THE UNIVERSITY TEXAS SYSTEM 210 West 6th Street, Suite … System... · UTS 142.1 , Policy on the Annual Financial Report, requires each financial reporting officer within The

• THE UNIVERSITY of TEXAS SYSTEM

FOURT EN I T TUT OhS. Uflll ~ITEO POSS B LITIES .

January 13, 2017

Randy Wallace Associate Vice Chancellor, Controller, and Chief Budget Officer Office of the Controller 201 West 7th Street, ASH 5th Floor Austin, Texas 78701

Dear Mr. Wallace:

Audit Office 210 West 6th Street, Suite B140.E

Au stin, T exas 78701

512-4 99-4390 I Fax: 512-499-4426

WWW. UT SYSTEM .ED U

The System Audjt Office has audited The University of Texas (UT) System Office of the Controller's monitoting plan for segregation of duties and reconci li ation of cost centers and subcertifications. The detailed report is attached for your review.

We conducted our engagement in accordance with The Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.

We appreciate the assistance provided by your office and the offices that were selected for audit. We hope the recommendations presented in our report are helpful.

Sincerely,

~,J--Q.~~ J. Michael Peppers, CIA, CPA, QIAL, CRMA Chief Audit Executive

cc: Scott C. Kelley, Ed.D., Executive Vice Chancellor for Business Affairs Sandra Neidhart, Fiscal & Policy Analyst

The University of Texas 11 Al'llng\on ·The University of Texas al Austin · The Unive .. ity of Texas at Dalla•• The Univet'sity o f Texas a t El Paso

The Univer•i1y of Texas of 1he Permian Basin• The University of Texas Rio C1·onde Volley• T he Univel'si1y of Texas a t San Antonio

The Universily of Texas at Tyler• The University of Texas Southwestern Medica l Center• The University of Texas Medical Branch at Calves1on

The University of Texas 1-feahh Science Center at Houslon •The University of Texas l!eahh Science Cenler at San Antonio

The University of Texas MD Anderson Cancer Cen1er ·The University of Texas I !eahh Science Center at Tyler

The University of Texas System Administration Cost Center Reconciliations & Subcertifications Audit Report for Fiscal Year 2016

Fiscal Year 2017

January 2017

THE UNIVERSITY OF TEXAS SYSTEM AUDIT OFFICE 210 WEST SIXTH STREET, SUITE B.140E

AUSTIN, TX 78701 (512) 499-4390

The University of Texas System Audit Office Cost Center Reconciliations & Subcertifications Audit Report for Fiscal Year 2016 Fiscal Year 2017

EXECUTIVE SUMMARY

AUDIT REPORT January 2017

UTS 142.1 , Policy on the Annual Financial Report, requires each financial reporting officer within The University of Texas (UT) System to "develop or update a monitoring plan for the segregation of duties and reconciliation of accounts." According to UTS 142.1, "the monitoring plan should be risk-based but also include random monitoring of low risk departments for the fiscal year." UTS 142. l also requires that the UT System Audit Office (System Audit) perform annual testing of the UT System Office of the Controller's (Controller's Office) monitoring plan.

The objectives of this audit were to determine whether the Controller's Office followed its monitoring plan for segregation of duties and reconciliation of cost centers, whether there was adequate segregation of financial duties, whether cost center reconciliations were properly performed and reviewed, and whether subcertifications were completed and submitted timely.

The scope of this engagement was limited to fiscal year (FY) 2016. In coordination with the Controller' s Office, we selected for audit the Offices of Business Affairs, Facilities Planning and Construction, Health Affairs, Risk Management, Strategic Initiatives, Systemwide Information Services, and Innovation and Strategic Investment, as well as the Texas Oil and Gas Institute and University Lands.

CONCLUSION We detennined that the Controller's Office followed its monitoring plan for segregation of duties and reconciliation of cost centers and that substantially all UT System Administration offices submitted subcertifications in a timely manner. For each of the nine offices reviewed, cost center reconciliations were completed, and adequate segregation of duties was in place. In addition, we had no reportable recommendations for three offices, including the Offices of Business Affairs, Facilities Planning and Construction, and Risk Management. However, we identified opportunities for the remaining offices to improve the completeness and timeliness of reconciliations and to ensure all individuals involved in the reconciliation process receive reconciliation training. We also noted opportunities for the Controller's Office to strengthen its monitoring plan by improving training tracking, developing more comprehensive training tailored to address areas identified as challenging for reconcilers, and ensuring that UT System's cost center reconciliations and segregation of duties expectations are clearly documented in UT System Administration's Handbook of Operating Procedures.

J. a~!;,~~, QIAL, CRMA Chief Audit Executive

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EricJ.Pol ski,CPA, CIA Director of Audits


BACKGROUND UTS 142.1, Policy on the Annual Financial Report, requires each financial reporting officer within The University of Texas (UT) System to "develop or update a monitoring plan for the segregation of duties and reconciliation of accounts." According to UTS142.l, "the monitoring plan should be risk-based but also include random monitoring oflow risk departments for the fiscal year." UTS 142.1 also requires that the UT System Audit Office (System Audit) perform annual testing of the monitoring plan and the subce1iifications and validate the assertions on segregation of duties and cost center reconciliations.

In accordance with its monitoring plan, the UT System Office of the Controller (Controller's Office) coordinates with System Audit to perform annual audits of selected System Administration offices. Additionally, the Controller's Office provides reconciliation training to those preparing or reviewing and approving cost center reconciliations and monitors whether department heads submit their annual subcertification letters. The following offices were selected for this audit:

1. Office of Business Affairs, 2. Office of Facilities Planning & Constrnction 3. Office of Health Affairs, 4. Office oflnnovation and Strategic Investment, 5. Office of Risk Management, 6. Office of Strategic Initiatives, 7. Office of System wide Infom1ation Services, 8. The Texas Oil and Gas Institute, and 9. University Lands

ENGAGEMENT OBJECTIVES The objectives of this engagement were to determine whether:

• The Controller's Office followed its monitoring plan for segregation of duties and reconciliation of cost centers;

• There was adequate segregation of financial duties; • Cost center reconciliations are properly performed and reviewed; and • Subcertifications were completed and submitted timely.

SCOPE & METHODOLOGY The scope of this audit included PeopleSoft cost center activity for the period September 1, 2015 through August 31 , 2016.

To achieve our objective, we conducted interviews with relevant personnel, reviewed FY 2016 subcertification letters for all System Administration offices, and reviewed a sample ofreconciliations completed during the audit scope. We evaluated whether System Administration offices had adequate segregation of duties and verified that those prepaiing or reviewing and approving cost center reconciliations completed related training.

We conducted our audit in accordance with the guidelines set fo1ih in the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.

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ENGAGEMENT RESULTS

Monitoring Plan The Controller' s Office primarily relies on System Audit to perform monitoring of cost center reconciliations and segregation of duties. The Administrative Programs Manager from the Controller's Office monitors whether department beads submit their annual subcertification letters and follows-up on any exceptions. Additionally, reconciliation training is provided to those preparing, reviewing, or approving cost center reconciliations. Overall, the Controller's Office established and followed its monitoring plan to provide adequate monitoring of cost center reconciliations and segregation of duties. For the nine offices selected for testing, staff members responsible for reconciliations generally followed guidance provided by the Controller's Office. Some offices also developed reconciliation procedures and templates tailored to meet the needs of their individual offices.

Reconciliation Training The Controllers Office's monito1ing plan indicates that reconciliation training is to be provided to those preparing, reviewing, or approving cost center reconciliations. The training is mandatory for new reconcilers and individuals who have had challenges with completing reconciliations adequately.

We identified 147 individuals in 32 offices responsible for prepaiing, reviewing, or approving reconciliations during FY 2016. Thirty-six (24.5%) had not completed any training as of October 2016. For FY 2016, the Controller's Office did not utilize attendance rosters to track training completion. The Controller's Office relied on a tracking spreadsheet to identify those who have completed training. However, the tracking spreadsheet was not complete because it did not include all individuals responsible for reconciliations. While the tracking spreadsheet did not include all individuals responsible for reconciliations, the Controller's Office does request that each UT System Administration office review and update a listing of individuals involved in the reconciliation process during the annual subcertification process. We also noted that 41 % of employees who completed training did so prior to PeopleSoft implementation in May 2014. Currently, individuals are not required to take refresher training.

During the audit, individuals responsible for reconciliations informed us that the reconciliation training could be improved to provide more comprehensive guidance, especially with regard to understanding PeopleSoft and proper use of IBM Content Navigator. In addition, reconcilers should have more than a basic understanding of Microsoft Excel to prepare the reconciliations. If responsible individuals are not adequately trained, this increases the risk that reconciliations are not performed correctly and that potential errors may go undetected.

The observation described above is considered a medium-level finding in accordance with UT System's Internal Audit finding classification system.

Recommendations: The Controller's Office should: ):>- Improve its tracking methods to provide more effective identification of individuals who

participate in the reconciliation process but lack required training; including those individuals who have not yet completed PeopleSoft reconciliation training. Such

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methods could include requiring each office to provide a mid-year confirmation of cost centers and responsible reconcilers, reviewers, and approvers.

_>;:.. Coordinate with the applicable offices to ensure that all individuals cmrently involved in the reconciliation process receive training. Because executive officers can be involved in approval ofreconciliations and subcertifications, the Controller's Office should consider providing a targeted approval-level training during a regularly scheduled executive officer meeting.

_>;:.. Consider developing more comprehensive training tailored to address areas identified as challenging for reconcilers. This may include offering a more interactive learning opportw1ity, especially for offices in remote locations, or specialized training for offices that have unique transactions.

Management's Response: The Office of the Controller will design an online training utilizing the Learning Zone which maintains a database of individuals participating in training. Training will be expanded to include how to use and document reconciliation support documents in Content Navigator. Specific Excel on-line training courses will be recommended in the training module to participants to compliment skills needed for the reconciliation process.

An executive overview of the reconciliation process will be offered during a regularly scheduled Executive Officer Meeting in order ensure that Executive Officers have received training.

A mid-year notice will be sent to Department Heads reminding them of their responsibility to ensure that reconciliation preparers and reviewers receive required training.

Anticipated Implementation Date: March 1, 2017 for notice to Department Heads and August 31, 2017 for development of on-line training/tracking

Cost Center Reconciliations & Segregation of Duties Based on review of 76 reconciliations performed by the nine offices selected for this audit, we determined that the majority of offices perfo1med reconciliations monthly and retained adequate supporting documentation. Many offices also established internal timelines for preparing the reconciliations, which ranged from five days after month-end to two months after month-end; and all nine offices maintained adequate segregation of financial duties- the reconcilers, reviewers, and approvers were always different individuals. In addition, we had no reportable recommendations for three offices, including the Offices of Business Affairs, Facilities Planning and Construction, and Risk Management.

Timeliness and Completeness of Reconciliations The Cost Center Reconciliation Process Job Aid, developed by the Controller's Office, states that reconciliations are to be completed (prepared and approved) within two months of the close of the month. Months typically close on the fifth working day of the following month. As illustrated in the table on the following page, six offices selected for this audit did not consistently complete their cost center reconciliations within the required time period. One office did not complete reconciliations for

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salaries and projects on a monthly basis. Another office did not date when their reconciliations were completed; consequently, we were unable to determine whether those reconciliations were completed timely.

Office Period Reconciled Date Date

Days Late Prepared Approved

FYI 6 - Salaries various various completed auarterlv

FY14-16 Project 10/12/2016 10/13/2016

completed after

Health Affairs X915190NXC915190 vear-end*

completed after FY14-16 Project X1019300 10112/2016 10/13/2016

vear-end*

FY14-16 Project XC915130 10114/2016 10/14/2016 completed after

vear-end*

Innovation and Strategic October 2015 11119/2015 6/3/2016 149 February 2016 3/22/2016 6/3/2016 27

Investment May 2016 10/10/2016 not dated at least 64

Strategic Initiatives October 2015 12/15/2015 1/13/2016 7 October 2015 not dated not dated unable to determine

Systemwide Infonnation February 2016 not dated not dated unable to determine Services August 2016 not dated not dated unable to determine

Month 13 not dated not dated unable to determine March 2016 10/21/2016 10/24/2016 139

Texas Oil and Gas May 2016 10/21/2016 10/24/2016 78 Institute June 2016 10/21/2016 10/24/2016 47

Au!mst 2016 10/21/2016 10/24/2016 10 October 2015-AUF/PUF 1117/2016 1119/2016 13

University Lands February 2016 - AUF/PUF 5/1/2016 6/27/2016 51 May 2016 - AUF/PUF 9/ 13/2016 9114/2016 38

* Health Affairs was not aware of its responsibility to reconcile certain projects and performed one reconciliation for multiple fiscal years in October 2016.

We also noted that five of the nine offices selected for this audit, including the Offices of Health Affairs, Innovation and Strategic Investment, and Systemwide Information Services, the Texas Oil and Gas Institute, and University Lands, did not consistently ensure that reconciliations accurately included all applicable transaction activity or ensure that all discrepancies identified were resolved.

Office-specific recommendations to address timeliness and completeness of reconciliations are detailed in the appendices for the offices in the table above that appear at the end of this report.

During the audit, it appeared that offices did not consistently understand requirements related to timeliness and completeness of reconciliations. Cun·entl y, these requirements are communicated within the reconciliation training materials and are not stated within a UT System Administration policy. Given the transition from the INT policy framework to a UT System Administration Handbook of Operating Procedures (HOP), an opportunity may exist to clearly document reconciliation requirements.

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The observation described above is considered a low-level finding in accordance with UT System's Internal Audit finding classification system.

Recommendation: As part of the development of the HOP, the Controller's Office should ensure that UT System's cost center reconciliations and segregation of duties expectations are clearly documented in the HOP.

Management's Response: Agreed

Anticipated Implementation Date: August 31, 2017

Timeliness of Subcertifications In accordance with UTS 142.1, each System Administration office is required to complete an annual subcertification in which the office's responsible account owner certifies in writing that their office's cost centers have been reconciled, that transactions are approp1iate and properly recorded, that the office maintains adequate segregation of duties, and that they have no knowledge of misstatements, fraud, or noncompliance. We determined that substantially all 32 System Administration offices submitted subcertifications to the Controller by the established deadline of October 14, 2016. However, the Texas Oil and Gas Institute (TOGI) submitted its letter 19 days after the established deadline. Because this office was created in March 2016, there was confusion as to which UT System Administration office was responsible for reconciling TOGI cost centers and preparing the subcertification letter. This confusion resulted in the delay.


Recommendation: The Controller's Office should develop a method to communicate reconciliation responsibilities for new cost centers and projects to responsible offices in a timely manner.

Management's Response: The Office of the Controller will amend the existing new cost center email notice to departments to reiterate department cost center/project reconciliation responsibilities.

Anticipated Implementation Date: January 31, 2017

For all 32 System Administration offices, we compared a listing of active UT System Administration cost centers and projects to those listed within each office's subcertification letter. We determined that all letters included a complete listing of active cost centers and projects for which each office had reconciliation responsibility.

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Follow-up on Prior Year Recommendations Prior to this audit in the Spring of 2016, we performed follow-up procedures on six recommendations from the Cost Center Reconciliations & Subcertifications Audit Report for Fiscal Year 2015 to ensure that management effectively implemented the recommendation or accepted the risk of not taking action. We determined that the Offices of the Chancellor, Employee Services, Facilities Management, Shared Information Services, and Technology and Infom1ation Services, as well as the Institute for Transformational Learning, fully implemented all recommendations and we cornmw1icated these results to each office.

As part of this audit, we performed follow-up procedures on one open recommendation. We recommended that the Controller's Office improve its tracking methods to provide more effective identification of individuals who pa11icipate in the reconciliation process but lack required training. This recommendation was not fully implemented during FY 2016. We will close the prior year recommendation and issue a more comprehensive recommendation that is included in the Reconciliation Training section of this report.

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Appendix A - Office of Health Affairs Results

The Office of Health Affairs (Health Affairs) completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations are completed timely and to ensure that reconciliations accurately include all applicable transaction activity.

Reconciliations Not Timely and Expenses Overstated Health Affairs is responsible for reconciling 34 cost centers and four projects. Although reconciliations were performed and duties were adequately segregated, the reconciliations were not always prepared and approved monthly. Salaries were reconciled on a quarterly basis and projects were not reconciled until the end of the fiscal year because the office was not aware it was responsible for the project reconciliations. Untimely cost center reconciliations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.

Additionally, due to a manual error in creating the reconciliation spreadsheet, operating expenses were overstated by approximately $38,000 in October 2015 and approximately $128,000 in May 2016. As a result, available budget balances were understated.


Recommendation: Health Affairs should strengthen its review process to ensure that reconciliations are completed on a monthly basis and in a timely manner and that those reconciliations accurately include all apphcable transaction activity.

Management's Response: Given that salaries generally do not vary from month to month, we found it acceptable to complete salary reconciliations less frequently. Additionally, project reconciliations presented challenges for our reconcilers due to back office transactions for which it is difficult to find supporting documentation. Moving forward, Health Affairs staff will ensure that reconciliations are completed correctly within two months of the close of the month. We have also requested project specific reconciliation guidance from the Controller's Office to ensure accuracy of our reconciliations.

Anticipated Implementation Date: Immediately

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Appendix B - Office of Innovation and Strategic Investment Results

The Office of Innovation and Strategic Investment (Innovation and Strategic Investment) completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations are completed timely and to ensure that reconciliations accurately include all applicable transaction activity. We also identified opportunities to ensure all individuals involved in the reconciliation process receive reconciliation training.

Reconciliations Not Timely or Complete Innovation and Strategic Investment is responsible for reconciling 11 cost centers. Although reconciliations were performed and duties were adequately segregated, the reconciliations were not consistently prepared and approved timely. Untimely cost center reconcil iations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely. Additionally, due to a manual error operating expenses were understated by approximately $33,500 in February 2016. As a result, available budget balances were overstated.


Recommendation: Innovation and Strategic Investment should strengthen its review process to ensure that reconciliations are completed in a timely manner and accurately include all applicable transaction activity.

Management's Response: A process has been implemented to ensure that reconciliations are completed correctly within two months of the close of the month. Encumbrances are now reported on a weekly basis (via an office-created Contract/Invoice Dashboard), thus reducing the risk associated with manual error in calculating encumbrance amounts.

Anticipated Implementation Date: The process is already implemented and will be reviewed on a quarterly basis for effectiveness.

Reconciliation Training We identified five individuals who were potentially responsible for preparing, reviewing, or approving reconciliations during FY 2016. One of these individuals had not yet completed the reconciliation training provided by the Controller's Office as of October 2016. Additionally, three individuals had not completed the required reconciliation training as of the end of FY 2016. Al I three completed the training in October 2016. Lack of training for those involved in the reconciliation process may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.


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Recommendation: Innovation and Strategic Investment should ensure that all inclividuals involved in the reconciliation process attend reconciliation training and should notify the Controller's Office of any related personnel changes in a timely manner.

Management's Response: The office has created a training tracker, which monitors training requirements across functions (including reconciliations). Training has been scheduled with the Office of the Controller for the individual identified through this audit.

Anticipated Implementation Date: December 2016

Auditor's Note: We confirmed prior to report issuance that all staff currently involved in the reconciliation process have been trained and that the training tracker has been implemented; therefore, we consider this recommendation implemented.

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Appendix C - Office of Strategic Initiatives Results

The Office of Strategic Initiatives (Strategic Initiatives) completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations are completed timely and to ensure that all individuals involved in the reconciliation process receive reconciliation training.

Reconciliations Not Timely Strategic Initiatives is responsible for reconciling eight cost centers. Although all cost centers were reconciled and duties were adequately segregated, one reconciliation was not prepared and approved timely. Untimely cost center reconciliations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.


Recommendation: Strategic Initiatives should ensure that reconciliations are completed in a timely manner.

Management's Response: The single reconciliation approved a week late during FYI 6 was a result of the cumulative effect of the winter holiday break coupled with additional vacation time taken during the month of December. All reconciliations will be completed, dated, and approved within two months of general ledger close.


Reconciliation Tr aining We identified five individuals who were potentially responsible for preparing, reviewing, or approving reconciliations during FY 2016. Two of these individuals had not yet completed the reconciliation training provided by the Controller's Office as of October 2016. Lack of training for those involved in the reconciliation process may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.


Recommendation: Strategic Initiatives should ensure that all individuals involved in the reconcihation process attend reconciliation training and should notify the Controller's Office of any related personnel changes in a timely manner.

Management's Response: The past year has been full of change-retirement, promotions, replacements, creation of a Project Management Office, assignment of oversight of Quantum Leaps- and OSI has attempted to maintain consistency during the changes. OSI will continue to

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work with the Controller's office to ensure that the said individuals take the trainings this FY as and when they are offered.

Anticipated Implementation Date: March 1, 2017

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Appendix D - Office of Systemwide Information Services Results

The Office of Systemwide Information Services completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations are completed timely and to ensure that reconciliations accurately include all applicable transaction activity. We also identified opportunities to ensure all individuals involved in the reconciliation process receive reconciliation training.

Reconciliations Not Timely and Expenses Overstated Systemwide Information Services is responsible for reconciling ten cost centers. Although reconciliations were performed and duties were adequately segregated, the reconciliations were not always dated and as a result we could not verify they were prepared and approved timely. Untimely cost center reconciliations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely. Additionally, due to a manual spreadsheet error operating expenses were overstated by approximately $84,000 in February 2016. As a result, available budget balances were understated.


Recommendation: Systemwide Information Services should strengthen its review process to ensure that reconciliations are completed in a timely manner and accurately include all applicable transaction activity.

Management's Response: Formulas that caused the February problem noted have been confirmed and to the best of memory, the cited issue (spreadsheet error) was corrected prior to preparation of the next month's reconciliation. Management agrees that the reconciliation should accurately note the date of the reconciliation to make it clear that the reconciliation is timely.

Thank you/or worldng with us on this audit. We lookforward to afuture where 1. Reconciliation and review is risk based; and 2. Professionals are able to review and reconcile.


Reconciliation Training We identified three individuals who were potentially responsible for preparing, reviewing, or approving reconciliations during FY 2016. One of these individuals had not yet completed the reconciliation training provided by the Controller's Office as of October 2016. Lack of training for those involved in the reconciliation process may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.

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Recommendation: Systemwide Information Services should ensure that all individuals involved in the reconciliation process attend reconciliation training and should notify the Controller's Office of any related personnel changes in a tirnel y manner.

Management's Response: Controller's office has been contacted to inquire about training. In reviewing the past training, we look forward to improved quality and clarity in any next generation of such training.


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Appendix E - Texas Oil and Gas Institute Results

The Texas Oil & Gas Institute (TOGI) completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations and subcertifications are completed timely and to ensure that reconciliations accurately include all applicable transaction activity. We also identified oppo1iunities to ensure all individuals involved in the reconciliation process receive reconciliation training.

Reconciliations Not Timely or Complete TOGI is responsible for reconciling two cost centers. Although reconciliations were perfo1med and duties were adequately segregated, the reconciliations were not prepared and approved timely. Untimely cost center reconciliations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.

The TOGI came into existence in March 2016, and there was confusion as to which UT System Administration office was responsible for reconciling TOGI cost centers. TOGI staff, who were new to UT System Administration, were unaware of their reconciliation and subcertification responsibilities. Consequently, none of their cost centers were reconciled during FY 2016. After year end, the Controller's Office became aware that the TOGI cost centers had not be reconciled and notified TOGI staff of their reconciliation and subcertification responsibilities. In October 2016, the Controller's Office provided in-person training to TOGI staff, who subsequently completed the reconciliations.

We reviewed the reconciliations and detennined that approximately $63,000 of transaction activity for month 13 was not included in the August 2016 reconciliation because staff was also unfamiliar with month 13 activity. As a result, available budget balances may not have been accurate.


Recommendation: TOG! should strengthen its review process to ensure that reconciliations are completed in a timely manner and accurately include all applicable transaction activity.

Management's Response: TOGJ staff was unaware of any reconciliation and subcertification responsibilities until we were made aware in mid-October by UT System Administration. TOG! staff was trained in October and thereafter both processes were completed in a timely manner.


Subcertification Not Timely TOGI submitted its subcertification letter to the Controller and that letter included all applicable cost centers and projects. For the reasons stated above, the letter was submitted 19 days after the established deadline of October 14, 2016. Untimely subcertifications may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.

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Recommendation: TOGI should ensure that it submits its subcertification letter to the Controller by the established deadline.

Management's Response: TOG! staff was unaware of any reconciliation and subcertification responsibilities until we were made aware in mid-October by UT System Administration. TOG! will ensure that its FY 2017 certification is submitted in a timely manner.

Anticipated Implementation Date: October 2017 (due date of the next annual subcertification)

Reconciliation Training We identified two individuals who were potentially responsible for preparing, reviewing, or approving reconciliations during FY 2016. Both of these individuals had not completed the required reconciliation training as of the end of FY 2016. However, both completed the training in October 2016. Lack of training for those involved in the reconciliation process may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.


Recommendation: TOG! should ensure that all individuals involved in the reconciliation process attend reconciliation training and should notify the Controller's Office of any related persormel changes in a timely manner.

Management's Response: Current staff involved in the reconciliation process received training in October 2016. TOG! will ensure that any additional staff that become involved in the process also complete the training.

Anticipated Implementation Date: October 2016

Auditor's Note: We confirmed that all TOGI staff currently involved in the reconciliation process have been trained and consider this recommendation implemented.

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Appendix F - University Lands

University Lands completed its cost center reconciliations for the period reviewed and duties over the reconciliation process were adequately segregated. However, we noted opportunities to ensure that reconciliations are completed timely and to ensure that all discrepancies identified are resolved. We also identified opportunities to ensure all individuals involved in the reconciliation process receive reconciliation training.

Reconciliations Not Timely or Complete University Lands is responsible for reconciling 40 cost centers. Although reconciliations were performed and duties were adequately segregated, the reconciliations were not consistently prepared and approved timely. Untimely cost center reconciliations may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely. Additionally, we noted that discrepancies identified for one cost center in February and May 2016 were not fully investigated. Specifically, expenses included in PeopleSoft exceeded those recorded in the office's internal Voucher Program by approximately $37,000 for February and approximately $4,000 for May 2016. University Lands primarily relies on its internal Voucher Program to determine available budget balances and may not always investigate PeopleSoft discrepancies. As a result, available budget balances for February and March 2016 may not have been accurate.


Recommendation: University Lands should strengthen its review process to ensure that reconciliations are completed in a timely manner and that all discrepancies are adequately resolved.

Management's Response: UL Staff will make an effort to complete all reconciliations in a timely manner and will investigate any PeopleSoft discrepancies until the issues are resolved.

Anticipated Implementation Date: May 1, 2017

Reconciliation Training We identified four individuals who were potentially responsible for preparing, reviewing, or approving reconciliations during FY 2016. One of these individuals had not yet completed the reconciliation training provided by the Controller's Office as of October 2016. Lack of training for those involved in the reconciliation process may increase the risk that errors and other accounting discrepancies will not be detected and corrected timely.


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Recommendation: University Lands should ensure that all individuals involved in the reconciliation process attend reconciliation training and notify the Controller's Office of any related personnel changes in a timely manner.

Management's Response: All UL staff who are involved in the reconciliation process will make an effort to complete the reconciliation training.

Anticipated Implementation Date: May 1, 2017

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Documents

THE UNIVERSITY TEXAS SYSTEM 210 West 6th Street, Suite … System... · UTS 142.1 , Policy on the Annual Financial Report, requires each financial reporting officer within The