Segregation of Duties– Sponsored Programs APM

2 Overview The policy outlines good internal controls for sponsored activity including: –Segregation of duties –Proper authorization, verification, and managerial review –Appropriate documentation –Delegation of authority form Effective Date: October 1, 2008

3 Overview APM —Segregation of Duties APM —Segregation of Duties- Sponsored Programs Supplements APM — Segregation of Duties APM – Delegation of Authority Form This training focuses on proper authorization, verification, and managerial review to meet compliance requirements

4 Relationship of 2 Policies

5 Requirements Compliance requirements from the Office of Management and Budget Circulars include: –A-21 – Cost Principles for Educational Institutions –A-110 – Administrative Requirements Other requirements per the award Ensure only allowable and allocable costs are charged to an award

6 Principal Investigator (PI) The PI’s role includes: –Ultimate responsibility for an award –Ability to delegate authorization PI cannot delegate responsibility for award PI cannot delegate managerial review

7 Delegation Form Delegation form (Form) used to document delegation of authorization Only used for sponsored programs Form maintained in the Department Key document in course of audit

8 Delegation Form

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10 Delegation Delegates for authorization must have: –Direct knowledge of the sponsored award –Awareness of terms and conditions of award –Awareness of compliance requirements –Knowledge of the transaction Delegate must be a University employee

11 Authorization Authorizer—appointed individual who can initiate activity for a sponsored program Authorization indicates the transactions meet the compliance requirements of: –Allowability –Allocability –Period of availability –Awarded budget

12 Authorization Documentation for cost transfers: –Sufficient – if cost transfer is < 60 days PI or Delegate certify costs are allowable PI or Delegate documents how costs benefit the award Why transfer is necessary

13 Authorization Documentation for cost transfers: –Substantial – if cost transfer is > 60 days Documentation must answer: Who WhatWhen Where WhyHow What is being done to ensure the circumstance does not occur again? (Due diligence)

14 Authorization Documentation for cost transfers: –Never “To spend out award” “To move costs to grant” “Due to pressure from UM System”

15 Verification All transactions must be verified –Confirms the accuracy and timeliness of accounting transactions –Confirms that cost transfers are properly documented with sufficient and/or substantial documentation

16 Managerial Review PI has ultimate responsibility for the award PI cannot delegate managerial review The monthly managerial review is the final opportunity to ensure programmatic and financial compliance

AuthorizationRecordingVerificationPI (Managerial) Review PI1 In less than optimal circumstances, a PI may perform all 3 functions (authorization, verification, managerial review) PI cannot authorize his/her own reimbursements Verification and Managerial Review can be done concurrently if both done by the PI Recording must be segregated 17 Exception to Segregation

18 Managerial Review To confirm: –Appropriate segregation –Costs are allowable and allocable –All costs are posted to the award –Costs are within the period of availability Timely review of financial reports including a budget to actual comparison –Address deficits or excess costs –Remove unallowable costs

19 Differences from Financial Requirements Managerial review should be performed monthly to facilitate timely error corrections If verification is done by the PI, still need to review and sign budget variance report.

20 Frequently Asked Questions The following Frequently Asked Questions (FAQs) address practical application of this policy.

21 FAQ’s – Fiscal Office Impact How does the policy impact the Fiscal Officer? –If the PI delegates authorization, the departmental Fiscal Officer confirms the: expenditure was authorized by a delegate, accuracy of accounting information, agreement with University Collected Rules, Business, and Accounting policies.

22 FAQ’s – SPO Impact How does the policy change the interaction between Departments and the Sponsored Programs Office (SPO)? –No interaction changes with the SPO. –Accounting Offices will still check PS Authorization for authorized signatures.

23 FAQ’s – PI Impact How does the policy impact the PI? –The PI is responsible for authorization of ALL transactions; the PI can delegate this responsibility. –The Form is adequate documentation for delegation.

24 FAQ’s – PI Impact Are there exceptions to when the PI can authorize transactions on an award? –Yes. The PI cannot authorize transactions for their own business reimbursement (e.g., travel or expense reimbursement).

25 FAQ’s – PI Impact Does the PI need to complete a Form if he/she signs all invoices? –No. The Form is needed only if someone other than the PI will be authorizing transactions without the PI’s signature.

26 FAQ’s – PI Impact Can a Co-PI delegate authorization? –Yes. The Co-PI has the same authority and responsibility as the PI, as long as the Co-PI is: a University employee, and named by the sponsor on the award document.

27 FAQ’s – Pre-Authorization Do expenditures on awards need pre- authorization? –No, a department may optionally require pre-authorization.

28 FAQ’s – Authorization What documentation is required for cost transfers? –The authorizer should look for: substantial or sufficient justification, timeliness of the cost transfer, and EVR agreement with payroll information.

29 FAQ’s – Authorization What effect does the policy have for anyone authorizing transactions on an award? –The PI may delegate authorization to anyone that has: direct knowledge of the activity, awareness of terms and conditions of award, awareness of compliance requirements, and knowledge of the transaction.

30 FAQ’s – Authorization How does this policy apply to charges to a sponsored award from a feeder system? –The PI or delegate must provide authorization to the feeder system owner before transactions are initiated.

31 FAQ’s – Authorization What is the Fiscal Officer’s role in authorization? –The Fiscal Officer should verify that transactions are authorized by either the PI or the delegate. –The Fiscal Officer must maintain the documentation.

32 FAQ’s – PS Authorization Is the information on the Form required to be entered into PS Authorization? –No, although a campus may optionally choose to do so.

33 FAQ’s – PS Authorization Does PS Global Authorization give the Fiscal Officer authorization for sponsored award activity? –No, it only provides authorization for Financial requirements, it does NOT meet the “direct knowledge” Compliance requirement. –Delegates must have direct knowledge of the sponsored activity.

34 FAQ’s – Managerial Review Can the PI delegate managerial review? –No, the PI has ultimate responsibility for the award and managerial review cannot be delegated.

35 FAQ’s – Managerial Review What should be maintained to document the PI’s managerial review? –The PI should sign and date the: budget to actual comparison report for the ChartField string, written justification for cost transfers, and detail list of transactions for the award if authorization and verification are not segregated.

36 FAQ’s – Managerial Review What should the PI look for in the managerial review? –Costs not related to the award, such as: clerical errors, salary posted to the award when no effort was made toward the award, supplies or travel not related to the award, costs outside the period of availability, or duplicate charges. –Costs related to the award that are missing.

37 FAQ’s – Delegation Form How does this policy change the current process for authorized signers? –The PI completes a Form to document delegation for authorization. –Delegates must have: direct knowledge of activity, awareness of terms and conditions, awareness of compliance requirements, and knowledge of the transaction.

38 FAQ’s – Delegation Form Can the PI use one Form to delegate authorization for multiple sponsored awards? –No. Each Form should reflect delegations for an individual ProjectID. –This will facilitate filing and retrieval of the Form to provide audit support for delegations of authority by ProjectID.

39 FAQ’s – Delegation Form Can one Form be used to delegate authorization for multiple individuals on one sponsored award? –Yes. Multiple delegations of authorization can be indicated on one Form.

40 FAQ’s – Delegation Form What if one of the delegates for authorization leaves the Department? –The Form should be updated to reflect changes in delegation. –All Forms must be kept as supporting documentation.

41 FAQ’s – Delegation Form Can the PI put a dollar and/or time limit on the delegations? –Yes. However, the form should be updated when changes occur.

42 FAQ’s – Delegation Form Where do I keep the Form? –The Form is retained by the Department to support delegated authorization on an award. –Some Sponsored Programs Offices may require a copy for the permanent award files.

43 FAQ’s – Delegation Form Who receives a copy of the Form? –The Form should be sent to the: delegate(s), departmental Fiscal Officer, and SPO or other campus offices if required.

44 FAQ’s – Delegation Form What are the retention requirements for the Form? –The Form has the same retention period as any documentation for the award Three years after filing the final reports or longer if required by the award, and Until all external (OIG) audits are closed. –It is maintained by the Department in either paper or electronic form.

45 FAQ’s – P-card When does authorization occur for a P- card transaction? –Written authorization may be provided by the PI or delegate before the purchase is initiated. –Written/electronic authorization by the PI or delegate must be provided before the monthly P-card reconciliation deadline.

46 FAQ’s – P-Card What if all charges for a P-card default to a sponsored award? –Unless all charges on a P-card will be posted to the award, the default should be a non-sponsored ChartField string. –Make all ChartField corrections before monthly reconciliation deadline for P- card.

47 FAQ’s – Requisitions When does authorization occur for a purchase requisition or e-Pro requisition ? –When the allowability is documented, such as an , or approved by a delegate through WorkFlow. –The PI or delegate should authorize all requisitions to be directly charged to an award.

48 Concluding Points Segregation of duties Authorization, verification, and managerial review Delegation form and retention Timely verification and PI review And don’t forget to…

49 Maintain Documentation..

50 Additional References APM – Segregation of Duties APM – Segregation of Duties- Sponsored Programs APM – Delegation of Authorization Form BPM 213 – Adjustment of Income & Expense ItemsBPM 213 – Adjustment of Income & Expense Items Fiscal Misconduct Reporting Line

51 Contact Information Mary Juettner, CPA Lead Accountant, Tiger Team