New Administrators Orientation Budget and Business Processes

1. New Administrators OrientationBudget and Business Processes Lori McMahon Associate Provost for Academic Budget and Personnel August 7, 2014

2. Color of Money • Determined when money comes INTO the University. • Cannot be changed by anyone within the University. • Drives many accounting decisions (fund accounting). 2

3. Unrestricted Funds • State General Funds -- The total $ amount is appropriated to the campus, but the campus (Chancellor) decides how/where to further allocate and spend. • Tuition and Fee Revenue • Institutional Trust Funds • Unrestricted gifts • Endowment income (unrestricted endowments) • Contract/Grant residuals • Certain Conference residuals • F&A Funds (Overhead Receipts) • Sales and Services (Recharge Units, Conf. & Event fees) • Student Auxiliary funds • Student Fees 3

4. Restricted Funds • Must be determined by external parties • Institutional Trust Funds: • Grants and contracts (except exchange transactions) • Restricted Gifts • Restricted by donor for the college or department • Can be further restricted as to how one spends the funds (e.g. scholarships) • Income from restricted endowments • Restricted Appropriations 4

5. Discretionary Funds • Can be Restricted or Unrestricted • Restricted Funds: if outside party did not restrict funds to certain account codes (books, scholarships), funds can usually be labeled as discretionary • Still must have a business purpose and follow all the expenditures policies and procedures of the University • Identification of Discretionary Funds • New funds will be marked when created as discretionary (if applicable) • Older funds will be reviewed at department’s request to see if they qualify for discretionary spending 5

6. Other Types of Funds • Endowment funds • Agency funds • Capital funds • Debt Service funds • Annuity and Life Income funds • Loan funds 6

7. Endowment Funds • True Endowment Funds • Only created due to contribution of an outside party • Must be held in perpetuity • Only the income can be spent (interest generated from principle earnings; i.e., spending policy) • Quasi Endowment Funds • Restricted if formed with restricted sources • Unrestricted if formed with unrestricted sources • Function like endowments • Management/Board decision to treat funds as endowment • Generally, only income is spent, but principal can be divested upon management decision • Term Endowment Funds • Treasury Services: Jane Johansen, Director, x75432 7

8. Summary of Fund TypesMain fund types generally used on campus for spending purposes 8

9. Main Colors of Money at UNC Charlotte 9

10. Takeaways • University Funds have different ‘use’ restrictions depending upon the source of funds • Discretionary Funds are a type of fund that have the most flexibility in terms of use (e.g., food/beverages) • Policy 601.8 provides spending restrictions on certain funds • Expenditures can generally be lumped into 3 categories of allowable transactions: • Ordinary business expenditures • Unallowable/nonoperational expenditures • Expenditures that require additional documentation (e.g., via FB&A form) 10

11. Business Processing Financial Services Department Functions 11

12. Roles and Responsibilities Fiduciary Responsibility Manages designated funds Adheres to policies applicable to job duties 12

13. Is this you or someone you know? 13

14. Grace Murray HopperRear Admiral, US Naval Reserve and Research Fellow in Engineering and Applied Physics at Harvard’s Computation Laboratory. B.A Mathematics/Physics from Vassar, 1928;M.A and Ph.D. Mathematics from Yale University 1930/1934. “It’s easier to beg forgiveness than to get permission.” 14

15. Delegation Criteria Dept. Heads who delegate responsibilities to a Fund Manager must: Prior to delegation -- • Consider the circumstances: condition of funds, competence of potential fund managers, and degree of supervision that will be required. • Communicate clearly and completely. • Verify the delegate’s understanding of responsibilities. During delegation -- • Retain fiduciary responsibility for accuracy and compliance and retain management-level decision making. • Retain open communication with delegate. • Regularly monitor and assess each delegate’s performance. 15

16. General Guidelines – Financial Activity • Planning • Evaluate financial consequences of activities • Evaluate anticipated costs and benefits • Transactions • Comply with policies, regulations, grant terms, etc. • Recorded accurately and timely • Training and Competence (Technical, Behavioral) • Corrective Actions • Timely • If frequent, or repeated, assess need for preventive controls, additional training, and/or sanctions 16

17. Fund Management Departments are responsible for managing their funds as follows: • Accurate financial reporting • Prudent spending aligned with University goals and policies • Safeguard assets • Safeguard confidential and sensitive information • Manage finances effectively • Avoid financial penalties or added costs • Avoid fraud 17

18. Accurate Financial Reporting & Analysis Department level financial management and analysis must be completed at least monthly for the following reasons: • Banner output is used as the basis for management decisions. • Accounting must be accurate and timely in order for management to evaluate the status of budgets, funds, cash flow, etc. • Budgeted labor and expenditure balances by fund and account must remain positive to ensure that reporting and certifications are submitted on time to the state and budgeted cash flow is not disrupted. • Cash flow problems may have a negative impact on vendor relationships and create complications that affect multiple departments. • Monthly analysis and validation enable more efficient month-end and year-end close processes since corrections and other entries are made timely. 18

19. Accurate Financial Reporting & Analysis Corrective Actions: If reporting exceptions continue to occur, control procedures must be implemented to correct the situation. Examples of corrective actions include: • Revise plan or budget to reflect changed circumstances, • Change or eliminate activities, • Obtain additional funding, • Modify goals or objectives, • Correct transaction errors, • Alter future budget assumptions, • Implement new control procedures, or • Document managerial decisions that depart from the budget. Document any corrective actions taken. 19

20. Spend Money Wisely All purchases and payments must be: • In compliance with University spending policies, and • Within budgetary constraints A thorough review of all charges should occur in accordance with UNIVERSITY POLICY 601.8, APPROPRIATE USE OF UNIVERSITY FUNDS to ensure that costs are allowable and charged appropriately. (i.e. Food and Beverage Expense Form/attachments) Other documents that should be referenced for applicable requirements include: • University PURCHASING MANUAL (49erMart, Direct Payments, P-Card) • University TRAVEL PROCEDURES MANUAL (Pre-Authorization, Reimbursement) • UNC Charlotte PURCHASING CARD MANUAL • Any documents governing grant and contract terms 20

21. Safeguarding University Assets Cash Handling • All cash, checks, and cash equivalents in excess of $250 are to be deposited by noon of the next day in accordance with the North Carolina Daily Deposit Act (NC G.S. 147-77). Exceptions to this requirement are rare. • If a department receives cash and/or equivalents that cannot be readily identified for a purpose, the department needs to contact General Accounting for direction immediately. These funds are still subject to the Daily Deposit Act. • All petty cash and change funds must be authorized by the Controller’s Office. All cash shortages and excesses must be promptly reported to a supervisor, who must investigate them immediately. See the Petty Cash and Change Fund Procedures 21

22. Safeguarding University Assets Physical Assets • A physical inventory of all equipment must be conducted on an annual basis. All discrepancies must be promptly reported and investigated. See the Fixed Asset Guidebook. • All thefts of University assets, including cash, must be reported to the police. Financial Records • Adjustments to asset records must be documented and approved. • Access to any forms or online resources that can be used to alter financial balances must be restricted to only those employees requiring such access to perform their University duties. 22

23. Safeguarding Sensitive Information When dealing with University financial information, proper safeguards must be in place to ensure the security of confidential and sensitive data, as defined in Policy 311, Data and Information Access and Security. Department heads should assess and address risks to in all areas of their operation. Simple steps include: • Determining what information is being collected and stored, and whether there is a business need to do so and ensuring any sensitive information is stored securely. • Limiting access • Ensuring proper information security awareness and training • Regularly reminding employees of security policies • Knowing how to handle a breach. See Policy 311.5 See SANS Security Awareness training information at: http://itservices.uncc.edu/security/security-awareness 23

24. Avoiding Financial Penalties & Fraud The University has been granted additional financial and administrative authority as a “special responsibility constituent institution” (SRCI) under G.S. 116-30.1. If we were found to be negligent or non-compliant with how we spend funds, we would lose this critical designation. Shared responsibilities to keep this designation: • Maintain appropriate admin staffing, procedures and internal controls • Resolve significant audit findings within 3 months • Support the ability to carry out BOG-defined educational mission with our GF budget (General Fund) • Obtain BOG approval to establish new academic, research, public service or financial aid programs in the GF • Measure impact on student learning and development • Submit monthly GF budget reports to governing agencies 24

25. Contact Information • Academic Affairs Office: • Lori McMahon, Assoc. Provost for Academic Budget/Personnel, 7-5774 • Niki Moseley, Budget Manager, 7-5772 • Controller’s Office: • General Accounting website: http://finance.uncc.edu/controllers-office/general-accounting • Ron Sanders, Assistant Controller, 7-5786 • Laura Williams, Compliance Manager, 7-5002 • Budget Office: • Budget Office website: http://finance.uncc.edu/budget-office • Ken Smith, Assistant Budget Director, 7-5599 25