management advisory and compliance services towson university management advisory and compliance...
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Management Advisory and
Compliance Services
Towson UniversityManagement Advisory and Compliance Services
Internal Controls
Management Advisory and
Compliance Services
Internal Controls
Effectiveness and efficiency of operations
Reliability of financial reporting Accomplishment of established goals
and objectives Compliance with laws and regulations Safe guarding university assets
Processes that help to reasonably ensure:
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Risk
The possibility that an organization will NOT:
Achieve its goals
Operate effectively and efficiently Protect itself from loss Provide reliable financial data Comply with laws and defined
policies Safe guard assets
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It is a Balancing Act!
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Responsibility vs. Accountability
You can delegate some of the duties you are responsible for, but you cannot delegate accountability!
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Control Activities Overview
Reasonable assurance YOU are ultimately responsible for tasks The trust issue Preventive vs. detective controls
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Key Control Activities
Creation of a control-conscious environment Segregation of duties Authorizations, approvals and verifications Control of physical and intellectual assets and
records Monitoring
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Tool #1: Control Conscious Environment
Integrity and ethics Commitment to competence Leadership philosophy Organizational structure
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Tool #2: Segregation of Duties
Segregation of duties is a preventive control that aids in the timely detection of errors and irregularities in the normal course of business.
Functions are divided so that no one person has control over all parts of a transaction.
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Functions to be Separated
Authorizing transactions Reconciling transactions Custody of assets Recording transactions
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Higher-risk Transaction Types
Purchase of Goods Purchase of Services Cash Receipts Payroll Procurement Card Inventory
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Tool # 3: Authorizations, Approvals and Verifications
Limit authorization authority
“Rubber Stamping”
Secure access to electronic signatures or
other signatory devices
NEVER, EVER sign a blank form
Develop written procedures outlining
delegation guidelines
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Tool # 4: Asset Control Activities
Periodic asset counts Periodic comparisons Investigation of discrepancies Physical safeguards against
theft and fire
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Tool # 5: Monitoring
Monitoring is a detective control that aids in identifying losses, errors or irregularities.
“But I’m so busy…”
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Five Control Tools
1. Control-conscious Environment
2. Segregation of Duties
3. Authorizations, Approvals, and Verifications
4. Control over Assets
5. Monitoring
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Red Flags of Fraud
No vacation Voluntary overtime Unexplained variances Complaints No reconciliation One employee “does it all” Documentation is not original “Rush” requests
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Questions
For additional information go to the Management Advisory and Compliance Services website:
http://wwwnew.towson.edu/adminfinance/macs