balances
Prepare monthly reconciliations of all sub-ledger balances to the corresponding
month-end fund balances in UniFi. This applies to all sub-ledgers including
accounts receivable, property and equipment, inventories for resale, etc.
If the sub-ledger reconciliations are being completed on a quarterly, semi-annual,
or annual basis, develop a plan to progress towards performing them monthly.
ICQ#49‘Budget vs.
Actual’
Financial
Reviews
If the unit does not have a current process for performing ‘Budget vs. Actual’
financial reviews:
1. On a timely basis following each month-end close, download the unit’s
Operating Statement report from FAST to Excel.
2. Revise the Excel worksheet to include a ‘Variance Explanation’ column,
which will be used to document explanations of significant variances, on a
‘per account’ basis, between the ‘Actual YTD’ and ‘Annual Budget’
figures.
‘Budget vs. Actual’ financial analyses should be reviewed by the responsible
department head/manager.
If the reviews are currently performed less frequently than monthly, develop a plan
to perform monthly financial reviews by the end of the 2012-13 fiscal year.
ICQ #50All reviews and reconciliations of unit financial reports are documented in writing.
Documentation Suggested documentation format options (one or more of the following):
of Financial
1. Hard copy of the prepared/reviewed reconciliation or report.
Reviews and
2. Email confirming the reviews performed.
Reconciliations
3. Word or Excel document detailing the completed reviews and/or
reconciliations.
Appropriate documentation should include:
1. Name of preparer and reviewer.
2. Date review and/or reconciliation was completed.
3. Names of the reconciliations or reports that were prepared or reviewed.
4. Details of the review process.
5. Queries, Variances or irregularities identified during the review or
reconciliation.
6. Details of subsequent corrective action taken.
ICQ#55Supervisory
Financial
Reviews
Recommend that College Dean or Unit Director perform documented monthly
review of the following Crystal Reports, if the College/Unit does not currently have
other appropriate financial review processes in place:
1. Report # 4990S-College/Unit Report of Financial Activity by Fund Roll Up
by Department, OR
2. Report # 4992S-College/Unit Report of Revenue and Expense by Fund.
3. Report # 4423-Salary and Benefits.
Recommend that College/Unit department heads perform documented monthly
review of the following Crystal Reports, if the department does not currently have
other appropriate review processes in place:
1. Report # 7328-Department Report of Revenues, Expenditures and Fund
Balances by Fund Roll-Up.
2. Report # 4423-Department Salaries and Benefits (by employee).
3. Report # 3917-Year To Date Actuals by Financial Manager
If these reviews are completed less frequently than monthly, develop a plan to
implement monthly financial reviews by the end of the 2012-13 fiscal year.
University Contact for Further Information
Internal
Controls and
Process
Improvement
Support
Greg Thorimbert
Financial Analyst, Financial Reporting
966-2641
greg.thorimbert@usask.ca