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Title: Financial Overview Presented to School of Medicine


1
Financial Overview Presented toSchool of
Medicine
  • Emory University Edie Murphree
  • Woodruff Health Sciences Center Ronnie Jowers
  • Cost Allocation/Internal Controls Belva White
  • September 8, 2006

2
Emory University Financial Overview Agenda
  • University Governance
  • University Finances
  • Debt
  • Endowment

3
  • University Governance

4

5
Emory University Internal Committees1
  • Presidents Cabinet
  • Ways and Means Committee
  • Presidential Advisory Committee
  • Administrative Council
  • Faculty Council
  • University Senate
  • Campus Development Committee
  • Committee on the Environment
  • Fringe Benefits Committee
  • Traffic and Parking Committee
  • Safety/Security Committee
  • Athletic Policy Committee
  • University Senate (continued)
  • Campus Life Committee
  • Library Policy Committee
  • Honorary Degrees Committee
  • Council of Deans
  • Council on Information Resources Technology
  • Employee Council
  • School Committees Governance
  • Student Committees Governance
  • 1 Excludes Emory Healthcare Committees

6
What?
  • Presidents Cabinet
  • President James W. Wagner Chairman
  • Executive Vice Presidents
  • Academic Affairs and ProvostEarl Lewis
  • Finance and AdministrationMichael J. Mandl
  • Health Affairs and CEO Woodruff Health Sciences
    CenterMichael M. E. Johns
  • Senior Vice Presidents
  • Development and University RelationsJohnnie Ray
  • General CounselKent B. Alexander
  • Campus LifeJohn Ford
  • Vice Presidents
  • Vice President and SecretaryRosemary Magee
  • Vice President and Deputy to the PresidentGary
    Hauk

7
How?
  • Ways and Means Committee
  • Executive Vice Presidents
  • Academic Affairs and ProvostEarl Lewis
    (Chairman)
  • Finance and AdministrationMichael J. Mandl
  • Health Affairs and CEO Woodruff Health Sciences
    CenterMichael M. E. Johns
  • Support Staff
  • Senior Vice Provost for AdministrationCharlotte
    S. Johnson
  • Vice President Health AffairsRonnie L. Jowers
  • Vice President for FinanceEdith C. Murphree

8
Emory University Board of Trustee Committees1
  • Executive Committee
  • Full Board
  • Robert W. Woodruff Health Sciences Center Board
  • Finance Committee
  • Audit Committee
  • Real Estate, Buildings Grounds Committee
  • Investment Committee
  • Academic Affairs Committee
  • Development University Relations Committee
  • Campus Life Committee
  • Governance, Trusteeship, and Nominations
    Committee
  • Executive Compensation and Trustees Conflict of
    Interest Committee
  • 1 Excludes Emory Healthcare Committees

9

10
  • University Finances

11
Emory University, Inc. Total Revenue FY
2004-2005 (s in thousands)
Total 3,018,868
12
Emory University, Inc. Total Operating Revenues
FY 2004-2005 (s in thousands)
Total 2,722,138
13
Emory University Academic Research Revenue FY
2004-2005 (s in thousands)
Total 1,340,126
14
Emory University Unrestricted Operating Activity
RevenueFY 2004-2005 (s in thousands)
Total 560,378
15
Emory University Unrestricted Operating Activity
ExpenseFY 2004-2005 (by Natural Classification)
(s in thousands)
Total 543,816
16
Emory University Unrestricted Operating Activity
Expenses FY 2004-2005 (by Unit) (s in thousands)
Total 543,816
17
Emory University Unrestricted Operating Activity
ExpenseFY 2004-2005 (General University Detail)
(s in thousands)
Total 154,311
18
Emory University Unrestricted Operating Budget
(s in thousands)
Updated from shared drive share/annual
plans/04-05bud/04-05book, Tab Unrestricted
Operating Report
19
Emory University Unrestricted Operating Budget
(s in thousands)
20
Emory University Condensed Consolidated
Statements of Financial Position (s in
millions)
21
Emory University Condensed Consolidated
Statements of Financial Position (s in
millions)
22
Debt
23
Debt Policy
  • Purpose
  • To articulate Emorys philosophy regarding debt
    and provide a framework by which decisions will
    be made concerning the use and management of
    debt.
  • Objectives
  • Manage Emorys credit rating
  • Optimize debt portfolio
  • Manage debt on portfolio basis to achieve lowest
    risk adjusted cost of capital
  • Preserve equity and access to capital

24
Emory University Debt
  • Municipal Bonds
  • Interest bearing securities issued by state and
    local governments on behalf of qualified entities
    (i.e., not for profit) to finance capital
    projects.
  • Tax-Exempt Bonds
  • Securities whose interest is exempt from taxation
    at the federal and/or state and local levels and
    issued by qualified entities.
  • Taxable Bonds
  • Securities whose interest is taxable. Bonds
    issued by Emory when it exceeded the maximum cap
    or when the use of the financed project was for
    taxable operations.

25
Emory University Debt
  • Fixed-Rate Bonds
  • Securities whose interest rate is fixed and whose
    maturities are generally from 1 to 30 years.
  • Variable-Rate Bonds
  • Securities whose interest rate is set on a weekly
    or short-term basis.
  • Derivative (synthetic debt)
  • Contract between 2 parties that relates to an
    underlying asset or liability and is intended to
    effect the nature of that underlying asset or
    liability.

26
Emory University Debt
27
Emory University Debt (s in millions)
28
Endowments
29
Investment Policy and Guidelines
  • Objectives
  • Policies
  • Portfolio Composition and Risk
  • Segment Objectives and Investment Guidelines
  • Monitoring
  • Investment Manager Selection Guidelines

30
Investment Policy and Guidelines
  • Objectives
  • Preserve and enhance the real (inflation-adjusted)
    purchasing power of the assets in perpetuity.
  • Provide a relatively predictable and stable
    stream of earnings to provide for spending needs.
  • Attain a real total return of at least 6 over
    the long term, with a standard deviation of
    nominal returns no greater than that of U.S.
    Equities.

31
Market Value of the Endowment, Trust, and Life
Income Funds
Millions
(s in millions)
Fiscal Year
FY Market Value 1994 1,784.6 1995 2,214.3 1996 3,2
27.4 1997 3,716.3 1998 4,052.5 1999 4,262.7
FY Market Value 2000 4,779.8 2001 4,294.1 2002 4,0
91.3 2003 3,849.1 2004 4,085.8 2005 4,347.9
32
Emory Endowment
Investment Return
33
Emory University Endowment Trust Funds Market
Value at 8/31/05 by Purpose
34
Emory University Proposed Endowment Spending
Policy
  • Objectives
  • Provide current programs with a predictable,
    stable stream of revenue.
  • Ensure that the real value (i.e., purchasing
    power) of this revenue stream does not decline
    over the long term.
  • Ensure that the real value (i.e., purchasing
    power) of endowment assets does not decline over
    the long term.
  • Reduce lagging effects of market fluctuations.

35
Emory University Endowment Spending
Dividends Interest ()
Appreciation ()
Endowment Funds 4.3 Billion
Spending Policy
36
Emory University Endowment Spending Policy
  • Proposed Spending Policy
  • The proposed policy is still under review by the
    Board of Trustees, but the proposed payout
    formula is
  • 70 x (current payout inflation growth)
  • 30 x (target payout rate of 4.75 of endowment
    market value)
  • Spending Policy designed to produce spending
    which, over time, equates to 4.75 of endowment
    market value.

37
Emory UniversityEndowment Spending (s in
millions)
38
Woodruff Health Sciences Center briefing for the
School of Medicine Department Administrators
September 8, 2006
Robert W. Woodruff Health Sciences Center
39
The Synergistic Triangle
RESEARCH Preeminence in biomedical and clinical
science which improves the quality of life.
PATIENT CARE High quality, affordable and
innovative care which the community utilizes and
supports.
The R.W. Woodruff Health Sciences Center
stands for
EDUCATION Training skilled and compassionate pract
itioners and leaders who will shape the health
care of tomorrow.
Robert W. Woodruff Health Sciences Center
40
WHSC Purpose, Values, and Vision
  • WHSC Purpose
  • To serve humanity by improving health
  • Making People Healthy
  • WHSC Values
  • Excellence Caring Integrity
  • WHSC Vision
  • Transforming Health and Healing
  • By the year 2012, WHSC will be recognized as one
    of the top ten academic health sciences centers
    and will beleading change in health care through
    its education, research and
  • patient care programs

Robert W. Woodruff Health Sciences Center
41
Divisions of the Woodruff Health Sciences Center
Robert W. Woodruff Health Sciences Center
42
Woodruff Health Sciences Center
Jointly Owned Entities Emory-Adventist
Hospital EHCA, LLC
Major Affiliates Childrens Healthcare of
Atlanta Grady Memorial Hospital Atlanta Veterans
Administration Medical Center The Marcus
Development Center at Emory
Robert W. Woodruff Health Sciences Center
43
Emory University Organizational Chart
Robert W. Woodruff Health Sciences Center Board
EMORY HEALTHCARE Board
Emory University President James Wagner, PhD
Executive VP Academic Affairs ProvostEarl
Lewis, PhD
Executive VP Chief Operating Officer Michael
J. Mandl
CEO, Woodruff Health Sciences Center Executive
VP Health Affairs Chairman of the Board, EMORY
HEALTHCAREMichael M. E. Johns, MD
Dean, Emory College Dean, Graduate A S Dean,
Oxford Dean, Theology Dean, Law Dean, Business
EMORY HEALTHCAREPresident and CEOJohn T. Fox
Senior VP for Campus Life John Ford, PhD
VP for Research Administration
Dean, Public Health
Dean, Nursing
Dean, Medicine
Director, Yerkes
Emory Hospitals
The Emory Clinic
Senior VP for Institutional Advancement Johnnie
D. Ray
ECC
Wesley Woods
Grady MemorialHospital
Veterans AffairsMedical Center
EMCF
Childrens Healthcare of Atlanta
EHCA,LLC
Emory Adventist Hospital
not a subsidiary entity or operating component
of Emory University
Source Strategic Planning Office
44
Woodruff Health Sciences Center Organizational
Chart
CEO, Woodruff Health Sciences Center Executive
Vice President for Health Affairs Chairman of
the Board, EMORY HEALTHCARE Michael M.E. Johns, MD
Vice President, Academic Health AffairsJeffrey
W. Koplan, MD, MPH
President Chief Executive Officer, EMORY
HEALTHCARE John T. Fox
Dean, Emory University School of Medicine Thomas
J. Lawley, MD
Vice President for Health Affairs CFO, Woodruff
Health Sciences Center Ronnie L. Jowers
Dean, Nell Hodgson Woodruff School of
Nursing Marla E. Salmon, ScD, RN, FAAN
Vice President for Research Administration,
Emory UniversityFrank Stout
Dean, Rollins School of Public Health James
Curran, MD, MPH
Chief Counsel, WHSC EMORY HEALTHCAREJane E.
Jordan, JD
Director, Yerkes National Primate Research
Center Stuart M. Zola, PhD
Senior Associate Vice President, WHSC
DevelopmentPhilippe Hills
Associate Vice President, WHSC
Communications Ron Sauder
Director, Strategic Planning Office WHSC EMORY
HEALTHCAREShari Capers
Senior Associate Vice President, WHSC
Administration Chief of Staff to the CEO Gary
Teal
Source Strategic Planning Office
45
Student Enrollment (FTE)for Fiscal Year 2006
Allied Health 305 School of
Medicine 460 Grad. Div. Biological
Biomedical 396 Residents 1,090 Post
Doctoral Candidates 438 School of
Nursing 355 Post Doctoral
Candidates 5 School of Public Health
735 Post Doctoral Candidates
18 TOTAL 3,783
46
Full-time FacultyFiscal Year 2006
Medicine 1,343 Nursing 42 Public
Health 111 Yerkes (Faculty
Scientists) 50 1,546
Robert W. Woodruff Health Sciences Center
47
WHSC Employment August 2006
Emory
Wesley Woods
Children's
668
Exec VP Health
Center
Affairs/EHC
105
Corporate 417
School of
Medicine 5,245
Emory Clinic
2,204
School of
Nursing
Emory Hospital
122
3,408
Crawford Long
School of Public
Yerkes Primate
Hospital
Health
Center
2,575
412
408
Total Health Sciences Center Employment
15,564 Above totals do not include approximately
3,000 employees of EHCA, LLC Robert W. Woodruff
Health Sciences Center
Robert W. Woodruff Health Sciences Center
48
WHSC Expendituresfor Fiscal 2005
RSPH 66,796,284
Yerkes 59,700,792
SON 16,685,667
SOM 520,986,678
EVPHA 25,943,548
EUH 464,452,000
Eliminations (32,816,000)
WWC 53,356,000
ECC 17,659,000
The Emory Clinic 427,066,000
EHC Corporate and CCIC 6,676,000
ECLH 363,262,000
Total WHSC Operational Expenditures
1,989,767,969
Robert W. Woodruff Health Sciences Center
49
WHSC Expenditures Clinical vs. Academic/ResearchF
or Fiscal 2005
Academic/
Research
690,112,969
EHC
1,299,655,000
Academic/Research Includes School of
Medicine Nell Hodgson Woodruff School of
Nursing Rollins School of Public Health Yerkes
National Primate Research Center Office of the
Executive Vice President for Health Affairs
EHC, Inc. Includes Emory University
Hospital Emory Crawford Long Hospital Wesley
Woods Center The Emory Clinic Emory Childrens
Center Clifton Casualty Insurance
Company Corporate Offices
Total WHSC Operational Expenditures
1,989,767,969
Robert W. Woodruff Health Sciences Center
50
Emory University All Funds Budget Fiscal Year
2005-06
University Expenses
All Other
8.8
Emory College
Yerkes
5.5
Theology
Emory Graduate School 5.0
20.4
1.9
Oxford
1.7
Public Health
6.0
Business
5.1
Nursing
1.5
Law
2.9
Medicine
41.1
Total 1.077 Billion
Robert W. Woodruff Health Sciences Center
51
Total WHSC Sponsored Project Awards
350
325.8
329.0
1.6
2.8
300.3
46.3
300
47.6
4.8
43.1
251.2
52.5
46.6
0.2
250
233
35.4
45.1
4.8
0.2
3.5
203.8
36.3
192.3
3.3
1.6
200
35.4
0.3
27.7
25.8
Amount of Award
23.2
(in Millions)
2.6
154.3
3.3
25.3
142.1
24.6
0.8
150
1.6
20.4
1.3
17.1
19.9
17.1
167.4
225.2
0.6
224
1.3
204.0
147.6
100
177.6
142.8
112.6
105.9
50
0
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
SOM
NHWSN
RSPH
Yerkes
EVPHA
Note Total Award Amounts are noted in red. All
Research Awards data include Direct and Indirect
amounts and reflect awards in the fiscal year
that ORA received notification of award (Notice
of Award date). Source Office of Research
Administration Annual Report
52
EndowmentMarket value as of August 31, 2005
Woodruff Medical Center/EVPHA 664,405,455 41.2
School of Medicine 840,754,327 52.1
Yerkes National Primate Center 966,202 .05
School of Public Health 30,046,045 1.9
Emory University Hospital 20,061,890 1.2
Emory Crawford Long Hospital 25,123,168 1.4
School of Nursing 31,026,810 1.7
Total WHSC Endowment 1,612,383,897 Total
Emory Endowment 4,313,236,530
53
Robert W. Woodruff Health Sciences Center Fund,
Inc.
  • Commenced in 1996 Separate Board of Trustees
  • Comprised of 12,565,640 Million Shares of Coke
    Stock
  • At 41/Share 515.2 Million (approximately)
  • Not on Spending Rate of the University
  • Income Approximates - 1.24/Share or
    Approximately 15.58m/yr.
  • Expenditures
  • Operations 6.0 Million Shares
  • 50 Cancer Initiatives
  • 50 Other WHSC Academic/Research Leveraged
    Initiatives
  • Facilities 6.2 Million Shares
  • 51 Cancer Facilities (WCI Building and Capital
    Equipment)
  • 49 Other WHSC Facilities (Whitehead)
  • 2004 Gift and 2005 Gifts 245,640 shares and
    120,000 shares, respectively
  • 51 WCI Operations
  • 49 School of Medicine Medical Education Building

Robert W. Woodruff Health Sciences Center
54
(No Transcript)
55
(No Transcript)
56
Woodruff Health Sciences CenterOwned and
Affiliated Hospitals
Summary
EHC 05
GRADY '04
CHOA '04
VAMC '05
TOTAL
Number of Licensed Beds
1,184
953
430
171
2,738
Number of Admissions
47,511
31,103
21,400
6,764
107,069
Number of ER Visits
70,140
162,669
111,000
10,225
337,151
Number of Outpatient Visits
1,391,831
700,533
450,000
459,689
3,788,884
57
New Construction Since 1996 Compared to Todays
Agenda
COST
SIZE
BUILDING
YEAR
18.5 M
80,000 GSF
1525 Clifton Road Building
1997
15.0 M
73,000 GSF
Vaccine Research Center
1999
22.0 M
100,000 GSF
Nell Hodgson Woodruff School of Nursing
2000
82.3 M
325,000 GSF
Whitehead Biomedical Research Building
2001
3.4 M
16,000 GSF
Autism Center
2002
270.0 M
915,000 GSF
Emory Crawford Long Hospital - Redevelopment
2002
75.7 M
264,000 GSF
Winship Cancer Institute (WCI)
2003
8.4 M
20,000 GSF
Winship Cancer Institute (WCI) - Vivarium
2003
15.0 M
68,000 GSF
Faculty Education Building _at_ Grady
2003
27.0 M
98,000 GSF
Yerkes - Neuroscience
2004
42.0 M
143,989 GSF
Pediatrics
2004
55.0 M
162,000 GSF
SOM Admin Medical Education Building (in
process)
2005
634.3M
2,264,989 GSF
Total Since 1996

Robert W. Woodruff Health Sciences Center
58
School of Medicine Administration and Medical
Education Building Conceptual Rendering -
Courtyard View
Robert W. Woodruff Health Sciences Center
59
EHCA,LLC Emory Johns Creek Hospital
  • Partnership structured as 50/50 ownership with
    Emory Healthcare controlling the medical
    management and HCA controlling the operational
    management.
  • Facility 110 bed replacement hospital
    (replaces Emory Dunwoody and West Paces Ferry
    Hospital). Four story building with
    269,000 gross square feet. CON granted in January
    2004.
  • Competition Gwinnett Medical Center (14
    miles), North Fulton Regional Hospital (10
    miles).
  • Emory Investment Emory will have 50 ownership
    of this hospital. Total initial expenditures
    estimated at 132.2 million (50 66.1M)
  • Financial Projections Payback Period is 9.7
    years.

Robert W. Woodruff Health Sciences Center
60
A Desired New Focus for WHSC
  • The Robert W. Woodruff Health Sciences Center of
    Emory University (WHSC) began the assessment and
    restatement of its strategic framework in
    November 2001. The plans developed in 1997
    directed activity and facilitated growth in the
    research, education, clinical and service
    activities of the WHSC but needed to be revised
    due to the changing landscape of the external and
    internal environments.
  • Key Drivers include
  • A renewed desire to be considered one of the Top
    10 Academic Medical Centers in the US
  • New leadership at Emory University
  • Accelerating financial constraints
  • Continued silo thinking within operating units
  • Consumerism movement in healthcare beginning
  • Continued fragmented, disconnected healthcare
    system
  • Academic and clinical research dollars more
    difficult to obtain

Based on this information, an updated mission and
core purpose, a new vision and goals, and
strategic initiatives have been developed to
guide WHSC into the 21st century.
Robert W. Woodruff Health Sciences Center
61
WHSC Vision 2012 Transforming Health and Healing
The WHSC Vision for a New Model of Health and
Healing is characterized by
  • Integrated, inter-professional care teams
    providing seamless, patient-centered care
    integrating new approaches to nursing, healing
    and public health.
  • Services differentiated from community
    competitors -- including prevention and
    regenerative care -- facilitated by discoveries
    in proteomics, genomics, bioinformatics,
    pharmaco-genomics, systems biology, epidemiology
    and other emerging fields.
  • Health professional education and training
    programs that reflect and inform the
    interdisciplinary convergence of research and
    clinical programs.
  • Outcomes-based research and continuous-feedback
    programs that enable real-time and continuous
    evaluation and improvement of all service
    efforts.
  • Technology platforms and databases that enable
    appropriate and on-demand information sharing
    among caregivers, researchers, students,
    patients, and families.
  • Measurable impact on the health of the people and
    populations we serve.

Robert W. Woodruff Health Sciences Center
62
WHSC Strategic Initiatives
To achieve this vision, WHSC needs to make
investments in key areas
  • Develop patient-focused centers, first in Cancer,
    Cardiovascular, Lung, Neurosciences, and
    Transplant, with the goal of positioning WHSC to
    be a leader in each of these areas by 2012
  • Strengthen quality and safety program based on
    outcome measures
  • Establish an enterprise-wide Predictive Health
    Program
  • Establish an enterprise-wide Global Health
    Program
  • Implement the master facility plan to include the
    Clifton Corridor, research and academic
    buildings, and the ECLH campus
  • Ensure WHSC Operating Units create and implement
    unit-specific strategic plans moving them to a
    top tier status, maintaining alignment with WHSC
    strategic vision

Robert W. Woodruff Health Sciences Center
63
Proposed New Building for Rollins School of
Public Health
Robert W. Woodruff Health Sciences Center
64
Future Hospital Site
New Clinic
New Hospital
Robert W. Woodruff Health Sciences Center
65
Conclusions
  • Only Comprehensive Academic Health Center in
    Georgia
  • Largest Health System in Georgia
  • Emory Name Recognition and Reputation for
    Excellence
  • Growing Atlanta and Georgia Populations
  • Strong History of External Foundation Funding
    Support
  • Strong Managed Care Attractiveness based on Emory
    Name, Geographic Dispersion, Continuum of Care
  • Appropriate Governance Structures
  • Cancer Institute Initiative, Strong Funding
    Support and Centerpiece of Georgia Cancer
    Coalition
  • Integration of Health System with Emory
    University

Robert W. Woodruff Health Sciences Center
66
Cost AllocationInternal Controls Guidelines
-SAS 112 -Unrelated Business Income
-Other Emory PoliciesFinance Division Support
67
Cost Allocation Goals
  • Achieve Effectiveness
  • Simplified Methodology
  • Support Decision-Making
  • Achieve Equity
  • Measure Basis
  • Assigned Measures
  • Achieve Efficiency
  • Budget Process
  • Reporting

Efficient
Equitable
Effective
Goals
68
Methodology Overview
  • Utilizes allocation measures that reflect
    effort/benefit.
  • Certain common good costs are to be shared by
    the entire University community.
  • Eliminates side recharges that are more
    appropriately handled through the cost allocation
    process.
  • Balances tension between fairness and efficiency.
  • Uses measures
  • that improve ability to control predict future
    allocations through operational decisions
  • that minimize the growth penalty and
  • that should not result in large fluctuations in
    cost shifts from year to year.

69
Methodology Overview
70
Key Factors in Analyzing Cost Allocation
Calculations
  • What are the cost drivers for your school?
  • Headcounts
  • Transaction/Effort
  • Direct Expenses
  • The pool concept - which cost pools drive your
    allocation?
  • How are your cost drivers used for specific
    accounts within the pools?
  • How do the current results compare to the prior
    year allocation? What caused the variance?
  • How can management decisions / fiscal planning
    effect future cost allocations?

71
Campus Services Space Allocation (Facilities
Management Division)
Allocation Methodology The facilities cost
distribution (excluding utilities) is based on a
standard charge per square foot.
  • Disadvantages
  • Types of space age are not considered
  • Assumes consistent level of FM services per
    building
  • No prorated costs for services on new buildings
  • Advantages
  • Transparency
  • Simplified cost projections
  • Eliminates significant annual cost fluctuations
  • Focus on service
  • FM assumes responsibility for fulfilling service
    agreement
  • FM will be utility company assume rate risk /
    schools will bear volume risk

72
Cost Allocation Measures
Accounts in Pools
Allocation Measures Used
Cost Pools
73
Cost Allocation Measures
Allocation Measures Used
Accounts in Pools
Cost Pools
74
Cost Allocation Measures
Allocation Measures Used
Accounts in Pools
Cost Pools
75
Cost Allocationsin the Budget Process
76
Reporting
  • On an annual basis, you will receive a detail of
    your schools allocated central and
    administrative costs as part of your approved
    budget package communication. This is normally
    distributed in the April-May time frame.
  • Cost Allocation Detail by Pool (see section 1c
    for example report)
  • Cost Allocation Detail by Measure (see section
    1c for example report)

77
Reporting
78
Reporting
79
SAS 112 Communicating Internal Control Related
Matters Identified in an Audit
80
SAS 112 - Overview
  • Effective for periods ending on or after 12/15/06
  • Focus is on potential exposure (versus actual
    exposure)
  • Basically lowers the control bar, increasing
    the likelihood that control deficiencies will be
    categorized as significant.
  • Expect the number type of internal control
    weaknesses reported in Yellow Book audits to
    increase
  • Expect the new definitions to impact the risk
    criteria for major programs under OMB A-133

Source NACUBO webcast SAS 112 (June 22, 2006)
81
SAS 112 Changing Environment
  • Continuing shift of Sarbanes into non-profits
  • Reduced materiality thresholds
  • Reduced tolerance for errors
  • Re-emphasis of testing for effective operating
    controls

Source NACUBO webcast SAS 112 (June 22, 2006)
82
SAS 112 Impact
  • Expect increased disclosure / reporting of
    deficiencies to
  • Trustees
  • Federal Sponsors
  • 3rd Party Creditors (possibly)
  • Donors
  • Accrediting Agencies
  • Rating Agencies
  • Insurers

Source NACUBO webcast SAS 112 (June 22, 2006)
83
SAS 112 Deficiency Levels
Source NACUBO webcast SAS 112 (June 22, 2006)
84
SAS 112 Deficiency Levels
  • Ineffective
  • Oversight by governing board
  • Internal audit or risk management function
  • Compliance function in highly regulated
    industries
  • Control environment
  • Restatement of prior year financials to correct a
    material misstatement
  • Audit adjustment that was not caught by internal
    controls
  • Identification of fraud
  • Not addressing previously communicated
    deficiencies

Source NACUBO webcast SAS 112 (June 22, 2006)
85
SAS 112 How Should We Respond?
  • Commence with a comprehensive risk assessment
  • Accept / confront known weaknesses
  • Inventory
  • Significant accounts
  • Significant processes
  • Develop a plan to address weaknesses

Source NACUBO webcast SAS 112 (June 22, 2006)
86
Internal ControlsMaturity Framework

MOST COMMON
GOAL
Source PriceWaterhouseCoopers Internal
Control Readiness Why you need to act today
87
SAS 112Practical Guidance
  • Account reconciliations
  • Timeliness
  • Evidence of review
  • Disposition of reconciling items
  • Journal entries
  • Evidence of review
  • Adequate supporting documentation Does the
    entry stand by itself?
  • Account set-ups
  • Adequate supporting documentation
  • Gift agreements
  • Restrictions

Source NACUBO webcast SAS 112 (June 22, 2006)
88
Audit Program Guides
http//www.auditnet.org/freeaccess.asp
89
SAS 112Practical Guidance
  • Assess your areas honestly and critically
  • Dont allow yourself to be surprised by a SAS 112
    disclosure

90
Other Policies Regulations
91
Emory Trust Line
Source Emory Internal Audit website
92
Emory Trust Line
Source Emory Internal Audit website
93
Emory Trust Line
Source Emory Internal Audit website
94
Financial Attestation Form
  • Why do we have a Financial Attestation Form
    (FAF) process?
  • Provides a framework for ethical financial
    management reporting
  • Why are central administrators business
    officers required to sign a FAF?
  • Accountable for
  • ensuring timely, accurate complete financial
    reporting
  • ensuring compliance with applicable University
    and legal requirements.
  • Responsible for identifying recommending
    potential remedies for inconsistent, fiscally
    vulnerable, and/or non-compliant business
    practices.

95
Financial Attestation Form
  • FAF references Emorys policies procedures
  • This means compliance with Generally Accepted
    Accounting Principles (GAAP) except where
  • Emorys written policies and procedures are
    stricter or more detailed than GAAP

https//www.finance.emory.edu/external/polprod/ind
ex.cfm
96
Bayh-Dole Act
  • Key Phrase to remember Bayh-Dole Royalty Use
  • Passed by Congress in 1980 to stimulate
    investment in and commercialization of scientific
    inventions
  • Allows universities to elect ownership of
    inventions made at their institutions using
    federal funding
  • After payment of expenses (including payments to
    inventors), nonprofit organizations may use the
    balance of any royalties or income earned by the
    contractor with respect to subject inventions
    for the support of scientific research or
    education.

http//www.ogc.emory.edu/Advisories/8.1-OGCAdvisor
yBayh-DoleAct
97
Unrelated Business Income
  • Basic question is the activity related to our
    tax-exempt purpose?
  • Areas to watch (may or may not be a problem)
  • Agreement with a third party to test a product
  • Research in clinical areas
  • Phase 4 trials when product marketing is
    involved, the analysis could change
  • Expert witness revenue
  • Service centers that perform research AND sell
    services to external customers
  • Bottom line Raise concerns so we can review
    potential issues with you. To ignore potential
    issues could result in IRS problems, negative
    publicity and conversion of tax-exempt debt to
    taxable debt (major impact). UBI is not
    necessarily a bad thing but accounting for it
    incorrectly could be.

98
Signature Authority Policy
  • Signature Authority and Contracting Policy
  • Effective January 1, 2006
  • Accountability
  • Fundamental to ethical, effective and efficient
    functioning
  • Uniform Practice
  • Essential for execution of contractual agreements
    with 3rd parties
  • Contracting Authority Committee
  • One person appointed to represent your school/unit

https//www.finance.emory.edu/external/polprod/aut
hsigners.pdf
99
Signature Authority Policy
  • Applicability and Scope
  • Applies to all Emory employees
  • Governs contractual agreements between an Emory
    entity and a third party
  • Transactions Covered Include
  • Contractual monetary limits
  • Procurement of goods and services
  • Personnel agreements
  • Research administration
  • Construction/Renovation projects
  • Real estate acquisition/Leasing
  • Software licenses/Technology
  • License and use of Emory trade names and marks

100
Signature Authority Policy
  • Delegation Responsibilities and Delegation Policy
  • Unclear delegations
  • Seek specific guidance from immediate supervisor
  • Procedure for proper delegation of authority
  • Must be in writing
  • Must be to positions, not to individuals
  • Must include (1)specs for scope, terms
    limitations, (2)types of contracts the delegate
    is authorized to sign, (3)the extent of monetary
    authority, (4)duration, (5)whether sub-delegation
    of authority is permissible
  • Copy of delegation must be transmitted in 3 days
    to General Counsel and copies retained in office
    with delegate
  • In effect no more than five years and may be
    terminated at any time
  • Senior leadership change precipitates a review of
    existing delegation of authority

101
Authorized Signers
  • If you are an Authorized Signer for your
    department, this does not mean you have been
    cleared for all transactions. You need to
    reference the Signature Authorization Policy.
  • Authorized Signers are registered as authorized
    to sign for a department for amounts less than
    the scope of the Signature Authorization Policy.

102
Authorized Signers
Periodical reviews of department authorized
signers is highly recommended.
103
Finance Division Support
104
Forms Available On-Line
  • Payment services
  • ACH Payment Authorization
  • Employee Stop Payment
  • Lost or Destroyed Receipt Affidavit
  • Mileage Log
  • Non-Employee Compensation
  • Petty Cash Fund Request
  • Petty Cash Replenishment
  • Petty Cash Voucher
  • Tax-Exemption Letters
  • Travel Advance
  • Travel Card Application
  • Wire Transfer Request
  • W9- IRS Form (Blank)
  • Controller's Office
  • Account Create
  • Cash Receipt/Disbursement Transaction
  • Department Signature Authorization
  • FAS Data Access
  • Grants Contracts
  • Direct Cost Exception Request
  • NonResident Alien Payments
  • Compliance Statement
  • Form 4 Instructions
  • Form 4 "Cheat Sheet"
  • Guidelines
  • FNIS
  • W-8BEN
  • Payroll
  • Direct Deposit Authorization
  • G4 - Employee's Withholding Certificate
  • Moving Expense
  • Paper Pay Advice Request
  • Vacation/Sick Leave Balance Change
  • W4 - IRS Form
  • W5 - IRS Form
  • Procurement Services
  • Cardholder Agreement
  • Student Financial Services
  • Authorization Automatic Direct Draft
  • Economic Hardship Deferment
  • Health Professions Deferment
  • Nursing Loan Deferment
  • Public Service Deferment Request
  • Request for Deferment of Repayment
  • Request for Forbearance Hardship
  • Service/Employment Deferment
  • Service/Employment Partial Cancel
  • Teaching Services Deferment
  • Teaching Service Partial Cancellation

https//www.finance.emory.edu/external/forms/index
.cfm
105
Financial Reporting
Welcome to WebFOCUS, the strategic business
intelligence and reporting tool for Emory
University! Enter WebFOCUS 5 New User
Instructions
https//www.finance.emory.edu/reports/webfocus/int
ro.cfm
106
Training
107
Training
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