RISK MANAGEMENT & AUDIT SERVICES Mackintosh-Corry Hall, B413 Queen’s University Kingston, ON, K7L 3N6
BEST PRACTICES
To assist departments in establishing and maintaining standard business practices and internal controls, Risk Management & Audit Services (RMAS) has provided some Best Practices based on frequent findings in past internal audits. These Best Practices are based on existing University policies and are not all inclusive. Departments are encouraged to review all business processes/procedures to identify risks and establish effective controls to mitigate those risks and to be familiar with Queen's Policies, Procedures and Guidelines.
PETTY CASH
Petty Cash is a liquid asset that can easily be misappropriated if adequate controls are not established. For more information please refer to the official Petty Cash Policy. The following best practices should be established: Given the liquidity of petty cash and the availability of a procurement card, departments should ensure there truly is a need for a petty cash fund (a number of small purchases or staff reimbursements which would be more costly or inefficient to process by cheque requisitions or through use of a procurement card). Petty cash should only be used for small dollar reimbursements, where individual purchases may be no greater than $50. Petty cash should be maintained in a secure location (e.g., strong box or safe) and one employee should be responsible for the fund. Petty cash may not be used for payment of salaries or wages, and never for employee IOUs. A petty cash log, detailed chits and receipts, must be kept for all purchases. The petty cash log should always be balanced e.g., total cash and receipts should always equal the petty cash fund balance.
Replenishment of the petty cash fund, by cheque requisition, must be approved by a supervisor or manager. Petty cash must not be replenished with miscellaneous departmental cash receipts. Normally petty cash funds should not exceed $200.
PROCUREMENT CARD
Queen's University supplies faculty and staff with a U.S. Bank Visa Purchasing credit card. The intent is to provide a cost effective method of paying for small dollar transactions. For more information please refer to the official Procurement Card Policy. The following best practices should be established: The procurement card should be kept in a safe location. The procurement card should not be used for restricted transactions: travel, personal purchases, furniture, alcohol, GST exempt purchases. Purchases may only be made by the individual to whom the card is issued. Transactions must be $2,000 or less. Splitting transactions for purchases larger than $2,000 is prohibited. Transactions should be edited in FirstViewNet prior to posting to the general ledger to ensure the GST calculations and account codes are correct. The printed cardholder statement must be reconciled monthly with receipts/packing slips and signed by the cardholder. The reconciled cardholder statement (with receipts attached) must be approved by the person responsible for the account from which the payment is being made (usually the Department Unit Head). The approved cardholder statement, along with supporting receipts, must be maintained in the department for 7 years and is subject to audit at any time.
TRAVEL CLAIMS
Queen's University provides reimbursement of reasonable expenses for University-approved travel and business expenditures. For more information please refer to the official travel and reimbursement policies: Travel & Subsistence, Travel Advances Policy, Travel Allowances. The following best practices should be established: The individual traveling is responsible for making the most economical travel arrangements possible. Travel claims may be reimbursed only by submitting a properly completed and approved travel claim form (form for Domestic Travel, form for International Travel, travel expense e-Form). Details regarding the business purpose of the trip, the destination and dates must be noted.
Reimbursement for entertainment expenses must include the names and organization of the persons entertained. Meal allowance must be recorded with accordance to the Treasury Board of Canada Secretariat Original boarding passes must be submitted for flight reimbursement, along with e-ticket or invoice noting method of payment. Travel claims must include the calculation of GST paid. The University will lose the GST rebate, with the department paying more than necessary, if this is not completed (both the actual GST paid and the calculation of GST in mileage, taxis and meal allowances). Travel claims must be approved by the next highest level of authority (e.g. Deans approve claims by Department Heads). First class or business class air travel is not permitted without prior approval of the Principal or delegate. First class rail travel is only permitted over the evening dinner hour. Travel claims should be submitted within 15 days of completion of travel. Any expenditure of more than $10 must be supported by original invoice or receipt. No receipts are required for per diem travel allowances. Missing receipt forms must be signed by the traveler and the approver if original receipts have been lost (missing receipt form). Credit card slips or statements are not acceptable proof on their own (i.e. the original restaurant receipt or supplier invoice must also be included). Corresponding travel advances are noted and attached with the claim if applicable Exchange rates are accounted accordingly for international travels Expenses are charged to appropriate account with compliance to the guidelines of each account All personal expenses such as expense of family members, entertainments unrelated to business, alcoholic beverages unrelated to hospitality are excluded from claim All fields of the travel claim form should be filled out to avoid any delay in reimbursement
ACCOUNT RECONCILIATION
Account reconciliation (the process of comparing the department's financial transactions to those in the general ledger) reduces the risk of inaccurate financial reporting. The following best practices should be established:
Every month, all account transactions per the monthly account statement must be reconciled (agreed) to the original document (cheque requisition, procurement card statement, salary requisition, travel claim, etc.). Note that if a payment includes GST, the amount charged on the account will be less than the total invoice, as given the University GST rebate, units are only charged 35.72% of the GST invoiced. There should be documentation/evidence of monthly account reconciliation which should be reviewed and approved by unit/department managers.
CASH RECEIPTS
Cash receipts (cash, cheques, credit cards) are subject to misappropriation if there are not adequate controls. For more information see Guidelines for Handling Cash. The following best practices should be established:
Try to minimize cash handling by using the bookstore to sell course-related material. Duties should be segregated so that the person receiving the cash and preparing the deposit is not also responsible for updating accounts receivable records or reconciling the deposit to cash receipt records (cash logs, cash register tapes, pre-numbered receipts, etc.). All donations/gifts should be sent to the Advancement Business Office for deposit and issuance of a charitable receipt. Cash receipts should always be recorded as revenue or recoveries, if it is an occasional minor reimbursement (eg. employee reimbursement for long distance charges) it may be recorded against the minor in which the expense was incurred. Cash should be stored in a safe location, with limited employee access, until it is deposited (e.g. strong box, safe). Using the Deposit Transmittal form, cash receipts should be deposited on a timely basis with the cashier at Financial Services. A bonded courier service should be used to transport significant cash receipts to Financial Services or the Bank of Montreal. Cheques should be endorsed "For Deposit Only to the Bank of Montreal, 297 King St. East, Queen's University" immediately upon receipt and should note the department account code. Departments may never open an external bank account for deposit of departmental funds.
EXPENDITURES
Every unit has the responsibility to ensure that university expenditures are appropriate and cost effective. For more information see the following policies: University Restrictions on Expenditures, Authorization of Expenditures, Purchasing Policy and Shipping Information.
The following best practices should be established: Individual reimbursements must be approved by the person at the next highest level of authority (eg. Deans approve reimbursements to Dept. Head). Reimbursements or cheque requisitions for items that could be considered personal items should include an explanation of the business nature of the expenditure. Reimbursements for entertainment expense should include the names and organizations of the persons entertained. A purchase order must be used for purchases greater than $2,000 (For purchases less than $2,000 a Procurement Card should be used where possible). Competitive bids are required for all purchases greater than $10,000. To facilitate accurate university accounting of types of expenditures, ensure all expenditures are coded to the correct "minor". Click here for a complete list of minor codes. All entertainment expenses that are not direct reimbursements should be approved by the person at the next highest level (examples include catered staff functions, gifts, etc.). Ensure the total GST is clearly documented on the cheque requisition to get the maximum GST rebate. (Departments are only charged 35.72% of the GST invoiced). As the university receives a 100% GST rebate on the purchase of books, all book purchases must be coded to the '60' minor to ensure the department is not charged GST.
INDEPENDENT CONSULTANT VS EMPLOYEE
Departments often employ consultants for contract work within the University. Determining the employment vs. non-employment relationship can be complex. If an employment relationship exists the University is liable for withholding taxes and deductions. Failure to do so exposes the University to fines & penalties. See the following related documents: How to Pay an Independent Contractor, How to Pay Consulting Fees. The following best practices should be established: If the "consultant" is an employee of the University, normally, the payment should be made through the payroll system using a salary requisition. If you are unsure please contact Human Resources. Where there is no employee-employer relationship, the consultant should be paid using a cheque requisition - independent contractor form.