What are the six classes of physical internal controls?
Last Updated: October 18, 2022 5:22:18 PM PDT Show
Learn how to incorporate internal control practices into your department's everyday procedures. Internal control practices enable UC San Diego to achieve its objectives while maintaining an environment that focuses on ethics and accountability. Establishing an ethical environment at all levels of the organization is the most important element of accountability and control. Effective control activities help you and your department identify priorities, achieve department goals, report reliably, meet compliance regulations, and safeguard university resources. How does my department benefit from internal controls?
4 keys to great internal control practices:With tightened resources, it’s more important than ever to minimize risk and focus on these key areas.
Internal Controls PracticesRead about potential consequences and best practices tailored to various business areas: Accounts PayableBackgroundUC San Diego pays approximately $2 million in invoices each day. Using proper internal controls, you can ensure that goods and services are received, and payments are properly processed. Separation of dutiesEnsure that payment documents are processed correctly by having different people involved in the payment process. This principle is called separation of duties.
Accountability, authorization, and approvalAccountability ensures that you authorize, review, and approve invoices for payment based on signed agreements, contract terms, and purchase orders.
Security of assetsOnce you receive your purchased goods, secure the materials in a safe location. To account for resources, periodically count your inventory and compare the results with amounts shown on control records.
Review and reconciliationYour reconciliation activities confirm that you're paying for approved purchases and are being billed correctly. Perform monthly ledger reconciliations to catch improper charges and validate transactions.
For information about accounts payable responsibilities, contact Disbursements, (858) 534-4080. For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. CashBackgroundUCSD transacts thousands of dollars in over-the-counter business every day. To ensure that you protect, accurately process, and properly report University assets, follow the internal control practices of separating duties, obtaining appropriate authorizations and approvals, securing assets, and reconciling cash. Definition: The University defines cash as currency, coins, checks, money orders, and e-commerce transactions like credit card transactions. Separation of dutiesOne of the most important steps your unit can take to protect cash — and you — is to separate cash handling duties among different people. With proper separation of duties, no single person has control over the entire cash process.
Accountability, authorization, and approvalCash accountability ensures that cash is accounted for, properly documented and secured, and traceable to specific cash handlers.
Security of assetsBe sure to keep all of your resources physically protected, including your cash handlers. Follow these practices to promote a safe work environment when working with cash.
Review and reconciliationYour reconciliation activities confirm that you've recorded transactions correctly. Perform monthly reconciliations of cash receipts and bank account statements to provide good checks and balances.
For information about cash handling responsibilities, contact the Cashier's Office, (858) 534-3725. For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. Entertainment ExpensesBackgroundEntertainment usually involves a guest-host relationship in which a UCSD host invites an official guest to attend an event. You may have meetings that don't fall into this category but still incur allowable entertainment expenses. Separation of dutiesA key step your department can take when handling entertainment expenses is to have different people involved in the process. Entertainment expenses must serve a business purpose, with no personal benefit to the host or other University employee.
Accountability, authorization, and approvalYou maintain accountability when you properly authorize, review, and approve expenses that make the best use of public funds and comply with University entertainment policy.
Security of assetsOnce you've purchased and received the goods to be used for an approved event, secure them in a place where a limited number of people have access.
Review and reconciliationYour reconciliation activities ensure that your entertainment costs are accurate and appropriate. Perform monthly ledger reviews to confirm that you're paying for approved charges.
Equipment ManagementBackgroundCampus funding is affected by reports of expenditures for equipment that are sent to federal, state, and private funding agencies. Keep your resources safe and reports reliable by focusing on the following key internal control practices. Definition: Inventorial equipment has an acquisition cost of $5,000 or more and must be tracked as property through CAMS (Campus Asset Management System) and through UC San Diego’s financial system. All equipment items are either owned by or in the custody of UC San Diego, and must be non-expendable (can't be used up), stand alone, have a normal useful life of more than one year, and qualify as tangible personal property. Separation of dutiesOne of the most important things you can do to protect your equipment is to separate equipment management duties so that no one person has control over the entire equipment management process.
Accountability, authorization, and approvalYou maintain accountability when the right person authorizes equipment purchases, classifies property based on UCSD equipment classification criteria, and correctly records new purchases and changes of asset location.
Security of assetsKeep all your equipment physically protected. This also applies to off-campus use of University equipment. Establish detailed equipment records to maintain accounting control and physical accountability of assets.
Review and reconciliationReconciliation activities ensure the proper classification, recording, and documentation of equipment. Perform periodic reviews to ensure the accuracy of equipment records and recorded asset balances.
For information about managing equipment, contact Equipment Management, (858) 534-6163. For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. Honorarium PaymentsUC Employee Honorarium PaymentsHonorarium payments for UC employees must be processed through UCPath for tax reporting purposes following the multi-location appointment guidelines. For instructions on how to process UC Employee Honorarium Payments, visit the PayPath Transactions section and see the UCPath job aid for How to Manage Multi-Location Appointments. Non-UC Employee Honorarium PaymentsPeople invited by UCSD to give lectures, seminars, or concerts may be paid an honorarium instead of reimbursement for travel expenses or other fees. Be sure that these guests are paid through Disbursements and the accounts payable system. Separation of dutiesAssign duties associated with handling honorariums among different people. A key step your unit can take to ensure a proper payment process is to have different people involved in the process.
Accountability, authorization, and approvalRemember that honorariums are only paid to non-University employees. University employees providing special services are paid through the payroll system. Contact Disbursements for information about eligibility requirements for recipients, best methods of payment, and tax liabilities.
Security of assetsBe sure to keep payments in a safe place and protect your guest's private or personal information. Secure information in a safe location and restrict access only to designated employees who need the information to perform their job functions.
Review and reconciliationYour reconciliation activities confirm that honorarium activities have been approved and billed correctly. Perform monthly ledger reconciliations to catch improper charges and validate transactions.
For information about honorariums, contact Disbursements, (858) 534-0045. For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. Information SystemsBackgroundUC San Diego's electronic information systems contain many forms of personal and private information. By allowing appropriate system access and recording transactions in an accurate and timely manner, you can manage electronic information and ensure data integrity. Follow these internal control practices to make sure you handle electronic information and technology appropriately. Accountability, authorization, and approvalWhen proper accountability exists, you know who has access to electronic and personal information, for what business purpose they have access, what information systems and data are authorized for use, and where sensitive, private information resides.
Security of assetsUCSD's electronic information is a valuable asset. Security controls prevent and reduce the risk of harm caused by error, accident, natural disasters, or malicious action. Avoid duplication of information if it’s available elsewhere. Store information in a secure location.
Review and reconciliationYour reconciliation activities confirm that transactions are recorded correctly, can be readily retrieved, and are safeguarded from improper alteration.
For information about information systems responsibilities, contact IT Services, (858) 534-6960. For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. PurchasingBackgroundUCSD department buyers spend approximately $350 million per year on goods and services. Follow these internal control practices and learn the importance of separating duties, obtaining appropriate authorizations and approvals, securing assets, and verifying charges. Separation of dutiesTo ensure proper separation of duties, assign related buying functions to different people. With proper segregation, no single person has complete control over all buying activities.
Accountability, authorization, and approvalYou maintain accountability when you authorize, review, and approve purchases based on signed agreements, contract terms, and purchase orders.
Security of assetsOnce you have received your purchased goods, secure the materials in a safe location. To ensure that your resources are accounted for, periodically count your inventory and compare the results with amounts shown on control records.
Review and reconciliationPractice timely review of supplier’s invoice, packing slips, and purchase orders. Check accuracy of the information for prior payment, correct quantity ordered, and price charged. Monthly ledger reconciliation enables you to find improper charges and validate appropriate financial transactions.
TravelFollow UC San Diego travel policy requirementsUC San Diego travel policy, as published in Blink, is decisive. It has been adapted to UC San Diego's organization, delegation of authority, terminology, chart of accounts, and processing applications. Travel expenses must serve a business purpose, with no personal benefit to the traveler.
Separation of dutiesYour department is required to have different people involved in handling travel expenses.
Note: Travelers cannot approve their own expense claims, or the expense claim of a direct or indirect supervisor.
Accountability, authorization, and approvalYou maintain accountability when you properly authorize, review, and approve expenses that make the best use of public funds and comply with university travel policy.
SecurityFollowing best practices optimizes security for travelers and sensitive information.
Review and reconciliationTimely reconciliation activities ensure that travel costs are accurate and appropriate. Perform monthly ledger reviews to confirm payment of approved charges.
For information on internal control practices, contact Arlynn Renslow, (858) 822-2968. Which of the following are components of internal control?There are five interrelated components of an internal control framework: control environment, risk assessment, control activities, information and communication, and monitoring.
Which of the following are principles of internal control?There are seven principles of internal controls and these are:. Separation of Duties. ... . Access Controls. ... . 3.Physical Audits. ... . Documentation. ... . Trial Balance. ... . Reconciliation. ... . Approval Authority.. Which of the following is not an internal control?Answer: c.
Hence, collusion is not a type of internal control.
Which of the following is an example of a preventive control in the workplace?Examples of preventive controls are separation of duties, proper authorization, adequate documentation, and physical control over assets. Detective controls, on the other hand, attempt to detect undesirable acts.
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