1

INTERNAL CONTROL QUESTIONNAIRE GENERAL Yes No Comments Objectives: To insure the overall organizational structure and controls are conducive to accomplishing the objectives of the organization. 1. Does the organization have a statement of

mission and objectives? 2. Is there a current organizational chart in

use which reasonably fixes the responsibility of key personnel?

3. Is there a formalized policy and procedures

manual? 4. Are there written job descriptions for each

employee? 5. Is there a budgetary control system? a. Is it being used properly? 6. Do reports: a. Adequately focus on management

information requirements? b. Provide timely and complete information

needed both internally and externally? c. Highlight significant or unusual

variations? 7. Do managers make periodic reviews of the

reporting system to determine if it is meeting current needs?

8. Does a functional records management program

exist? 9. Has an internal review function been

established?

10. Are the internal review reports directed to an organization officer with sufficient responsibility to insure that adequate attention is given to findings and recommendations?

2

MANAGEMENT REVIEW Yes No Comments Objectives: To determine existing or potential weaknesses in organizational and management controls and to determine the utilization of existing controls. 1. Are all major channels of communication

utilized effectively? 2. Has fiscal authority been formally delegated

to specific management personnel? 3. Has a system been established to insure that

fiscal responsibility exists at all management levels?

4. Do policy and procedures manuals reference

the following: a. Applicable federal and state regulations? b. Bylaws and statutes of the governing

board of the system? c. Internal policies? 5. Do reports and summaries of operations

provide essential and timely information necessary for managerial monitoring and control?

6. Are employees periodically evaluated by

managers? 7. Do managers and supervisors review the

evaluations with their employees? 8. Are managers and supervisors required, as

part of the evaluation process, to suggest measures to correct weaknesses or inadequacies?

9. Are new management systems properly reviewed

and approved by managers before implementation?

10. Are employee training programs adequate?

11. Do fiscal officers understand the importance

of internal controls, including division of responsibility?

3

ACCOUNTS PAYABLE, ACCURED LIABILITIES, AND OTHER LIABILITIES Yes No Comments Objectives: To ascertain that controls exist to insure that all current unsecured liabilities are properly identified and recorded. 1. Are the liability control accounts

reconciled at frequent intervals (at least monthly) with subsidiary records?

2. Are bid deposits and similar receipts

properly recorded and recognized as liabilities when received?

3. Are accounts payable maintained

independently of cash receipts and disbursement functions?

4. Is there a system for comparing the invoice,

purchase order, and receiving report prior to entry of the account payable in the accounting record?

5. Are accounts payable adjustments properly: a. Reviewed? b. Approved? 6. Are year-end cutoff procedures adequate to

insure inclusion of all items purchased during the period?

7. Does a policy exist that requires payments

to vendors be made within the discount period in order to take advantage of all offered discounts?

8. Are lost discounts properly recognized in

the accounting system? 9. Do procedures exist to prevent duplicate

payments?

10. Are procedures adequate to avoid duplication of payments for transportation charges?

11. Are returned purchases controlled in a

manner which assures proper credit? 12. Do procedures preclude payment for damaged

or spoiled goods?

13. Are debit balances in accounts payable reviewed?

4

ACCOUNTS RECEIVABLE Yes No Comments Objectives: To ascertain that controls exist to

insure that all unsecured amounts due the organization are properly identified and recorded.

1. Are credit and collection policies in writing

and properly approved? 2. Are accounts receivable maintained

independently of cash receipts and disbursement functions?

3. Are noncash credits, bad debt write-offs,

credit memos and allowances:

a. Approved independently of processing, recording, and collecting the charge?

4. Is the total of the individual accounts independently reconciled at least monthly with the control account(s)?

5. Are accounts aged periodically?

a. Are aged accounts reviewed by a responsible official?

b. Are charge documents controlled and

properly accounted for?

7. Are all valid receivables promptly recorded? a. Examples are expenditures under cost

reimbursement contract, freight damage, shortages, and returned merchandise.

8. Are all claims for such items as freight

damage, shortages, and unsatisfactory merchandise:

a. Recorded on the books or otherwise

controlled, as soon as the claims are prepared for filing?

b. Billed currently? 9. Do adequate procedures exist for follow-up

and collection of delinquent accounts? 10. Are appropriate measures in force to insure

prompt collection of employee and student accounts receivables?

11. Are there controls to insure that individuals

with delinquent accounts are precluded from receiving additional credit?

12. Are accounts receivable balances

independently confirmed on a periodic basis? 13. Are credit balances reviewed periodically? 14. Is there adequate control over the mailing of

statements to prevent interception prior to mailing?

5

ACCOUNTS RECEIVABLE, continued Yes No Comments 15. Are disputed liabilities handled by person(s)

other than those receiving payment?

6

CASH DISBURSEMENTS Yes No Comments Objectives: To ascertain that controls exist to insure that cash disbursements are properly authorized, supported by adequate documentation, and properly executed. Check Disbursements 1. Is there adequate segregation of duties

between the approval and payment functions as to:

a. Approval of documents for payment? b. Check preparation? c. Check signing? d. Access to cash? e. Access to accounting records? 2. Are all cash disbursements, except those

from petty cash, made by check? 3. Are only printed pre-numbered checks used

and properly controlled? 4. Are voided checks properly mutilated and

held for inspection? 5. Are all checks protected against alteration? 6. Are all checks made payable to a specific

payee? 7. Is the signing of checks in advance

prohibited? 8. Are all disbursements properly authorized

and supported by appropriate documentation? 9. Are all bank accounts and check signatures

properly authorized?

10. Is there adequate review of supporting documentation before checks are signed?

11. Are there dollar limits on:

a. Single signature checks? b. Signatures mechanically fixed?

12. Are the signers of checks bonded?

13. Do procedures provide for immediate bank notification when an authorized signer of checks changes duties or resigns?

14. Is the supply of blank checks adequately

controlled?

15. If a mechanical check signer is used, are facsimile signature plates under proper control?

7

CASH DISBURSEMENTS continued. Yes No Comments 16. Is there a firm procedure establishing the

conditions under which cash disbursements will be made?

17. Are all paid invoices or other authorized

documents adequately cancelled so as to prevent their reuse?

18. Are vouchers prepared for all expenditures?

19. Is each bank account under separate ledger

control?

20. Are bank accounts reconciled monthly by a person who is independent of the cash function?

21. Are bank statements delivered unopened

directly to the reconciler?

22. Is the sequence of check numbers accounted for when reconciling the bank accounts?

23. Are endorsements on cancelled checks

periodically examined, incidental to the reconciliation of the bank account?

24. Are paid checks scrutinized for suspicious

and irregular features?

25. Do adequate procedures exist for the disposition of old outstanding checks?

PETTY CASH DISBURSEMENTS 1. Is the petty cash fund: a. Properly authorized? b. The responsibility of only one person? c. Properly safeguarded? d. Controlled by an imprest system? 2. Are petty cash vouchers: a. Signed by the person receiving the cash? b. Prepared in ink and required for each

expenditure? c. Supported by an invoice with the amounts

spelled out? 3. Are the reimbursement vouchers approved by a

responsible employee who has no direct access to cash?

8

PETTY CASH DISBURSEMENTS, continued Yes No Comments 4. Are the vouchers and attachments properly

cancelled to preclude their reuse? 5. Is the fund verified by surprise counts? 6. Are IOU's unauthorized advances, and

personal checks prohibited? 7. Are petty cash funds restricted to

expenditures not exceeding a fixed amount? 8. Are reimbursements made payable to the fund

custodian? 9. Is the custodian prohibited from handling

more than one fund or other cash receipts?

10. Are petty cash fund balances adequate for the activity's needs?

TRAVEL DISBURSEMENTS 1. Is the authority for approval of travel

requests established at all organizational levels?

2. Are all travelers familiar with the

institution's travel regulations? 3. Does the fiscal officer or an appointed

agent approve all travel vouchers? 4. Are travel vouchers independently reviewed

for allowability and reasonableness? 5. Is the fiscal officer's travel voucher

approved by his or her superior?

9

CASH RECEIPTS Yes No Comments Objectives: To ascertain that controls exist to insure that cash received is properly accounted for and deposited. 1. Are all cash receipts recorded through the

use of pre-numbered receipts (or cash registers) by an individual designated to receive cash?

2. Are cash register procedures in writing? 3. Do cash register procedures reflect proper

daily check-out and documentation? 4. Does someone independent of cashiering and

accounts receivable open mail? 5. Is there adequate separation of duties: a. Between the cashiering function and the

cash disbursements function? b. Between the cashiering function and the

accounts receivable function? 6. Is accountability and responsibility for

checks and cash received through the mail established immediately on receipt and maintained through deposit in the bank?

7. Are banks and institutional cashiers

instructed not to cash checks made payable to the college or university?

8. Are cashiers' daily cash reports subjected

to supervisory review and approval? 9. Is a restrictive endorsement placed on

incoming checks as soon as they are received?

10. Are instructions given to persons writing

checks to make checks payable to the college or university?

11. Are receipts which are given to individuals

who deposit cash with the cashier: a. Prepared in multiple copies? b. Identifiable to a specific cashier? c. Dated? d. Numerically controlled? 12. Are the duties of employees connected with the cash receipts function rotated

periodically?

10

CASH RECEIPTS, continued Yes No Comments

13. Is a record of cashier’s overages and shortages:

a. Maintained? b. Regularly reviewed? c. Recorded on the books?

14. Are locked-in audit copies of receipts used where appropriate?

15. Is there daily posting of cash receipts to

subsidiary accounts receivable records?

16. Are cashiers provided separate cash drawers to establish accountability and are these drawers locked during the cashier's absence?

17. Do procedures prohibit the disbursement of

cash from cash receipts prior to their deposit?

18. Are cash receipts deposited intact daily and

without delay?

19. Are adequate physical facilities provided for safeguarding cash prior to deposit?

20. Are safe combinations and keys to cash boxes

or files restricted to an essential number of employees?

21. Are safe combinations or locks to files

changed periodically and at each personnel change?

22. Are bank deposits verified by means of a

duplicate deposit slip or other means?

23. Are checks returned by the bank controlled and is follow-up maintained independently of the cash function?

24. Are the following cash register controls

used: a. Locked-in-totals? b. Visible amount of sale? c. Bell that signals sale and opening of

cash drawer? d. Receipt given to customer? e. Over-or-under-ring vouchers signed by

customer and supervisor?

f. Voided copies of receipts retained for audit purposes?

11

CASH RECEIPTS, continued Yes No Comments

25. Are all persons who handle cash adequately bonded?

26. Are records of revenues such as rents,

interest, dividend, etc., adequately controlled so that their non-receipt would be noted and investigated?

12

EQUIPMENT Yes No Comments Objectives: To determine that adequate controls exist for all phases of the equipment management function, particularly authorization, acquisition, record keeping, disposal, and review. 1. Are capital expenditures authorized by

appropriate officials? 2. Are equipment acquisitions originated by

approved requisitions that show: a. Item description? b. Estimated cost? c. Justification? d. Accounts to be charged? 3. Does the sale, transfer, scrapping or

dismantling of equipment require written approval?

4. Does the accounting department receive a

copy of each authorization for equipment transactions?

5. Are all equipment additions controlled by a

budget? a. Do variations between budget and actual

costs require approval of appropriate officials?

6. Is all equipment recorded at cost or fair

market value at time of acquisition? 7. Is there a policy for differentiating

between expenditures to be capitalized and those to be expensed?

8. Is identifying information: a. Promptly placed on the equipment? b. Difficult to remove? c. Removed from equipment prior to

disposal? 9. Are detailed subsidiary records of equipment

maintained?

10. Are detailed records regularly reconciled to the general ledger by fund?

11. Are the detailed accounts for equipment

promptly adjusted when equipment is disposed of or transferred?

13

EQUIPMENT, continued Yes No Comments 12. Do written policies exist to enforce

restrictions placed on property in the custody or under the control of, but now owned by, the institution?

13. Are adequate records maintained of property under the control or custody of, but not owned by, the institution?

14. Are releases from accountability properly

handled for transfers of equipment?

15. Are there adequate procedures for the receiving and recording of gifts of equipment?

16. Is a physical inventory taken periodically

and at least annually?

17. Are small tools properly safeguarded and kept in specific locations?

18. Does a written policy exist for the normal

inspection and maintenance of equipment?

19. Do written procedures exist for safeguarding equipment against improper or unauthorized use?

20. Is equipment periodically reviewed for the

purpose of determining adequate insurance coverage?

21. Are inventories tested periodically by an

official having no responsibility for the inventory?

22. Does a procedure exist for identifying and

disposing of unused equipment?

14

INVENTORIES Yes No Comments Objectives: To determine that adequate controls exist to insure that all inventories are properly reported, safeguarded, and accounted for. 1. Is there separation of duties between

persons who handle the inventories and those handling:

a. Inventory records? b. Sales billings? c. Recording of purchases? 2. Are inventories under the physical control

of designated individuals who are held responsible for quantities on hand?

3. Are receiving, issuing, accounting, and

storing responsibilities properly separated? 4. Are materials released from the storeroom

only on receipt of approved requisitions? 5. Is a central storeroom and receiving station

maintained? 6. Are all incoming shipments, including

returns by customers, handled by a central receiving department?

7. Are purchases made by requisition/purchase

order only? 8. Are the storerooms or storage areas properly

safeguarded or controlled to prevent access to materials by unauthorized persons?

9. Is a record kept on keys to storerooms,

storage areas, etc.? a. Is this record checked periodically?

10. Has adequate protection against spoilage and pilferage been provided for, with special care being given to sensitive items?

11. Are pre-numbered receiving reports used and

copies thereof forwarded to the accounting department?

15

INVENTORIES, continued Yes No Comments

12. Are issuing and billing procedures designed and correlated so as to insure the billing of all items?

13. When inventories are to be taken, are

adequate written procedures prepared?

14. Is there proper cutoff of inventory receipts and issues during inventory counts?

15. After the inventory is counted, are the

count tags, sheets, etc., properly controlled?

16. Are inventory counts verified by persons

independent of those in charge of the inventory records?

17. Are responsible officials advised of

significant inventory discrepancies?

18. Are perpetual records adjusted for discrepancies?

19. Are obsolete, damaged, and slow-moving items

reported to a responsible person?

20. Are scrap material inventories properly controlled?

21. Are goods that are consigned in and out

accounted for properly?

22. Is there physical segregation and proper accounting control of merchandise on hand that is not the property of the institution?

23. Is adequate insurance coverage provided?

Apply Only to Perpetual Inventory Systems

24. Are surprise physical inventory counts made by persons not responsible for the inventory?

25. Are perpetual inventory records:

a. Maintained? b. Verified by physical count at least once

every twelve months? c. Reconciled to control ledgers?

16

INVENTORIES, continued Yes No Comments 26. Are stock records updated daily? 27. Are the postings to the stock records made

promptly from the following items: a. Pre-numbered, signed receiving reports? b. Issue requisitions? 28. Are additions to stock records referenced to

insure easy verification of the records? 29. Are maximum and minimum quantities recorded

on the stock records to insure against over- or under-stocking?

30. Are inventories taken without prior

reference to quantities on perpetual records?

31. Are discrepancies between physical counts

and perpetual records investigated and reconciled while counts are in progress?

32. Do adjustments of the perpetual inventory

records require approval of responsible officials?

33. Are returnable containers: a. Properly accounted for? b. Properly safeguarded? c. Properly inventoried? d. Returned promptly to eliminate or reduce

demurrage charges?

17

INVESTMENTS Yes No Comments Objectives: To determine that procedures are adequate to control and safeguard investments. 1. Is there a written investment policy? 2. Are changes in the type of investment in the

investment portfolio approved in accordance with the investment policy?

3. Are investments purchased and sold only on

proper authorization? 4. Are brokers' advices and other original

papers evidencing purchase and sale of securities properly filed?

5. Is an independent safekeeping agent

utilized? 6. Are all investment documents under the

control of a responsible official as custodian?

7. Are all persons having access to investments

adequately bonded? 8. Are investment documents registered in the

name of the institution? 9. Are investment documents kept in a safe

deposit box or vault? 10. Is a record maintained of all investments

placed in or removed from the box or vault? 11. Are two or more signatures required for

access to safety deposit boxes and are all signatures required to be reported? If so, is a permanent log maintained reflecting each individual access?

12. Is more than one person required to be

present during inspection of investments? 13. Is an accounting record maintained for each

investment, including cost, description, and identifying number?

14. Are detailed records of investments

maintained independently of the custodian(s)?

18

INVESTMENTS, continued Yes No Comments 15. Are investments which have been approved for

write-off properly authorized and recorded in a separate ledger and periodically reviewed as to possibility of recoveries?

16. Is a record of investment income maintained? 17. Are accruals recorded as investment income

is earned? 18. Is there proper segregation and accounting

control of securities held for others as collateral, for safekeeping, or for other purposes?

19. Are investments examined periodically by

responsible officials and reconciled with the controlling accounts?

20. Do employees having no responsibility for

custody of investments or record keeping: a. Periodically inspect the investments? b. Confirm those held by outsiders? c. Reconcile documents to the records? d. Verify recorded investment earnings to

determine the accuracy thereof? e. Reconcile earnings with published

financial records of payments? 21. Are purchased investments carried on the

books at cost? 22. Are investments that are received as gifts

recorded at fair market value (or appraised value) at date of gift?

23. If current market value (or fair value) is

used to value investments, is this basis applied consistently for all investments in all funds?

19

LAND, BUILDINGS, AND OTHER IMPROVEMENTS Yes No Comments Objectives: To determine that controls are in effect to insure that the ownership of land, buildings, and other improvements is in order and that the carrying value is appropriately recorded in the records; that the method of acquisition complies with appropriate regulations of the institution and has the necessary approval of the proper governing body. 1. Are deeds and titles: a. Properly prepared? b. Legally recorded? c. Properly safeguarded? 2. Are additions to fixed assets properly

authorized and approved by the governing board?

3. Is title insurance: a. Carried? b. Policy value equal to the purchase price? 4. Are requests for purchase of fixed assets

supported by requisition or other justification that shows:

a. Probable cost? b. Description of addition? c. Accounts to be charged? d. Reason for the addition? 5. Does the governing board have control over

capital budgets and changes therein? 6. Are actual expenditures later compared with

the authorized estimates? 7. Are fixed assets carried in the accounting

records at cost or, for assets acquired by gift, at fair market value at the date of gift? (If not indicate basis of valuation.)

8. Are plant ledgers:

a. Maintained?

b. Reviewed periodically? c. Balanced regularly to the control

accounts? d. Periodically checked by actual physical

inventory? e. Used to reflect pledges as collateral?

20

LAND, BUILDINGS, AND OTHER IMPROVEMENTS, continued Yes No Comments 9. Is written approval required for all items

removed from the plant ledger? 10. If detailed property records are not

maintained, is it possible to determine by other means what property is in service?

11. Is a work order system used for major repair

jobs? 12. Are regular employees used for construction

of fixed assets for institutional use? Is so, are the costs properly recorded and controlled through:

a. Payroll records? b. Disbursement records? 13. Are all costs of constructed fixed assets

accumulated by work order or contract? 14. Are interim construction costs initially

charged to construction in progress and distributed to permanent asset accounts on project completion?

15. Are there formal recording procedures for

gifts of fixed assets? 16. Does a policy exist for the normal

inspection and maintenance of fixed assets? 17. Does a policy exist for the normal

inspection and maintenance of fixed assets? 18. Is the property adequately covered by

insurance? 19. Are idle plant facilities: a. Properly identified? b. Is depreciation fully funded? c. Adequately secured? 20. Is there proper accounting treatment for

recording of sales proceeds? 21. Is there a policy for differentiating

between items to be capitalized and those to be expensed?

21

LAND, BUILDINGS, AND OTHER IMPROVEMENTS, continued Yes No Comments 22. When assets are to be depreciated: a. Is the depreciation policy consistent

from year to year? b. Is depreciation fully funded? c. Are useful lives reasonable? d. Are depreciation charges discontinued

when an asset or group of assets becomes fully depreciated?

e. Are records maintained of fully

depreciated assets which are still in use?

22

LONG-TERM LIABILITIES Yes No Comments Objectives: To ascertain that controls exist to insure that all bonded indebtedness is properly identified and recorded. 1. Are borrowing of funds and repurchases/

returnables of long-term liabilities properly authorized?

2. Is there an independent transfer agent for

registered bonds? 3. Is there an independent registrar for

registered bonds? 4. If there is not an independent transfer

agent or registrar: a. Are unsigned bonds properly controlled? b. Are bonds and other obligations signed

prior to issuance? c. Are cancelled obligations properly

mutilated or otherwise destroyed? 5. Are at least two signatures necessary to

validate an instrument for long-term borrowing?

6. Is an interest-paying agent utilized? 7. If an independent interest-paying agent is

not utilized, is the control over coupons or interest checks adequate?

8. Are unclaimed interest amounts adequately

controlled and properly handled? 9. Are interest accruals made and verified? 10. Are there any special funding requirements

or debt restrictions in effect? a. If so, is a bond compliance checklist

used? b. Are the bond trustee's billings reviewed

and monitored? 11. Is there board approval of the agreement

with the trustee? 12. Was it determined by legal counsel that the

debt issuance was in accordance with applicable laws and regulations?

23

NOTES RECEIVABLE Yes No Comments Objectives: To ascertain that controls exist to insure that all secured amounts due the institution are properly identified and recorded. 1. Is there a written policy governing notes

receivable? 2. Are all notes, approved, prior to their

acceptance, in accordance with written policy?

3. Are individual notes regularly reconciled

with the control account balance(s)? 4. Are notes in the custody of persons having

no access to accounting records? 5. Are partial payments adequately reflected in

the subsidiary records? 6. Is there periodic confirmation of notes

receivable balances? 7. Is a contingent liability record maintained

for discounted notes receivable? 8. Are past-due notes promptly followed up? 9. Does the proper approval exist for the

write-off of uncollectible notes in accordance with written policy?

10. Is proper control exercised subsequent to

collection of notes charged off? 11. Is the custodian of the notes receivable

denied access to: a. Cash receipt and disbursement records? b. Notes receivable records? c. Initiation of write-offs? 12. Are notes receivable and related collateral

kept under proper physical and accounting control?

13. Are renewals and modifications properly

approved?

24

NOTES PAYABLE: SHORT-TERM Yes No Comments Objectives: To ascertain that controls exist to insure that all indebtedness secured by notes or mortgages are valid claims and are properly identified and recorded. 1. Does the governing board authorize borrowing

on notes? 2. Does the governing board authorize the

mortgage of property? 3. Do the records of the board specify the

types of institutions from which money may be borrowed?

4. Do the records of the board designate the

officers authorized to sign notes? 5. Are note transactions controlled (that is,

two signatures on notes) to prevent unauthorized borrowings?

6. Are notes payable recorded in a note

register or other organized record which shows:

a. Amount of the note? b. Maturity date? c. Interest dates? d. Interest payments? e. Principal payments? 7. Is there separation of duties between

persons maintaining the note register and those authorized to sign notes or checks?

8. Are proper records maintained for collateral

pledged as loan security? 9. Are detailed note records regularly

reconciled with the control account? 10. Are preprinted but unissued notes properly

safeguarded? 11. Are paid notes properly cancelled and

retained? 12. Are restrictions in the note agreements

observed?

25

PURCHASES Yes No Comments Objectives: To ascertain that procedures exist to insure that acquisition of goods and services is properly controlled, accounted for, and in compliance with the institution's purchasing regulations. 1. Are all purchases, other than those from

petty cash, made on properly approved orders?

a. Does the purchasing agent have sole

authority to obligate funds for purchases?

b. If not, have delegations of authority

been specifically approved by the appropriate governing board?

c. Are confirming (after the fact) purchase

orders properly used and controlled? 2. Is there adequate separation of duties in

connection with the following functions? a. Controlling blank purchase orders? b. Placing orders with vendors (including

preparation of purchase order)? c. Receiving? d. Approving vouchers for payment? e. Processing approved vouchers? f. Disbursing? 3. Are purchasing policies defined by written

procedures? 4. Are the purchasing policies in accordance

with applicable statutes, contract specifications, and institutional policies?

5. Do policies provide for the assignment of

responsibility for final purchasing decisions at the appropriate level?

6. Are all purchase orders: a. Pre-numbered? b. Accounted for?

26

PURCHASES, continued Yes No Comments 7. In regard to leasing, do procedures insure

compliance with the following categories: a. Statutory purchasing regulations? b. Institutional rules and regulations? 8. Is a system of competitive bidding used? 9. Is there a designated centralized receiving

area for all incoming goods? 10. Are receiving reports: a. Prepared on pre-numbered forms? b. Compared in detail with purchase orders

and vouchers (or invoices)? 11. Are there written procedures for appraisal

of vendor performance? 12. Is there a policy statement with regard to

conflicts of interest, including employee-vendor relationships?

13. Are blanket orders and long-term contracts

under adequate control? PROCUREMENT CARD POLICIES AND PROCEDURES 1. Have the Procurement Card policies and

procedures been approved by executive management?

2. Is there a group responsible for maintain and

updating Procurement Card policies and procedures?

3. If the Procurement Card has been active for

more than one year, have the policies and procedures been reviewed, and, if appropriate, updated in the last year?

4. Do the Procurement Card policies and

procedures include the following provisions? a. Who can have the card?

b. Who cannot have the card (former

employees, nonemployees, agents, students, or vendors?

c. Training requirements. d. Reconciliation procedures. e. What can and cannot be purchased with

the card? f. Restricting use to organizational

business needs.

27

PROCUREMENT CARD POLICIES AND PROCEDURES, continued

Yes No Comments

g. How to get the card? h. How to handle exceptions and

irregularities? i. How a card can and should be

deactivated? j. How to get help? k. Cardholder agreements? l. Rights and responsibilities of the

cardholder, department manager responsible for managing card usage, department manager, organization and card-user.

PROCUREMENT CARD TRAINING 1. Is unique training provided for managers vs.

end-users?

2. What training is provided to new users of the Procurement Card system?

3. Are new users required to receive training

before becoming users of the Procurement Card system?

4. Are department managers required to receive

special training before being assigned management responsibility over the Procurement Card System?

5. How do users and managers become aware of the

available training? Is this notification process effective at reaching all relevant personnel?

PROCUREMENT CARD ISSUING 1. Are cards issued only to appropriate

employees in a department?

2. Is the common practice to issue one card per person, i.e., no sharing?

3. Is the cardholder required to sign a

cardholder agreement stating the terms and conditions?

4. Is the method of distributing the cards

secured and ensures that only the cardholder receives the card?

5. How are new cards activated?

28

PROCUREMENT CARD ISSUING, continued Yes No Comments

6. How are cards renewed?

7. Do the card-issuer and organization

distribute and activate replacement cards in such a way to prevent mishandling?

PROCUREMENT CARD USE 1. Are expenditures appropriate for the accounts

being charged?

2. What are the purchase limits and/or number of transaction limits, and how are they enforced?

3. What are the default accounts and are these

accounts appropriate for business?

4. How does the system prevent or monitor “Card Sharing”?

5. How does the system prevent, limit or monitor

“stringing”, i.e. breaking down one large purchase into several smaller purchases to circumvent purchase authorization limits?

6. What are the procedures for following up with

the card-issuer regarding disputed transactions? Is the method timely?

7. How is personal use of the card monitored,

and if found, how does the user provide restitution?

8. Are there procedures for identifying high or

otherwise unusual activity?

PROCUREMENT CARD DEACTIVATION 1. Do the cards have an expiration date? 2. How does the organization retrieve the

Procurement Card of someone transferring from one department to another?

3. How does the organization retrieve the

Procurement Card of someone leaving the organization?

4. If the Procurement Card is shared, how does

the organization change the card when an employee with whom it had been shared transfers or leaves the organization?

29

PROCUREMENT CARD DEACTIVATION, continued Yes No Comments 5. What is the process for reporting and

deactivating stolen cards?

a. Are they clearly understood by users?

b. What are the responsibilities of the cardholder organization, and the card-issuer?

c. Who notifies the card issuer?

d. Who notifies law enforcement authorities?

e. What is the liability for fraudulent use between the time of the card being stolen and the time it is reported?

PROCUREMENT CARD INTERNAL CONTROLS 1. What evidence of Procurement Card purchases

does the organization and departments require and how is this documentation filed? Does this information include the following: a. Original receipts

b. Shipping documents (if available)

c. Packing lists

d. Vendor’s name

e. Unit cost of each item purchased

f. Date of purchase/sale

g. Total amount of purchase transaction

h. Itemized description of each item

purchased

i. Business purpose, if evident

2. How long is evidence of receipt of goods retained?

3. To make up the lack of detail regarding

purchases made with the Procurement Card; does the cardholder complete a log of card usage?

4. What are the procedures for reconciliation?

5. If there is a combination of automated and

manual reconciliation, does the department manager perform the manual reconciliation before the automated reconciliation?

6. Is the review of activity at the level to

detect abuse, i.e., inappropriate purchase?

30

PROCUREMENT CARD INTERNAL CONTROLS, continued Yes No Comments 7. Is segregation of duties adequate so that no

one person will control al phases of Procurement Card usage (transaction initiation, authorization of payment, and reconciliation) and to reduce the likelihood of errors and irregularities going undetected?

8. Are the roles and responsibilities of cardholders periodically reviewed to ensure card privileges are still appropriate?

9. Is the stock of blank cards stored in a

secure location?

10. Are active cards stored in a secure location? (If the card is issued to the individual, the card should be under the control of these individuals. If the card is issued to the department, the card should be in a secured desk drawer or filing cabinet.)

11. If user accesses an automated log to note

card usage, who is the access to the log secured?

12. What actions are taken if incomplete

supporting information is made available by the cardholder, e.g., missing receipts?

13. What actions can be taken if a user routinely

disobeys usage guidelines?

14. What actions can be taken if a user abuses the system?

15. What actions can be taken if a department

manager does not perform the review and approval function?

16. Has legal counsel reviewed the various

disciplinary actions the organization can take to stop Procurement Card abuse?

PROCUREMENT CARD DEPARTMENT ADMINISTRATION 1. Are departmental users familiar with

Procurement Card policies and procedures? 2. What are the procedures to ensure property

assets purchased with the Procurement Card are properly tagged and reported to Property Control?

3. Do departments maintain a record of

Procurement Card cardholders? Is this list reviewed at least annually to ensure appropriate assignment privileges?

31

PROCUREMENT CARD DEPARTMENT ADMINISTRATION, continued Yes No Comments 4. Are there any special year-end cutoff

5. Can purchases be split between different accounts?

SYSTEM ADMINISTRATION 1. Who maintains the automated card

recordkeeping system? Are these people restricted from using a procurement card?

2. How is access to the card recordkeeping

system secured?

3. How often is the automated card recordkeeping system backed up? Is a backup copy stored off-site?

4. How are data transmissions between the card

issuer (bank) and the organization secured from unauthorized use and alteration?

5. What transmission controls are there for the

data transmissions between the card issuer (bank) and the organization?

6. Is there a business continuity plan for

restoring the Procurement Card system/

PROCUREMENT CARD BUSINESS ADMINISTRATION 1. If the Procurement Card was installed to save

money and increase efficiencies, how does the organization monitor these savings and efficiencies? Also, can the organization compile statistics to support the continued use of the Procurement Card?

2. Who maintains complete records of Procurement

Cards issued? Do Procurement Card administrators review this list with department heads at least annually to ensure appropriate assignment or privileges?

3. If the Procurement Card can be used for

purchasing services, what are the provisions for ensuring 1099 reporting?

4. Is the organization satisfied with the

quality of customer support provided by the card-issuer?

5. Is the organization satisfied with the

quality of customer support provided by the card-issuer?

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PROCUREMENT CARD DEPARTMENTAL PROCEDURES Yes No Comments Objective: To ensure all P-card transactions adhere to the Policies and Procedures required. 1. Who are P-Card holders in the department? 2. How many cards are there assigned to the

department? 3. What are the account numbers for the cards

assigned to the department? 4. What are the monthly thresholds/limits

established for the P-Cards assigned to the department?

How are the thresholds determined? 5. What is the process for the purchase of

items?

a. What is provided for the purchase to be initiated?

b. Is the request approved prior to the

item being purchased? c. Who places the order or conducts the

purchase? d. Is business purpose of purchase

required to be documented? e. How is the vendor for the purchase

chosen? Is there a comparative price review?

d. How is receipt of merchandise handled? e. How is distribution of merchandise

handled? Is a signature required from the faculty member once the item purchased is delivered?

f. Who maintains the files of documents

related to the purchase? Where are the files maintained?

6. Are P-Cards ever delegated to other employees

for usage? a. Is the P-Card Cardholder Delegation form

completed and on file? 7. Who is the P-Card departmental liaison? 8. Is a P-Card transaction log maintained?

9. Who is responsible for maintaining the P-Card

transaction log? 10. Who is responsible for reconciling P-Card

transactions?

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PROCUREMENT CARD DEPARTMENTAL PROCEDURES, continued Yes No Comments 11. If the department liaison is a cardholder,

are the transactions for that card reviewed and approved by the department head or another designated official in the department?

12. Has the department liaison attended all the

required training sessions? 13. Is the department liaison a subscriber for

the P-Card List serve? 14. Where are Procurement Cards stored? 15. What cards are used for routine departmental

purchases? 16. Are cards ever used to purchase services? 17. Have cards ever been lost or stolen?

34

PAYROLL Yes No Comments Objectives: To determine that the authorized records and procedures are so designed and operated as to provide adequate internal control. 1. Is there uniform application of payroll

policies regarding the following items? a. Time worked? b. Time not worked (such as vacations, sick

leave, and holidays)? c. Job classifications and salary ranges? d. Changes in rates of pay? e. Application of employee benefits? 2. Is written approval required for the

following areas: a. Employees added to or deleted from the

payroll? b. Changes in rate of pay? c. Payroll deductions? 3. Are files that support the above

documentation in good order? 4. Is there adequate separation of duties in

the preparation of payrolls? 5. Are payrolls approved by someone in

authority? 6. Are the terms of union agreements as to wage

rates, vacation pay, and similar items being complied with?

7. Are appropriate regulations being followed

in regard to FICA, wages and hours, and other federal, state, and local requirements concerning employment?

8. Is there segregation of personnel and

payroll functions? 9. Are complete personnel records maintained

outside the payroll section? 10. Do procedures exist to insure that all

employees are bona fide?

35

PAYROLL, continued Yes No Comments 11. Are payroll subsidiary accounts reconciled

with control accounts?

12. Do procedures exist to insure that employees do not receive more than the authorized salary payment?

13. Are the payroll checks distributed by

someone other than the payroll department? 14. Are employees required to be identified or

to produce some identification before receiving their paychecks?

15. Do procedures exist to properly control and

dispose of old, outstanding payroll checks? 16. Are the duties of payroll office employees

rotated, and are they required to take annual vacations?

17. Are vacation, sick leave and compensating

time off properly documented and controlled? 18. Are payroll bank accounts maintained on an

impress basis and reconciled by someone having no payroll duties?

19. Do reconciliation procedures include

checking names on payroll checks against the payroll records and the examination of endorsements on checks?

20. Are blank payroll checks adequately

controlled? 21. Do procedures exist to prevent employees

from receiving pay other than through properly approved and processed payroll procedures for services performed (for example, consulting services)?