Reviewing and Verifying Revenue, Expenses, and Other Financial Reports

Revenue and expenses, including payroll and other financial transactions, should be verified for accuracy and completeness. Various methods may be employed to determine the accuracy of financial information.

Review of Data

A review of revenue and expenses should begin at a high level. In MyU Reporting Center, the Account Budget Status Report run at an RRC or ZDeptID level can be used to start a review of unit revenue and expense activity. As this report is being reviewed, the reviewer can drill down to specific DeptIDs to determine where variances exist to identify unusual activity that needs to be investigated. The Chartfield String Budget Status for Non-Sponsored Funds Report can be used for reviewing activity at the detailed department chartfield (program, ChartField 1, ChartField 2, etc.) if that level of review is required. High level comparisons to a similar time period of the prior year may also help assist with a review.

The Transaction Detail Report can be used to identify specific transactions recorded on a chartfield, to identify errors or unusual activity.

Note: A review of financial data does not require verifying every transaction that occurred for each period. A reviewer’s focus should be on unanticipated revenue or expense activity. One of the purposes for the review is to determine if general ledger adjustments may be required in order to properly reflect revenues and expenses of the unit.

Since salary and fringe expenses are typically the largest expense for a unit, payroll activity must be reviewed for accuracy. The HRMS Payroll Verification Report, which must be reviewed and approved each pay period by units in accordance with Administrative Policy: Processing, Documenting, and Approving Financial and Accounting Transactions, is an excellent source to verify that salary expenses on the general ledger for the unit are correct. Financial reports in MyU Reporting Center that are useful in locating variances include the following:

• Payroll Detail Report provides salary and fringe expense by employee. A comparison of this general ledger report with the Payroll Verification Report is a quick way to reconcile salary and fringe expenses.
• Salary Cost Transfers Report can be used to help identify reconciling differences.

When performing a review, look for:

1. Unusual fluctuations in balances or activity levels for the period.
2. Activity for reasonableness.
3. ChartField strings for expected balances.
4. ChartField strings with static (no) activity.
5. Balances in clearing accounts with a "normal" zero balance.
6. Deficit spending.

Comparison of Data

Look for unusual activity or balances by comparing actual data for different periods to source data. For example, a comparison of the Account Budget Status for Non-Sponsored Funds Report for the second quarter of the current and prior fiscal years could indicate variances that may be caused by timing differences, errors, etc. Performing a comparison can include:

1. Comparing beginning balances for current period to ending balances from prior period.
2. Comparing budgeted revenue and expenses with actual activity for the period.
3. Comparing current period activity with prior period activity.
4. Comparing current year activity and balances with same-period last year.

Analysis

Types of analysis that may be useful in the review would include:

• Compute variances.
• Prepare a roll-forward.
• Perform trend analysis.
• Track and compare key ratios and statistical data.
• Investigate unusual and significant variances to budget or prior periods.

Substantiation of Data

Types of substantiation that may be useful in the review would include:

• Performing computations (e.g., amortization of a value).
• Validating calculations.
• Footing (recalculating the summation of numbers) columns and cross footing rows of numbers.
• Comparing activity and balances in general ledger to source documents when differences or unexpected results are noted.

Distribution of Data

Distribute appropriate financial information internally to respective units for review.

MyU Reporting Center

Reports in MyU Reporting Center that may be helpful in reviewing various financial transactions including revenues, expenses and payroll are listed below:

High Level Summary Reports:

• Account Budget Status for Current Non-Sponsored Funds
• Actual Account Summary by Accounting Period for Current Funds

Transaction Detail Reports:

• Transaction Detail
• Payroll Detail
• Position Budget vs. Actual
• Accounts Receivable Status by Chart String
• Budget Status by Budget Account for Non-Sponsored Funds

Additional financial reports are available depending upon the specific need of the reconciler. Financial reports can be found at:

myu.umn.edu > Key Links > Reporting Center > Finance