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Compliance Certification Report
Comprehensive Standards 3.10.4


Last Updated Aug 13, 2004
(static edition)


Comprehensive Standards 3.10.4:

The institution exercises appropriate control over all its financial and physical resources.

The Institution Certifies Compliance: Yes

Compliance report completed by: Audit Team 8

Statement of Rationale for Judgment of Compliance:

The Office of Financial Planning and the Accounting Office are the primary university units responsible for controls over financial resources. Financial Planning ensures that appropriate budget processes are in place and in compliance with state, Tennessee Board of Regents (TBR), [1] and university policies. [2] The Accounting Office establishes and communicates policies and procedures to ensure the efficient use of resources. The staff of these offices work closely with purchasing, payroll, human resources, bursar’s office, and other academic and administrative units to maintain effective budget management and resource control.  

Financial Planning publishes university budget procedures and guidelines to the campus community in accordance with state and TBR guidelines and prudent budget management. [3] Twice a year (Spring and Fall) the university budget is prepared in accordance with institutional priorities and is approved by TBR. Between budget cycles, Financial Planning staff review and approve all significant budget revisions.  

The Accounting Office generates a monthly report of over-expended accounts for review and distributes an appropriate communication to the appropriate responsible official. [4] Staff from the Accounting Office and Financial Planning work with the individual units for resolution of over-expended accounts.

Efficient use of funds for goods and services is assured by compliance with state, TBR, [5] and university [6] purchasing policies that require strict adherence to bidding policies, appropriate supporting documentation to substantiate university benefit, absence of conflicts of interest, and responsible official and Accounting Office approval prior to disbursement. Similarly, human resource costs for full-time employees are budgeted by position and monitored each month as described above. Positions are reviewed by Department of Human Resources and classified in accordance with industry standards in consideration of market salary rates. [7]   

The Bursar’s Office is responsible for cash controls, including receipting and billing. Procedures, including a cash handling guide, are provided to units approved to handle cash. [8]

Department heads and their staff have daily, real-time electronic access to all financial and human resource activity in accounts for which they are responsible. In addition, monthly reports of detailed transactions and summary information are distributed to department heads. [9] Deans and executive level administrators and vice presidents also receive monthly summary account reports for all departments in their division.

Physical resource control is also the responsibility of the Accounting Office, with assistance from Physical Plant. The value of all campus buildings and their contents is reviewed semi-annually and reported to the State of Tennessee, Division of Risk Management, to ensure that property is adequately insured. [10] Equipment is recorded as it is acquired in the fixed asset system. Disposals and other status changes are recorded as they occur. Each year, all departments, using output from the fixed asset system, perform a physical inventory to verify the location and status of equipment. [11]

Additional control over university financial and physical resources is provided by internal and external audit processes. The university has an Internal Audit Department whose tasks and duties include the annual development and execution of an audit plan approved by the president and reviewed by TBR. Each year, university records are audited [12] by the State of Tennessee Comptroller’s Office, Division of State Audit, to determine compliance with federal and state laws and TBR and university policies and guidelines. The audit program typically includes a review of purchasing, payables, human resources, and property control. The audit program also includes an analysis of variances between budgets and actual expenditures.


Relevant Organizational Unit(s):

Vice President for Business and Finance


Supporting Documentation and Evidence:

[1] TBR Policy 4:01:00:00 Budget Control
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[2] UofM Procedures 2D:01:02A Budget Procedures
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[3] FY2005 Budget Guidelines
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[4]

Sample Monthly Schedule of Overexpended/Overobligated Accounts – FB1190

Sample Monthly Automated Departmental Memo of Overexpended/Overobligated Budgets

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[5] TBR Policy 4:02:10:00 Purchasing Policies and Procedures
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[6] UofM Policy UM1507 Purchasing
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[7] UofM Pay Plan Methodology
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[8]

UofM Procedure 2D:01:01A - Cash Receipts

UofM Cash Handling Guide

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[9] Sample Monthly Departmental Account Statement
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[10] University Semi-Annual Property Insurance Report
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[11]

UofM Procedure 2D:01:01H Inventory and Control Program for University-Owned Equipment

Sample Cover Memorandum from Accounting to Departments regarding Physical Inventory

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[12] University of Memphis audit reports for fiscal years ending:

June 30, 2003

June 30, 2002

June 30, 2001

June 30, 2000

June 30, 1999

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