Attachment 3
THE OHIO STATE UNIVERSITY BOARD OF TRUSTEES
AUDIT AND COMPLIANCE COMMITTEE
October 27, 2009
TOPIC:Financial Management Scorecard
CONTEXT:
Our internal auditors, external auditors and the PricewaterhouseCoopers (PwC) review stressed the importance of central oversight in assuring appropriate levels of accountability in our decentralized management structure. This is the second such review. Compliance orders were raised from last year (see Attachment A).
SUMMARY:
The scorecard for FY 2009 is included as Attachment B. All 38 major administrative areas are included. Red-green-yellow assessments are provided for all units in six categories:
- Payroll
- Procurements
- Budget
- Segregation of Duties
- Sub Certifications
- Business Office Audit Results
Please see definitions page for additional information.
Highlights include:
- Overall improvements despite stricter criteria
- Biggest improvements in Payroll (from 11 greens in 2008 to 37 in 2009) and Procurement (5 greens in 2008 to 22 in 2009).
- 13 units green across all five areas reviewed annually compared to none in 2008.
- 9 reds in 2009 compared to 6 in 2008, but no repeats. For details see Attachment C.
- Only one college had more than one red (Medicine) and that was in procurement, which also produced an audit red. This reflects a highly decentralized structure. Corrective action has already been initiated by the college.
CONSIDERATIONS:
- What does this mean in terms of the university’s overall financial management?
- Where is improvement most needed?
- What changes are planned for FY 2010 review?
- How does this compare with what our benchmarks do?
- How have the units responded?
- What additional information would the Committee like to have?
REQUESTED OF AUDIT AND COMPLIANCE COMMITTEE:
For information and discussion. No vote required.
Attachment A
Preliminary College/VP Scorecard Definitions
Note: These ratings apply to a specific point in time and/or specific transactions evaluated in FY 2008 and do not reflect corrective actions taken since that time.
Explanation of Color code Categories:
Green– Generally complies with policies and control activities (Compliance >= 90%.
Yellow– Partially complies with policies and control activities, opportunities for improvement exist. (Compliance >= 75% but < 90%)
Red – Routinely does not comply with policies and control activities. (Compliance < 75%)
Explanation of Assessment Categories:
Payroll- Ratings based on monitoring of transaction compliance including completion of payroll certification, approvals of pay period timekeeping, timeliness of payroll actions and transaction error rates.
Procurement- Ratings based on compliance testing of random transaction samples for procurement card, travel, blanket purchase order and 100w transactions.
Budget- Ratings based on year-end budget deficit status for deficits in excess of $100,000
Segregation of Duties - Ratings based on compliance review of segregation of duties within ERP System role assignments for general ledger, procurement and human resources systems.
Sub Certification – Compilation of unit’s self-reporting results from official sub-certification process.
Audit Experience – Results of business office audits conducted by Internal Audit during the fiscal year.
Attachment B
Preliminary College/VP AssessmentBased of FY09 Activity
Area / Payroll / Procurement / Budget / Segregation
of Duties / Sub-
Certification / Audit Experience
Arts / Green / Green / Green / Green / Green
Athletics / Green / Yellow / Green / Yellow / Green / *Yellow
Biological Sciences / Green / Green / Yellow / Yellow / Green
Business / Green / Green / Green / Yellow / Green
Business and Finance / Green / Green / Green / Green / Green / *Green
Dentistry / Green / Yellow / Green / Yellow / Yellow / Yellow
Development / Green / Green / Green / Green / Green
Educ & Hum Ecology / Green / Green / Green / Green / Yellow / Yellow
Engineering / Green / Green / Yellow / Green / Green / *Yellow
Executive Dean ASC / Green / Green / Green / Green / Green
FAES / Yellow / Yellow / Green / Yellow / Green
Govt Affairs / Green / Red / Green / Green / Yellow
Health Sciences / Green / Red / Yellow / Yellow / Yellow
Humanities / Green / Green / Green / Green / Green
Law / Yellow / Green / Green / Green / Green
Legal Affairs / Green / Red / **Yellow / Green / Green
Lima / Red / Yellow / Green / Green / Yellow
Mansfield / Green / Green / Green / Green / Green
Math & Physical Sci / Green / Yellow / Yellow / Green / Yellow
Marion / Green / Green / Green / Yellow / Yellow
Medicine / Yellow / Red / Yellow / Yellow / Yellow / Red
Newark / Green / Green / Green / Green / Green / Yellow
Nursing / Green / Green / Green / Green / Green
Office of Academic Affairs / Green / Yellow / Green / Yellow / Yellow / *Yellow
Optometry / Green / Green / Green / Green / Green / Yellow
Pharmacy / Green / Yellow / Green / Green / Green
President / Green / Green / Green / Yellow / Green / Yellow
Public Health / Green / Green / Green / Green / Green / Yellow
Research / Green / Yellow / Green / Red / Green / Yellow
Senior VP - A&P / Green / Yellow / Yellow / Green / *Yellow
Soc & Behav. Sci. / Green / Green / Green / Green / Green
Social Work / Green / Yellow / Green / Green / Green / Yellow
Student Life / Yellow / Red / Green / Yellow / Green
Trustees / Green / Green / Green / Green / Green / Green
UnderGrad Studies / Green / Green / Green / Yellow / Green / Yellow
Univ Outreach / Green / Red / Green / Yellow / Green
Univ Relations / Green / Green / Green / Green / Green / *Yellow
Veterinary Medicine / Green / Green / Green / Yellow / Green
Notes:
* Partial Audit
** Due to significant receivables balance at year-end
Data Sources :
Payroll: Completion rate and accuracy of quarterly monitoring of payroll certification and risk assessment
Procurement: Completion rate and accuracy of annual sampling of p-card, travel & blank order activity
Budget: Deficit reporting
Segregation of Duties: eReports segregation of duties reports for Financials and HRIS systems
Sub-Certification: Timely completion of annual sub-certification report and volume of exceptions Identified
Audit Experience: Overall assessment of business office audit results for those units included in audit cycle for year
Attachment C
Explanation and Corrective Actions – Areas Receiving “RED” Ratings
PAYROLL
Area / Issue / Corrective ActionLima Campus / Payroll Certifications not submitted / Certification process will be completed
PROCUREMENT
Area / Issue / Corrective ActionGovernment Affairs / Process and staffing changes during assessment period resulted in errors. / Defined processes and staff are not in place and responsibilities are fully understood
Health Sciences/
College of Medicine / Processes are highly decentralized within the area resulting in a large number of staff performing procurement tasks. Decentralized staff is not effectively following established policies and procedures. / College has initiated efforts toward continuous communications with departments on controls and processes and is undertaking a review of their administrative processes with focus on establishing service centers to more effectively process transactions.
Legal Affairs / Transaction documentation is not complete and system transaction approvals are not consistently performed. / Additional monitoring and reporting has been implemented to ensure that all processes are complete. Staff have been counseled on the documentation required to support transactions
Student Life / Policies and procedures not effectively in place for procurement card and blanket order processing / Additional training required of all procurement card managers; reconciliation and compliance review functions moved to service center.
University Outreach / Process and staffing changes during reorganization resulted in errors and unapproved transactions. / Roles and responsibilities are now clearly defined and process for approvals is in place.
SEGREGATION OF DUTIES
Area / Issue / Corrective ActionResearch / Multiple employees with end to end transaction access in multiple systems. / Review system access and realign staff roles and responsibilities to ensure required segregation of duties.
AUDIT EXPERIENCE
Area / Issue / Corrective ActionHealth Sciences/ College of Medicine / Audit findings confirm and expand on assessment results / Units are undertaking a review of their administrative processes with focus on establishing service centers.
Office of Business and Finance 10/15/09
F:\Finance\files\financialmanagementscorecard10-15-09.doc