**INACTIVE POLICY**

For Current Policies:
Policy Table of Contents

 

                      UNIVERSITY OF VIRGINIA
           FINANCIAL AND ADMINISTRATIVE POLICIES MANUAL



TITLE:  INTERNAL CONTROLS                            POLICY:  I.A.1x 

                                                                   

General

Internal controls include organizational plans and procedures which
are designed to:

     Safeguard assets,

     Verify the accuracy and reliability of accounting data and 
     other management information,

     Promote operational efficiency, and

     Ensure adherence to prescribed policies.

Department and activity heads are responsible for conducting their
business activities in a manner consistent with good internal
control.

The University Comptroller is responsible for the promulgation of
policies and procedures directed toward the establishment of good
internal control.

The Department of Accounting Operations is prepared to assist
departments and activities in designing procedures that will meet
these criteria.

The University's internal auditors, in their periodic reviews of
departments and activities, will review the system of internal
control and make recommendations for improvements.

Responsibility to Safeguard Assets

Assets include all property of the University.  Examples of assets
are buildings, equipment, inventory, accounts receivable, and cash
(including checks).

Extreme care must be exercised in safeguarding cash and items
easily convertible to cash, such as accounts receivable.

Appropriate physical safeguards must be employed to protect all
assets.  Cash must be secured in a locked facility (safe, desk,
closet, file cabinet).

Appropriate procedural safeguards must be in place to protect cash
and cash convertible items.  THE EMPLOYEE WHO RECEIVES AND DEPOSITS
PAYMENTS ON ACCOUNT MUST NOT ALSO HAVE THE RESPONSIBILITY OF
RECORDING PAYMENTS IN THE ACCOUNTS RECEIVABLE RECORDS.


Any observed weaknesses in internal control should be brought to
the attention of the University Comptroller immediately.

See also the following policies and procedures:

     Policy IV.B.1, "Petty Cash and Change Funds"

     Policy IV.D.1, "Cashiering Activities"

     Policy IV.D.2, "Controlling Cash Items"

     Procedure 4-12, "Cash Item Controls"

Responsibility to Verify the Accuracy and Reliability of Financial
Data

The University's Financial Accounting System produces monthly
reports for all accounting entities.  These reports are distributed
to departments and activities in the early part of each month.

It is the responsibility of departments and activities to verify
promptly the accuracy of all reports received.  Any errors should
be reported immediately to the appropriate central financial
office.

See also Procedure 1-4, "Reconciliation of Monthly Departmental
Accounting Records to AM090/91."

     NOTE:  This procedure contains a list of central offices 
     capable of helping with various kinds of Financial Accounting
     System-related problems.

The reliability of the monthly reports is dependent on the timely
recording of all transactions.  Vouchers, travel expense
reimbursement vouchers, billings of support service units,
receipts, personnel/payroll actions, and any other financial
transactions must be forwarded promptly to the appropriate central
financial office for processing.

See also Policy VII.A.11, "Timely Payments to Vendors."

The University's central financial offices will review accounts on
a selective basis and seek resolution of any questionable balances.


Responsibility to Reconcile Accounts Periodically

Fiscal Administrators are responsible for ensuring each assigned
account is reconciled to departmental records on a periodic basis.

"Fiscal Administrator" is the person responsible for monitoring and
reconciling the activity in a group of accounts.  Fiscal
Administrators are expected to be familiar with financial policies
and procedures and serve as the primary resource for inquiries on
that group of accounts.

"Responsible Person" is the person designated to approve trans-
actions and has the primary responsibility for control of the
activity within the account.

Responsibility to Promote Operational Efficiency Through
Organization and Training

The University is committed to achieving a high level of efficiency
and effectiveness in the use of personnel and other resources.

The achievement of an acceptable level of operational efficiency is
dependent on:

     A proper organizational plan, and
     Sufficient training of employees.

Organizational plans must be designed to segregate duties so that
no one employee controls all phases of a transaction.

New employees should be trained adequately for their
responsibilities to help assure efficiency and accuracy.

The Department of Personnel Administration is responsible for the
development of broad training programs.  Specific job training and
assignment of job responsibilities are the responsibility of the
department or activity head.

Adherence to University Policies and Procedures

The University's policies and procedures are a primary means of
establishing internal controls.  In addition to conforming to
certain State and Federal regulations, these controls allow the
University to fulfill the dictates of prudent management.  All
individuals who deal with financial and administrative matters must
be familiar with and adhere to these policies and procedures.
Failure to adhere to the University's policies and procedures may
be considered misconduct, as stated in the State's Standard of
Conduct Policy.                                                    


Monitoring of Internal Controls by the Audit Department

The University's Audit Department is an integral part of the
internal controls system.  This office will monitor and evaluate
internal controls as part of its annual audit plan.  Weaknesses in
internal controls will be commented on by the Audit Department in
its reports.

The appropriate department or activity head must make a written
response to any findings of inadequate internal controls and take
prompt corrective action as recommended.

See also Policy I.C.1, "Internal Audit."

Documenting Departmental Business Operations

Departments should document all unique business operations with
internal policies and procedures.  Such departmental policies/
procedures not only document current operating practices, but also
enhance management's communication to employees, help produce
consistency of effort during periods of turnover, and provide a
training aid for new employees.

Maintenance of Internal Controls

In an effort to maintain an effective system of internal controls,
University management has instituted the following measures:

     Internal Audit's program of ongoing reviews throughout the 
     year.

     An annual questionnaire to verify the soundness of depart-
     mental internal controls.  See also Procedure 1-1, "Completing
     the Internal Controls Questionnaire."

     An extensive questionnaire follow-up program with selective 
     departments to ensure compliance with internal controls
     standards.

     At least annually, review with the Audit Committee of The 
     Board of Visitors the internal audit reports and both the
     external auditors'management comments and the progress reports
     to resolve those comments.

     At least every four years, ensure all financial systems have 
     been reviewed by external auditors, internal auditors, or by
     management.



The following is a list of policies and procedures addressing major
internal controls issues.                                           
                
       Financial and Administrative Policies and Procedures


     Policies

     I.A.1                   "Internal Controls"

     I.A.2                   "Reporting Fraudulent Transactions"

     II.C.1                  "Records Retention and Disposition"

     IV.E.1                  "Credit and Collection"

     IV.F.1                  "Payroll Check Distribution"

     V.A.1                   "Revenue Generating Activities"

     V.A.3                   "Remittance of State Tax"

     VI.A.1                  "Disbursements:  General Requirements"

     VII.A.6                 "Surplus Property Disposal"

     VII.A.7                 "Types of Purchases Requiring Special
                              Processing"

     X.A.1                   "Maintenance of Equipment Inventory"

     XV.A.1                  "Conflict of Interests"

     Procedures

     1-1                     "Completing the Internal Controls
                              Questionnaire"

     1-4                     "Reconciliation of Monthly
                              Departmental Accounting Records to
                              AMO 90/91"

     4-12                    "Cash Item Controls"

     6-4                     "Preparing Combo Forms"

     6-9                     "Receiving Goods/Services for Purchase
                              Order Classes C, G, I & S"
                                                                   

     6-12                    "Preparing Receiving Reports for 
                              Limited Purchase Orders"

     7-11                    "Preparation of Purchase Requisition"

     7-12                    "Preparing Limited Purchase Orders"



                 Personnel Policies and Procedures

     415.530                 "Types of Overtime"

     416.000                 "Wage and Hour - Rules and 
                              Regulations"

     920.000                 "Leave and Absence Policy"

     920.100                 "Leave and Absence With Pay Policy"

     920.140                 "Compensatory Leave"

     920.940                 "Leave Recordkeeping - Questions and 
                              Answers"



                                                                 
ISSUED BY:                                                 07/17/89

University Comptroller         1.1.1.1