Table of Contents

Executive Summary 4

Audit Plan 5

Project Evolution 9

Process Maps and Narratives10

Risk Chart22

Preliminary Recommendations24

Audit Recommendation and Conclusion

Recommendation Table27

Recommendations28

Project Summary36

Supplementary Materials

Meeting Minutes38

Ketchum42

Old Main48

Hellems53

PowerPoint55
Executive Summary

Acting as a third party approving agency, the FSCs provide the extra compensating controls that weremissing in the previous system. the three different FSCs have developed specialized processes in order to provide a high level of customer service. At this point in time, our team was brought in to help address the growing issue of segregation.

Our team participated in an audit of the FSCs that was to focus on the reimbursement processes in place at each FSC. Our goal was to develop process improvements that would help standardize the process across all FSCs to minimize the effects of a high rate of employee turnover. To do this, we aimed at constructing an environment focused on cross-communication to maintain standardization.

To achieve our goals, our team developed a standardized process that all three FSC could utilize effectively. However, we needed to ensure that our solutions were not just a short term fix to a long term problem. We decided to focus on training, communication, and implementation of technology throughout the process. The training process was important to make sure that all employees started off on an even keel. We then decided that increased communication between the different FSC would allow them to evolve the process together and increase the knowledge base of the FSCs overall. Finally, we thought the FSC could benefit from technology in making the process more efficient.

After gathering research from the FSC staff members and the department program assistants, we consulted with professionals from KPMG, Statera, and the LEEDS School of Business to develop creative solutions to the processes shortcomings. Upon the culmination of our research and development of the processes in place at each FSC, we were able to create a list of recommendations that we believe would benefit the client immensely. It will be up to the FSC to implement any of our suggestions but since they were an integral part of the development process, we are confident that our suggestions will appeal to them.

Audit Plan

Date / 02/18/09
To / Cynthia Husek
Company / Arts & Sciences Financial ServicesCenter
Prepared By / CU Boulder Audit Team

1.0General Information

1.1Internal Audit Team

The internal audit team, with roles and responsibilities,includes the following people:

  • Katie Baltera (Hellems), Contact for Debra Enevoldsen
  • E-mail:
  • Jacob Malson (Hellems), Contact for Stephanie Weber (FSC Manager)
  • E-mail:
  • Kimberly Smith (Ketchum), Contact for Leisa Hesebeck
  • E-mail:
  • Mariana Mejias (Old Main), Contact for Megill Stewart
  • E-mail:
  • Stephen Newcomb (Ketchum), Contact for KPMG IT Advisory Services
  • E-mail:
  • Alexander Krantz (Old Main), Contact for Stephanie Plumberg (Statera)
  • E-mail:

1.2Duration of Internal Audit

The duration of this internal audit will be for three and a half months commencing on February 4th, 2009 and concluded on April 29th, 2009.

It is anticipated that the fieldwork, working papers and drafting of deliverables will be completed by April 15th, 2009.

1.3Location of Internal Audit

The location of the internal audit will be performed at the three Arts and SciencesFinancialServiceCenters in the Hellems, Old Main, and Ketchum buildings and at the Leeds School of Business in the KoelbelBuilding, Room 320 at the University of Colorado at Boulder.

It is predicted that a site visit(s) toOldMainFinancialServiceCenter (OldMainBuilding, Room 1B-43), HellemsFinancialServiceCenter (HellemsBuilding, Room 151), and KetchumFinancialServiceCenter (KetchumBuilding, Room 8A),will be conducted during the course of this review. In addition, additional site visits will be conducted at select department as needed.

1.4Arts and Sciences Financial ServiceCenterBusiness Hours

Hellems, room 151: M-F, 8-5

Ketchem, room 8A: M-F, 8-5

Old Main, room 1B-43: M-F, 8-5

1.5Key Contacts

Contact / Position / Company / E-mail / Contact No.
Cynthia Husek / Director of Budget and Finance / Arts and Sciences FSC / / 303-492-4361
Stephanie Weber / FSC Manager / Arts and Science FSC / / 303-735-4215
Debra Enevoldsen / Hellems FSC Supervisor / Hellems FSC / / 303-735-2786
Leisa Hesebeck / Ketchum FSC Supervisor / Ketchum FSC / / 303-735-0994
Megill Stewart / Old Main FSC Supervisor / Old Main FSC / / 303-735-2920
Stephanie Plumberg / Senior Consultant / Statera / / 303-507-0939
Maggie Cheney / IT Advisory / KPMG / / 303-382-7174

1.6Definitions

  • Inefficiencies – Issues arising from non-value adding activities and from noncompliance to regulatory methods.
  • Inconsistencies – Issues arising from differences between processes and practices among the three FSCs.
  • Based upon findings and customer service needs, the processes may have deviated too much among the FSCs to effectively standardize them.

2.0Internal Audit Objective and Scope

2.1Internal Audit Objective

The objective of this review is to:

  • Document the processes in each FSC and identify best practices among the three.
  • Provide recommendations on how to best standardize the processes among the individual FSC’s.
  • Exploreinefficient data storage procedures to see if the opportunity exists to reduce paper usage.
  • Identify areas where the FSCs’ procurement cards, accounts payable, purchasing, and travel reimbursement procedures can be made more efficient.

2.2Internal Audit Scope and Approach

The scope of this review includes an assessment of the process, controls, and risks of the College of Arts and Sciences FSC program and recommendations for this program.Specifically, this review will include:

  • Establish understanding of the current FSC focusing on the activities surrounding procurement cards, accounts payable, purchasing and travel. Then review the differences among the three FSCs.
  • Identify which processes or steps within the processes are most likely to be skipped over, delayed or take more time than necessary and recommend procedures to speed the processes and eliminate any non-value added processes or steps.
  • Find procedures that will reduce paper usage and/or allow for more efficient data storage.
  • Establish standardized processes and procedures and use of technology associated with employee training both within the FSC and for the departments.
  • Understand current procedures for ensuring compliance with standard processes and regulation and identify areas that may be improved upon.
  • To standardize processes among the three FSCs while maintaining risk control in compliance with CU, State and Federal rules and regulations.

2.3Deliverables

  • Project deliverables will consist of the following:
  • Meeting Agendas/Meeting Minutes
  • Questions to be provided prior to arrival
  • Audit Plan
  • Process Maps
  • As-Is and To-Be
  • Work Papers and Testing Documentation
  • Audit Findings and Audit Reports
  • Risk Assessment Chart
  • Audit Recommendations for Operational Improvement

It is planned that the above deliverables will be delivered to you by April 15, 2009for your review and subsequent discussion.

3.0High-Level Work Program

The following are specific areas where the audit team will focus its field work in order to meet the objectives previously stated. The subsequent bullets are specific areas in which audit work will be conducted.

  • Verify that the Procurement Card Program Handbook is both up to date and utilized by employees.
  • Obtain sample of monthly reconciliations to verify accuracy
  • Observe and evaluate the processes for Travel Reimbursements

4.0High-Level Work Schedule

Date / Task
February 25 2009 / Final Audit Plan Delivered
March 4, 2009 / “New Employee Training Day” (*Old Main FSC Team only)
March 11, 2009 / “As-is” Process Maps delivered and discussion of possible recommendations
March 18, 2009 / Risk Assessment and Test Plan Delivered
April 1, 2009 / Testing
April 8, 2009 / Testing
April 15, 2009 / Review Audit Findings and Prepare Final Deliverables
April 22, 2009 / Review Client Presentation
April 29, 2009 / Final Client Presentation

Project Evolution

Throughout the audit it became clear that the original audit plan may not enable us to adequately complete the final goals of our audit. It became clear from the first field day that we were not going to provide an assessment of risk surrounding the accuracy of the reimbursement procedure, but rather process improvements to consider. This eliminated the need for quantitative testing, and directed our group to focus on efficiency of the FSC’s. To do this we met with the FSC staff on a question and answer basis and began to identify risks to overall success. We then followed those meetings with meetings at the department level to understand problems and questions that they were experiencing. These actions took the place of our testing days, and added support to our recommendations for a process improvement. The process was best benefited by improvements around communication and utilizing technology. Due to these qualitative observations a “to-be” process map seemed to be unbeneficial to create. Finally, we decided to add the procedures around Procurement “ACARD” cards because they fit the mold of the rest of our audit. These deviations from our audit plan seem to be necessary and beneficial to our client.

Ketchum FSC As-Is Process Maps

Procurement Card Purchase

The card holder uses their procurement card to make a purchase. This purchase can be made almost anywhere, but the goods or services purchased must somehow benefit and serve the business purpose of the University. A single purchase must not exceed a set dollar limit (currently $5,000). The monthly purchase varies by card holder and is usually determined by the department.In addition, the card holder must watch their university account (speedtype) balance to avoid creating a zero or negative account balance. The FSC technicians are responsible for helping the ACARDACARD users do not exceed their limit of their speedtype balances.

When a purchase is made, the amount of the purchase is directly deducted from the accountto which the card is linked. This transaction happens similarly to a purchase made with a personal credit card. The card holder retains the proof of purchase and itemized receipts from the purchase to turn into their financial service center so the FSC can review the purchase was for University purposes and is in compliance with fiscal policy.

Once the purchase is complete and a receipt is received, the card holder, or the program assistant from their department, fills out ACARD an ACARD purchase receipt form, attaches the receipt to the form, and turns the form into the FSC. Meanwhile, the procurement service center downloads the purchase deduction from the bank so the FSC technician will be able to reallocate the purchase to the correct speedtype. When the FSC technician receives the ACARD ACARD purchase receipt form with attached receipt(s), they date stamp the form so they know what day the form was received. The technician checks to make sure the proper receipt documentation is present and that the explanation and purpose of the purchase benefits the university. If the receipt is missing, reallocation information is not complete, or the technician needs further explanation of the purchase, then he/she contacts the card holder or program assistant to request clarification. The technician then uses a computer application, Pendragon, to reallocate the purchase to the proper speedtype and account code. Once reallocation is complete, the technician notes the transaction number, signs the form and files it for later use in the monthly reconciliation.

After the end of each monthly cycle (the 25th to the 24th), the FSC technician prints a monthly statement for each card holder who had activity on their card in the preceding month. The technician then has each cardholder review, sign and return the statement. Upon return, the FSC technician finds each ACARDACARD purchase receipt form that has been filed since the last reconciliation for that card holder, matches the forms to the purchases that appear on the statement, attaches all of the forms to the monthly statement and delivers the attached forms and statement to the FSC supervisor who serves as the approving official. The approving official reviews the monthly statement and attached forms for compliance, signs and then returns the packet to the specialist to file.

Procurement Card Application

When someone (faculty, employee, student, etc.) needs a procurement card the department must first send authorization to the financial service center. This authorization may be submitted in writing, as an e-mail, through a phone call, or simply by stopping in the office to let the FSC know the person is authorized to receive a card. The authorization must include information about the card applicant including their name, department, address, what speedtype the card should be linked to, dollar limits and other details the FSC needs to fill out the card application.

Once authorization from the department is received, the FSC then completes the card application and sends it to the card applicant. The applicant signs the form and returns it to the FSC. This signature must be original, so the applicant must return the hard copy to the FSC. When the FSC receives the signed form from the applicant, the FSC Supervisor signs as approving official and then faxes the form to the procurement service center and file the original. The PSC receives and processes the application, updating the training status for the applicant as incomplete. At this point the card applicant must complete a three part, online training course to receive the card. When the PSC confirms that the training is complete, they notify the bank of the need for issuance of a new card. The bank then issues the card and sends it to the applicant. Once the card is received, the card holder must activate the card in a manner similar to activating a personal creditt card. Then the card holder may begin making University purchases using the new card.

Employee Travel Reimbursement

When the employee determines they need to travel out of state or by air for University Business, they fill out an online form through the Travel Authorization Program (TAP). This authorization is forwarded by e-mail to three people: the traveller, the authority, and the contact. The authority is the person who authorizes the travel and the contact is someone the traveller selects. If the authority takes no action, then the travel is approved. If they do take action, then the traveller will not be eligible for reimbursement. The financial service center technicians prefer to be the traveller’s contact so that he/she knows in advance that the travel will take place. If the technician is not selected as the contact, then the traveller must either forward or print and turn in the e-mail to the. The procurement service center automatically receives notification of the intent to travel through TAP.

While the traveller is away, they must keep an itemized receipt and a proof of payment receipt for all items they wish to be reimbursed for. Upon return, the traveller or their program assistant completes the multi-purpose request form, attaches all receipts to the form and sends it to the FSC. This form includes which speedtypes the FSC should use for reallocation.

When the FSC receives this form and the attached receipts, the technician first determines whether the purchases are eligible for reimbursement per fiscal policy. Some of these eligible items include transportation, per diem meals, and lodging. Next the technician fills out the travel voucher. If the technicians have any uncertainties about the information they are putting on the travel voucher then they contact the traveller to obtain the needed information. Once the travel voucher form is filled out completely,the FSC technician has their supervisor review and sign as authorizing signature. The technician then forwards the voucher to the traveller who signs and returns it to the FSC. It is allowable for the traveller to sign electronically through a fax, e-mail, etc. The FSC makes a copy of the voucher and files it then forwards the original copy to the PSC. The supervisor’s/approving signature must be original on the copy that the PSC receives. The PSC then deducts the reimbursements amounts from the selected speedtypes and issues a reimbursement check to the traveller. If the travelleris setup for direct deposit with the University of Colorado, then this reimbursement will be completed through a direct deposit.
Hellems FSC As-Is Process Map

Travel and Reimbursements

The reimbursement process as described and revised by the members of the Hellems FSC is as follows:

A department staff member will start the process by being involved in a transaction where they spend money with the expectation of reimbursement. To do so they must be able to justify how their purchase benefits theUniversity, and provide documentation proving the occurrence of the transactions. The documentation that is needed to do so is original Proof of Purchase and an itemized receipt. This will allow outside auditors to objectively determine how the transaction was paid for and what items were purchased. Afterwards the department member completes the FSC multi-purpose request form in order to allocate the transaction to the appropriate account, and apply for reimbursements.

After receiving the multi-purpose request form, the FSC reviews the expenditures to ensure the transaction is allowable for reimbursement. The FSC also verifies that the accounts have been properly identified with an account number and allocated with a speed-type. At this point in the process, if there are any clarifications or if the department is unaware of a speedtype deficit, the FSC will contact the department to rectify the situation. After ensuring the accuracy of the transaction and allocation, the FSC technician will file a voucher that is to be approved by their supervisor. They then file the paperwork with copies of all documentation, and send the voucher with originals to the PSC for reimbursement.