1101 PR.02 Financial Transaction Review and Budget Monitoring

Revision Date: 
June 29, 2020

Contents

1.      Overview

2.      Financial Transaction Review and Budget Monitoring Standards

3.      Financial Review Checklist: Use, Completion, and Responsibilities

4.      Financial Review Checklist: Certification

5.      Financial Review Checklist: Monitoring

1. Overview

This procedure supports Policy 1101 Guiding Principles for University Operations.  It describes the standards for financial transaction review and budget monitoring, the role of Form 1101 FR.01 Financial Review Checklist (“FRC”), and the processes supporting the use of the FRC.  This procedure discusses detective (after-the-fact) Internal Controls.

2. Financial Transaction Review and Budget Monitoring Standards

Financial reviews, including transaction review and budget monitoring, are essential components of an integrated system of Internal Control activities.  Detective financial reviews are intended to identify errors, anomalies, potential compliance issues, and inaccurate accounting.  Along with preventive controls, detective financial reviews provide reasonable assurance (but not absolute assurance) to individuals with financial oversight roles that financial activity is accurate, valid, and complete.  

In general, time and effort for a financial review should be proportional to the associated risk and should not exceed the expected benefits.  Therefore, reviewers should concentrate on high-risk activities and the specific areas of focus defined in Form 1101 FR.01 Financial Review Checklist.  High-risk activities include, but are not limited to: large dollar transactions; transactions not requiring pre-approval; unusual transactions; and transactions where the cost of non-compliance is high.

Budget monitoring, an indispensable component of the financial review, includes the review, documentation, distribution, and discussion of the financial state of each respective school, department, unit, or other organizational unit on a regular basis with individuals in budgetary oversight roles.  Budget monitoring includes a review of deficits, reserve balances, financial forecasts, and significant budget variances.

Overarching principles related to the financial transaction review and budget monitoring process include the following:

  • Financial transaction reviewers and budget monitors have a duty to question, research, and correct, if necessary, any potential issues discovered during the review process.
  • Financial transaction reviewers and budget monitors have a duty to document corrective actions taken and explanations of significant variances. 
  • Financial transaction reviewers and budget monitors have a duty to raise issues that cannot be expeditiously resolved to the attention of the appropriate Lead Administrator or Central Office.

3. Financial Review Checklist: Use, Completion, and Responsibilities

The FRC (Form 1101 FR.01 Financial Review Checklist) details the minimum required financial review activities that must be performed to achieve the principles detailed in Section 2, above, including maintaining proper accounting, Internal Controls, and adherence to University policies and procedures.  The FRC also contains certain other Internal Control activities that are not strictly financial review activities but that are included in the FRC completion and certification requirements.  These activities are governed by their respective policies and/or procedures (as referenced in the FRC).

Every school, department, unit, or other organizational unit with authority to process and approve financial transactions must utilize the FRC and complete the listed activities at their specified frequencies (e.g., monthly, quarterly).  For each activity, the FRC identifies the area of focus and the recommended report(s), tool(s), and/or other resources available to assist with the review.

The Controller’s Office compiles the requirements and activities for the FRC, publishes the current version, monitors completion of the FRC certification process, and assesses the FRC’s effectiveness.

Departmental Business Offices (“DBOs”) are responsible for completing the FRC and its activities for their respective schools, departments, units, or other organizational units.  Individuals performing detective financial reviews for their DBO (i.e., financial transaction reviewers and budget monitors) should be properly trained and knowledgeable in their assigned areas of responsibility.  They should also be comfortable exercising professional judgment to facilitate an efficient and effective financial review of transaction activity.

Individuals completing the FRC are responsible for documenting on the FRC their initials and date of completion for each completed step.  This responsibility extends to FRC items delegated to areas outside the DBO (e.g., Faculty Research Management Services, Yale Shared Services).

DBOs are responsible for maintaining completed FRCs, including all initialed completion dates, in accordance with Policy 1105 Retention of University Financial Records.

Lead Administrators are responsible for ensuring their respective DBO(s) adhere(s) to the responsibilities detailed above.  They are also responsible for ensuring any exceptions noted during the review process are properly documented and discussed, as appropriate.

4. Financial Review Checklist: Certification 

Lead Administrators must certify the completion of the FRC and its activities for their respective schools, departments, units, or other organizational units on a quarterly basis.  Each certification applies to the preceding three months’ reviews.  Lead Administrators are notified of each quarterly deadline via email generated by the Controller’s Office from Salesforce, and they are required to complete the certification in the Salesforce application.  Lead Administrators are identified as responsible for performing this activity through the Controller’s Office use of the Workday report Lead Administrator and Operations Manager by Cost Center – Yale.

The Controller’s Office establishes the quarterly certification deadlines and publishes them in the Financial Review Checklist Certification Training Guide*.  Current certification deadlines are also listed in the table below for reference.  Lead Administrators are expected to complete the quarterly certification no later than the published deadline for the respective quarter.  For detailed instructions on proper completion of the quarterly certification, refer to the Financial Review Checklist Certification Training Guide*.

FY21 Quarter Certification Deadlines

Quarter 1 (July, August, September)

November 6, 2020

Quarter 2 (October, November, December)

February 22, 2021

Quarter 3 (January, February, March)

May 8, 2021

Quarter 4 (April, May, June)

August 16, 2021

*Please note, the Financial Review Checklist Certification Training Guide is currently in development.  It will be published prior to the initiation of the first certification cycle for Q1 of FY21.  

5. Financial Review Checklist: Monitoring

The Controller’s Office monitors the completion and timeliness of the quarterly FRC certifications detailed in Section 4, above.

The Controller’s Office may conduct independent reviews of FRCs at its discretion.  Upon request, DBOs must be able to provide documentation that FRC activities for their respective schools, departments, units, or other organizational units are being performed properly and timely.