SOA RECONCILIATION

Financial Operations

Internal Controls

University Audits

Information Technology Systems

December 16, 2009

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

2

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!

3

Why Perform SOA Reconciliation

4

Great way to support key control objectives/assertions:

Completeness All transactions are processed (once and only once)

Accuracy All transactions are processed correctly

Validity All transactions are authorized or approved by appropriate person

Restrictiveness Access to certain functions is restricted to appropriate persons

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

5

When to Perform SOA Reconciliation

Monthly Timeliness Sponsor time limits

120 days from the time the transaction hits the statement to correct any errors

6

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

7

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.

8

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

9

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

10

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)

11

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

12

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)

13

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

14