topic cod Internal Controls 10-14

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					                                         Council of Deans
                                         October 14, 2008

TOPIC: Internal Controls


       The purpose of this information is to give the deans a sense of what will be expected of
       them and the university in the year ahead regarding internal controls and streamlining.


       Attached are two sets of documents. The first is a summary of what was laid out for the
Audit Committee regarding Internal Control goals for FY2009 (Attachment A).

       The second set of documents lays out the status of various streamlining initiatives
(Attachment B).


      Is the information clear?
      Is there any additional information the deans would like to have?
      Who else will this be shared with?
      What happens next?


       For information and discussion.

                                                                    Office of Business and Finance
                                                                            Attachment A

                     The Ohio State University Board of Trustees
                          Audit and Compliance Committee
                                 September 18, 2008


Internal Controls


This is a follow up to the discussion at the July meeting about how to improve and
streamline internal control processes on the front end in order to reduce our reliance on
corrective action after the fact.


The attached information is intended to provide the current status and FY 2009
deliverables for each of the four key components of our internal controls strategy.
These are:

   1.   Policies
   2.   Personnel
   3.   Processes
   4.   Accountability


       Does this address the issues identified in the PWC review?
       Does this address the issues identified by our internal and external auditors?
       Are the goals and metrics for measuring progress clear?
       Have the key areas been covered?
       How does this compare with benchmarks?
       What are the biggest barriers to success?
       How would the Audit Committee like to be kept informed?


For information and discussion. No vote required.

                                                                Office of Business and Finance
         Action Plan for Streamlining and Strengthening Core Processes
                        Audit and Compliance Committee
                                 September 2008

1. Policies

   Objectives:   Make operational policies consistent, easy to understand and
                 readily accessible.


   o Al policies have been reviewed and reformatted in accordance with the
     University’s new policy template
   o New policies have been developed that define expectations with respect to
     internal controls and effective financial management.
   o Expenditure policies have been revised and simplified where possible

   To Do:

   o Consolidated University policy page will be deployed this fall as will a new
     consolidated Business and Finance policy website. (12/31/08)
   o Travel policies are being rewritten in conjunction with efforts on new Travel
   o Align campus and Research Foundation policies. (TBD)

2. Personnel

   Objectives:   Fiscal positions staffed with highly trained, highly qualified
                 personnel who understand and meet expectations.


   o Standard language added to position descriptions for Deans, Vice Presidents
     and Senior Fiscal Officers.
   o Training program redesign is complete including linkages to positions held and
     course by course assessments
   o Four core business courses are now available through a web based program:
   o Training for systems revised as modules are released.

   To Do:

   o Finalize new classification structures for fiscal and human resource positions
     including required skills and competencies. (6/30/09)
   o Continue rework of system training as new modules are released. (on-going)

                                                              Office of Business and Finance
3. Processes

   Objective:   Simplify operational processes and procedures while maintaining
                required controls and approvals; Increase level of central
                evaluation and oversight of decentralized processes.


   o Streamlining Task Force Report completed June 10, 2008 (attachment)
   o Procurement Card contract re-bid resulting in new vendor offering greater
     program options and restoration of dispute rights consistent with Task Force
   o Travel system redesign and contract re-bid underway consistent with Task Force
   o Central Review processes completed for all procurement activity, payroll
     certification, segregation of duties, financial management and budget.
   o Service Center projects underway in 6 areas including: Business and Finance,
     Student Life, Research, College of Engineering and the Federation of the Arts
     and Sciences
   o eProcurement implemented and processing $1.0 million in orders per month
   o New payment request entry system implemented for processing $17 million in
     payments per month

   To Do:

   o Implement new features of procurement card program (December 31, 2008)
   o Complete Travel System replacement project (June 30, 2009)
   o Financial oversight position to be created and filled to oversee monitoring efforts
     and provide single point of contact for questions. (June 30, 2009)
   o Continue implementation of service centers (on-going)
   o Align Research Foundation and campus processes (TBD)

4. Accountability

   Objective: Clearly defined accountability for fiscal control and oversight.


   o Dotted reporting line from Chief Financial Officer to Senior Fiscal Officers
   o Chief Financial Officer provides input into performance evaluations
   o Formal sub-certification process completed for FY2008.

   To Do:

   o Finalize college/vp unit score cards (December 31, 2008)
   o Establish dotted reporting lines from department fiscal staff to college/vp level
     fiscal staff. (June 30, 2009)

                                                               Office of Business and Finance
                                                             Attachment B

                           Council of Deans
                           October 14, 2008

                         Streamlining Update

Wave One     Streamlining of Board Policies    Completed
             Regarding Procurement
             (Attachment B-1)
Wave Two     Procurement and Travel
             Streamlining Task Force
                   Phase I                     to be completed 12/31/08
                   Phase II                    to be completed 6/30/08
             (Attachment B-2)
Wave Three   In Process
             Goals To Be Identified            to be completed 12/31/08
             (Attachment B-3)

                                                Office of Business and Finance
                                                                   Attachment B-1

                                   Wave One
                        Recent Changes in Board Policy to
                  Streamline Procurement and Capital Approvals

Changes in Purchasing Policy (12/2007)

       Removed requirement that waivers of competitive bidding and all
        contracts greater than $1M require prior approval by the Board of
        Trustees through the Fiscal Affairs Chair.

         o Replaced with a quarterly report.

         o Will save an average processing time of two weeks for an estimated
           25 contracts over $500,000 annually.

Changes in approval of Capital Improvement Projects and Real Estate Transactions

       Delegated approval for projects over $1M, but less than $4M from BoT
        to Senior Vice President for Business and Finance.

       For projects over $4M, but less than $10M, only one Board approval
        required instead of two.

         o Reduce project delivery times by 4-8 weeks on 770+ projects

       Also delegated approval for easements and other real estate transactions.

                                                         Office of Business and Finance
                                                                      Attachment B-2
                                  Wave Two
                     Streamlining Procurement and Travel
                                June 10, 2008

       The Streamlining and Simplification Task Force was formed in January of
2008 and charged with identifying the five biggest aggravations to faculty and staff
related to the University’s procurement and travel policies and procedures.
Members of the Task Force included:

Dr. Ken Andrien, Professor, History
Dr. Frank DeLucia, Professor, Physics
Dr. Kay Bea Jones, Associate Professor, Architecture
Dr. Stephen Summerhill, Associate Professor, Spanish and Portuguese
Mr. Thomas Conrad, Senior Fiscal Officer, College of Social and Behavioral
Ms. Marie Mendenhall-Mead, Senior Fiscal Officer, College of Engineering
Ms. Helen DeSantis, Assistant Vice President, Business Operations
Ms. Leslie Flesch (Chair), Associate Vice President, Business and Finance

      The five high priority opportunities for improvement in Procurement and
Travel as identified by the Task Force are:

      1.   Inconsistent application of policies.
      2.   Too difficult to use a P-card.
      3.   Unresponsive and inflexible travel system.
      4.   University and OSURF policies not aligned.
      5.   Excessively complex fiscal management for study abroad programs.

      A proposed timetable for addressing these issues is attached.

                                                           Office of Business and Finance
                                      Implementation Status of
                             Streamlining and Simplification Task Force
                             Procurement and Travel Recommendations
ISSUE:           Inconsistent application of policies across the institution

RESPONSE:        Streamline and clarify existing policies in one place.                       12/31/08

                 Provide one consistent point of contact in Business
                 and Finance for policy and process questions.                                 6/30/09

                 Review all college policies and require central approval for                  6/30/09
                 implementation of more restrictive policies.

ISSUE:           Simplify P-card processes to encourage utilization

RESPONSE:        Implemented eStores system to provide on-line ordering of high
                 volume commodities at contracted rates                                        3/31/08

                 Contracted with new vendor for procurement card program and
                 negotiated dispute rights for departmental cards                              4/31/08

                 Modify P-card process requirements to simplify process and
                 allow for additional usage                                                   12/31/08

ISSUE:           Streamline Travel process and improve travel agency responsiveness

RESPONSE:        Rebid travel agency contract and awarded to new vendor                        9/30/08
                 with increased services and lower transaction fees

                 Implement new on-line travel booking tool, including access to
                 discount air carriers, hotels and rental cars, for all travelers             1/31/09

                 Implement simplified web-based travel request and reimbursement
                 system for all travel, including sponsored research travel                    6/30/09

                 Revise process for guest travel including simplified alternate
                 W-9 compliance                                                                6/30/09

ISSUE:           Align University and OSURF policies and processes

RESPONSE:        Clarify and communicate what costs are allowable on research grants
                 and what alternative funding may be available                                12/31/08

                 Implement integrated OSURF/Campus travel process                              6/30/09

                 Implement integrated OSURF/Campus P-Card program                              6/30/09

ISSUE:           Simplify fiscal management requirements for study abroad programs.

RESPONSE:        Replace cash advances for in-country expenses with procurement
                 cards.                                                                       12/31/08

                 Develop and implement standard financial reports.                            12/31/08

                                                                               Office of Business and Finance
                                                                               Attachment B-3

                                             Wave Three
                                        Streamlining Initiative

Ask each of the following groups to identify the three or four bureaucratic issues
beyond procurement and travel that frustrate them the most, and then develop an
action plan to address them.

      Stakeholder                        Focus Group                          Lead(s)
Faculty                      Senate Steering Committee             Herb Asher/Bill Shkurti
Staff                        University Staff Advisory Committee   Larry Lewellen
Students                     Council on Student Affairs            Rich Hollingsworth
Senior Management            Senior Management Council             Joe Alutto

Each lead is expected to report back in November with a list of three to four key
issues and a work plan.

                                                                   Office of Business and Finance

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