1. Internal Controls Towson University
Management Advisory and Compliance Services

2. 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

3. 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

4. It is a Balancing Act!

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

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

7. 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

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

9. 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.

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

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

12. 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

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

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

15. 5 Control Tools Control Conscious Environment Segregation of Duties
Authorizations, Approvals, and Verifications
Control over Assets
Monitoring

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

17. Questions For additional information:
Management Advisory and Compliance Services  Towson University Administrative Building room York Road Towson, MD 21252