1. Office of the Comptroller Financial Reporting April 18, 2007

2. Office of the Comptroller Financial Reporting  Financial statement design  Proper object code/fund usage  Proper substantiation of object code balances  Timeliness  Analytics  Proper use of agency funds

3. Office of the Comptroller Financial Reporting  Financial statement design  Statement of Position – line item classification principally based on object code  Statement of Activities – line item classification principally based on org/fund purpose code and then by object code – Nonoperating section – comprised of all endowment, capital and student loan fund activity – Operating section – comprised of all other funds  Functional expenses – line item classification based entirely on org/fund purpose code

4. Office of the Comptroller Financial Reporting  Financial statement design

5. Office of the Comptroller Financial Reporting  Financial statement design

6. Office of the Comptroller Financial Reporting  Financial statement design

7. Office of the Comptroller Financial Reporting  Proper object code/fund usage  Income classification - Gifts are non-reciprocal transactions that should only be recorded via the gift system. Revenues received for goods or services provided that may be designated for quasi-endowments cannot be deposited directly to the endowment. Must be deposited properly and then resource transferred to the endowment fund.  Receivables/accrued expenses - Receivables object codes (12xx range) are to be used only for receivables due from parties external to the University. Internal funding/allocation/transfer cannot be accrued. Likewise for all balance sheet object codes.  Resource transfers – must use 4820 and 4825 together. Cannot be used with agency funds or the interfund.  Cost sharing – must use 4822 on both sides of journal entry. Cannot be used with agency funds or the interfund.  Interfund transactions – a 15xx object code should be used, with the other side being either an external expense, external revenue or inter- entity transfer (4824).

8. Office of the Comptroller Financial Reporting  Proper substantiation of object code balances  Reconciliation of all asset and liability object code balances to subsidiary records – i.e. billing systems, amortization schedules, etc.  Inventory needs to be adjusted to correctly reflect your individual physical counts.  Equipment in process should be current and any completed items properly categorized in Plant.  Risk areas include Accounts receivable, Prepaid assets, Accrued expenses, etc.  Receipt accrual - PO's should only be receipted for goods or services received. Expenses will be recorded for all amounts on PO's receipted in the current period. If the benefits of the goods or services will be received in future periods, the PO should not be receipted, and the expenses would be charged to those periods.  Contingent liabilities - Review of any known conditions that may warrant recording of contingent liabilities. A contingent loss exists at the time the event is probable and can be reasonably estimable, not when cash is paid.

9. Office of the Comptroller Financial Reporting  Timeliness of data  Notification to Senior Business Officers and Office of the Comptroller personnel of any significant transactions, changes in business practices – i.e. timing of billings, disposals or relocation of equipment, etc. – University stands to benefits a great deal by move to room to room depreciation, which cannot be done with timely and accurate records  Recording of incentive bonus accruals.  Recording of revenue and non-PO related expenses that should be included in the current reporting period.  Clearing of SUSP org balances and balances in suspense object codes as they may misstate the financial results of the University.  Reclassification of grant overdrafts to operating funds.  Allocations/transfers between schools and centers – cannot complete school closing process if journals continue to be recorded after deadline.  Correction of wayward transactions – incorrect org/fund combinations.  Closing of inactive funds.  Review of feeder transactions to ensure proper recording.

10. Office of the Comptroller Financial Reporting  Analytics  Analytical reviews of your areas should be consistently done, preferably on a monthly basis for the following reasons: – Timely detection and correction of errors – Explanation of business reasons for significant fluctuations  Fluctuation analysis is a powerful tool that can be employed as your review tool.  Preventative controls, such as signing-off on review of reconciliations, process documentation, etc., should be installed into your operations to ensure that transactions are recorded correctly the first time.

11. Office of the Comptroller Financial Reporting  Proper use of agency funds  An agency relationship exists only if the University has an agency agreement with an external 3rd party whereby the University is acting as an agent to provide services for the 3rd party that it may not be able to do itself or the University can perform better.  Revenues and expenses captured in agency funds are not classified as revenues and expenses of the University, as these activities are merely being managed by the University on behalf of an external 3rd party. This activity is netted and recorded as a liability on the financials of the University, as any unspent funds are due back to the external 3rd party if not used.  Example: Running or managing an event alone may not merit classification as an agency relationship. May simply be a proper use of University resources and be recorded as expense and revenue to the University.