Internal Audit ASR/BSC Update

ASR Project:

• Elimination of non-essential work;
• Implementation of purchasing cards (PCards);
• Automation of personnel/payroll document processing; and
• Utilization of existing/emerging technologies.

Current Status:

Under the previous structure, there were many more so-called "Business Managers" throughout UNH; they reported directly to Deans/Directors of the Colleges and Institutes; they did not necessarily feel responsible for administration of financial operations within their areas in accordance with policies; and they did not have oversight of the numerous secretaries and clerks who processed financial transactions. In addition, some large units like the College of Liberal Arts did not have a Business Manager at all.

We have included in this package a description of each of the 19 BSCs, along with an outline of the formal training program that is being developed specifically for the BSCs by the ASR Training Coordinator. Personnel in a number of BSCs have begun this training program. Such training has resulted in more focus on quality customer service and effective supervision of staff. BSC personnel will have access to a formalized training program in a number of other areas as well, including hiring and paying employees, CUFS, management reporting, purchase and payment of goods and services, travel expenditures, budgeting and internal controls.

The Controller has placed existing financial policies on-line, and has developed financial policies that either did not previously exist or that required enhancements (e.g. travel and processing travel). Additional policies regarding rules surrounding appropriate business expenditures are currently in development.

A standard desktop hardware and software configuration for BSCs was put in place and all BSCs now have Pentium PCs loaded with Excel, Access and others for all staff. Local Area Network services are provided centrally by CIS for most BSCs. BSCs have also standardized on printers, fax and even office furniture. The technology standard allows for efficient training and support, as well as easier file sharing and the capability of accessing automated reporting tools. Currently in process is the rollout of standard office automation tools- MS Outlook.

The Controller's Office also has developed additional standard financial reports using System 1032 for use by the BSCs. Over 20 report formats have been laid out, of which 6 are now in production. Training has begun to take place, and a number of BSCs have started using these report formats to analyze and manage the financial operations. 4 BSCs are in the pilot stage for using Brio, a web-based tool, to develop financial reports for purposes of managing the operations of the units. The Assistant VP Finance Office and MIS have developed these tools. The Controller's Office also has assisted several BSCs in making significant enhancements to charts of accounts, resulting in simpler designs, greater management information, and less administrative costs.

While all 19 BSCs have been established, there are 5 BSCs (COLA, Student Affairs, Business Affairs, Advancement and CIS) that require further renovations to allow all BSC employees to be in the same physical location. Renovations will be completed by November 1998. In addition, there are three BSCs (COLA and the 2 BSCs at EOS) where either the permanent Manager or Director is not yet in place (COLA) or significant changes are still necessary for implementation to successfully result in enhanced operations (EOS). Management expects these issues to be addressed and resolved in the coming year.

Status of Specific Initiatives:

PCards
	PCards have been issued to all BSCs; however 2 BSCs (the two at EOS) are in initial stages of implementation. It is up to each BSC Manager or Director to decide the extent of PCard distribution throughout each unit. For example, the WSBE BSC has not provided all of its faculty with PCards, yet COLSA has issued 260 PCards to its faculty. The objective is for the PCard program to recognize the different cultures and needs of each unit, and that such needs may change going forward. In any event, PCard users must receive PCard training before becoming a PCard holder. PCards are limited to purchases of goods (in general, no services, equipment, travel and entertainment, hazardous materials, etc.) under $1000, unless special approval for exceptions has been authorized by both the Purchasing Department and the Controller's Office. PCard limits greater than $10,000 require approval of the USNH Vice Chancellor for Financial Affairs. When items are purchased using PCards, final approval of the purchase resides at the PCard holder level. Until recently (spring of 98), the Purchasing Department/Controller's Office was auditing 100% of PCard transactions. Currently, PCard transactions are audited at each BSC on a monthly/quarterly/semi-annual basis (depending on the comfort level with the particular BSC). Transactions are selected judgmentally, with about 50 percent of all transactions audited. The plan is to reduce this percentage once the Purchasing Department and Controller's Office are comfortable with each BSC's compliance with PCard procedures. Meetings for PCard managers are held regularly with representatives from the Controller's Office and the Purchasing Department in efforts to keep abreast of problems or concerns with PCard usage. The PCard managers are responsible for communicating with PCard holders. PCard usage has increased steadily each month since initial pilot implementation in October 1996. A summary of PCard activity in Month 23 of implementation (7/11 through 8/10/98):
	campus dollars # trans ave $/trans UNH $561,878 3663 $153.39 KSC    56,101   373   150.40 PSC    73,720   509   144.83 System     6,007    39   154.03 CLL     8,929    66   135.29 Total $706,635 4650 $151.96
	PCard usage is expected to level off at just under $1 million per month in the next few months.
	Convenience checks (checks written against PCards) are in the pilot stage at 3 BSCs. Policies are currently being drafted to define the types of expenditures for which these checks may/may not be used, and control procedures are being developed. Management expects these to be more fully used by BSCs in the next fiscal year.
Payroll Data Entry
	Most BSCs have received training and are now hourly payroll data entry units. Only the following BSCs still need to complete the necessary training to become data entry units: COLA, Marine, WSBE, and HHS. BSCs that are data entry units have been delegated full authority for entering time for hourly employees. A copy of a payroll report is sent to the UNH Payroll Office, with the report total tied into the master report. The records are passed through the normal payroll validation process for personnel records, account existence in CUFS, and to ensure that not more than 40 hours has been submitted for an employee. However, a detailed review of hours entered against hours worked is not done by the Payroll Office. Rather, the Payroll Office performs periodic reviews of the BSC's record retention and filing systems, assuring appropriate documentation and approvals after the fact.
	In addition to hourly data entry, BSC staff are responsible for data entry of Non-status Personnel Payment transactions and Exception to Normal Pay transactions. Both of these electronic documents pass multiple on-line validations and require approvals for expense account, employee's home department, and by the BSC and/or Personnel Services. Two additional pay mechanisms are in the planning stages: Non-status Appointment Record for hourly employment and Payroll Redistribution Change transactions. These are currently on hold pending the anticipated new financial and human resources computer systems.
	In an effort to more effectively and efficiently track hours worked for employees, the Business Affairs BSC has recently installed a timekeeping software system (Kronos) for employees in Housing and the New England Center. This is similar to the Kronos system in place at Dining for the past 10 years. Some aspects work well; others are being reviewed. Management anticipates other BSC units (e.g. Student Affairs and Facilities) will make decisions regarding automated timekeeping systems in the next fiscal year.
Departmental Purchases
	The dollar threshold for departmental purchase orders (electronic PD documents) has been raised from $1000 to $3000 for all BSCs except for the two BSCs at EOS, and Business Affairs (Business Affairs has been approved but the Controller's Office is waiting for some paperwork to be processed before it is official). Final approval on payments of invoices still resides with the Accounts Payable Office. The Controller's Office is currently negotiating with the following BSCs to provide them with 5th level (final) approval for payments of routine purchases less than $50,000: Facilities, Business Affairs, and Library Acquisitions (part of the Academic Affairs BSC). These BSCs/Departments have demonstrated a high level of responsibility when processing their documents, and given the nature of their purchases the Accounts Payable Office adds little value during the review of these expenditures. Original documentation will be maintained by the BSC. The Controller's Office will continue to review and approve all disbursements greater than $10,000, perform quarterly reviews of a sample of transactions at each unit that has 5th level approval for payments, and subject all payments to judgmental sampling of weekly check runs before checks are actually mailed.
Travel Policies and Procedures
	These have been revamped and streamlined for users while preserving appropriate approvals and other internal controls. Forms (accessible on-line) have been simplified, and related reports from CUFS have been developed.

Going Forward:

Another process currently in the pilot stage is the American Express (ACard) electronic charge process. UNH plans to delegate responsibility to the BSCs for the use of ACards. ACard holders will be allowed to purchase airline tickets (which are currently not allowed with PCards) directly through airlines or via an agency to acquire the best price. Unlike PCards which are distributed to each user (after training), ACards will be held and used centrally at the BSC. When airline tickets are purchased through an ACard, the final approval resides with the BSC, in this case the BSC travel coordinator.