Segregation of Duties and Reconciliation of Accounts Monitoring Plan

The University of Texas at Austin

Segregation of Duties and Reconciliation of Accounts Monitoring Plan

November 2021

Purpose

To establish the university’s monitoring plan for segregation of duties and reconciliation of accounts required by UTS 142.1 – Policy on the Annual Financial Report.

The Plan

I. Segregation of Duties

Certain duties should be performed by separate individuals to reduce the risk of fraud or errors, and no one individual should have responsibility for all aspects of a transaction.

In general, the following transaction-related duties are considered incompatible and should be performed by separate individuals:

  • Initiating
  • Approving
  • Record Keeping
  • Asset Receipt – Including Cash Receipt
  • Reconciliation of the related transactions

If a department needs assistance with determining appropriate segregation, they should reach out to Risk Management.

Segregation of duties for vouchers is largely governed automatically through DEFINE routing and approval requirements.

For expenditure transactions in DEFINE, the Expense Accounting Certification System (EAC – linked) uses a risk based review process to ensure material expenditures with less than three distinct approvers get another level of review.

II. Reconciliation of Accounts

A. Expense Transaction Reconciliation

For expense transactions, a risk based system will analyze the transactions to determine if any net outflows, including encumbrances, have occurred within a budget group.If there is a material net outflow from a budget group, and the electronic document has fewer than three unique approvers, certification of that budget group is required for the current month. See flowchart provided explaining the expense analysis steps.

This process provides an automated method to give evidence of separation of duties in expenditure approvals.

For expense transactions, this is accepted as the minimum standard for expenditure account review and reconciliation.

Additional methods for reconciliation (for example the LMM module) can be approved subject to review and approval by Risk Management.

Expense reconciliations should be completed prior to thirty (30) days after the close of the prior month.

B. Revenue Transaction Reconciliation

Reconciliation of all revenue activity is required.

Departments should develop and document reconciliation processes with the assistance and approval of Risk Management. See HBP 2.5 Account Reconciliation (linked).

Reconciliation of transactions must be completed every month and any required corrections need to be identified and processed within thirty (30) days after the close of the prior month.

C. Business Officer Sub-Certification and Monitoring Responsibilities

Business officers are required to complete the annual Certification Letter to the Financial Reporting Officer (Sub-Certification) which asserts, among other items, that all departmental accounts have been reconciled and appropriate separation of duties have been observed.

D. Risk Management Monitoring Responsibilities

  1. The Risk Management section of Accounting and Financial Management will implement a system of periodically reviewing the reconciliation and segregation of duties processes for colleges and units. Risk Management will work with Business Officers and Departmental Managers to adjust processes and correct issues as they are identified by these reviews. The goal of the review process will be to work with each unit on their processes at least once every three years.
    1. Should a college or unit be determined to be out of compliance with the requirements of this Monitoring Plan, Risk Management will report the findings to Assistant Vice President in Accounting and Financial Management.
  2. Risk Management will coordinate the annual Sub-Certification process and will monitor university-wide expense account certifications on a quarterly basis.
  3. Each year, Risk Management will review the Account Monitoring Plan and the related UT System policy to assess if changes are necessary. Risk Management will report any recommended changes or no recommended changes on or before March 1st.

Appendix

Appendix 1

Appendix 2

Last updated 11/29/2021