SOA RECONCILIATION

Financial Operations Internal Controls University Audits December 16, 2009 Information Technology Systems

SOA Reconciliation Defined

    Verify transactions in the system of record (M-Pathways)  Ensure transactions are accurate and appropriate  Compare to original source documents  Identify errors  Ensure policies and procedures are being followed  Confirm approvals  Ensure transactions are properly reflected in the financials (account, class, etc) Analyze differences Correct errors Check and balance

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Why Perform SOA Reconciliation

   Be good financial stewards of University resources and help maintain compliance  University financial data is accurate  Information can be relied upon for decision making Important detective control  Fraud, theft, compliance violations, vendor issues, irregularities, incorrect charges – can be detected earlier A little work now can prevent big problems later!

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Why Perform SOA Reconciliation

Great way to support key control objectives/assertions: Completeness Accuracy Validity Restrictiveness  All transactions are processed (once and only once)  All transactions are processed correctly  All transactions are authorized or approved by appropriate person  Access to certain functions is restricted to appropriate persons

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Who Can/Should Perform SOA Reconciliation

   “Detective work” – not just “tick/tie”  Right people doing the job – right skill set  Somebody familiar with the activity/related expenses Ensure proper separation of duties  No one individual can control a transaction from beginning to end  Ensure errors do not go undetected  Compensating controls Management oversight  Making sure reconciliation is being performed

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When to Perform SOA Reconciliation

   Monthly Timeliness Sponsor time limits  120 days from the time the transaction hits the statement to correct any errors

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How to Perform SOA Reconciliation

  No single required method Key elements  Defined, documented process that makes sense for your unit  Evidence of the review  Who, when, issues noted and resolution  Charges are valid and accurate  All appropriate charges are present  Corrective action is taken for issues identified

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How to Perform SOA Reconciliation

   Example: Reconcile supplemental pay to approved PeoplePay form  Don’t reconcile GPR to SOA Example: Reconcile a vendor charge to the vendor invoice  Quantity, rate, receipt appropriate  Don’t reconcile a vendor charge to the voucher line report eReconciliation provides electronic means to maintain evidence of reconciliation, comments, etc.

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Other Key Points

    Automation, process improvement initiatives, and up front preventative controls will help  e.g., self-entry time reporting eliminates the risk of re-keying errors If supporting documentation lives in imaging systems, then reprinting is unnecessary; but keep any supporting documentation that is not in imaging systems – doesn’t need to be duplicative Keep supporting documents current year + 2, for Sponsored documents, 3 years from final report submission FinOps, ITS, Office of Internal Controls, and University Audits are all willing to assist unit

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Common Audit Issues

    Reconciliations not done Done by “glance-over” instead of compare to source documents No tickmarks, corrections, or evidence of review Reconciliations not signed/initialed or dated  User ID/Updt field and Date/Last Updtd field in eReconciliation acceptable

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Common Audit Issues

    Concluding that expenses are in line with budget is NOT good enough Lack of segregation of duties Use of shadow system to reconcile and shadow system not reconciled to M-Pathways Discrepancies not investigated/corrected (JEs)

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Reconciliation Can Find Error & Fraud

      Item keyed to your account mistakenly Deposits not being made Expenses not properly approved Ordering excessive supplies/inventory Unauthorized temp employees Mistakes/miss-keys  e.g., temp paid $78.50 instead of $7.85 per hour

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New Reports Available

    Activity Summary Report by Dept – Indicates chartfields within your department that have had activity and should be reconciled New run controls for SOA reports in FINODS  Reports can be run by Dept ID, Dept Manager or SAPOC Improved Reporting  Adding checkbox and notes to current SOA reports  Adding the ability to print reports with or without notes Month-end close email to all reconcilers and department managers (pushed to users, not self-subscribing email)

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Future Functionality

 eReconciliation Enhancements  Additional detail pages  Voucher detail  Payroll detail (also adding percent distribution and percent effort)  Student Financial detail  Accounts Receivable/Billing detail

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