University Financial Policies

Maintenance of Adequate Internal Controls Policy
The following statement of policy was issued in August, 1987 and is effective from that date; for additional information contact the Director of Financial Reporting and Cost Analysis.

Virginia Commonwealth University has and will strive to maintain, at all times, adequate internal controls within the accounting systems and within those administrative systems that ultimately produce or relate to financial transactions.

The term internal control encompasses any procedure, process or system that records a financial event or result, and any system that directly causes such event or result. Internal controls shall apply to documentation, recording of transactions, execution of transactions, separation of duties, adequate supervision, access to resources, competent personnel and reasonable assurance.

The two types of internal controls that this policy addresses are accounting controls and administrative controls. Accounting controls are the controls surrounding the activities concerned with authorizing, processing, recording, and reporting transactions (which operate within the broader control environment of administrative controls). Administrative controls are the broad controls surrounding all activities carried out by officials to accomplish their objectives (e.g., planning, organization, productivity monitoring and improvement, and quality control).

When internal controls are identified as not being adequate, appropriate action will be undertaken by the administration to address these deficiencies. The President has the ultimate responsibility of ensuring that internal control deficiencies are addressed.

Reviews of the accounting and administrative systems will be timed frequently enough to index for any significant changes in internal controls that may have occurred since the last review and to adequately support the general statement on internal controls included in the transmittal letter of the annual financial statements to the State Comptroller.

The administration will coordinate efforts in maintaining and documenting adequate internal controls with Virginia Commonwealth University's internal and external auditors. To carry out this process, Virginia Commonwealth University will rely on the State Comptroller's Directive 1-87 on the Maintenance of Adequate Internal Controls.

Internal Control Questionnaire
Consistent with the Maintenance of Internal Controls Policy Statement the University Controller's Office has identified key financial areas within the University (usually Schools or offices), referred to as Assessable Units. An Internal Control Questionnaire has been developed to assist these areas in evaluating the adequacy of their internal controls and their compliance with University policies and procedures. The Questionnaire addresses the following topics:
a. Organization Structure
b. Policies and Procedures
c. Monthly Financial Reports
d. Cash Operations
e. Payroll
f. Procurement and Payment
g. Fixed Assets
h. Automatic Data Processing Systems

On an annual basis, the Office of Financial Reporting will distribute an Internal Control Questionnaire to all Assessable Units for completion. Completion of the questionnaire requires the Assessable Unit to identify all internal control weaknesses noted and provide a plan of action that will be taken to strengthen those controls. A copy of the completed questionnaire should be retained by the Assessable Unit for possible future review by internal or external auditors.