The University of Texas System FINANCIAL STATEMENT SUBCERTIFICATIONS

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The University of Texas SystemFINANCIAL
STATEMENT SUBCERTIFICATIONS

• NACUBO
• 2007 Higher Education Accounting Forum

Charles G. Chaffin Chief Audit Executive and
System-wide Compliance Officer
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The University of Texas System
A public university system with 9 academicand 6
health institutions.

• 9.6 billion annual operating budget
• 32 billion total assets
• 160,000 students (3k to 50k per campus)
• 90,000 employees
• 5 billion construction program

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UT Programs

• 1.5 billion in Research
• 5 Division I NCAA Programs
• 4 Medical and 3 Dental Schools
• 6 Hospitals
• 2.1 million acres with almost 10,000 wells
• 6 Physician Practice Plans

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Historical Audit Activities

• Part of State Auditors opinion on financial
  statements of the State of Texas
• Part of A-133 federal audits of the State of
  Texas
• Student Financial Aid
• Research
• Internal auditors at each institution (130 total)
• Risk-based audit plans approved by the Board of
  Regents (BOR)
• Significant findings presented to the BOR
• Internal Control Actions Plans 1994-96
• Institutional Compliance Program 1998

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Spirit of Sarbanes-Oxley

• Review of NACUBO White Paper on SOX and Higher
  Education
• Preparation of a UT discussion paper on
  application of SOX
• Appointment of Ad Hoc Committee to draft an
  Action Plan to Implement the Spirit of SOX in the
  UT System
• Adoption of Action Plan by the Audit, Compliance
  and Management Review Committee of the Board of
  Regents

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Financial Statement Audit

• Board hired external auditor in July 2004
• Deloitte Touche audited September 1, 2004
  beginning balances
• Controller developed Policy on Annual Financial
  Report

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Certifications
Certifications by Account Owners
(Subcertifications)

• Each Account Owner should provide a
  subcertification annually to the Financial
  Reporting Officer
• Each institutions Financial Reporting Officer
  should decide at what level the subcertification
  is required (e.g. Dean, department head)

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Subcertification Examples

• Certification from institutions to System
• Standard representation letter
• Signed by President, Chief Financial Officer,
  Financial Reporting Officer, and Chief Audit
  Executive

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Subcertification Examples

• Subcertification from Departments to Financial
  Reporting Officer
• All accounts are reconciled
• Revenues and expenses are OK
• Adequate segregation of duties
• No fraud

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Steps Before Subcertification

• Internal Control and Fraud Awareness Training
• Appointment of departmental reconciler
• Segregation of duties and reconciliation training
• Financial accounting inspections
• Internal Audit departmental audits

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Benefits of Subcertifications

• Significant reduction in fraud
• More accurate departmental accounting and
  year-end cut off
• Establishes accountability
• More accurate budgeting and cost controls

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EXAMPLES

• UTS 142.1 Policy on the Annual Financial Report
• http//www.utsystem.edu/policy/ov/uts142_1.html
• Financial Statement Certification letter
  Appendix A
• Certification Letter to Financial Reporting
  Officer Appendix B

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Questions

• cchaffin_at_utsystem.edu
• [phone]