Senior HR/Fiscal Officers Summary of July 24, 2008 Meeting

Meeting #106 ____________________________________________________________________________

Attendees: Dan Allen, Diane Beall, Julian Bell, Tom Bond, Ruth Burns, Nancy Campbell, Tom Conrad, Erin Delffs, Helen DeSantis, Michael DeWees, Barb DeYoung, Pam Doseck, Jeff Ellison, Tom Ewing, Leslie Flesch, Ann Florentine, Carol Freytag, Donna Hobart, Eunice Hornsby, Ben Jay, Zhong Jiang, Nancy Kaler, Judy Kleen, John Lahey, Candie Lester, Larry Lewellen, Melissa Levings, Betsy Lindsey, Ruth Luther, Marie Mead, Tim Meager, Mark Miller, Anne Moffat, Phyllis Newman, Judy Nodjak, Lisa Orr, Kevin Patton, Devon Phelps, Greta Russell, Anne Sandstrom, Diane Town, Linda Walsh, Barb Withem, Jim Woods, and Darrell Young. I. Human Resources Update A. Proposal for Dependent Certification (Jody Gilkerson)

• The goal of Dependent Certification is to ensure plan compliance and maintain equity in the method by which eligibility is determined for all plan dependents.

• There are several ways to approach dependent certification, but two common ones involve: Requiring all employees with dependents enrolled in a health plan to provide copies of

specified documents to certify each dependent’s eligibility Requiring all employees with dependents enrolled in a health plan to certify eligibility by

responding to several questions about each enrolled dependent • Given our population and our objectives for this project, which approach should we consider? • Next steps include continuing to gather feedback from university constituency groups and

develop a proposal for the Senior Management Council, develop an RFP and initiate bid process to select a vendor and begin to announce the certification process and re-communicate dependent eligibility requirements during the fall and throughout Open Enrollment.

• Additional communications, emphasizing the process and the benefit to conducting the certification.

• For more information, contact Jody Gilkerson, Benefits Coordinator at 247-4460 or gilkerson.7@osu.edu or Tori Weeks, Associate Director, Benefits, at 292-2815 or Weeks.56@osu.edu

B. Benefits Changes for the 2009 Plan Year (Pam Doseck) Changes in benefits for the 2009 plan year include:

• Prime Advantage Value – all outpatient lab/x-ray covered at 90% with deductible waived • Prime Care Advantage and Advantage Plus - $100 co-pay for outpatient procedures and $300

annual out-of-pocket maximum for outpatient procedures • Prime Advantage Plus – new Rx plan with co-pays for brand name drugs • $180 Premium Differential for taking the PHA • Faculty & Staff Incentive Program – payout increased so net is $125 maximum • Introduce PHA dependent incentive for spouse/same-sex domestic partner • Dental - 100% preventive coverage • Adoption Assistance – increase benefit to $5,000 • There are changes in the medical plan rates for each plan • Open enrollment will occur November 3 – 14 • Open Enrollment will serve as the review/correction period for the dependent certification to

occur in 2009 ] C. Disaster & Emergency Designations (Eunice Hornsby)

• We are in the process of updating the Disaster & Emergency designations to include a Weather and Short-Term designation.

• We will distribution the policy for review on August 1. The deadline to review and respond to this will be September 1.

• Contact Eunice Hornsby with questions at Hornsby.1@osu.edu.

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D. University Policy Process (Eunice Hornsby)

• There will be a soft launch of the University Policy website on September 1, and a hard launch on January 1, 2009.

• Colleges are currently working to review historical policies and update them for the policy website.

• We are currently reviewing University Policy Process Guiding Principles. This process would define how university policies are developed, implemented, disseminated and maintained in each area.

• Ownership of the policy lies with the responsible office/area. Policy owners would be responsible to review, update, or retire policies on a regular basis.

• Give feedback to Eunice at Hornsby.1@osu.edu. II. Financial Updates (Tom Ewing)

1. Sub-Certification - we have received two-thirds of the sub-certification statements. Be forthright in you response to send these in.

2. Equipment Testing – The first round of review samples went good with the auditors. The will return to test 15 or 20 more items. Please take a look at the old items to determine where they are and update the list.

3. Fund Transfer and Research Fund Transfer policy – We have updated the job aid on these policies.

4. Sales Tax – Steve Hoffman has taken over the sales tax from the Treasurer’s Office. The deadline for submitting sales tax is the 15th of every month. We must do timely and complete filing of sales tax due.

5. Auditors – The auditors should be back in August to review year-end transactions. III. Internal Controls Update (Leslie Flesch)

A. Recycled Paper Policy • The university policy states that each area is required to use a minimum of 30% recycled paper.

This went into effect on July 1, 2008. • Departments/ Colleges should be buying recycled paper through e-stores or via a minority vendor.

B. Core Training Course Roll-out

• There are now four required training courses for fiscal personnel. They include: Business Responsibilities at OSU Understanding and Preventing Fraud Internal Controls (coming soon) Expenditure Controls

• All are available via the web through Carmen.

C. Internal Control Policy

BACKGROUND: As a major public institution, The Ohio State University is held to a high level of accountability for its business practices. Accordingly, every effort must be made by all employees to ensure that funds are used in a responsible and appropriate manner consistent with the University’s mission, applicable law, and ethical practice. At the core of this effort is a formalized system of internal controls designed to mitigate the risk of financial impropriety and the resulting damage to institutional reputation. As defined by the Statement on Auditing Standards No. 1 (Section 320.09):

“Internal control comprises the plan of organization and all of the coordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies”

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Simply stated, internal controls are the mechanisms that reduce the probability of errors and inappropriate transactions and formally establish accountability. In an effective financial control structure:

• Segregation of duties is maintained with at least two people are involved in every transaction • Every transaction is approved for business purpose by individuals who have the business

knowledge and authority to determine the appropriateness of the transactions without gratuitous influence or interference by the transaction initiators.

• Every transaction is approved for compliance by individuals who have received adequate training on University business policies.

• University resources are protected against loss and unauthorized use or disposition • Financial data is reconciled in a timely manner • Approvers are held accountable for transactions approved.

The University operates in a decentralized operating and internal control environment with the Dean or Vice President of each college or support unit responsible for the financial operations, budget, internal controls and monitoring activities of their area. Basic internal control requirements must be in place within each of these decentralized areas in order to create an environment of accountability with effective monitoring and oversight. POLICY REQUIREMENTS: 1. Internal Control Structure: Each operating unit is required to develop and maintain an Internal

Control Structure document that has been formally approved by the appropriate Dean or Vice President and distributed to all employees within the unit who have responsibility for financial related functions or processes.

Required components of the Internal Control Structure are: • Definition of process flow for payroll, procurement, revenue, cash receipts and other

general ledger transactions including specification of required documentation and approvals. Process flows must provide for appropriate segregation of duties between transaction initiators and approvers as well as review and approval for business purpose and policy compliance. For areas that are too small to implement effective segregation of duties, functions should be aggregated across areas to ensure requirements are met.

• Definition of roles and responsibilities of transaction approvers.

• Description of procedures, roles and responsibilities related to custody over University resources, including equipment, inventories, cash receipts, petty cash and change funds, access to facilities, and other assets that are susceptible to theft or misuse.

• Delegation of Signature Authority documentation approved by the Dean or Vice President, specifying for each area and each transaction type the individuals who are authorized to approve transactions.

• Transaction reconciliation requirements for each transaction type.

• Procedures for resolving discrepancies and escalating issues or concerns.

2. Delegation of Signature Authority: Each area is required to develop and maintain a Delegation of Signature Authority document, approved by the Dean or Vice President, specifying for each area and each transaction type the individual(s) who are authorized to approve transactions for business purpose and for compliance. Individuals should only be authorized to approve business purpose on transactions initiated by individuals for whom they have sufficient authority (e.g., department chair approves faculty transactions, manager approves staff transactions, etc.)

3. Standard Language for Position Descriptions: Standard language is intended to formally assign accountability for establishment of internal controls within our decentralized operating environment. The following language is required for the position descriptions of all Deans, Vice Presidents and Senior Fiscal Officers.

For Deans and Vice Presidents the following must be included in the Summary of Duties portion of the position description:

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“Responsible for establishment and maintenance of a financial and operational processing environment that is focused on appropriate internal controls. This should include, but not be limited to, appropriate segregation of duties in the processing of every financial transaction, appropriate mandatory approvals, appropriate procedures to maintain effective custody over University resources, appropriate monitoring and oversight and appropriate mandatory reconciliations.” For Senior Fiscal Officers the following must be included in the Summary of Duties portion of the position description: “Responsible for oversight and maintenance of the established financial and operational processing environment to ensure adherence to established internal control structures. This should include, but not be limited to, appropriate segregation of duties in the processing of all financial transactions, appropriate mandatory approvals, appropriate procedures to maintain effective custody over University resources, appropriate monitoring and oversight and appropriate mandatory reconciliations.” Expanded language, providing the specifics relative to the individual units, should then be included in the Duties and Responsibilities section of each position description. Typically, this language would become a part of the duties associated with the administrative components of these positions and should represent a significant component of the position.

4. Governance Structure: Each area is required to maintain a governance reporting structure that provides the Senior Fiscal Officer with the appropriate level of authority to effectively oversee, maintain, and assess internal controls. At a minimum, each Senior Fiscal Officer should have a reporting line responsibility directly to the Dean or Vice President of the area and should be formally assigned authority (straight line or dotted line) over all fiscal managers and personnel involved in the area’s internal control structure, including payroll processing controls.

5. Compliance with Policy: Employees who have been delegated the authority and privilege to purchase approved goods and services on behalf of the University, approve human resources activity and or maintain custody over University resources must agree to abide by all policies set forth by the University including: Financial Code of Ethics as referenced at http://www.busfin.ohio-

state.edu/expenditures/financialcodeofethics.pdf University Expenditure Policies as set forth by Purchasing and Accounts Payable policies and

procedures as referenced at www.ctlr.ohio-state.edu/webhelp/Financial_Policies.htm; Procurement Card policies and mandatory requirements as referenced at www.osupcard.com; Travel policies and mandatory requirements as referenced at http://busops.osu.edu/travel.php Human Resources policies as referenced at http://hr.osu.edu/policy/index.aspx; Cash handling, petty cash and change fund policies as referenced at

http://www.treasurer.ohio-state.edu/staff/pols_proc.html Equipment Policies as referenced at http://www.ctlr.ohio-

state.edu/webhelp/Financial_Policies.htm 6. Monitoring and Oversight: Internal Control systems need to be monitored through a process

that assesses the quality of the internal controls system’s performance over time. Ongoing monitoring and oversight should occur in the course of normal operations and includes regular management and supervisory activities. Adequate supervision of personnel and other monitoring activities are required to ensure the reliability of accounting and/or operational controls by pointing out errors, omissions and inconsistencies in the application of procedures.

D. Update on Small Deficit Policy–

Policy Statement: Effective resource management requires that expenditures be in alignment with available resources. No operating funds should end the fiscal year in a deficit financial position. Procedures: In July of each fiscal year deficit balances will be determined based on the following criteria. Funds determined to be in deficit will be assessed a penalty based on a predefined schedule.

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General Funds: Change report to consolidate dollars at the Dorg level. Only assess penalty if there is a deficit at the Dorg level. Sales and Service/ Auxiliaries: Current state. Interest charges monthly on deficit balances. Endowment Funds: Funds (excluding those with a scholarship function code) in deficit assessed penalty. Scholarship funds monitored separately. Development Funds/Current Use Gifts: TBD Private Grants and Contracts Funds in deficit assessed penalty State Grants and Contracts Monitor Separately Federal Grants and Contracts Monitor Separately Plant Funds: Funds in deficit assessed penalty • There was a discussion regarding a one-time assessment for funding university deficits. The

group suggested removing the 180 day hold.

E. Standard Classifications • A draft of standard classification specifications was distributed for staff holding fiscal positions.

These draft specifications are attached. • We are looking at broadbanded fiscal titles for these positions. • OHR is doing a corresponding review of classifications for SHRP’s. There is a small workgroup

working on this review. • We are not asking for a restructuring of units, but are asking if your areas should migrate toward a

future structure. IV. Development Survey (Eileen Bertolini and Dana Booth)

• Beginning October 1, the Office of University Development will launch an effort to communicate personally with over 1,500 of our best donors and key volunteer to complete a perception survey, assessing Ohio State’s donor stewardship philosophy and practice.

• To this end, we have crafted a survey covering such topics as gift receipts and than you letters; gift use and impact reporting; and individual preferences and experiences involving related issues.

• The survey will be implemented in person from October through April, 2009. • A personalized report on FY08 use of donor supported funds will be provided at the end of every

survey visit. • This spring, the OSU Center for Statistical Consulting will analyze the data and issue a report on

our findings. • We need your help to populate the FY08 use of donor supported funds specific to the donor pool

we will survey.

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Proposed Timeline: • July 24-31: SFO feedback to University Development on how to best provide information and

ability to complete in August • August 1: University Development will send list of fund numbers and instructions for website to

SFO’s • August 1-29: SFO’s and college staff will enter the fund impact statements on the website • September 1-30: Development will incorporate fund impact statements into stewardship reports

V. Next Meeting: TBD