Accountability and Business Rules ppt

The following passage from the University of California Accounting Manual University Accounting Program, Section A-000-4 describes the purpose of the accounting program: “The University

O BJECTIVES

§ Understanding the objectives of the UC Accounting Program and how they are achieved through accounting and business rules in DaFIS

§ Understanding why certain requirements exist in policies and regulations

§ Knowledge of the features in DaFIS that provide accountability, and guidance

in using these features appropriately

1 Objectives of the UC Accounting Program, p 3

2 Stewardship Responsibilities, p 4

§ Ethical Decision-making, p 4

§ Strategic Direction for UC Business Administration & Operations, p 5

§ UC Davis Principles of Community, p 6

§ Policy Examples – Stewardship Responsibilities, p 7

3 Accountability, p 10

§ Authority / Responsibility / Accountability, p 10

§ Policy Example – Accountability, p 10

§ Internal Controls, p 11

§ Establishing an Accountability Structure, p 11

§ Routing, p 14

§ Policy Examples – Internal Controls, p 17

4 Laws, Regulations and Policies, p 20

O BJECTIVES OF THE UC A CCOUNTING P ROGRAM

DaFIS is an electronic accounting system designed to achieve the objectives of the University Accounting Program Specific procedures in DaFIS ensure proper accountability and compliance with university policies, and state and federal laws and regulations

The following passage from the University of California Accounting Manual (University Accounting Program, Section A-000-4) describes the purpose of the accounting program:

“The University of California maintains and operates a comprehensive accounting program in order to meet its stewardship responsibilities and to provide

management information to all levels of the university’s administration, as well as

to state and federal officials

In addition to these stewardship responsibilities, the university’s comprehensive accounting program must provide financial information to all levels of university administration for use in planning, budgeting, evaluating the uses of funds, making comparative studies, and other purposes.”

In this class we will discuss these responsibilities, and how DaFIS can properly be used

to meet them

S TEWARDSHIP R ESPONSIBILITIES

Remember the first part of the Accounting Program Objectives: “The University of California maintains and operates a comprehensive accounting program in order to

meet its stewardship responsibilities .”

Our Public Trust

“The University of California shall constitute a public trust …”

California Constitution, Article 9, Education

“We recognize that each of us has an obligation to the community of which we

have chosen to be a part.”

UC Davis Principles of Community

“We succeed by earning the respect and trust of those who govern us, support us,

and do business with us.”

Mission of UC Business Administration and Operations

Ethical Decision-making

Making ethical decisions, collectively and individually, is at the core of ensuring that we meet our stewardship responsibilities

What are Ethics?

Moral principlesof duty and virtue that prescribe how we should behave

Principles provide a means of evaluating and deciding among competing options

© 2000 Josephson Institute of Ethics – Reprinted with Permission

What are Values?

Values are important beliefs and desires that shape attitudes and motivate actions

© 2000 Josephson Institute of Ethics – Reprinted with Permission

Are Values Different from Ethics?

§ “Values” are inner judgments about how a person actually behaves.“Ethics is concerned about how a person should behave.Values concern ethics when they pertain to beliefs about what

is right or wrong.© 2000 Josephson Institute of Ethics – Reprinted with Permission

Perception is Reality

§ When it comes to trust, perception is reality

§ It’s not enough that we do no wrong, we must also try to assure that others believe

we have done no wrong © 2000 Josephson Institute of Ethics – Reprinted with Permission

Classical Fallacies About Ethics

It’s not unethical if:

1 It’s for a good cause

2 I’ve got it coming

3 It’s legal

4 Everyone does it

5 Others are a lot worse

6 I don’t get caught

7 It’s not for me

8 It benefits my family

9 It’s necessary / It’s the only way I can win

10 I’m just following orders

11 My job is on the line

12 I’m just fighting fire with fire

13 No one is really hurt

© 2000 Josephson Institute of Ethics – Reprinted with Permission

The Rat Race

The problem with the rat race is that, even if you win you are still a rat – Lilly Tomlin

© 2000 Josephson Institute of Ethics – Reprinted with Permission

Bell, Book and Candle Test

§ Listen for the bells warning you of an ethical issue

§ Check to see if there are any laws, regulations or rules restricting your choice

§ How would your decision look in the light? Could a reasonable, fair-minded person conclude you acted improperly?

© 2000 Josephson Institute of Ethics – Reprinted with Permission

Strategic Direction for UC Business Administration and

UC’s business administration and operations foster and support the academic mission

by employing sound business practices, simple and cost effective operating processes,

proven technologies, ethical business relationships, and a trained and

service-oriented workforce We succeed by earning the satisfaction of our customers; the respect and trust of those who govern us, support us, and do business with us; and the pride of our employees

Values and Principles

§ We strive for excellence in everything we do

§ We foster the UC values of honesty, integrity, collegiality, and respect for

UC Davis Principles of Community

The campus adopted the following principles of community over a decade ago Everything we do as an institution, and as individuals, should be done with the following in mind:

The University of California, Davis, is first and foremost an institution of learning and teaching, committed to serving the needs of society Our campus community reflects and is a part of a society comprising all races, creeds and social circumstances The successful conduct of the university's affairs requires that every member of the

university community acknowledge and practice the following basic principles:

We affirm the inherent dignity in all of us, and we strive to maintain a climate of

justice marked by respect for each other We acknowledge that our society carries within it historical and deep-rooted misunderstandings and biases, and therefore we will endeavor to foster mutual understanding among the many parts of our whole

We affirm the right of freedom of expression within our community and also affirm our commitment to the highest standards of civility and decency towards all We recognize the right of every individual to think and speak as dictated by personal belief,

to express any idea, and to disagree with or counter another's point of view, limited only by university regulations governing time, place and manner We promote open expression of our individuality and our diversity within the bounds of courtesy,

sensitivity and respect

We confront and reject all manifestations of discrimination, including those based on race, ethnicity, gender, age, disability, sexual orientation, religious or political beliefs, status within or outside the university, or any of the differences among people which have been excuses for misunderstanding, dissension or hatred We recognize and cherish the richness contributed to our lives by our diversity We take pride in our various achievements, and we celebrate our differences

We recognize that each of us has an obligation to the community of which we have

chosen to be a part We will strive to build a true community of spirit and purpose

based on mutual respect and caring

(The Principles of Community can be found online at

http://www.ucdavis.edu/principles.html )

Policy Examples — Stewardship Responsibilities

The following excerpts from the Policy & Procedure Manual (P&PM) illustrate how policy is written to ensure that we meet our stewardship responsibilities (The P&PM

is available online at http://www.mrak.ucdavis.edu/web-mans/ppm/welcome.htm ) Acceptance or Offering of Gifts and Gratuities by University Employees (380-55)

As a public institution of higher education and a custodian of public funds, the university is concerned that there be appropriate safeguards against any appearance of favoritism in its relations with other entities, either public or private To avoid any such appearance of favoritism, no officer or employee should accept any gift or gratuity from any source that is offered or reasonably appears to be offered because of the university position held by the officer or employee, nor should an officer or employee extend an offer of a gift on a similar basis

Gift Reporting Procedures (260-25)

When a gift is received, it is recorded in DaFIS using the Statement of Cash Collections document If it is equipment, a DaFIS Add Asset or Multiple Add Asset document also needs to be completed University Relations’ Advancement Information System (AIS) asks for both DaFIS account codes and legacy Loc/Account/Fund/Sub numbers, but either can be entered New gifts not yet assigned an OP fund number should cite 90000 as the OP fund number Extramural Accounting will change this to the actual new OP fund and advise University Relations

Agency Account Services (330-09)

This section covers the creation and use of agency accounts maintained by campus Accounting & Financial Services for funds held by the university as custodian or fiscal agent on behalf of principals (i.e., individuals, faculty/staff/student organizations, private organizations, and other sponsors)

Entertainment with University-Controlled Funds (330-80)

As with travel expenses, entertainment expenses require the handwritten signature of the host, attesting to the necessity and appropriateness of the expense Therefore, Request for Issuance of Check - Entertainment Expense, Form D2853 is used, in addition to the DaFIS Entertainment Expense Voucher (EEV) This paper form, along with any additional documentation, should be routed concurrently with the DaFIS electronic document, and be available to all additional reviewers The paper form should indicate the EEV document number For entertainment expenses in excess of $250, department heads must also obtain the approval of their dean or vice

chancellor This approval can be obtained via electronic routing There are occasions for which judicious extension of hospitality in connection with official university business is in the best interest of the university

A CONDITIONS FOR APPROVAL

1 Expenses for entertainment must be directly related to, or associated with, the active conduct of official university business When a university employee acts as an official host, the occasion must, in the best judgment

of the approving authority, serve a clear university business purpose, with

no personal benefit derived by the official host or other university employees In addition, the expenditure of funds for entertainment should

be cost effective and in accordance with the best use of public funds

2 When determining whether an entertainment expense is appropriate, the approving authority must evaluate the importance of the event in terms of the costs that will be incurred, the benefits to be derived from such an expense, the availability of funds, and any alternatives that would be equally effective in accomplishing the desired objectives

University Payment of Membership Fees (330-75)

It is the policy of the University to consider membership in organizations that would promote the advancement of education and research, enhance the professional standing of its administrative personnel, and facilitate favorable campus-community relations

It is often in the best interest of the university to consolidate payment of multiple individual membership fees into a single institutional membership The Chancellor retains approval authority for memberships in organizations of universities and colleges and community organizations The approval of deans and vice chancellors is required for other memberships Authority to approve membership requests may not

be re-delegated After initiation of the appropriate DaFIS purchasing document, ad hoc or review hierarchy routing should be used to obtain these higher-level approvals

1 Costs in relation to benefits shall be considered

2 Payments shall not be made to organizations that are primarily social (e.g., country clubs)

3 Payments shall not be made to support an organization's political action committee or to any organization whose primary activities include carrying

on propaganda, or otherwise attempting to influence legislation, or participating or intervening in any political campaign on behalf of any candidate for public office

4 Whenever possible, institutional rather than individual memberships shall

be obtained, as the former often allow participation by several or alternate employees Individual memberships shall be purchased only if particular circumstances warrant an exception; the decision to grant an exception shall be based on an evaluation of the benefits to the university In no case may more than one institutional membership in any organization be purchased on the campus

5 Memberships and employee participation in community organizations should be held to the number necessary to achieve effective campus-community relations within a reasonable expenditure of funds

6 Departments may purchase a membership in an organization to secure its periodicals if the periodicals cannot otherwise be secured Such periodicals will become the property of the university rather than of an individual, and must be made available to all department faculty, staff, and students

7 University libraries may secure periodicals for their collections that cannot

be obtained except through membership

A CCOUNTABILITY

Remember the second paragraph in the of the Accounting Program Objectives?

“The University, as a public institution, has a special stewardship obligation to

process properly and accurately all receipts and disbursements of funds; to account for all financial resources received and used; …”

This further defines our stewardship obligation, and brings in the issue of accountability So, just what is accountability?

Authority/Responsibility/Accountability

Authority is the power to direct (or delegate) that a task be done

Responsibility is the obligation to do it

Accountability is an obligation or willingness to accept responsibility or to furnish a

justifying analysis or explanation for one’s actions

Merriam-Webster’s, Collegiate Dictionary, Tenth Edition

True Accountability is:

§ How the human, financial and political resources are being used

§ How well the leadership is carrying out the unit’s mission

§ What risks legal, financial, and other are being incurred by the unit

§ The quality of decisions being made

Policy Example - Accountability:

The following policy excerpt illustrates the issue of accountability:

Travel Policies & Regulations (300-10)

It is the policy of the university that all official travel shall be properly authorized, reported, and reimbursed in accordance with university travel regulations Under no circumstances shall travel expenses for personal travel be charged to, or temporarily funded by, the university When a university employee travels under the sponsorship

of a non-university entity, the travel expenses shall not be charged to a university account; travel advances and tickets should be obtained from the sponsor University employees traveling on official business shall observe normally accepted standards of propriety in the type and manner of expenses to incur It is the responsibility of the traveler to plan university travel in such a manner as to minimize the cost to the university

The paper Travel Expense Form, along with all receipts and other documentation, should be routed concurrently with the DaFIS electronic document, and be available

to all additional reviewers The paper form should indicate the DaFIS TEV document

number Ultimately, the paper Travel Expense Form will route to, and be maintained

in, the Accounts Payable office

Internal Controls

… are processes, effected by the Regents, administration, faculty and staff, designed to provide reasonable assurance regarding the achievement of the university’s objectives

in the following categories:

- Effectiveness and efficiency of operations

- Reliability of financial reporting

- Compliance with applicable laws & regulations

Internal Control - Integrated Framework, July 1994

Five Components of Internal Control — COSO*

Control Environment - Tone at the top, integrity, ethics, competence

Risk Assessment - Process of identifying and evaluating risks (threats) to achieving

objectives

Controls Activities - Actions that help management mitigate identified risks and achieve

objectives

Information and Communication - Capture and analysis of relevant operational, financial

and compliance information, and communication of such information to stakeholders

Monitoring - Assessing the quality of the internal control system over time

* COSO is the Committee Of Sponsoring Organizations of the Treadway Commission

Establishing an Accountability Structure

It is the responsibility of departments, deans’ offices and vice chancellors’ offices to use the functionality of DaFIS to ensure appropriate accountability

§ Individuals delegating accountability can only do so to the extent that this same accountability has been delegated to them

§ Individuals delegating accountability are responsible for ensuring the qualifications of the individuals to whom they delegate, as well as the proper fulfillment of their responsibilities

§ Qualified individuals are those who:

ú Manage the activities being conducted;

ú Possess a working knowledge of the budget, an adequate level of technical skills required to use DaFIS, and an awareness of policies, rules, laws, regulations or other restrictions on the use of the funds sufficient to either ascertain compliance or seek additional assistance; and,

ú Have been provided sufficient authority to fulfill their responsibilities so they can disallow a transaction without being overruled or subject to disciplinary action

§ Department heads must sign all authorization or cancellation forms (Forms are available online at http://accounting.ucdavis.edu.)

1 A DaFIS Approval Authorization or Cancellation form is required

to document delegations of authority by the department head for financial business transacted in DaFIS

2 A Payroll Signature Authorization or Cancellation form is required

to document delegations of authority by the department head for payroll and personnel transactions

3 An approval or signature authorization cancellation form must be promptly processed to cancel authorizations upon separation of an employee or transfer of an employee to a position not involving approval responsibility previously delegated

DaFIS Roles & Responsibilities

Everyone active in conducting the business of the university has a role to play in accountability, whether or not they are DaFIS users

Document Initiators – DaFIS document initiators are expected to prepare transactions accurately and appropriately, in compliance with policies and procedures Document initiators (like all users) are accountable for transactions processed under their user ID

Account Managers/Approvers – Documents route to account managers and/or other approvers (e.g delegates), by one of the routing mechanisms in DaFIS It is the responsibility of account managers and other approvers to review documents for compliance with university policies and procedures, then approve or disapprove them

Transaction Listing Reviewers – These reviewers are responsible for performing the monthly review of the Transaction Listing (2) (a.k.a the ledger) in Decision Support, and certifying the validity of the charges and credits

Department Heads – By virtue of their appointments, department heads have the authority to approve departmental transactions They can delegate to departmental

representatives, provided the delegation is within the policy (see

http://www.mrak.ucdavis.edu/web-mans/ppm/330/330-10.htm) Departmental financial transactions must be fully approved in DaFIS However, in the event the department head is not a DaFIS user, a hard copy approval provided to both the Document Initiator and the Account Manager/Approver will suffice

Delegates

Account managers may wish to establish delegates for one or more accounts, to ensure that business continues in a timely manner Delegates can be created for each account, and can be based on dollar amount and/or document type There are two types of delegates: – primary and non-primary

Primary - documents will route to this person instead of to the account manager The account manager can still access the documents via the In Box choice called Alternate: Search as Acct Mgr

Non-primary - documents will continue to route to the account manager, but the primary delegates could access them via the In Box choice called Alternate: Search as non-

The following Decision Support queries allow you to review your organization’s accountability structure within DaFIS:

§ Access Manager Delegation Information (149)

§ Account Delegate Lookup (167)

§ FIS User Lookup (86)

§ DaFIS User Responsibility (214)

§ Organization Hierarchy (50)

§ Review Hierarchy Lookup (166)

To ensure that an appropriate structure is in place, the Department Head should review these reports quarterly

Routing

While departments remain responsible for ensuring that their transactions receive appropriate approvals, with DaFIS, much of the processing is automated DaFIS provides many tools to allow you to design workflow to comply with policy Routing

is one such tool

Routing Types

Ad Hoc Routing – Allows initiators and/or approvers to route documents on an

as-needed basis to any other user in the system, either for approval or FYI Ad hoc

routing is used to acquire approvals not otherwise possible

Account Manager Routing – The system automatically routes most documents to the account manager for each account cited in the document The exceptions are below

Review Hierarchy Routing – Allows additional approvals to be required at the organizational level, after account manager routing This could be used to route documents that otherwise wouldn’t route to the account manager

Special Conditions Routing – Allows central administrative offices to work with Financial Services to build into the system much of the routing required to comply with policy For instance, Special Conditions Routing is used to obtain required administrative approvals (Facilities Services, Fleet Services, EH&S, etc.) for some purchases before they are processed in the Purchasing department

Documents created by departments, that bypass account manager routing

The following documents do not have Account Manager Routing, however Review Hierarchy can be established where necessary:

§ Cancel/Close Departmental Purchase Order

§ Statement of Cash Collections (does not have review hierarchy routing)

§ Sub Object

§ Most of the Accounts Receivable maintenance documents

§ Any document that does not have an account field on it (i.e FIS User, Organization, Project, Review Hierarchy, Workgroup, etc.)

§ Any document initiated by the account manager, that contains only accounts for which the initiator is the account manager

Documents initiated by Account Managers are automatically approved at the Account Manager level However, if a document contains one or more accounts for which that individual is not the account manager, the document will route to the other account managers for approval

Documents created by Accounting and Financial Services or other departments, that bypass account manager routing

Most of the documents that bypass account manager routing are generated in Financial Services or other central administrative offices, as illustrated in the table below

Closed Payment Adjustment Accounts Payable

Fund Balance Adjustment Financial Services

Fund Balance Adjustment Year End Financial Services

Journal Voucher Year End Financial Services

Manual/Rush Check Accounts Payable

Non-Check Disbursement Accounts Payable

Non-Purchasing Agreement Accounts Payable

Restricted Account Financial Services

Restricted Base Budget Adjustment Resource Planning and Management

Restricted Current Budget Adjustment Resource Planning and Management

Stale Dated Check Accounts Payable and Internal ControlState Tax Remittance Accounts Payable

To keep Account Managers fully apprised of all activity in their accounts, Accounting

& Financial Services has committed to routing FYI copies of these documents to the managers of any affected accounts We encourage service departments and others to adopt a similar policy

Routing Logs

Each document processed in DaFIS has a routing log to record the approvals, cancellations, and reviews made on the document These logs provide a record of accountability for the transaction During routing, the log reflects the current level of routing Once all approvals have been made or the document is canceled, the log will show the entire history of approvals, cancellations, and reviews

The following routing logs illustrate different types of routing, and reflect the history of accountability that each provides: