This policy governs reconciling, verifying and substantiating financial information used by University personnel for administrative and programmatic decision-making. Review of financial information should be performed on a regular and timely basis.
- Revenue and expenditure reports, payroll reports, and other financial reports should be verified for accuracy and completeness upon receipt.
- Controls must be in place to ensure that financial information transmitted (interfaced) from a subsidiary system to the University's general ledger is complete and accurate each time the subsidiary system passes information to the general ledger.
- Balance sheet accounts must be reconciled monthly.
Accountability and procedures must be assigned and in place in each department to ensure that inaccuracies or incomplete financial information identified during the reconciliation or verification process are investigated and corrected in a timely manner.
Materiality, compliance risk, transaction detail volume, knowledge and experience of personnel performing analyses, and other factors should be considered in the design and implementation of an account reconciliation and the subsequent review process.
Reconciliation, verification and substantiation are essential for an effective internal control environment to ensure that:
- The information transmitted to, contained in, and reported from the University's financial systems is accurate, complete and recorded in a timely manner;
- The information can be relied upon for making financial and administrative decisions; and
- Fraud, theft, compliance violations and other irregularities are quickly detected and reported to the appropriate authorities.
University personnel must comply with the requirements of this policy to ensure that an effective internal control environment is maintained.
Supporting forms are under development.
Note: (*) Specific examples are provided in Appendix A.
- Analysis*
- The process of evaluating and interpreting financial information. Includes breaking the information as a whole down into various parts to determine the makeup of the parts.
- Balance Sheet account
- An account in the University's general ledger that records and summarizes financial transactions representing assets and liabilities of the University. Assets represent economic resources that benefit future accounting periods such as accounts receivable and investments, while liabilities represent external obligations of the University, such as bonds and leases payable.
- Comparison*
- The process of examining financial information for similarities or differences.
- General Ledger
- The official financial system used to record, summarize and report financial data for the University of Minnesota.
- Interface
- The mechanism and process of electronically transmitting information from one computer system or application to another. Typically, interfaces are designed to transmit information from a subsidiary financial system, such as Payroll or an ISO system, to an enterprise financial system, such as the general ledger. A properly functioning interface is one that transmits complete and accurate information.
- Interface Owner
- The unit responsible for maintaining the transmission of financial information and integrity of data from that subsidiary system to the general ledger or to another financial system.
- Reconciliation*
- The process of comparing information that exists in two systems or locations, analyzing differences and making corrections so that the information is accurate, complete and consistent in both systems or locations. For financial reporting purposes, the process includes comparing the local unit's record of financial information to the general ledger.
- Review*
- The process of examining financial information for accuracy and reasonableness. If determined to appear inaccurate or unreasonable, further investigation is warranted.
- Subsidiary System
- A separate, independent computer system that is used to record, process and report specialized or selective financial information. An example of a subsidiary system is a computer system that is used to track costs for a University auxiliary and create internal or external billings.
- Substantiation*
- The process of corroborating or confirming financial information contained in an account, report or system to ensure that the information is accurate and complete.
- Verification*
- The process of examining information contained in an account, report or system to ensure that it is accurate and complete.
- Accounting Services
- Perform regular and timely reconciliations of balance sheet accounts or interfaces as assigned by the Office of the Controller. Monitor the reconciliation processes performed by other University departments who have been assigned primary responsibility for reconciling accounts or interfaces; to ensure that they are completed regularly, timely and consistently.
- Departments
- Review financial data and information relevant to their operating activities for integrity, accuracy and completeness. Review financial information processed by their unit and interfaced to the general ledger, the payroll system, or other financial systems. Perform regular and timely reconciliations of balance sheet accounts as assigned by the Office of the Controller. Investigate and correct inaccuracies, discrepancies or errors timely.
- Interface Owner
- Perform a timely reconciliation and/or verification of each data transmission. Ensure that all transactions submitted by the subsidiary system have been sent and accepted by the general ledger system or any other financial system as intended and designed. Obtain approval from the Office of the Controller for any planned changes to the system interface or the reconciliation process.
- University Controller
- Assign responsibility and accountability for reconciliation of all general ledger balance sheet accounts and interfaces.
- Revenue and Expenditure Reports (Currently under development)
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- Appendix B - Overall Instructions for Reviewing Revenue and Expenditure Reports
- Appendix C - Instructions for Using "Comparative Actual & Budgeted Revenue & Expenditures Report"
- Sample Query Report - Comparative Actual & Budgeted Revenue & Expenditures.
- Appendix D - Instructions for Using "Actual Revenue and Expenditure By Accounting Period Report"
- Sample Query Report - Actual Revenue and Expenditure By Accounting Period.
- Appendix E - What to Look for When Reviewing Financial Reports
- Payroll Reports (Currently under development)
- Appendix F - Overall Instructions for Reviewing Payroll Reports.
- Appendix G - Sample Reconciliation of Payroll Abstract Report to Salary Expenditures.
- Sample Payroll Department Abstract Report - Pay Period 20.
- Sample Payroll Department Abstract Report - Pay Period 21.
- Sample Query Report - Reconciling Salary and Fringe Benefits - HSA, IX and JV Entries.
- Sample Report - Budget Status By Fund: Organization
There is no FAQ for this policy.
- Effective:
- September 2002
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To obtain a copy of a historical policy,
e-mail the U Policy Librarian at policy@umn.edu or call 612-624-4372.
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