University faculty and staff initiating, preparing, or approving financial and accounting transactions (transactions) must ensure compliance with the justification and documentation standards established by this policy. Units must ensure that transactions are entered accurately and timely in the enterprise financial system (EFS) or interfaced systems by employees who have satisfied the University's prescribed training and assessment requirements and have access to initiate and/or approve transactions in EFS or interfaced systems. This policy governs the processing, documenting, and approval of University accounting transactions that impact balances and amounts that reside in EFS.
Processing Accounting and Financial Transactions
Units must ensure that transactions:
- are processed in the appropriate EFS module, including general ledger
- align revenues and expenses with the associated chartfield strings that is in alignment with the documentation
- reflect the nature or function of what is being recorded
- accurately record assets, liabilities, and fund balances at the end of an accounting period
- are entered in accordance with applicable federal, state, grantor, donor or University restrictions
- are recorded accurately in the proper reporting period
Transactions that originate in a module other than the General Ledger have specific policies and procedures related to the module (see appendix).
Documentation and Justification of Transactions
Transaction initiators, preparers, and approvers must ensure that transaction documentation is complete and transparent. Source documentation must be available in EFS or Perceptive Content and accessible to all transaction approvers. Transaction documentation must support the following:
- WHO initiated and authorized the transaction and who are the affected individuals or units?
- WHAT is the transaction for?
- WHERE did/will the activity take place (if applicable)?
- WHEN did/will the activity take place (if applicable)?
- WHY the transaction is necessary and how it relates to or benefits the chartfield string affected or charged?
- HOW MUCH is the transaction?
Units need not repeat information in the justification that is already included in supporting documentation. The transaction justification provides clarity about the allowability, allocability, reasonableness, and connection to University mission not already apparent within the transaction or supporting documentation.
Units must record transactions accurately, in a timely manner, and completely in accordance with University policy and procedures, as well as with alignment with applicable external agency rules. Accurate recording includes complete and transparent documentation of transactions, as well as the correct use of chart of account codes (fund, deptid, program, project, and account).
Documentation of transactions is inclusive of supporting source documents and narrative justification maintained in EFS or the University’s document retention system (Perceptive Content).
Approvers ensure transactions are appropriate in nature and adhere to University policies and procedures.
Every approver must ensure they understand the approval capacity in which they are acting when approving accounting and other financial transactions in EFS or interfaced systems. Units should ensure alternate approvers are different than the primary approver.
Approval processes utilized by campuses, colleges, and vice presidential units must be consistent with certified approval requirements on sponsored projects, all requirements for central approvals on certain transactions, and any other special requirements.
Chief Financial Managers (CFMs)
Financial transaction approval authorities and processes within units are designed and performed so that they are consistent, cost-effective, and adhere to the following guiding principles:
- Knowledge and authority: Authorized approvers must be those persons who have an understanding of the transaction to ensure its accuracy and consistency with University policy, and who have the authority to approve or deny the transaction.
- Segregation of duties: Approval processes must be designed to ensure that a person cannot approve transactions for which they also perform the following functions:
- commit to or authorize payment for payroll, purchases, travel/expense reimbursements, or cash disbursements;
- receive or distribute goods, checks, or cash; or
- record transactions in EFS.
Employees cannot approve their own travel and expense reimbursements or purchases they initiate. Employee travel and business expense reimbursements and purchases of goods or services that could be perceived as personally benefiting an employee must be approved by a person one level senior to the employee requesting reimbursement or initiating the purchase. One-up approval authority can be delegated to an individual other than the initiator; however, accountability cannot be delegated. Both the delegate and the original approver are accountable for the accuracy and validity of any approvals completed.
Module or System Interfaces
Transactions processed through interfaces are exempt from the approval routing specified in the procedures due to existing rules and logic within EFS.
Source documentation that includes protected information, such as protected health information (PHI) or student education records protected by Family Educational Rights and Privacy Act (FERPA) should be eliminated from files prior to uploading to EFS. Units are responsible for determining the appropriate storage of such information.
Exception requests for cost transfers onto sponsored or cost share chartfield strings occurring more than 90 days after the original transaction can be requested and require the completion of the cost transfers exception form, with appropriate justification and approvals.
Reason for Policy
Complete, accurate, and timely transactions with proper documentation and approval is paramount to the integrity of the University’s financial reporting and aides in ensuring stewardship of the University’s resources. University financial transaction documentation must comply with legal, governmental and auditing requirements. Approval of those transactions is a key financial internal control. Providing thorough and complete transaction documentation and ensuring approvals are completed protects and benefits the University in the following ways:
- Creates a framework allowing the University to maintain stewardship over University resources.
- Ensures transactions included in the University’s financial statements are accurately reported in accordance with generally accepted accounting principles and other financial reporting requirements and minimizing inefficiencies due to the correction of errors.
- Provides the framework for a centralized and efficient source for obtaining financial transaction information, while establishing adequate and consistent documentation standards for all financial transactions.
- Ensures funds provided to the University by stakeholders such as taxpayers, students, donors and sponsors are being used in accordance with University Mission, regulatory requirements, grantor and donor intentions.
- Safeguards the University against the risks of fraud, misuse of funds, or unsubstantiated expenses, which could result in expense disallowances, repayment of funding, loss of future funding, penalties or fines.
- Assists compliance with legal and regulatory requirements, as well as compliance with tax regulations that specify requirements for nontaxable reimbursements under an accountable plan versus reimbursements taxable to employees.
- Manages reputational risks and adverse public perception.
- Ensures that the benefit to the institution and compliance with regulatory requirements is clearly documented and can be understood by both internal and external reviewers (e.g., new employees, managers, auditors, IRS, the public).