As an executive officer of the University, you have a role and responsibility impacting the financial activities of the institution. The authority vested in your position allows you to make decisions on behalf of the University that are legally binding and may require an entry into the University’s accounting system potentially impacting “the budget” and “the financial statements”.
An annual financial reporting certification signed by you and your business manager is necessary to comply with current audit standards and best practices. In order to clarify scope, responsibilities, or define terms, we have provided answers to the most frequently asked questions below. Please refer to this document if you have a questions regarding the certification. If this document does not address your questions or concerns, please feel free to contact Kim Kvaal in the Office of Accounting & Business Services at extension 6732 or firstname.lastname@example.org.
Q1: Why do I have to sign the certification?
The University issues audited financial statements annually in compliance with federal and state regulations. The financial statements are the responsibility of USF’s management and are derived from the “books” (general ledger) which summarizes economic events (“transactions”) initiated, authorized, and reviewed by those with budget authority. Examples of transactions include payroll payments, purchase orders for goods and services, purchase card charges, invoice payments and employee out-of-pocket expense reports as well as gift revenues, tuition and fee revenues, and other miscellaneous revenues. It is crucial that all transactions are properly recorded in the correct accounting period in the general ledger system.
As part of the annual audit process, the external auditors review the financial statements and require a letter certifying that the general ledger transactions are complete and accurate. Because of USF’s decentralized budget authority system, the increasingly complex audit standards require us to document that the financial statements and the underlying general ledger are complete and accurate at the University, division, and department levels. This will be accomplished through the annual financial certification process.
Q2: What if I disclose a matter on the certification?
The Office of Accounting & Business Services will contact you to determine if there is any financial statement impact related to your response. If there is a material impact to the financial statements, an adjustment will be made accordingly to the general ledger and the financial statements. Additionally, recommendations will be made to avoid similar issues in the future, if necessary.
Q3: Will there be consequences for me personally if I disclose a matter in answering some questions on the certification?
No. The purpose of this document is to determine if we have any financial reporting errors. We may, however, use this information to improve our processes by implementing new procedures or modifying existing ones.
Q4: What if I am aware of instances of fraud but I have not reported it for fear of retaliation?
University policy prohibits retaliation for reporting misconduct. The Whistleblower Hotline is an anonymous reporting tool that you can use to report fraud.
Q5: What are internal controls?
Internal controls are processes carried out by the members of USF and our information technology (IT) systems and are a means by which resources are directed, monitored, and measured. They play an important role in preventing and detecting fraud and protecting the organization's resources, both physical and intangible. At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations. Examples of internal controls are obtaining secondary approval on purchases by an authorized individual, review of budget and labor distribution reports for accuracy and completeness, the timely deposit of any cash receipts with the University Cashier, and the consistent application of University policies and procedures.
Q6: What is considered a material impact to the financial statements?
The objective of financial reporting is to provide information that is useful for University stakeholders to make decisions. Any error that may influence decisions made by the users of the financial statements is considered a material impact. In general, a material transaction is an omission or misstatement of accounting information that makes it probable for a reasonable person relying on the information to be influenced by the omission or misstatement.
Q7: What is a transaction?
A transaction is an event or a condition that is recorded on your account (FOAP). Examples are purchases (cash, check, or credit card), interdepartmental charges, and payroll charges. Transactions also include revenue items such as contributions, student tuition and fees, ticket sales, parking permit sales, and other miscellaneous revenue items.
Q8: What are receivables?
Generally, receivables are monies owed to the University for services provided (such as student receivables for tuition), or for unconditional promises to give (gift pledges).
Q9: What are liabilities?
Generally, liabilities are monies owed by the University for goods and services, debt, refunds, awards, claims or potential losses including early retirement and separation agreements.
Q10: What is an accrual?
An accrual is an accounting term that refers to situations where goods and services have been received but payment has not been made. If you have received goods or services in the current fiscal year but have NOT submitted a payment request to Disbursement Services, an accrual(journal entry)request should be submitted to Accounting & Business Services (Jennifer Chan email@example.com or Frank Wasilewski firstname.lastname@example.org) so that the expense can be recognized in the correct year. For example, you may have received a new piece of equipment on May 1,2013 but as of May 31, 2013 the invoice has not been processed. You will need to notify ABS of the cost of the equipment so that an accrual can be posted to reflect the cost of the equipment and the obligation to the vendor.
Q11: How will I know that all material transactions have been properly processed and recorded?
Review the Monthly Budget Status Report and determine if the activity includes all significant revenue and expenditures that you would expect to see based on transactions that you have approved. Additionally, the Labor Distribution Report should also be reviewed on a monthly basis for accuracy and completeness.
Q12: What types of cash must be reported?
All cash maintained in your area of responsibility or in bank accounts that you have established should be included in the University’s financial records. This could include petty cash and cash on deposit with banking institutions. Please note that departmental petty cash funds are prohibited. The University Cashier is available for petty cash needs. Furthermore, departments do not have the authority to open bank accounts using the University’s name and Tax Identification Number. Please contact Kim Kvaal or Frank Wasilewski in ABS if you need to establish a new USF bank account, have an existing account under departmental control, or have a departmental petty cash fund.
Q13: With respect to communication from regulatory agencies, what would you consider as a deficiency in financial reporting practices?
Errors in a report submitted to an external funding agency would be considered a deficiency in financial reporting. Additionally, any communication that indicates USF may have a fine, penalty, or loss of funding for non-compliance should be reported to Kim Kvaal or Frank Wasilewski in ABS. Unless you are receiving funding from external sources you most likely would not receive this type of communication. For example, if you’ve received a report from the National Science Foundation related to a federal grant that contains findings or errors in financial reporting, a copy of the report should be sent to Kim Kvaal or Frank Wasilewski.
Q14: What types of contractual agreements might I have in my department?
Below are some examples of contractual agreements that you might have in your area of responsibility:
- Software licensing and/or maintenance agreements
- Service contracts in which USF has agreed to provide and/or receive certain services
- Grant agreements and contracts (private or governmental)
- Early retirement agreements
- Separation agreements
- Legal settlements
Q15: What regulatory agencies might I have exposure to in my department?
Listed below are examples of regulatory agencies. (This list is not all-inclusive.)
- Internal Revenue Service (IRS)
- Environmental Protection Agency (EPA)
- Occupational Safety and Health Administration (OSHA)
- Department of Labor (DOL)
- Department of Health & Human Services (DHHS)
- National Science Foundation (NSF)
Q16: What are possible violations of laws or regulations?
For example, inaccurate reporting and approval of federal work-study hours is a violation of federal regulations for student financial assistance. Disposing of electronic waste with regular trash could be an EPA violation. Not properly reporting overtime for nonexempt employees is an example of a violation of Department of Labor and IRS regulations.
Q17: What is a guarantee?
A guarantee is an exchange of promises or an agreement between parties that may be legally binding similar to a contract.
Q18: What is a donor-imposed restriction?
A donor may contribute to the University and place restrictions on how those funds are to be used. These restrictions can be limited as to purpose, time, or both and obligate the University to utilize the funds according to the donor’s wishes.
Q19: What is a related-party transaction?
A business contract or agreement between two parties who are joined by a special relationship prior to the deal. For example, a business transaction between a member of the Board of Trustees and the University, such as a contract for the board member’s company to perform renovations to a University building, would be deemed a related-party transaction. Another example would be the University purchasing new vans through a dealership that is owned by a relative of a University executive officer. It's not illegal, but it introduces the potential for conflicts of interest.
While the great majority of related-party transactions are perfectly acceptable, these types of transactions must be disclosed in our audited financial statements and tax returns. Therefore, all related party transactions must be reported to ABS. Please contact Kim Kvaal to disclose these types of transactions or if you have further questions.