Judgment of Compliance

Narrative

Sam Houston State University (SHSU) exercises appropriate control over all its financial resources. The Vice President for Finance and Operations is the chief financial officer and has the primary responsibility for maintaining control over the University’s financial resources [1] [2]. The Vice President establishes and communicates policies and monitors adherence to such policies, thereby ensuring appropriate management and control of all financial resources. The Organizational Chart for the Division of Finance and Operations outlines the University’s structure and personnel who control the financial resources [3].

The Vice President supervises the following departments which share the responsibility for monitoring controls in their areas: Accounts Payable [4] [5], Administrative Accounting [6] [7], Business Office [8] [9], Cashiers’ Office [10] [11], Contracts and Grants [12] [13], Human Resources [14] [15], Information Resources [16] [17], Payroll [18] [19], Physical Plant, Purchasing and Property [20] [21] [22] [23], and Sam Houston Press [24] [25].

Administrators in all of the above-named departments are responsible for monitoring controls in their areas, taking corrective action when controls are threatened, and reporting violations to the Vice President when not corrected. The job descriptions and resumes of the responsible managers are presented in the supporting documents which demonstrate that these managers meet the qualifications for the positions they hold and that their job descriptions require a sufficient level of expertise to fulfill their monitoring duties. Prior to hiring an individual, a criminal background check is done and credentials and transcripts are required to ensure that the person is qualified to fill the position. All financial personnel have the requisite credentials to perform their jobs.

Cash Handling
Most cash handling takes place in the SHSU Cashiers’ Office. The SHSU Cashiers’ Office is equipped with electronic monitoring equipment and alarms. Internal procedure controls and computer access controls separate the collection of cash from the recording of cash. No one who collects cash can post transactions and vice versa. Each cashier has a separate cash drawer which must be balanced daily. The Office of the Internal Auditor performs random cash counts and audits the Cashiers’ Office periodically.

During formal registration payment periods, the activity takes place in a separate location, but the same security procedures are used. In addition, a university police officer is present at all times during the registration payment periods.

Daily deposits to the Institution’s depository bank, First National Bank of Huntsville, Texas, are carried to the bank in a locked bag by a university police officer at the close of each business day [26]. The officer does not have a key to the bag nor does the bank. The next business day, a cashier goes to the bank, unlocks the bag, and observes the cash count and deposit preparation. On most days, this process includes a return of cash in the locked bag to the University. A university police officer picks up the locked bag and returns it to the Cashiers’ Office.

Monitoring Purchase Orders, Expenditures, and Payroll
The first step in initiating an expenditure is preparing a document to request that expense. The document is in the form of a travel application, purchase order, payroll action form, or purchase voucher. The administrative department which receives these documents monitors signature authority to ensure that the person requesting the expense is authorized to do so [27]. In many instances, multiple signatures are required. These departments also review each document to determine the appropriateness of the expenditure and the source of funds.

Prior to the beginning of each fiscal year, The Texas State University System Board of Regents approves the SHSU Budget [28], [29], [30], [31] for that year. Each budget is prepared in accordance with the SHSU Budget Procedures and Guidelines [32]. At the beginning of the year, the budget information is loaded into the SHSU general ledger. Computer programs used for data entry into the general ledger have controls built in which will not allow an encumbrance, an expenditure, or a payroll action form to be posted if sufficient funds are not available to cover that cost. Throughout the year, budget adjustments are made and approved by the Board of Regents at their quarterly meetings [33].

Online, real time reports are available to each account manager [34]. These reports may be viewed online or printed to assure that each manager has the most up-to-date information available. Administrative Accounting, Payroll, Human Resources, and Purchasing offer training classes periodically to assist employees in using the financial system correctly and effectively.

Purchasing policies guide employees in the proper procedures to use when procuring goods and services [35]. These policies are in accordance with statute and The Texas State University System Board of Regents Rules and Regulations [36].

Contracts
Section III.1 of The Texas State University System Board of Regents Rules and Regulations details items requiring board approval [37]. That section details contract signature authority. Some contracts must go to the Board of Regents for approval regardless of the amount. The University President may sign contracts up to $200,000 without further approval, unless prohibited by Board of Regent policy. Section III.10 further provides guidance on contract signature authority [38]. This policy stipulates that each year the President may delegate signature authority to other University personnel and that the authority must be specific and in writing. Copies of all signature authority delegations are maintained in the Office of the President at Sam Houston State University. Appropriate administrative offices receive copies to ensure that only those with delegated authority are allowed to obligate the University.

Endowments
The Texas State University System Board of Regents has granted authority to each component president to establish monetary levels for permanent endowments [39]. The University Advancement Office accepts gifts on behalf of the University and negotiates the terms of the agreements. The University Advancement website discusses the various types of endowments and the required monetary level of each [40]. Section III.1.12 of The Texas State University System Board of Regents Rules and Regulations establishes guidelines for accepting and reporting gifts to the Board [41].

Investments
Sam Houston State University invests in TexPool and Common Fund. The Vice President for Finance and Operations is the Investment Officer for Sam Houston State University. The Summary of Investments for February 29, 2008, is presented for review [42]. Section III.6.76 of The Texas State University System Board of Regents Rules and Regulations requires a quarterly report of investments as prescribed by The Texas State University System Investment Policy [43] [44].

Audits
SHSU’s Internal Audit Department reports directly to the Director of Audits and Analysis at The Texas State University System (TSUS) [45] [46]. Section III.7 of The Texas State University System Board of Regents Rules and Regulations describes the Internal Audit function, responsibilities and reporting structure [47]. The SHSU Director of Internal Audit conducts an annual Audit Plan and Risk Assessment [48] as required by the TSUS Board of Regents. Departments and activities are audited based on the risk assessment to ensure that controls are in place and working.

Supporting Documentation