Docstoc

An Overview of Financial Management at UC Berkeley - UC Berkeley

Document Sample
An Overview of Financial Management at UC Berkeley - UC Berkeley Powered By Docstoc
					Deans & Chairs Retreat – August 21, 2007

An Overview of Financial Management at UC Berkeley
John Ellis Paul Jenny

Deans & Chairs Retreat – August 2007

Deans & Chairs have responsibility for the financial management of their organization
Requirements: 1) Efficiently manage campus resources

2) Effectively mitigate risks to attain program objectives
3) Maintain a sound financial condition within the limits of your resources 4) Comply with applicable policies, laws and regulations.

Deans & Chairs Retreat – August 2007

Success in the financial management area depends on building a strong relationship with your management partners
• Regular discussions with your CAO /MSO and your department managers

•
• •

General awareness of the campus financial environment
Not accepting responses that don‟t seem to “make sense” Working with Central Budget Office, Controller‟s Office, and Audit and Advisory Services

Deans & Chairs Retreat – August 2007

Financial management at UCB requires a sensitivity to the level of risk
Impact of Risk Occurrence

Risk: ƒ(Frequency x Significance)

High

Unacceptable

Combinations of frequency and significance expose the campus to various degrees of risk.

Mod

Caution Acceptable
Low Hig h Likelihood of Risk Occurrence Mod

Deans & Chairs Retreat – August 2007

Agenda
1. Campus Revenue / Sources of Funds
2. Expenditures / Use of funds 3. System & Analytic Tools

4. Governance
5. Regulatory Compliance

Deans & Chairs Retreat – August 2007

The campus has many sources of funds
State (includes 19900)
Contracts & Grants (Federal, State, Local) Tuition & Fees Private Gifts, Grants & Contracts

$471,420
$393,656 $292,482 $236,052

29%
25% 18% 15%

Auxiliary Revenues
Sales & Service Revenue Other

$106,177
$51,141 $47,736

7%
3% 3%

dollars in thousands Source: UCOP 2005-06 Financial Schedules (Berkeley – Schedule A)

Deans & Chairs Retreat – August 2007

All campus funding comes with restrictions
• Use of all campus funds is governed by UC Regents and campus policies. • The campus or departments may impose additional restrictions on the use of funds (e.g. start-up). • Some funds have additional restrictions imposed from outside the campus. For example: – Gifts – Contract & Grants – State Funds

Deans & Chairs Retreat – August 2007

Funds flow across the campus in two ways
• Currently the majority of funds are predictable and recurring. These funds flow automatically to departments (e.g. permanent budget). Some fund sources are temporary allocations: • Temporary Academic Staff (TAS) • Contracts & Grants • Gifts • Revenue • Start up

•

Deans & Chairs Retreat – August 2007

The campus manages many of its funds by fiscal year
• The University‟s fiscal year runs from July 1 to June 30
– FY2007 = July 1, 2006 to June 30, 2007

• Campus policy generally allows for fund balances to be carried forward at the end of a fiscal year. Control Units, schools or colleges may follow different carry forward procedures. • However, some funds sources do not follow the fiscal year:
– Capital projects often cross fiscal years – Many contracts and grants operate on different funding schedules (i.e. federal grants often run October 1 – September 30)

Funds are allocated to departments through a permanent recurring and temporary budget allocation process
Permanent Budget Temporary Budget

PRT (Position Resource Tracking)

Start of each Fiscal Year

Snapshot from Permbudg

Non-Salary Dollars

ONLY predictable sources (state funds, endowments, etc.)

Money from temporary only sources (grants, gifts, etc.)

Deans & Chairs Retreat – August 2007

Agenda
1. Campus Revenue / Sources of Funds
2. Expenditures / Use of funds 3. System & Analytic Tools

4. Governance
5. Regulatory Compliance

Deans & Chairs Retreat – August 2007

Campus systems are designed to help you manage and analyze the use of your funds
• • The Chart of Accounts consistently classifies financial transactions to support report generation. Financial reports, both standard and customized, • • • Show how funds were allocated and spent, Are used to analyze programs and projects, Support informed decision-making.

Deans & Chairs Retreat – August 2007

The Chart of Accounts is a classification system that categorizes how we spend our money in several ways
• Helps us get information out of the relational database • Helps us answer lots of questions: – Which department “owns” these resources or these expenses? – Where did the money come from to pay for this activity? – How much did we spend on travel this year?

Deans & Chairs Retreat – August 2007

Each financial transaction is coded using the Chart of Accounts
• • • • Every field in the chart of accounts serves a purpose Some matter to everyone – departments and central campus alike Some matter only to UC Office of the President But they all matter….

Deans & Chairs Retreat– August 2007

This is what a Chart of Accounts string looks like
BU Account Fund Org Program Project* Flexfield*

1-56411-19900-12307- 40- (blank)-IBBIO
HIGH level org: only three possible values Source of funds: 19900 = General Funds (from state) Type of expense: copying charges Broad activity categories; 40 = Instruction Track other data important to the dept

What dept? What unit within that dept?

Track other data important to campus or the dept.

*Optional fields, generally used at department’s discretion.

Deans & Chairs Retreat – August 2007

Data is displayed using several categories of financial activity

Tempbudg (or Budget): How much do we have to spend?

Actuals: How much have we spent (or earned)?

Encumbrance: How much have we officially committed to spend?

Pre-encumb: How much have we unofficially committed?

Balance: How much do we have left?

Deans & Chairs Retreat – August 2007

Account tells you the type of revenue or expense
• For example, expense accounts include: – Academic Salaries – Staff Salaries – Employee Benefits – Computer Equipment – Domestic Travel – Publications & Media….

Deans & Chairs Retreat – August 2007

Fund identifies the source of the money and the specific terms and conditions
Fund identifies • A discrete pool of money • The source and use of funds
– Where did the money come from? – What restrictions, if any, on how it can be spent?

• Where did the money come from?
– – – – General funds from the state Gifts from donors Revenue from sales of goods or services Grant from agency (i.e. National Institutes of Health)

Deans & Chairs Retreat – August 2007

Fund examples 19900 – General Funds (from the state) 55936 – Gifts to the Botanical Garden 60340 – Revenues to the Botanical Garden 34534 – Endowment to support the California Area of the Botanical Garden • 57344 – Howard Hughes Medical Institute grant for “Math in the Garden” curriculum development • • • •

Deans & Chairs Retreat – August 2007

Organization Code (Org) identifies the unit responsible for resource or transaction
• Lowest level at which we budget • Reflects the organization of resource management • Reflects meaningful, permanent activities of the unit (org structure is stable)

Financial transactions are aligned with the organizational structure of the University
Chancellor

Upper levels used for analysis and reporting

Vice Chancellor for Research

Vice Chancellor for Administration

Exec VC/Provost

College of Letters and Sciences

College of Engineering

School of Public Health

Integrative Biology

Physics

History

12300 - Research

12307 – Instr. Support

12333 – Bio Scholars

Use Detail Level for Individual Transactions

Deans & Chairs Retreat – August 2007

Agenda
1. Campus Revenue / Sources of Funds
2. Expenditures / Use of funds 3. Systems & Analytic Tools

4. Governance
5. Regulatory Compliance

Financial information comes from a set of interconnected applications
Human Resources Management System (HRMS)

Berkeley Financial System (BFS)

Accounts Payable/ Purchasing (AP/PO) Payroll/Personnel System (PPS) Berkeley Administrative Initiatives Reporting System (BAIRS)

General Ledger (GL) Berkeley Integrated Budget & Staffing System (BIBS)

Recharge Systems

Cash Deposit System (CDS)

Campus Accounts Receivable System (CARS)

Department Student Awards System (DSAS)

Deans & Chairs Retreat – August 2007

Many different financial reports can be derived from the data in BFS to help manage department finances and support decision-making
The system that generates financial reports is known as BAIRS. It provides: •Canned (pre-formatted) reports •Customized ad hoc reports

Deans & Chairs Retreat – August 2007

Canned report—Monthly Expense

Deans & Chairs Retreat – August 2007

Canned report—Monthly Expense

Deans & Chairs Retreat – August 2007

Customized report – Haas Monthly Dean’s Report

Provided by Alice J. Kubler and Monica Porter, Haas School of Business

Deans & Chairs Retreat – August 2007

Information in financial reports should be relevant to the decision that needs to be made
•Does the information make a difference to you as the decision maker for the situation?

•Does it relate to what you need to decide?

Deans & Chairs Retreat – August 2007

Early identification of the financial information you need to make decisions is essential
Steps in developing a financial forecast: 1. Identify the requirements for your situation 2. Obtain all the facts, determine assumptions within facts 3. Identify missing information, relevance, problems; assess materiality 4. Identify financial patterns (trends, averages, forecasts) 5. Determine if additional research is needed; identify significant macro issues or events; identify assumptions needed for missing information 6. Build the forecast 7. Test forecast for sensitivity, review for reasonableness and ability to monitor 8. Assess effectiveness of plan in meeting the objectives (pros/cons) 9. Consider alternative solutions

Deans & Chairs Retreat – August 2007

Agenda
1. Campus Revenue / Sources of Funds
2. Expenditures / Use of funds 3. System & Analytic Tools

4. Governance
5. Regulatory Compliance

Deans & Chairs Retreat – August 2007

We are in an era of major business scandals and meltdowns
•Irregular accounting practices •Ineffective or non-existent oversight

The news media is looking for any sign of impropriety

Deans & Chairs Retreat – August 2007

Recent UC news continues to adversely effect the University

•Executive compensation (UCOP)

•Body parts (UCLA)
•Liver transplant program (UCI)

Deans & Chairs Retreat – August 2007

We also have problems closer to home at UCB
• Non-compliance with federal regulations
• Lack of oversight of deficit spending and inadequate review of operations • Due diligence issues in separation of employment • Fraud • Unsecured equipment and data (laptop)

Deans & Chairs Retreat – August 2007

Deans and Chairs are instrumental in the controls process to mitigate risk

Information
Perform

Risk Assessment Promote Culture of Accountability, Responsibility and Ethics
Monitor

Training

Training

Performance

Control Activities

Implement

Communication

Deans & Chairs Retreat – August 2007

Main focus for Chairs & Deans in establishing a strong control environment is to:
•Nurture a control environment where all employees are expected to be responsible, accountable, and ethical when conducting University business.

•Lead by example
•Identify and address risks

Deans & Chairs Retreat – August 2007

What is Risk?
Risk is the threat that an event or action will adversely affect an organization‟s ability to achieve its objectives and/or execute its strategies successfully. • Strategic risks -- doing the wrong things.
• Operating risks -- doing the right things the wrong way. • Financial risks -- losing financial resources or incurring unacceptable liabilities. • Informational risks -- inaccurate or non-relevant information, unreliable systems, and inaccurate or misleading reports. • Physical risks – loss of computer data, fire, earthquake, degradation of the environment, injury to people and/or things.

Deans & Chairs Retreat – August 2007

Risks have both quantitative and qualitative factors
We should consider quantitative factors:
•Cash dollar loss (loss of future grants) •Cost of property, equipment, or inventory •Cost of defending a lawsuit

We should also consider qualitative risk factors
•Increased legislation •Loss of public trust

•Injury to the unit‟s and/or UC Berkeley‟s reputation

Deans & Chairs Retreat – August 2007

How can you deal with risk?
•Ignore the risk,
•Accept the risk, •Transfer the risk (insurance), or

•Mitigate the risk.

Deans & Chairs Retreat – August 2007

Risks can be mitigated by proper internal controls
Internal Control is any process, created and implemented by people (administration, faculty and staff) at the University of California, Berkeley designed to give reasonable assurance regarding the achievement of objectives in the following three categories: •Effective and efficient operations; •Reliable financial information; and,

•Compliance with laws and regulations.

Deans & Chairs Retreat – August 2007

Separation of Duties an example of an internal control
Objective: to ensure that duties (roles) are assigned to individuals in a manner so that no one individual can control a process from start to finish. Funds can not leave the campus without two different people participating.

Separation of duties: • Reduces the possibility of errors. • Reduces the „opportunity‟ factor that could lead to fraud.

Deans & Chairs Retreat – August 2007

What can jeopardize internal controls?
•Inadequate separation of duties •Inappropriate access to assets

•Inadequate knowledge of UC Berkeley policies
•Control override •Inherent limitations

Deans & Chairs Retreat – August 2007

Controls can also be jeopardized if actions are not approved correctly
Policies specify what can or cannot be delegated What authority can Deans and Chairs delegate?

•Chairs & Deans cannot delegate greater decisionmaking authority than they have been delegated •Chairs & Deans who delegate decision-making authority must do so in writing

Deans & Chairs Retreat – August 2007

Deans and Chairs do not have authority to sign contracts
• Departments do NOT have contracting authority • Certain units have been delegated authority by the Regents or the Chancellor (e.g. Business Contracts Office, Sponsored Projects Office, Central Procurement, Cal Performances) • Matrix to determine which campus unit to contact:
– http://carmo.berkeley.edu/controls/ContractingDelegationsAuthority. pdf

Deans & Chairs Retreat – August 2007

Deans and Chairs have oversight responsibility for data integrity and integration, and equipment security
• Responsibilities include:
• • • identifying computing devices containing “restricted data,” establishing and maintaining adequate data control systems, ensuring financial and personnel transactions are recorded accurately and in a timely manner, ensuring that departmentally developed information systems are secure, reliable, responsive, and accessible, security and protection of electronic information resources.

•
•

• •

Security of sensitive data - http://security.berkeley.edu/ Equipment controls http://businessservices.berkeley.edu/HtmFiles/EquipMgt.htm

Deans & Chairs Retreat – August 2007

Agenda
1. Campus Revenue / Sources of Funds
2. Expenditures / Use of funds 3. System & Analytic Tools

4. Governance
5. Regulatory Compliance

Federal and State Laws, Regulations and Statutes

Policy Hierarchy University of California, Berkeley

Regents of the University of California Bylaws Standing Orders Policies

Office of the President
Presidential Policies Delegations of Authority

Personnel Policies for UC Staff

UC Business & Finance Bulletins

UC Accounting Manual

UC Academic Personnel Manual

UC Academic Senate Manual

Chancellor UC Berkeley

Personnel Procedures for UC Berkeley Staff

UC Berkeley Administrative Policies and Procedures Delegations of Authority

UC Berkeley Academic Personnel Procedures Manual

UC Berkeley Division Academic Senate Manual

Other Sources of Authority at Office of the President UC Contract & Grant Manual UC Policies Applying to Campus Activities, Organizations, and Students UC Code of Conduct for Trademark Licensees UC Conflict of Interest Code UC Sales and Use Tax Manual UC Records Management Disposition Schedules UC Environmental Protection Services UC Development Policy and Administration Manual UC Policies on Technology Transfer UC Facilities Management and Construction Manual Universitywide Review Processes for Academic Programs, Academic Units, and Research Units

Deans & Chairs Retreat – August 2007

Tighter reporting requirements were established beginning July 1, 2006 for universities by the Statement of Auditing Standards 112 (SAS 112)
•Lower threshold for reporting internal control deficiencies to the Chancellor, Regents, and the public

•Control Deficiencies
•Significant Deficiencies •Material Weakness

Deans & Chairs Retreat – August 2007

Assume you will be audited
•Internal Audit •Federal Auditors •State Auditors •PricewaterhouseCoopers •External audit of gifts and private grants

Deans & Chairs Retreat – August 2007

Recap - Deans & Chairs have responsibility for the financial management of their organization
Requirements: 1) Efficiently manage campus resources

2) Effectively mitigate risks to attain program objectives
3) Maintain a sound financial condition within the limits of your resources 4) Comply with applicable policies, laws and regulations.

Deans & Chairs Retreat – August 2007

Appendix
1. Important Resources
2. Financial Systems 3. Org chart – Administration

4. Org chart – Controller‟s Office
5. Financial Organization – additional units 6. Useful on-line courses

Appendix - Deans & Chairs Retreat – August 2007

Important Resources
•Campuswide Policies and Procedures Web Site
http://campuspol.chance.berkeley.edu/ •Bear Alerts – email subscription service for policy change notification

•Campus Administrative (Deans and Directors) Memos
https://mossberg.berkeley.edu/calmessages/

•Delegations of Authority Web Site
http://delegations.berkeley.edu/

•Administrative Responsibilities Guide
http://controller.berkeley.edu/ResponsibilitiesGuide/

•SAS 112
http://controller.berkeley.edu/SAS112/index.htm

Appendix - Deans & Chairs Retreat – August 2007

Financial Systems
• BFS = Berkeley Financial System includes: – AP/PO = Accounts Payable/Purchasing module – GL = General Ledger module – BIBS = Berkeley Integrated Budget and Staffing module (aka Budget module) • BAIRS = Berkeley Administrative Initiatives Reporting System – Includes Human Resources data as well as BFS – BAIRS is accessed through the Berkeley Reporting Portal

Appendix - Deans & Chairs Retreat – August 2007

Financial Systems
• Other systems you might encounter – HRMS = Human Resource Management System
• Hiring, changes of appointments/chartstrings, terminations, leaves of absence, etc.

– PPS = Payroll/Personnel System
• Paychecks, hours for UC Retirement System, taxes, benefit charges, vacation/sick leave usage

– CDS = Cash Deposit System
• Cash, checks, credit card payments received

– CARS = Campus Accounts Receivable System
• Receivable billing; generally student‟s accounts

Appendix - Deans & Chairs Retreat – August 2007

Financial Systems
• Other systems you might encounter – DSAS = Department Student Award System
• Department payments of financial aid to students

– Travel & Entertainment System – Recharge systems
• e.g. telephone bills handled by Communications and Network Services

– CADS = Campus Alumni and Development System
• Donor and gift information

Administration Organization

Chancellor ROBERT J. BIRGENEAU

Executive Vice Chancellor & Provost GEORGE W. BRESLAUER

Vice Chancellor Administration NATHAN BROSTROM

Assistant Vice Chancellor Administration EMILY SEXTON Director Administration Financial Planning & Budget MICHAEL GLOGOWSKY

Executive Director Business & Technology Solutions TESSA MICHAELS Special Advisor to the Vice Chancellor KHIRA GRISCAVAGE

Associate Vice Chancellor Budget & Resource Planning PAUL JENNY Campus Budget Office Financial & Management Analysis Planning & Analysis

Associate Vice Chancellor Business & Administrative Services RON COLEY ASUC Auxiliary Business Services

Associate Vice Chancellor Finance & Controller JOHN ELLIS Controls, Accountability & Risk Management Extramural Funds Accounting

Associate Vice Chancellor Health & Human Services STEVE LUSTIG Center for Workforce Development Disability Management Services

Executive Director Intercollegiate Athletics SANDY BARBOUR External Relations Facilities

Associate Vice Chancellor Public Safety and Chief of Police VICTORIA HARRISON Office of Emergency Preparedness UC Police Department

Parking & Transportation Recreational Sports Space Management & Capital Programs Financial Accounting & Operations Environment, Health & Safety

Intercollegiate Competition Student Services Faculty/Staff Support Programs Youth/Community Outreach Health Services Human Resources Staff Ombuds Office

Updated: May 2007

Appendix - Deans & Chairs Retreat – August 2007

Controller’s Office Organization
BFS Systems Analysis Susan Connolly Jane Valentine

Administration Nathan Brostrom Vice Chancellor

Controller’s Office John Ellis Associate Vice ChancellorFinance and Controller Administrative Support

Financial Accounting & Operations John Ellis Interim Assistant Controller

Controls, Accountability & Risk Management Barbara V. Smith

Extramural Funds Accounting Cynthia Kane

General Accounting Lisa Vanderfin

Controls & Accountability Sharon Kurek

Contract and Grant Teams Team Leads TBD

Payroll Pamela Heintzleman

Policy Access & Coordination Andy Goldblatt

Gift & Endowment Team Team Lead TBD

Strategy & Organizational Development Jon Bain-Chekal Nora Watanabe

Billing and Payment Services Joyce Sturm (interim)

Conflict of Interest Barbara V. Smith

Post Award Compliance Rose Katsus

Administrative Services Joyce Sturm

Disbursements Dwight Hendrix (interim)

Risk Management Barbara V. Smith

Travel & Entertainment Tina Chan

Appendix - Deans & Chairs Retreat – August 2007

Financial Organization
• Additional units (not reporting to the Controller) – Campus Budget Office – Procurement and Business Contracts – University Relations (fundraising/donor relations) – Sponsored Projects Office (grant proposals) – Office of Intellectual Property and Industry Research Alliances
• Technology licensing and research collaborations with industry

Appendix - Deans & Chairs Retreat – August 2007

Useful on-line courses
• An Introduction to Finance at UC Berkeley – Part 1 • An Introduction to Finance at UC Berkeley – Part 2

On line access at http://dtsetrain.berkeley.edu/login/
Have your CalNet ID and passphrase available


				
DOCUMENT INFO