Internal control and monitoring activities enable UC Santa Barbara to achieve its objectives while maintaining an environment that focuses on ethics and accountability.
Effective control and monitoring activities help you and your department identify priorities, achieve department goals, ensure accurate financial reporting, meet compliance regulations, and safeguard university assets against fraudulent activity.
Implementing Financial Control Practices
To start, consider the consequences and risk of not using solid control practices in the financial areas below:
- Accounts Payable
- Effort Reporting
- Entertainment Expenses
- Equipment Management
Then, build an internal controls program incorporating the following best practices into your business operations as the standard to mitigate identified consequences and risk:
- Separation of duties: Division of responsibilities between different people so one individual does not control all aspects of a transaction. Learn more about the Separation of Duty A,B,C’s and Implementation Grids.
- Authorization and approvals: Only person(s) with delegated authority approves or authorizes transactions.
- Security of assets: Assets such as equipment, cash, inventory, and resources are secured to reduce the risk of unauthorized use. Periodic counts and comparison of amounts documented.
- Review and reconciliation: Regular examination of transaction records against official university records to verify accuracy, appropriateness, and proper compliance.
Below are suggestions for incorporating best practices:
- Implement separation of duties where duties are divided, or separated, among different people to reduce risk of error or inappropriate actions. No one person has control over all aspects of any financial transaction.
- Make sure transactions are authorized by a person with delegated approval authority and the transactions are consistent with policy and funds are available.
- Ensure records are routinely reviewed and reconciled, by someone other than the preparer or transactor, to determine that transactions have been properly processed.
- Make certain that equipment, inventories, cash and other property are secured physically, counted periodically, and compared with item descriptions shown on control records.
- Provide employees with appropriate training and guidance to ensure they have the knowledge necessary to carry out their job duties, are provided with an appropriate level of direction and supervision, and are aware of the proper channels for reporting suspected improprieties.
- Make sure university and departmental level policies and operating procedures are formalized and communicated to employees. Documenting policies and procedures and making them accessible to employees helps provide day-to-day guidance to staff and will promote continuity of activities in the event of prolonged employee absences or turnover.
Remember, everyone in the department has responsibility for internal controls.