Fund Management

Business Manager Curriculum

February 2014

Facilitators:

Ron Sanders Ken Smith Laura Williams

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Agenda

1. Introduction 2. High-level overview of Fund Management • Roles and Responsibilities • • • Financial Objectives Steps to Manage Funds Budget Review and Reconciliation 3. Discussion of how objectives apply to you and your department • Roundtable discussion • Compilation of Best Practices 4. Wrap-up

3

Objectives

By the end of this training, you should: • Be able to identify objectives of fund management • Be equipped to manage and reconcile your department’s finances • Be able to identify key issues related to fund management, analyze why these issues exist, and determine potential solutions

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Financial Management

What does good financial management look like?

Presented by:

Ron Sanders, General Accounting

5

Financial Services Department

Budget Office Controller’s Office Financial Data Admin Materials Management Treasury Services Accounts Payable eCommerce General Accounting Payroll P-card Reporting & Fixed Assets Student Accounts Tax Travel & Complex Payments

6

Roles and Responsibilities

Dept.

Head Fund / Business Manager Preparers/ Financial Support Staff Fiduciary Responsibility Manages designated funds Adhere to policies applicable to job duties

7

Delegation Criteria

Dept. Heads who delegate responsibilities to a Fund Manager must: • • •

Prior to delegation --

Consider the circumstances

potential fund managers, and degree of supervision that will be required.

: condition of funds, competence of

Communicate

clearly and completely.

Verify the delegate’s understanding

of responsibilities.

•

During delegation --

Retain fiduciary responsibility

for accuracy and compliance and retain management-level decision making.

• • Retain

open communication

with delegate.

Regularly monitor and assess

each delegate’s performance.

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Financial Objectives

Each University department requires financial resources to perform its role according to the University’s mission of education, research, and public service.

Departments are responsible for meeting financial objectives on an ongoing operational basis to ensure proper stewardship of University resources (will be covered on Fund Management slides).

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General Guidelines – Financial Activity

1. Planning

– Evaluate financial consequences of activities – Evaluate anticipated costs and benefits

2. Transactions

– Comply with policies, regulations, grant terms, etc.

– Recorded accurately and timely – Proper authorization and internal controls

3. Training and Competence 4. Corrective Actions

– Timely – If frequent, assess need for preventive controls, additional training, and/or sanctions

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Fund Management

Departments are responsible for managing their funds as follows: 1.

2.

3.

4.

5.

6.

7.

Provide accurate financial reporting Spend money wisely in accordance with the University’s goals Safeguard assets Safeguard confidential and sensitive information Manage finances effectively Avoid financial penalties Avoid fraud

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Fund Management

Objective 1: Accurate Financial Reporting/Analysis

Department level financial management and analysis must be completed

at least monthly

for the following reasons: • Banner output is used as the

basis for management decisions

.

• Accounting must be accurate and timely in order for management to

evaluate the status of budgets, funds, cash flow

, etc.

• Budgeted labor and expenditure balances by fund and account must remain positive to ensure that reporting and certifications are submitted on time to the state and

budgeted cash flow is not disrupted

.

• Cash flow problems may have a

negative impact on vendor relationships

and create complications that affect multiple departments.

• Monthly analysis and validation enable m

ore efficient month-end and year-end close processes

since corrections and other entries are made timely.

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Fund Management

Objective 1: Accurate Financial Reporting/Analysis

Monthly financial monitoring steps:

1.

Review revenues and expenses

in summary at the end of each month, as well as a sampling of transactions.

– Ensure staff are trained on appropriate expense account code use!

– Identify trends and areas of concern/interest

2.

3.

4.

Examine causes of significant errors

, deviations, or exceptions – Including: deviations from regulations or from the budget

Reconcile

departmental subsystems and transactions to the administrative system of record (Banner).

– Ensure postings such as those processed through FUPLOADs are accurate – Check and account for open encumbrances on at least a monthly basis to assist when reconciling internal balances to those posted in Banner.

• For encumbrance balances >$5, departments must review their funds to determine how to close out the encumbrance.

Take corrective actions

if errors or exceptions are revealed before the next cycle ends

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Fund Management

Objective 1: Accurate Financial Reporting/Analysis Corrective Actions:

If reporting exceptions continue to occur, control procedures must be implemented to correct the situation.

Examples of corrective actions include: – Revise plan or budget to reflect changed circumstances, – Change or eliminate activities, – Obtain additional funding, – Modify goals or objectives, – Correct transaction errors, – Alter future budget assumptions, – Implement new control procedures, or – Document managerial decisions that depart from the budget.

Document any corrective actions taken.

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Fund Management

Objective 2: Spend Money Wisely

All purchases and payments must be: 1. In compliance with University spending policies and 2. Within budgetary constraints.

A thorough review of all charges should occur in accordance with UNIVERSITY POLICY 601.8, APPROPRIATE USE OF UNIVERSITY FUNDS to ensure that costs are allowable and charged appropriately. • • • • Other documents that should be referenced for applicable requirements include: University PURCHASING MANUAL University TRAVEL PROCEDURES MANUAL UNC Charlotte PURCHASING CARD MANUAL Any documents governing grant and contract terms

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Fund Management

Objective 3: Safeguarding University Assets Cash Handling

• All cash, checks, and cash equivalents in excess of

$250

are to be deposited by noon of the next day in accordance with the North Carolina

Daily Deposit Act

(NC G.S. 147-77). Exceptions to this requirement are rare.

– If a department receives cash and/or equivalents that cannot be readily identified for a purpose, the department needs to contact General Accounting for direction immediately. These funds are still subject to the Daily Deposit Act.

•

All petty cash and change funds must be authorized by the Controller’s Office

. All cash shortages and excesses must be promptly reported to a supervisor, who must investigate them immediately. See the Petty Cash and Change Fund Procedures

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Fund Management

Objective 3: Safeguarding University Assets Physical Assets

• A physical inventory of all equipment must be conducted on an annual basis. All discrepancies must be promptly reported and investigated. See the Fixed Asset Guidebook .

• All thefts of University assets, including cash, must be reported to the police.

Financial Records

• Adjustments to asset records must be documented and approved.

• Access to any forms or online resources that can be used to alter financial balances must be restricted to only those employees requiring such access to perform their University duties.

Fund Management

Objective 4: Safeguarding Sensitive Information

When dealing with University financial information, proper safeguards must be in place to ensure the security of

confidential and sensitive data

, as defined in Policy 311, Data and Information Access and Security. 17 Department heads should assess and address risks to in all areas of their operation. Simple steps include: • Determining

what information is being collected and stored

, and whether there is a business need to do so and ensuring any sensitive information is stored securely.

•

Limiting access

• Ensuring proper information

security awareness and training

• Regularly reminding employees of security

policies

• Knowing how to handle a breach. See Policy 311.5

See SANS Security Awareness training information at: http://itservices.uncc.edu/security/security awareness

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Fund Management

Objective 5: Recording of Transactions

Financial management includes maintaining adequate levels of cash to meet operational and capital requirements.

Most related responsibilities remain with Financial Services

. Department management and support staff are responsible for

ensuring that transactions are recorded as accurately as possible on a timely basis, i.e., as soon as the transaction occurs, and with the proper authorizations

. Accuracy, timeliness, and obtaining proper approvals will minimize the need for correcting entries. Supporting documentation and records must be retained in accordance with the University’s

record retention policy

. As a general rule, documentation over and above the official policy should not be maintained.

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Fund Management

Obj. 6 & 7: Avoiding Financial Penalties and Fraud

Department management and support staff are responsible for having sufficient knowledge of applicable financial and

internal control policies, standards, and regulations, and for compliance with these

to foster an environment where financial penalties are avoided and fraud is prevented.

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Fund Management

Obj. 6 & 7: Avoiding Financial Penalties and Fraud

Example

: The University has been granted additional financial and administrative authority as a “special responsibility constituent institution” (SRCI) under G.S. 116 30.1. If we were found to be negligent or non-compliant with how we spend funds, we would lose this designation.

Things we must do to keep this designation: – Maintain appropriate admin staffing, procedures and internal controls – Resolve significant audit findings within 3 months – Support the ability to carry out BOG-defined educational mission with our (General Fund) GF budget – Obtain BOG approval to establish new academic, research, public service or financial aid programs in the GF – Measure impact on student learning and development – Submit monthly GF budget reports to governing agencies

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Budget Review and Reconciliation

How do I review and reconcile my department’s budget?

Presented by:

Ken Smith, Budget Office

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General Guidelines – Budgets

Principles are applicable to all fund types

General Fund

budgets are maintained by Budget Office and allocated annually at the divisional level. Division management establishes unit budgets at the fund level.

For all other fund types

, budgets are the responsibility of Department Heads and Fund Managers.

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General Guidelines – Budgets

Budgets should be…

• Tools to: – Define annual spending limits – Measure financial performance – Help discover errors – Detect substantial changes in business conditions – Help avoid unnecessary costs by ensuring that expenditures are reasonable, necessary, and adequately supported • Realistic, reasonable, attainable • Based on thorough analysis (of unit’s goals and objectives, etc.)

–

All budgets must support the

University’s goals

.

• Monitored against Actual financial results regularly

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Budget Management – General Funds

Available Budget Balances should not be less than $0

at any point. Each department must review their funds and make the necessary entries to ensure that available budget balances are positive by the end of the month.

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Budget Management – General Funds

Monthly Review

If a negative Available Budget Balance or incorrect posting is found, the Fund Manager must do one of the following, depending on the situation: 1.

If the budgeted amount for an account or budget pool is inadequate, request an increase to the budget (See Budget Revisions), 2.

3.

If a transaction was entered incorrectly, submit a Journal Entry to correct the expense account that was used (See Journal Entry Guidelines), or If an expense can be better classified within a different budget pool that has an adequate available budget, reclassify the expense to the more appropriate account (See Journal Entry Guidelines).

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Budget Management – General Funds

Monthly Review

Budget Pools See Appendix 2 of the Financial Management Guidelines Banner Forms • • • The most common Banner forms that the Budget Office recommends to identify negative budget balances in funds:

FGIBAVL

(to see Operating Ledger [OL] Balances at the budget pool account level)

FGIBDST FGITRND

(to see OL Balances at the expenditure account level) (to see OL Detail) Instructions on how to use these forms are located in Section X of the Financial Management Guidelines.

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Budget Management – General Funds

Budget Revisions

Net zero process -- any change to a budget must not change the Requirements portion of the Authorized Budget, e.g., an increase in the budget of one account must be offset with the decrease of the budget in another account. To change the existing budget of a General Fund account, the departmental representative must submit the change request on one of two budget forms: • Budget Revision Form (BD606) • Budget Flexibility Form (BD607) Forms can be obtained from the Financial Services Forms website.

Budget revisions are due to the Budget Office by the 25th of each month.

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Budget Management – General Funds

The requirements of using a accounts: – Library (949xxx) – Utilities (923xxx) – Financial Aid (96xxxx) Chancellor)

BD606

are as follows: • The funds being increased and decreased must have the same Program Code (check via FGIBAVL or FGIBDST).

• Accounts must be regular expense accounts (92xxxx-99xxxx), not personnel or fringe benefit accounts (91xxxx) or the following • Signature authorization at a Department/Unit level (not Vice When verifying that BD606 information was keyed correctly into Banner, the Document Type used in FGITRND will be

B15T

.

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Budget Management – General Funds

A Budget Flexibility form (

BD607

BD606 cannot be met, i.e.: ), or long form, must be used to increase the budget in an account when the requirements to use the • Increasing and decreasing funds are in different Program Codes.

• One of the affected accounts is a personnel (911xxx, 912xxx, 913xxx, 914xxx, 915xxx) account.

• One of the affected accounts is a fringe benefit account (916xxx – 919xxx).

Signature authorization is needed at the Vice Chancellor (or delegate) level.

When verifying that BD607 information was keyed correctly into Banner, the Document Type in FGITRND will be

B14P

or

B14T

.

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Important Takeaways



Manage funds by:

1.

2.

3.

4.

5.

Providing accurate financial reporting Spending money wisely in accordance with the University’s goals Safeguarding assets Safeguarding confidential and sensitive information Managing finances effectively 6.

7.

Avoiding financial penalties Maintaining proper control environment/Avoiding fraud   Responsible to NC taxpayers Departments are responsible for meeting financial objectives on an

ongoing

mission.

basis to ensure

proper stewardship

of University resources, which are needed to carry out the University’s

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Website/Contact Information



Controller’s Office:

 General Accounting website: http://finance.uncc.edu/controllers-office/general accounting   Ron Sanders, Assistant Controller, 7-5786 Laura Williams, Compliance Manager, 7-5002 

Budget Office:

  Budget Office website: http://finance.uncc.edu/budget-office Ken Smith, Assistant Budget Director, 7-5599

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The following slides are for Reference Only

Financial Management

Journal Entries, Encumbrances, Record Retention, Financial Management Guideline Resources

Journal Entry Guidelines

33 

Transfers

  Must be two-sided To correct prior year expenses, use transfer accounts 

Supporting documentation

  Should be clear, concise, and relevant When submitting supporting documentation for corrections, include a screen print of the transaction activity in Banner (e.g., in FGITRND) that shows the Document Number of the original transaction(s) 

See full JE guidelines on General Accounting website:

http://finance.uncc.edu/controllers-office/general-accounting UNC Charlotte - Financial Services Wednesday, April 29, 2020

Journal Entry Guidelines

34 Checklist to complete the Journal Voucher form: √ √ √ √ √ √ √ √ √ √ √ Fill in Effective Date.

Select “Journal Entry” as the Type.

Select Chart of Accounts.

Enter and double-check Fund and Account Codes.

Enter short descriptions for debit and credit of entry. For corrections and reclassifications, include the Document Number of the original transaction.

Enter debits and credits, and ensure debits equal credits!

Provide an explanation for the entry that is clear, relevant, and concise.

In Banner, check fund balances to ensure availability of funds affected by the entry, and check that correcting entries have not already been initiated.

If a transaction is being reclassified or corrected, capture a screen print from Banner Form FGITRND and highlight the applicable transactions.

Sign and date by Preparer and Approver and include phone numbers.

Forward the JV to the appropriate contact along with supporting documentation.

UNC Charlotte - Financial Services Wednesday, April 29, 2020

Reviewing for Encumbrances

35 Being able to check and account for open encumbrances on at least a monthly basis will assist departments when reconciling internal balances to those posted in Banner.

How encumbrances are closed/liquidated:   Normally, encumbrances are liquidated when an invoice related to the PO is entered into 49er Mart, matches the PO and Receipt(s) and integrates to Banner.

Any open encumbrances should be closed out as they are determined to be no longer needed.  Encumbrance balances <$5 will be eliminated automatically every Friday night. 

For encumbrance balances >$5, departments must review their funds to determine how to close out the encumbrance.

UNC Charlotte - Financial Services Wednesday, April 29, 2020

Reviewing for Encumbrances

36 How to check for open PO encumbrances that have not yet posted: Banner Form FGIOENC – Organizational Encumbrance list  Query by Organization or Fund code   Lists open PO encumbrances Can drill down on specific encumbrance to FGIENCD to see any invoices that have been applied against the encumbrance

49er Mart Document Search

  Query on your department’s POs not fully matched (‘Partially Matched’ or ‘No Matches’) Can customize and save search criteria To close the PO, email your Purchasing Agent. (A comment can be emailed directly from the PO in 49er Mart; this helps for future reference purposes.) A P URCHASING A GENT D EPARTMENTAL L ISTING is on the P

URCHASING WEBSITE

.

UNC Charlotte - Financial Services Wednesday, April 29, 2020

Records Retention

37   Current UNC Charlotte Financial Services Records Retention Schedule (draft)  Developed from authoritative guidance: UNC-GA Schedule (adopted 2007), NC State Agency Schedule (adopted 2009) Related guidance:    NC G.S. §121 & 132 UNC Charlotte Policies 101.8 (personnel), 311 (security), 402 (FERPA), 605.2 (HIPAA), 605.3 (University Records) UNC-GA schedule: https://legal.uncc.edu/sites/legal.uncc.edu/files/media/UNCGeneralSchedule.pdf

UNC Charlotte - Financial Services Wednesday, April 29, 2020

Records Retention

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Organized by - Categories (Series):

 Administrative  Financial  Accounting  Budget  Purchasing  Payroll  Student Accounts      AP/Travel Foundation/Trust Fund/Endowment Administrative System Records Departmental Personnel Records Tax UNC Charlotte - Financial Services

Guidance – What to do with the documents:

  Description Items/Examples    Disposition method   Original and Reference copies Years to retain Compliance Citation Record Custodian Wednesday, April 29, 2020

Document Type Matrix

39 To investigate a transaction, a department may need to contact the Financial Services department that keyed the entry. Below is a matrix that contains frequently used Document Types and the associated contact.

If the Doc Type is: BDxx B11, B12, B14, B15 CS1 INEI, INNC, INNI, CNNI JNA, JEF, JEP JN6 JFL, JFI JTV POxx Doc Type category

Budget entries Budget entries Cash payments Invoice, A/P related Internal charges Journal entries FUPLOADs Travel documents Purchase Order related

Contact

Budget Office – Hong Vu Budget Office – Sandra Leeds Cashiers – Nicole Haire Accounts Payable – Jerri Painter Accounts Payable – Lucy Mullens Should be maintained by each department Should be maintained by each department Travel & Complex Payments – Julie Hughes Materials Mgmt – Dept Purchasing Agent UNC Charlotte - Financial Services Wednesday, April 29, 2020

Other Resources in Financial Mgmt. Guidelines

40   P.19 - Other Banner and ePrint Forms and Reports that may be helpful P.21 - Information on Banner Finance Training, which provides an overview of Banner forms and reports related to financial management Available in Moodle2: https://moodle2.uncc.edu/login/index.php

    P.22 – Contacts, Websites, and Further Resources (Start at finance.uncc.edu

!) P.25 – Appendix 1: Contacts for Fund Use Guidance P.28 – Appendix 2: Budget Pool Accounts P.29 – Appendix 3: Components of Internal Control UNC Charlotte - Financial Services Wednesday, April 29, 2020

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Also see

• • • • • • • • University Policies: 102.2, Conflicts of Interest and Commitment 311, Data and Information Access and Security 601.8, Appropriate Use of University Funds 601.11, Purchasing Policy 601.15, Control of Equipment and Other Property 602.3, Petty Cash and Change Fund Policy 602.4, Handling Cash, Checks, and Other Receipts 603.1, Authority to Sign Contracts and Other Official Documents • • University Manuals: Financial Management Guidelines Journal Entry Guidelines • Statewide Guidance: North Carolina Budget Manual