1 Brown Bag Luncheon: ARMICS Stage 2 Update Presented By: Susan Petersen January 9, 2008

2 Presenter Introduction  Employed at UVA since January  Current Role: Manager of Planning & Accountability within Financial Administration.  Responsible for managing strategic initiatives and compliance requirements.  Background focused around standardizing processes and creating useful documentation.

3 What is ARMICS? Agency Risk Management and Internal Control Standards (ARMICS) is an initiative of the Department of Accounts (DOA) for all state agencies within the Commonwealth of Virginia. The purpose of ARMICS is to implement internal control standards and “best-practices” that directly support the Commonwealth’s vision and long-term objectives.

4 What is ARMICS? ARMICS defines an effective system of internal control as:  providing accountability for meeting program objectives;  promoting operational efficiency;  improving the reliability of financial statements;  strengthening compliance with laws and regulations;  reducing the risk of financial or other asset losses due to fraud, waste, or abuse.

5 The Stages of ARMICS Certification  Stage 1: Agency-Level Assessments –Answers the question: At the University level, how well are we implementing internal controls? –This certification was due in September –Leonard Sandridge signed the certification sent to DOA for all agencies within the University.

6 The Stages of ARMICS Certification Stage 2: Transaction-Level Assessments –Answers the question: At the process owner level, how well are we implementing internal controls? –This certification due date was just extended from the original date of March. –The new due date is June 2008.

7 The Stages of ARMICS Certification Stage 3: Corrective Action Plan –Answers the question: How do we plan to improve our internal controls in the areas where they are currently not sufficient? –This certification due date is listed as June 2008.

8 Documentation Required for Stage 2  Completion of 85 DOA Assessments based on topics within the CAPP (Commonwealth Accounting Policies and Procedures) manual.  Mapped process flow charts and completed Assessments for all identified Significant Fiscal Processes (SFP’s).

9 Definition: Significant Fiscal Process A fiscal process may be significant if it is associated with programs or activities that: -consume a proportionally large share of agency resources; -have a high-degree of public visibility; -represent areas of concern and high risk to mission- critical business processes for agency managers and stakeholders, or; -have a significant affect on general ledger account balances.

10 Example: Stage 2 Assessment

11 Where are we?  Group ARMICS Coordinator meetings on a regular basis  Individual Coordinator meetings as needed  Stage 2 Assessments and SFP’s are moving through the review process

12 Map of the Review Process

13 How are Other Schools Doing?  Monthly Conference Calls with the FOCUS schools  Most, if not all, have identified their list of SFP’s  Some other schools have begun the testing phase  They do not appear to have as many levels of review as we have built into our process

14 How does ARMICS apply to you?  The ICQ will be coming out, which is one of the tools that we utilize to make sure that departments are in compliance with the internal controls set by the institution.  There will be some changes in this ICQ, but more will most likely develop as we determine where we need additional information to satisfy the ARMICS compliance requirements.

15 How does ARMICS apply to you?  The key to ARMICS compliance is proper documentation and standardization of processes to limit risk to the institution.  The testing phase of our Stage 2 documentation may possibly include field testing to ensure that we are, in fact, doing what we say we’re doing.

16 How is the mitigation of risk intertwined with ARMICS?  Internal controls help mitigate the risk involved with many of the financial processes where the University could incur damage due to fraud, theft, or from simple misstatement/human error.  Using internal controls to limit the risk of not achieving the University’s mission.

17 Moving Forward, we will…  Continue to work toward completing the requirements for the Stage 2 due date of June 30.  Develop a formalized process for the recertification of ARMICS, which will most likely become an annual requirement.  Continue quarterly group Coordinator meetings to ensure continual refinement of the ARMICS objectives into the business decisions made by process owners.

18 Questions? Comments?

19 References  DOA Website: –Link to ARMICS Standards –Link to CAPP Manual  Financial Administration: –Link to Policies and Procedures –Link to ARMICS public website