Massachusetts Institute of Technology. Financial Review and Control (FRC) Overview

Transcription

1 Massachusetts Institute of Technology (FRC) Overview

2 Basic Vocabulary and Tools FRC uses MIT resources and acronyms: It is important to understand the shorthand (MIT-Speak) to navigate through FRC procedures Learning to use MIT terms and resources helps with many administrative tasks and with seeking help as needed

3 Vocabulary The following terms are used in FRC: Cost Object Document Type Backup Risk Sub ledger Purchase Order Salary distribution Document retention

4 Vocabulary The following terms are used in FRC: Cost Object an account number in SAP that enables collection of costs and revenues. The three types of cost object are: Cost Center used for MIT operating activities Internal Orders used for project-level breakdown of MIT operating activities WBS Elements used for sponsored research project activities Document Type the line-item-level definition of a cost or revenue (such as contract services, travel expenses, and MITemps) Backup original documentary proof of a transaction Risk the possibility that funds could be used incorrectly Sub ledger collection of like cost activities (such as payroll or accounts payable) Purchase Order authorization to spend money under specific terms Salary distribution allocation of payroll costs to cost objects Document retention practice of keeping original back-up under specified terms

5 Acronyms The following acronyms are common in the FRC process: PI Principal Investigator DLCs Departments, Labs & Centers OSP Office of Sponsored Programs VPF MIT central finance/accounting operation IS&T Information systems support for MIT DTR Detail Transaction Report DACCA/eDACCA Report that details salary and wage distribution ESDS electronic tool that enables adjustment of salary and wage distribution

6 Tools/Resources The following resources can help with questions raised through the FRC process: VPF Website For information about accounting policies and procedures go to: OSP Website For information about Federal regulations such as cost allocation go to: IS&T Website For software and other technical support go to:

7 Description FRC is a way to monitor expenses that: Liberalizes the rules for matching paper documents to transactions Requires less record retention in Departments, Labs and Centers (DLCs) Maintains excellent control over the expenditure of funds

8 Liberalized Rules for Reviewing Transactions Reviewer does not need to find paper backup for every transaction Reviewer should find paper backup for transactions that cannot be reconciled by a visual check, or 10% per PI, whichever is greater Accounting Services and DLC controls make this approach possible

9 Risk Factors Cost object assignment Dollar amount

10 Consider the Degree of Risk When Reviewing Transactions Lower-risk transactions: Standard PO invoice because the invoice uses the PO cost object Low $ amount transactions Higher-risk transactions: Blanket purchase order invoice because the data entry operator assigns cost object High $ amount transactions

11 Less Record Retention DLCs are not required to maintain duplicates of centrally filed documents or reports such as: invoices and DTR DLCs should retain invoices for goods that are under warranty & certain other documents for convenience

12 Less Record Retention DLCs only need to retain original documents, specifically: DACCAs (current FY + 4 FYs) Timecards (current FY + 1 FYs) Credit Card Receipts (current FY + 4 FYs) Packing Slips (current FY + 4 FYs) Verification of Review (current FY + 4 FYs) } Payroll Docs * } Procurement Docs * Electronically entered timecards and DACCAs that are electronically certified by the primary certifier require no paper back-up

13 Policies for Reviewing Transactions Review ALL transactions visually Check paper backup for all transactions > $2,500 Check paper backup for all blanket order invoices Check paper backup for at least 10% of transactions for each PI Retain copies of documents in a pending folder until transaction has been reviewed

14 What is the Control in Financial Review and Control? Control is a process or procedure that prevents someone from completing an improper transaction DLC s and Accounting Services are all part of the system of internal control How do we make sure controls are working? In FRC if you find an error on your statement you have a very important role. You should: Fix the error Determine where the error occurred, i.e., DLC or Accounting Services, share your findings and, in so doing, help improve our controls

15 SAP is the primary tool for financial reporting at MIT

16 SAPWeb offers easy access to many SAP functions

17 The Summary Statement and DTR are SAP documents Cost Object Reporting Period GL Account Operating Budget Open Commitment Current Spending Year-to-Date Spending