1 Brown Bag Luncheon: ARMICS Update Presented By: Steve Kimata and Susan Herod July 23, 2008

2 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.

3 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.

4 The Stages of ARMICS Certification FY08 Stage 1: Agency-Level Assessments –Answers the question: At the University level, what internal controls are in place and how well are they functioning? –This certification was due on September 30, –A certification was sent to DOA for all agencies within the University, signed by EVP&COO Sandridge and VP&CFO Reynolds.

5 The Stages of ARMICS Certification FY08 Stage 2: Transaction-Level Assessments –Answers the question: At the process owner level, what internal controls are in place and how well are they functioning? –This stage included the use of risk assessments for our Significant Fiscal Processes. –This certification was due on June 30, –A certification was sent to DOA for all agencies within the University, signed by EVP&COO Sandridge and VP&CFO Reynolds. Sub-certifications were signed by VPs.

6 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.

7 The Stages of ARMICS Certification FY08 Stage 3: Corrective Action Plan –Answers the question: How do we plan to improve our internal controls in the areas where we found weaknesses in Stage 1 or 2? –A draft has been created and reviewed by the Vice President and Chief Financial Officer. –This certification is due on July 31, 2008.

8 Where were our weaknesses?  Reconciliations –Payroll  Salary Expenses  Timesheet Hours –Budget  Budget Amounts –Medical Center  Time and Labor Transactions

9 Where were our weaknesses?  Purchasing Card –Monthly Cardholder Review –Supervisor Review and Signature

10 ARMICS is a yearly event  ARMICS is an annual, ongoing requirement  Recertification efforts are already underway  The next year may include more information from field offices in the way of survey data

11 How does ARMICS apply to you?  We must ensure that all reconciliations are completed timely and with the proper signatures  All purchasing cardholders and their supervisors must ensure that they are providing monthly review of their accounts and receiving supervisory approval for all purchases

12 How does ARMICS apply to you?  Recertification efforts may include a questionnaire to receive additional input for the ARMICS response  Documentation, Documentation, Documentation

13 Moving Forward, we will…  Continue to work on our recertification efforts  Talk about ARMICS recertification and implementation at upcoming Fiscal Administrator meetings  Continue to work with Central Office stakeholders  Begin to work more closely with Schools and Departments and other users  Continue to work with other FOCUS schools to maintain a standardized approach

14 Questions? Comments?

15 References  DOA Website: –Link to ARMICS Standards –Link to Comptroller’s Directive –Link to CAPP Manual  Financial Administration: –Link to Policies and Procedures –Link to ARMICS public website