Office of the Chief Financial Officer

• Section 1: Delegations of Responsibility
  The Office of the President is structured along divisional lines and each division head has programmatic and administrative responsibility for the areas under their jurisdiction. Division heads report to the President. The Senior Vice President - Business and Finance, as chief operating officer of the Office of the President, is responsible for development of policy for, and oversight of, the business practices and financial systems for the Office of the President. Each division head has responsibility for assuring that business practices and financial systems are in compliance with these policies. As part of the oversight responsibility, each division head delegates responsibility and accountability for the financial management of UCOP resources to functional units (departments) at UCOP. Each UCOP department is responsible for managing its own financial resources.
  
  The head of each department, while responsible for managing the department's financial resources, will normally delegate the overall financial management administration to a Department Administrator (DA). The DA is responsible for developing an appropriate structure for handling the department's financial resources. This will involve delegating a variety of tasks to employees within the department.
  
  Each department head and DA shall be responsible for developing an accountability structure that adheres to the following principles:
  1. Accountability cannot be delegated.
  2. A person cannot delegate greater responsibility than he or she has.
  3. Tasks shall only be delegated to people who are qualified to perform them.
     A qualified person must:
     1. be actively involved in the tasks being performed;
     2. have the appropriate knowledge and technical skills to perform those tasks, including knowledge of relevant regulations and policies; and
     3. have the authority to carry out the tasks.
  4. A person delegating tasks is responsible for ensuring that those tasks are being properly performed.
  5. The DA must keep a complete, up-to-date record of the delegations, as well as an audit trail of modifications to them. The DA must ensure that delegations are appropriately decided and communicated, documented, and periodically reviewed for accuracy, completeness and effectiveness.
  6. The DA must designate an individual with responsibility for updating the Distributed Administrative Computing Security System (DACSS) to grant access to department employees to prepare, review, or inquire against on-line systems.
• Section 2: Preparing and Reviewing Budgetary and Financial Transactions
  Two people will be required to process each financial transaction. The first person (Preparer) enters information about the transaction, and the second person (Reviewer) reviews each financial transaction to ensure that the Preparer has properly fulfilled his or her function. Both a Preparer and Reviewer must be involved in each budgetary or financial transaction.
  1. A Preparer must:
     1. understand all relevant regulatory requirements, the UCLA systems, the UCOP policies, and the purpose of each transaction;
     2. enter accurate data into all fields on a transaction document or application system screen;
     3. record an accurate and thorough explanation of each transaction;
     4. ensure that the proper Full Accounting Units (FAUs) are entered;
     5. ensure that any new account and fund linkages requested are appropriate;
     6. be aware of basic policy, regulatory, and other requirements;
     7. resolve any questions which come to mind during the completion of the transaction, or are raised via on-line edits and related messages; and
     8. forward the completed transaction, with any supporting documents, to a Reviewer.
  2. A Reviewer must:
     1. review all transactions within two working days of receipt;
     2. inspect each transaction to ensure the Preparer properly fulfilled his or her responsibilities;
     3. ensure that each transaction complies with policy, regulatory, and other requirements;
     4. resolve all questions that arise concerning a transaction, or ensure the transaction is reversed until the questions are resolved;
     5. notify the DA if he or she will be absent from work for two or more business days, so another Reviewer can be assigned; and
     6. notify the DA when he or she is returning to work from an absence of two or more business days.
• Section 3: Signature Responsibility and Financial Stewardship
  University management formally delegates signature responsibility to provide a method to control who may approve financial transactions and to meet the University's financial stewardship responsibilities. UCOP employees who have been delegated signature authority should understand the University's financial stewardship philosophy, applicable policies, regulations, rules and laws.
  
  Financial stewardship is defined as the responsibility for managing University resources wisely and executing these responsibilities with integrity and ethical conduct. These resources include time, money, people and property. When UCOP employees manage public resources in an efficient, economical and ethical manner, the result will be better achievement of the University's overall missions of teaching, research and public service.
  
  Stewardship responsibilities encompass total oversight of the resources assigned to each employee as well as those resources available for use. Financial stewardship responsibilities include:
  1. Spending money wisely and monitoring expenditures as if they were your own.
  2. Purchasing goods and services wisely.
  3. Helping others in their financial stewardship efforts.
  4. Being accountable for your actions, equipment, funding and time.
  5. Encouraging others to be good stewards of their resources.

• Section 1: Budgeting Financial Resources
  Each operating department at UCOP requires financial resources in order to perform its role in the University's mission of research, teaching and public service. Each DA is responsible for ensuring that the department manages financial resources in an efficient and cost-effective manner.
  
  Each department head and DA shall adopt the following practices to ensure sound financial management:
  1. A budget must be established annually by the department, and reviewed and approved by the department head. All budget augmentation requests must be reviewed and approved by UCOP Budget Administration. The budget provides a tool to project resources necessary to achieve a department's goals and objectives.
  2. Actual financial results must be compared to the budget on a regular basis to detect changes in circumstances or the business environment, identify and/or correct transaction errors and measure financial performance. When actual financial results vary significantly from the budget, a manager must determine the cause, evaluate the activity, and take corrective action.
  3. Departments must operate within their budget. When expenditures exceed budget, justification for such excess must be provided to the department head. The department head and DA must develop a formal plan to eliminate deficits generated.
• Section 2: Monitoring and Evaluating Financial Data
  Each department head and DA must establish monitoring procedures to provide assurance that financial transactions are appropriate and are accurately recorded. Procedures for monitoring and evaluating financial data must include:
  1. Utilizing monthly financial reports that are clear and concise, provide budget vs. actual comparisons, and identify trends and special areas of concern.
  2. Developing a method for reviewing revenue and expenses at the end of each ledger cycle, including identification of the individual(s) responsible for performing the reconciliation procedures.
  3. Ensuring that staff reconcile transactions appearing on the general ledger in a timely manner at the end of each accounting period. All transactions must be verified for:
     1. Amount;
     2. Account classification (FAU);
     3. Description; and
     4. Proper accounting period.
  4. A monthly sampling and review of individual financial transactions by a supervisor to ensure transactions are appropriately approved, accurately recorded and supported by proper documentation.
  5. For each significant deviation, an examination must be completed to determine why the deviation occurred. A method for taking corrective action must be established, including complete documentation of the deviation and the corrective action.
• Section 3: Safeguarding University Assets
  University assets must be safeguarded from loss or unauthorized use. Adequate safeguards include the following:
  1. All cash, checks or cash equivalents collected at major and sub cashiering stations, and all petty cash funds, are processed and managed in compliance with the requirements of BUS-49 Cashiering Responsibilities and Guidelines.
  2. All department assets are properly described and accounted for in the Financial System. Actual physical assets, as recorded in the equipment inventory system, are compared to assets recorded in the Financial System at least once per year. Discrepancies are resolved in a timely manner, and adjustments to asset records must be documented and approved.
  3. Access to any forms or on-line systems that can be used to alter financial balances must be restricted to employees who require such access to perform their University duties.

• Section 1: Managing University Data
  Financial management decisions affect every aspect of the University, but such decisions can only be as good as the data on which they are based. Consequently, each department must establish and implement procedures to ensure data integrity. These procedures must provide reasonable assurance that transactions are in accordance with management's authorization and are recorded in the University general ledger in an accurate and timely manner.
  
  Each department head and DA shall be responsible for developing procedures to ensure data integrity adhering to the following requirements:
  1. An adequate data control system including independent checks and balances must exist within and between operating units.
  2. All employees engaged in financial management activities are responsible for ensuring that adequate data controls are being employed. If problems are identified, all employees must take an active role in developing and implementing appropriate corrective actions.
  3. All systems that are used to report financial data must be secure, reliable, responsive and accessible. These systems must be designed, documented, and maintained according to accepted development and implementation standards.
  4. All interfaces between financial systems and affecting any financial information must contain controls to ensure the data is synchronized and reconciled.
• Section 2: Establishing Separation of Duties Controls for Data Integrity
  No single individual shall have complete control over all processing functions for any financial transaction. Such functions include:
  1. Recording transactions into the Financial System directly or through an interfacing system;
  2. Authorizing transactions through pre-approval or post audit review;
  3. Receiving or disbursing funds;
  4. Reconciling financial system transactions; and
  5. Recording corrections or adjustments.
  
  
  If the number of employees in a department is limited, causing one person to perform multiple functions, the department must assign a second person to review the work for accuracy, completeness and timeliness, or combine these functions with another unit.
• Section 3: Departmental Computing Responsibilities and Acquiring Computing Equipment and Information Systems
  1. Each department needs experienced and well-trained technical professionals to support the department's computing needs. Such support can be contracted for or provided by a department itself through a PC Coordinator.
  2. If a department is developing or acquiring information systems for their use, the requirements in BFB IS-10 must be followed.
  3. When significant hardware and software purchases costing over $7,500 are being contemplated, the PC Center in IR&C should be contacted.

Every employee who conducts transactions that affect University funds must comply with all applicable laws, regulations, and special restrictions. To ensure compliance, each department head and DA shall adopt the following practices:

• Section 1: Financial Reporting
  1. Departments will conduct transactions in compliance with applicable financial reporting requirements, including Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB) Statements, and Cost Accounting Standards Board (CASB) Statements. The basic requirements of these standards as applied at UCOP include the following:
     1. Sources and uses of funds must be segregated by the type of activity they support in accordance with any restrictions imposed on their use.
     2. Revenues are reported when earned, and expenditures are reported when goods or services are received.
        1. In general, revenue is earned when the University provides goods or services.
        2. Likewise, expenses are incurred as the University uses goods or services. For example, when supplies are received, the University incurs the expense. Holding an invoice does not and must not prevent the expense from being incurred.
  2. Accounting principles must be applied consistently, both within fiscal years and between fiscal years. Financial Management is charged with ensuring consistent, University-wide application of these accounting principles.
  3. Reports to sponsoring entities will be made according to the specific reporting requirements. In general, most sponsoring entities require adherence to GAAP. Additionally, federal agencies and entities which serve as conduits for federal funds require adherence to either Office of Management and Budget Circulars (OMB) and/or Federal Acquisition Regulations (FAR). Two primary OMB circulars are:
     1. OMB Circular A-21, provides the cost principles for educational institutions. These principles define allowable costs as those which are reasonable, allocable, consistently treated and in conformance with any special limitations. Circular A-21 also defines direct vs. indirect costs, and provides guidelines for calculating indirect costs; and
     2. OMB Circular A-110, provides uniform administrative requirements for grants and other agreements with institutions of higher education, including financial reporting requirements.
• Section 2: Records Retention
  Each DA will maintain financial records in compliance with regulatory requirements and University policy. This includes:
  1. Maintaining records for a period of three years from the latter of the budget period or the filing of all required reports.
     See the UCOP Website http://www.policies.uci.edu/adm/records/721-11a.html for specific retention requirements.
  2. In cases where there is pending litigation or audits, records must be maintained until the action is concluded.
• Section 3: Expenditures
  All expenditures must comply with applicable regulatory and legal requirements and University policy.
  1. Federal and state restrictions must be followed.
  2. When goods and services are purchased for the University, the following requirements apply:
     1. The Purchasing Director, authorized buyers or specified University departments must execute the purchases of real estate and construction projects, the services of independent consultants and legal services.
     2. Any person who makes unauthorized purchases shall be responsible for the payment of all charges incurred.
     3. Purchases exceeding $2,500 must be conducted through the Purchasing Department. The Purchasing Department must maintain documentation of solicitations made to vendors, vendor responses, sole source justifications, and the contracts awarded.
     4. Goods and services for individuals or for non-University activities shall not be made using University credit, purchasing power or facilities. If purchased items appear to be of a personal nature, the University purpose must be properly documented.
     5. When pooled purchase orders or commodity agreements exist, goods and services shall not be purchased from other sources, unless special delivery dates or unusual specifications preclude the use of these sources.
     6. Unnecessary or redundant purchases must be avoided.
  3. Actions affecting a person's compensation must adhere to the following additional requirements:
     1. providing the Payroll Office through input to the on-line system with all the data needed to process that person's paycheck, including:
        1. Name
        2. Social Security number
        3. Tax withholding forms
        4. Pay rate
        5. Terms of appointment
        6. Title code
        7. Hiring department code and name
        8. Full Accounting Unit (FAU) to be charged
     2. updating such information so that checks may be issued in a timely manner;
     3. ensuring that other payroll information is updated accurately and timely that affects such items as:
        1. Medicare
        2. OASDI
        3. Retirement plans
        4. Voluntary withholdings such as insurance, various employee benefit programs, and credit union payments.
     4. adhering to all time keeping requirements whether for compensation or allocating charges to federal awards; and
     5. ensuring compliance when payments are made for unusual circumstances, such as housing allowances, car allowances, foreign subsistence when assigned to work in a foreign country, etc.
• Section 4: Tax Laws and Regulations
  To comply with tax regulations, each DA must ensure that appropriate personnel are informed of the various tax authority requirements applicable to their operations. In general, taxes applicable to University operations include:
  1. Sales and use tax on certain sale and purchase transactions as required by the California State Board of Equalization. Purchases made for resale are generally exempt in cases where the seller obtains evidence from the purchaser such as a certificate of resale. Otherwise:
     1. Departments that conduct sales activities must charge sales tax and properly account for sales tax collected by coding related deposits against sales tax payable account numbers designated by UCOP Payroll and Tax Services; and
     2. Departments making purchases must include a provision for such taxes when making orders. Further, they must ensure these payments have been included on their invoice payments or through other charging methods used by the UCLA Office of Accounting Services, which is responsible for the actual filing and remitting of sales and use tax payments.
  2. Income tax on income-producing activities which constitute a regularly-carried-on trade or business that is not related to the furtherance of educational activities. Consequently, employees who are engaged in such activities must:
     1. Maintain information that supports whether or not a particular activity is subject to income tax;
     2. Notify UCOP Payroll and Tax Services of any income taxable activities and complete the various questionnaires and worksheets prescribed by UCOP Payroll and Tax Services; and
     3. Account for all taxable income earned in an income-producing fund approved by Corporate Accounting, which is responsible for the actual completion of the Form 990-T, Exempt Organization Business Income Tax Return.
  3. Federal and State income taxes assessed on University employee base salary and wages, supplemental pay, undocumented reimbursements, and various allowances (such as car and housing) in accordance with the Internal Revenue Code and California Revenue and Taxation Code. In this process:
     1. The UCLA Payroll Office is responsible for withholding taxes on compensation based upon the individual's Form W-4, Employees' Withholding Allowance Certificate on file. This office is also responsible for remitting the actual tax payments to the Federal and State governments, completing the required quarterly tax returns, and distributing Forms W-2 Wage and Tax Statements to employees; and
     2. Departments at UCOP are responsible for submitting accurate and timely data to payroll for the completion of these forms, and determining whether individuals are to be considered employees or contractors for tax purposes.
  4. Income paid to payees outside the university (such as payment of fees, commission, rents, and royalties) or University employees (such as prizes and awards) must be accumulated and reported as taxable income. In this process:
     1. Departments must provide tax identification numbers when processing these types of payment transactions; and
     2. The UCLA Office of Accounting Services is responsible for reporting this information to the payees via annual reporting forms such as the Forms 1099, W-2, or 1042S.
  5. The University is generally exempt from paying property taxes. When necessary, the UCOP Facilities Administration Department will file the exemption reports and claims to receive refunds of such taxes paid on leased property for UCOP departments.
• Section 5: Reporting Fraudulent or Illegal Acts
  Any person who becomes aware of fraudulent or illegal business transactions conducted in the name of the University shall properly report the fraudulent or illegal act. This includes:
  1. Any person who suspects that fraud or illegal activities are taking place in his or her department must report that suspicion immediately to their immediate supervisor. If the employee believes that the supervisor is involved, or is otherwise uncomfortable reporting in this manner, he or she must immediately notify the University Auditor. Supervisors to whom such reports are made must review them, and if they have merit, report them to the next level of management or to the University Auditor. For complete guidance on reporting irregularities, see Business and Finance Bulletin G 29 - Procedures for Investigating Misuse of University Resources.
  2. Individuals conducting business on behalf of the University are personally responsible for the consequences of any violations they commit.
  3. Individuals conducting business on behalf of the University must do so for the benefit of the University. Where a potential for personal gain exists, this potential conflict of interest must be reported immediately, and be carefully evaluated before any financial transactions are allowed to occur.
• Section 6: Response and Resolution of External Audit Findings from Regulatory Agencies
  Responding to external audit findings from regulatory agencies includes ensuring the following:
  1. The University Auditor is notified prior to commencement of any audit or review by an external regulatory agency; and
  2. A full investigation of the facts is conducted to ensure accuracy of any findings.
     1. If a finding is in error, full documentation must be sent immediately to the UCOP External Audit Coordinator.
     2. If a finding is valid, corrective action must be taken immediately to correct the deficiency and ensure the situation does not recur.
     3. Where findings result in disallowances, departments must cover the disallowances with other department funds. If a department does not take prompt action, central accounting departments may step in to take action. Where findings result in extrapolated disallowances, the Vice President - Financial Management will review the circumstances and decide upon an appropriate allocation of the disallowance.