As an executive officer of the University, you have a role and
responsibility impacting the financial activities of the institution.
The authority vested in your position allows you to make decisions on
behalf of the University that are legally binding and may require an
entry into the University’s accounting system, potentially impacting
“the budget” and “the financial statements.”
An annual financial reporting certification signed by you and your
budget manager is necessary to comply with current audit standards and
best practices. In order to clarify scope, responsibilities, or define
terms, we have provided answers to the most frequently asked questions
below. Please refer to this document if you have a question regarding
the USF Financial Certification form.
If this document does not address your questions or concerns, please
feel free to contact Kim Kvaal, AVP for Accounting & Business Services
at extension 6732 or email@example.com.
Q1: Why do I have to sign the certification?
The University issues audited financial statements annually in
compliance with federal and state regulations. The financial
statements are the responsibility of USF’s management and are derived
from the “books” (general ledger) which summarizes economic events
(“transactions”) initiated, authorized, and reviewed by those with
budget authority. Examples of transactions include payroll payments,
purchase orders for goods and services, purchase card and employee
out-of-pocket expense reports as well as gift revenue, tuition and fee
revenue, and other miscellaneous revenue. It is crucial that
transactions are properly recorded in the correct accounting period in
the general ledger system.
As part of the annual audit process, the external auditors review
the financial statements and require a letter certifying that the
general ledger transactions are complete and accurate. Because of
USF’s decentralized budget authority system, the increasingly complex
audit standards require us to document that the financial statements
and the underlying general ledger are complete and accurate at the
University, division, and department levels. This will be accomplished
through the annual financial certification process.
Q2: What if I disclose a matter on the certification?
The Office of Accounting & Business Services will contact you to determine
if there is any financial statement impact related to your response. If
there is a material impact to the financial statements, an adjustment
will be made accordingly to the general ledger and the financial
statements. Additionally, recommendations will be to avoid similar
issues in the future, if necessary.
Q3: Will there be consequences for me personally if I disclose a matter in answering some questions on the certification?
No. The purpose of this document is to determine if we have financial reporting
errors. We may, however, use this information to improve our process by
implementing new procedures or modifying existing ones.
Q4: What are internal controls?
Internal controls are processes carried out by the members of USF
and our information technology (IT) systems and are a means by which
resources are directed, monitored, and measured. They play an important
role in preventing and detecting fraud and protecting the
organization's resources, both physical and intangible. At the
organizational level, internal control objectives relate to the
reliability of financial reporting, timely feedback on the achievement
of operational or strategic goals, and compliance with laws and
regulations. Examples of internal control obtaining secondary approval
on purchases by an authorized individual, review of budget and labor
distribution reports for accuracy and completeness, the timely deposit
of any cash receipts with the University Cashier, and the consistent
application of University policies and procedures.
Q5: What is an accrual?
An accrual is an accounting term that refers to situations where
goods and services have been received but cash has not been exchanged.
If you have received goods or services in the current fiscal year but
have NOT submitted a payment request to Disbursement Service, an
accrual request (a journal entry) should be submitted to the Office of Accounting & Business Services (Liz Denefeld at firstname.lastname@example.org or Frank Wasilewski at email@example.com)
so that the expense can be recognized in the correct year. For example,
you may have received a new piece of equipment on May 1, 2009 but as of
May 31, 2009 the invoice has not been processed. You will need to
notify the Office of Accounting & Business Services of the cost of the equipment so that an
accrual can be posted to reflect the cost of the equipment and the
obligation to the vendor.
Q6: How will I know that all significant transactions have been properly processed and recorded?
Review the Monthly Budget Status Report and determine if the
activity includes all significant revenue and expenditures that you
would expect to see based on transactions that you have approved.
Additionally, the labor distribution report should also be reviewed on
a monthly basis for accuracy and completeness.
Q7: How do I know if a transaction is significant?
This will vary depending on the size of your budget. As a general rule of thumb, anything greater than $5,000 or 10%
(whichever is greater) of your budget could be considered significant.
If you need guidance, please contact the Office of Accounting & Business Services.
Q8: What types of cash must be reported?
All cash maintained in your area of responsibility or in bank
accounts that you have established should be included in the
University’s financial records. This could include petty cash and cash
on deposit with banking institutions. Please note that departmental
petty cash funds are prohibited. The University Cashier is available
for petty cash needs. Furthermore, departments do not have the
authority to open bank accounts using the University’s name and Federal
Identification Number. Please contact Kim Kvaal in the Office of Accounting & Business Services if you need to establish a new USF bank account,
have an existing account under departmental control, or have a
departmental petty cash fund.
Q9: What types of contractual agreements might I have in my department?
Below are some examples of contractual agreements that you might have in your area of responsibility:
- Software licensing and/or maintenance agreements
- Service contracts in which USF has agreed to provide and/or receive certain services
- Grant agreements and contracts (private or governmental)
- Early retirement agreements
- Separation agreements
- Legal settlements
Q10: With respect to communication from regulatory agencies, what would you consider a deficiency in financial reporting practices?
Errors in a report submitted to an external funding agency would be
considered a deficiency in financial reporting. Additionally, any
communication that indicates we may have a fine, penalty, or loss of
funding for non-compliance should be reported to Kim Kvaal in the Office of Accounting & Business Services. Unless you are receiving funding
from external sources you most likely would not receive this type of
communication. For example, if you’ve received a report from the
National Science Foundation related to a federal grant that contains
findings or errors in financial reporting, a copy of the report should
be sent to Kim Kvaal in the Office of Accounting & Business Services.
Q11: What regulatory agencies might I have exposure to in my department?
Listed below are examples of regulatory agencies. (This list is not all inclusive.)
- Internal Revenue Service (IRS)
- Environmental Protection Agency (EPA)
- Occupational Safety and Health Administration (OSHA)
- Department of Labor (DOL)
- Department of Health & Human Services (DHHS)
- National Science Foundation (NSF)
Q12: What if I am aware of instances of fraud but I have not reported it for fear of retaliation?
University policy prohibits retaliation for reporting misconduct. The Whistleblower Hotline is an anonymous reporting tool that you can use to report fraud.
Q13: What is a transaction?
A transaction is an event or a condition that is recorded on your
account. Examples are purchases (cash, check, or credit card),
interdepartmental charges, and payroll charges. Transactions also
include revenue items such as contributions, student tuition and fees,
ticket sales, parking permit sales, and other miscellaneous revenue
Q14: Which transactions require authorization?
All expenditure (payments made by USF) transactions require approval
from someone other than the initiator or purchaser. This includes, but
is not limited to submission and approval of time sheets, expense
report, purchase orders, and direct payment requests including wire
transfers. In some instances, Dean or Vice President approval is
required in addition to budget manager approval.
Q15: What are possible violations of laws or regulations?
For example, inaccurate reporting and approval of federal work-study
hours is a violation of federal regulations for student financial
assistance. Disposing of electronic waste with regular trash could be
an EPA violation. Not properly reporting overtime for nonexempt
employees is an example of a violation of Department of Labor and IRS
Q16: What is considered a material impact to the financial statements?
The object of financial reporting is to provide information that is
useful for University stakeholders to make decisions. Any error that
may influence decisions made by the users of the financial statements
is considered a material impact.
Q17: What is the carrying value of a University asset?
It is the value of an asset based on the original cost of the asset
(what we paid for it) less depreciation, if applicable. The carrying
value of an asset can be affected if the asset is damaged, enhanced,
improved, or retired. For example, the carrying value of an electronic
microscope is impaired if the microscope is broken or damaged.
Therefore, the carry value would be adjusted to reflect the reduced
Q18: What is a guarantee?
A guarantee is an exchange of promises or an agreement between parties that may be legally binding similar to a contract.
Q19: What is a related-party transaction?
A business deal or arrangement between two parties who are joined by
a special relationship prior to the deal. For example, a business
transaction between a member of the Board of Trustees and the
University, such as a contract for the board member’s company to
perform renovations to a University building, would be deemed a
related-party transaction. Another example would be the University
purchasing new vans through a dealership that is owned by a relative of
a university executive officer. It's not illegal, but it introduces the
potential for conflicts of interest.
While the great majority of related-party transactions are perfectly
acceptable, these types of transactions must be disclosed in our
audited financial statements and tax returns. Therefore, all related
party transactions must be reported to Business & Finance. Please
contact Kim Kvaal in the Office of Accounting & Business Services to disclose these types of transactions or if you
have further questions.
Q20: What are receivables?
Generally, receivables are monies owed to the University for
services provided (such as student receivable for tuition), or for
unconditional promises to give (gift pledges).
Q21: What are liabilities?
Generally, liabilities are monies owed by the University for goods
and services, debt, refunds, awards, claims or potential losses
including early retirement and separation agreements.
Q22: What is a donor-imposed restriction?
A donor may contribute to the University and place restrictions on
how those funds are used. These restrictions can be limited as to
purpose, time, or both and obligate the University to utilize the funds
according to the donor’s wishes.
Q23: What is off balance sheet?
Off balance sheet is an asset, debt or financing activity not
reported on the University’s balance sheet (the financial statement
that discloses assets, liabilities, and net assets). It could involve a
lease, a separate subsidiary entity of the University, or a contingent
liability such as a letter of credit. Operating leases are one of the
most common forms of off-balance-sheet financing. In these cases, the
University reports only the required rental expense for use of the
asset. Generally Accepted Accounting Principles in the U.S. have
established numerous rules for companies to follow in determining
whether a lease should be capitalized (included on the balance sheet)
or expensed (included on the income statement).
Generally, these types of agreements are reviewed by the Office of Accounting & Business Services before the University enters into the agreement. However,
occasionally a lease or other type of commitment is entered into
without prior review. All agreements should be forwarded to Kim Kvaal
in the Office of Accounting & Business Services to be reviewed for proper accounting