Internal Controls Towson University

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Presentation transcript:

Internal Controls Towson University Management Advisory and Compliance Services

Internal Controls Processes that provide reasonable assurance regarding the achievement of the following objectives: effectiveness and efficiency of operations reliability of financial reporting accomplishment of established goals and objectives compliance with laws and regulations safe guarding university assets

Risk achieve its goals operate effectively and efficiently The possibility that an organization will NOT: achieve its goals operate effectively and efficiently protect itself from loss provide reliable financial data comply with laws and defined policies safe guard assets

It is a Balancing Act!

What are your responsibilities? Are you held accountable? You can delegate some of the duties you are responsible for, but cannot delegate accountability!

Control Activities Overview Reasonable assurance Who is responsible? YOU! The trust issue Preventive vs. detective controls

Key Control Activities Creation of a control conscious environment Segregation of duties Authorizations, approvals, and verifications Control over physical and intellectual assets and records Monitoring

Tool #1: Control Conscious Environment Integrity and ethics Commitment to competence Leadership’s philosophy Organizational structure

Tool #2: Segregation of Duties Functions are divided so that no one person has control over all parts of a transaction. Segregation of duties is a preventive control that aids in the timely detection of errors and irregularities in the normal course of business.

Functions to be Separated Authorizing transactions Reconciling transactions Custody of assets Recording transactions

Examples of Higher Risk Transaction Types Purchase of Goods Purchase of Services Cash Receipts Payroll Procurement Card Inventory

Tool # 3: Authorizations, Approvals, and Verifications Limit authorization authority “Rubber Stamping” Secure access to electronic signatures or other signatory devices NEVER, NEVER, NEVER sign a blank form Develop written procedures outlining delegation guidelines

Tool # 4: Asset Control Activities Periodic asset counts Periodic comparisons Investigation of discrepancies Physical safeguards against theft and fire

Tool # 5: Monitoring Monitoring is a detective control that aids in identifying losses, errors or irregularities. “But I’m so busy…”

5 Control Tools Control Conscious Environment Segregation of Duties Authorizations, Approvals, and Verifications Control over Assets Monitoring

“RED FLAGS” OF FRAUD No vacation Voluntary overtime Unexplained variances Complaints No reconciliation One employee “does it all” Documentation is not original “Rush” requests

Questions For additional information: Management Advisory and Compliance Services Towson University Administrative Building room 207 8000 York Road Towson, MD 21252 410-704-2114