Quality and Productivity Database

Descriptive Title of Proposal: Quality Assurance in Financial Controls Through Self-Assessment
Year Submitted 2011
Person(s) Responsible for the Idea
Name Title
Laura Kennedy Associate Vice-President, Financial Services
Terry Summers Director, Financial Reporting (Financial Services Division)
Greg Thorimbert Financial Analyst , Financial Reporting ( FSD)
Name of Institution University of Saskatchewan
Office Address University of Saskatchewan Room E270 Administration Building 105 Administration Place
Saskatoon, Saskatchewan S7N 5A2
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Telephone: (306) 966-8305
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Name (Senior Administrative Office of the Institution) Richard Florizone
Office Address University of Saskatchewan Room E284 Administration Building 105 Administration Place
Saskatoon, Saskatchewan S7N 5A2
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Telephone: (306) 966-6631
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Abstract

The annual self-assessment of our internal financial control processes is an integral component of our Internal Control Review Project, following the COSO (The Committee of Sponsoring Organizations of the Treadway Commission) internal control framework.  As a publicly funded institution, our stewardship requirements for financial accountability are more stringent than those of a commercial enterprise.  In recognition of this, an annual self-assessment is being performed, using a developed on-line survey, to ensure the adoption and consistent utilization of strong financial control processes, and the effective mitigation of identified key financial management risks.

Completion of the survey, which has been done annually since 2008, facilitates the self-assessment of current financial controls against identified ‘best practices’, by over 300 internal units of budgetary responsibility; with a 100% participation rate.  The on-line survey is also supported and supplemented by 19 detailed questionnaires which are used internally by university administration and audit services to facilitate more detailed reviews and annual validation testing of survey responses, as necessary.

In 2008 the university completed research to identify the current ‘best practices’ in key financial control processes, through the examination of a number of university and non-educational organizations selected from the following annual independently published sources:

1.         THES-QS World University Rankings

2.        Canada’s 50 Best Managed Companies

3.        Saskatchewan’s Top 100 Companies

Annual validated self-assessment results are provided to college/unit deans, directors, heads, financial officers, and the Board of Governors and Audit Committee, in the following manner:

1.        In a comparative scorecard format, by five key financial control categories:

  •       Selling/Revenue Activities
  •       Buying/Expenditure Activities
  •       Payroll
  •       Property and Equipmen
  •       Reviews, Reconciliations and Other Activities

2.         By individual key financial controls, which correspond to each of  the 51 questions in the survey

The information provided in these reports facilitates the following activities by each unit:

1.        Evaluation of the effectiveness of key financial controls

2.        Development and implementation of action plans for improving effectiveness of key financial controls

3.        Acquire knowledge of how to design an effective control

4.        Acquire knowledge of  financial management roles and responsibilities

Additional support and information on internal controls and financial control process improvements is available from the university’s Financial Services Division staff and website.

Criteria Please submit one paragraph describing how the proposal fulfills each of the evaluation criteria.
Transferability

The annual self-assessment of financial control processes is highly transferrable to other educational institutions, as well as to non-educational organizations. To date, we have shared our on-line survey with two other interested Canadian universities. The key features which make this project extremely transferrable include the following: - The format used for reporting results is simple. - The process used for validating responses from participants follows standard institutional internal audit procedures and guidelines. - The self-assessment survey is short, consisting of 51 questions. - The identified key financial control processes will be relevant to all institutions. - The self-assessment survey could be replicated and used at any other institution, without change. - The self-assessment survey is delivered via an on-line survey tool which would be easily adaptable to other institutions' information technology systems.

Quality Impact

The expected qualitative outcomes, which have all been achieved to date, include the following: - Provide the Board of Governors, senior management and external stakeholders with assurance that our financial control environment can be relied upon. - Identify and prioritize opportunities for targeted improvements in key financial control processes at both the department/unit and university level. - Improve the working relationship between department/unit and central administration staff. - Achieve greater awareness and understanding of key financial control processes. - Shared accountability, acknowledgement and understanding of financial roles and responsibilities by college/unit faculty and staff. - Identify opportunities for development and delivery of training initiatives. The results have been assessed from December, 2008 to the present in the following manner: - Validation of self-assessment survey responses by completion of on-site visits and compilation of supporting documentation for 10% of participants annually. - Review of results of bi-annual internal client satisfaction survey to assess understanding and awareness of financial controls (see 4. Productivity Impact). - Feedback received from the project's advisory committee (Committee to Review and Monitor Internal Controls), which is comprised of senior financial and administrative officers from all of the university's colleges and major administrative and research units.

Productivity Impact

The project's productivity gains have come from: - Strengthening of the university's financial control environment and the financial control processes at the department/unit level to compliance with identified best practices. - Increasing the percentage of campus financial managers who understand the key financial controls in their college/unit. - Increasing the percentage of campus financial managers who are involved in testing key controls in their college/unit - Maintaining the percentage of campus financial managers who understand their financial management responsibilities. - Increase the percentage of campus financial managers who know what tools are available to assist with financial management responsibilities. - Increase the percentage of campus financial managers who feel that the tools noted in 5 above are adequate. In quantitative terms, the above noted productivity gains are as follows: Productivity Gain (# as above) Dec2010 Dec2008 % Gain 1 84.25% 77.25% 9.06% 2(*) 56% 44% 27.3% 3(*) 23% 10% 230% 4(*) 88% 88% - 5(*) 61% 47% 29.8% 6(*) 59% 48% 22.9% Note: (*) As measured by the bi-annual voluntary internal client satisfaction survey.

Innovation

From the perspective of higher education, this project shows innovation from the following attributes: - Utilizes concepts that are currently accepted in teaching and research for quality assurance and accreditation programs, and applies them to financial management and administration processes. - A number of Survey Completion Workshops are facilitated by Financial Services Division where department staff complete the self-assessment survey on-line and have the opportunity to seek advice and guidance on financial control processes. The workshops are held in student computing labs that are easily accessed by participating staff. This has contributed to a 100% completion rate in the past three years. - The survey addresses the financial control processes that are in place at the department/unit level and is being completed by financial administration personnel at the department/unit level. - Delivers accurate, reliable and useful information to faculty and staff to promote learning, reflection, analysis, awareness and understanding. - Provides department/unit faculty and staff with opportunities for self-assessment, collaboration with others, and identification of priorities that will not only contribute to the strengthening of the university's financial control environment, but will also be invaluable in the development of self-learning, for all participants. - Serves as a foundation for the development and delivery of other supportive internal training programs. - The self-assessment survey is a knowledge transfer tool for informally increasing the knowledge and awareness of departmental staff. - Enables staff to effectively monitor and judge their unit's financial control environment, with less time required from others in a supportive oversight role. - Provides for easy understanding of successes/outcomes in a simple concise quantitative scorecard report format.