Audit Services Best Practices

1. Audit Services Best Practices April 20, 2010

2. Overview • Introductions • About Audit Services • Best Practices

3. Introductions QUEEN’S AUDIT SERVICES Audit Manager: Angela Riddell Senior Internal Auditor: Kellie Hart Internal Auditor: Ed Lew http://www.queensu.ca/rmas

4. Audit Services Responsibilities • Assist management and the Board of Trustees in the effective discharge of their fiduciary and governance responsibilities • Report administratively to the VP (Finance & Administration) and functionally to the Chair of the Audit Committee • Accomplish objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of control and governance processes

5. Audit Services Responsibilities • Provide independent, objective assurance and consulting services designed to add value and improve Queen’s University operations • Promote a strong risk management culture to assist the University meeting its objectives

6. Audit Services Responsibilities Risk Management (moved to VP Finance & Administration): • Identify those risks most critical to Queen’s achieving its goals and objectives • Identify what is currently being done to mitigate those risks and if anything further needs to be done to manage risks and to be able to seize opportunities • Iterative process • NOT about avoiding risks

7. Audit Services Responsibilities Efficiency, Effectiveness, Integrity, Compliance: • Proactive involvement in new process or system implementations • Assist in policy development and training • Internal audits based on risk assessments • Audit Services is here to HELP!

8. Audit Services Responsibilities Governance: • Assist Audit Committee by researching best practice governance issues • Report regularly to the Chair of the Audit Committee • Provide summary reports to the Audit Committee on internal audits and other issues

9. Best Practices • GST • Procurement Card • Travel • Amex Card • Expenditures • Account Reconciliation • Summary Financial Reports • Petty Cash • Cash Receipts • Journal Entries • Equipment Lists • Salary Requisitions • Research Expenditures • Ask!

10. GST • Always ensure you record GST on all travel claims, cheque requisitions, procurement card transactions, etc. • Recording the GST will save your department $$$ • Your department is only charged 33% of the GST paid (1.66% rather than 5%) • GST paid on books is not charged to departments –Financial Services will be issuing a communication regarding the process to follow

11. GST & Travel • You need to add up the GST on all travel receipts that are being claimed • The on-line travel expense claim form will automatically calculate the GST on meal allowances (per diems), mileage and taxi claims • If you are calculating GST from a total that includes GST multiply the total by .0476 to determine the GST • HST will be effective July 1, 2010 – training by Financial Services to follow

12. General Expense and Travel Claim Forms

13. Sample Travel Expense Claim Form

14. GST & Procurement Card • When checking your transactions always ensure the GST is recorded correctly, especially on foreign currency purchases, or purchases where it states that GST is included • Change the amount shown to what it is on the invoice or receipt

15. Sample Procurement Card Review

16. Procurement Card • The procurement card is the responsibility of the person whose name is on the card • The procurement card should always be kept in a safe location • The procurement card should not be used for restricted transactions (i.e. travel, entertainment, personal purchases, furniture, alcohol, etc) • Can be used for conference registration (but details should be filed with the travel claim)

17. Procurement Card • Purchases may only be made by the individual to whom the card is issued • Any expenditure less than $2,000, that does not contradict above policy limitations, should be charged to the procurement card • Edit transactions in Access Direct to ensure the GST calculations and Account ID codes are correct and agree to supporting documentation (i.e. receipts, etc.) • PRINT the reconciled cardholder statement and attach all supporting documentation slips

18. Procurement Card • The reconciled cardholder statement must be signed by the cardholder and approved by the cardholder’s supervisor • The approved cardholder statement, along with supporting receipts, must be maintained in the department for 7 years (or longer if CFI-related research expenditures) and is subject to audit at any time

19. Sample Procurement Card Review

20. Sample P-Card Change Request Form

21. Travel • Utilize most economical means of travel • Obtain travel advance if needed • Include details on the business purpose of the trip • Include conference itinerary • If meals are not provided, please note

22. Travel • Any expenditure greater than $10 must be supported by receipts • No receipts for per diem meal allowances • Include original boarding passes • Credit card slips are not sufficient • Missing receipt form • One over one approval

23. Sample Travel Expense Claim Form

24. Sample Travel Expense Claim Form

25. Sample Travel Expense Claim Form

26. Travel Continued • If meals include entertainment expenses, note names and organizations of those entertained • Submit claims within 15 days of travel- especially important if there has been a travel advance • Cheque requisition payments to travel agencies require one over one approval

27. Amex Card • Employees who incur business expenses on behalf of the University may apply for an Amex card • Personal expenses are not to be charged to the Amex card, only Queen’s University business expenses • The monthly balance is paid directly by the cardholder and not charged directly to a University account • There is no annual membership fee for the card

28. Expenditures • Appropriate and cost effective • Employee reimbursements – one over one approval • Purchase orders for items greater than $2,000 • Cheque requisitions greater than $10,000 must be approved by the Dept. Head/Dean/VP

29. Expenditures • Competitive bids for items greater than $10,000 • Public posting for items greater than $100,000 • Entertainment type expenses (staff functions, gifts etc.) – one over one approval • Cheque requisition form • Ensure coded to the correct Account ID

30. Sample ChequeRequisition Form

31. Sample ChequeRequisition Form

32. Sample ChequeRequisition Form

33. Expenditures Questions to Ask: 1. How well do I know this vendor or contractor? Do I have first hand knowledge that they even exist? 2. Do I know that they actually provided the goods or services identified in the invoice or other billing statement? 3. Do I know that they are using the correct amounts for price (including unit prices used), sales tax, freight, and other variables that make up the amount invoiced?

34. Expenditures Questions to Ask: 4. On what basis do I know that the prices are reasonable in the first place? What standard have I used in determining that the price charged is fair? 5. How do I know that the quantities make sense? On what basis have we agreed to purchase the stated quantities? 6. How do I know that the invoice and other documents are mathematically correct? 7. Do I know that this invoice has not already been paid?

35. Account Reconciliation • Print monthly Statement of Operations report from PeopleSoft • Agree all transactions to supporting documentation • Ensure coded to appropriate Fund, Department, Account ID, Program, Class etc. • Show evidence of reconciliation

36. Summary Financial Reports • Monthly Statement of Operations Summary report • Department heads may only require summary information • Try to avoid using alternate tools

37. Petty Cash • Only maintain if necessary • Secure location and one person responsible • Never use for wages or IOU’s • Keep a petty cash log and chits for all purchases/uses

38. Petty Cash • Replenish by cheque requisition (never with miscellaneous cash receipts) and record to correct expense account code • Balance receipts and remaining cash to petty cash balance • Normally a maximum of $200

39. Cash Receipts • Try to minimize cash handling • Segregate duties  person receiving cash is not responsible for reconciling • Keep cash in a secure location with limited access • Deposit on a timely basis to Financial Services • Financial Services prefers deposits be made by 1:30pm each day

40. Cash Receipts • Use a bonded courier service for significant deposits • Donations should be sent to Advancement • Record as revenue or recoveries • Never open an external bank account

41. Journal Entries • Journal entries should contain documentation indicating the reason for the entry • Backup must contain sufficient information to enable an auditor to identify the specific charges in the original account

42. Journal Entries • System users are responsible for maintaining the necessary supporting documentation for those entries • Every attempt should be made to ensure account coding is accurate initially and not rely on recoding of information at a later date • To request access to create journals, complete the PeopleSoft Finance Security Access Request form on the Financial Services website at http://www.queensu.ca/financialservices/forms.html

43. Equipment List • Departments are responsible for knowing where all equipment purchases are located • Equipment is the property of Queen’s University • Keep an updated list of all equipment • Date purchased • Description • Serial number • Location (building and room number) • If equipment is located off-site, complete an “Acknowledgement of Off-site Equipment Form”- signed by Department Head

44. Salary Requisitions • Casual salary pay – controlled at the department level • Keep approved time sheets – can be a simple summary of days and hours • Keep a record of how the hourly rate was determined – consult HR • If the employee is a friend or relative of someone in the department, ensure approval is at a higher level

45. Research Expenditures • Queen’s policies and procedures apply to research accounts • Familiarize yourself with the granting agency guidelines, which are often complex and contain specific terms • If the granting agency’s guidelines are more restrictive than Queen’s policies, then the granting agency’s guidelines must be followed

46. Research Expenditures • There are regular Tri-Council and Canada Foundation for Innovation (CFI) workshops for principal investigators and departmental administrators • Each granting agency has specific rules – ask Financial Services in advance of any questionable purchase • All financial reporting to granting agencies should be reviewed by a Financial Services representative

47. Research Expenditures • Tri-Council grants (NSERC, SSHRC, CIHR) have specific salary maximum and minimum rules • Tri-Council grants do not allow additional health insurance during travel, gratuities or alcohol expenses to be claimed • CFI grants have very specific budget proposals to be followed (identified by individual line items) • Follow Queen’s Purchasing Policy on all purchases

48. Research Expenditures • Ensure PeopleSoft reflects research grant or contract budget • Review any overhead received and ensure proper amounts credited to accounts • If a U.S. dollar award, ensure current exchange rates and future projections are realistic and are reflected in expenditure planning

49. Ask! We are all busy, but please take the time to ASK questions and get training.

50. Ask! • No question is inconsequential – there are numerous resources available, including: • Finance training – Terena Grice X74157 • Human Resources X32070 • Research Services X36081 • eQUIP X32757 • Audit Services – Angela Riddell X74701 • Audit Services – Kellie Hart X79072