Consideration of Fraud in Financial Statements
In order to minimize the risk of fraudulent activity affecting the Financial Statement presentation of Santa Fe College high-risk areas have been identified along with the steps the College is taking to safeguard its assets. The majority of transactions are automated and access to various input and approval screens are limited and controlled through the use of user ids, passwords, and access codes. In addition a specially configured monitor limits Payroll access.
In addition to addressing high-risk areas all employees, both management and other, are responsible to conduct College business in such as way as to prevent fraud from occurring in the workplace. It is also the responsibility of all College employees to report suspicions of fraud without delay. The College’s Fraud Policy outlines the responsibilities of employees and management for detecting and reporting fraud and/or suspected fraud; the College’s control environment emphasizes the commitment to ethical values and integrity and therefore sets the tone for the institution that these responsibilities are inherent to being an employee of the College.
The College maintains adequate insurance to ensure that theft, damage, or misuse of College property would not materially affect the financial statements. The College has considered all the areas identified below to be areas of risk and as set stringent internal controls. By adequately segregating duties, this reduces the likelihood that errors (intentional or unintentional) will remain undetected by providing for separate processing by different individuals at various stages of a transaction and for independent reviews of work performed. The College continuously seeks and reviews new procedures to enhance internal controls.
Cash Receipts
A person independent of cash records logs all incoming checks. This person turns the cash over to the cashier for deposit. The cashiering functions are separate from the accounts receivable functions. Checks presented at the cashier windows are made payable to the College and immediately endorsed for deposit. Personnel independent of cash transactions perform the bank reconciliation. Deposits are made when necessary to reduce the amount of cash on hand. Checks are deposited nightly via an online reporting process. Validated cash receipts are used for cash transactions processed at the cashier’s windows.
Cash receipts are also collected at the SF Little School, Teaching Zoo, and Planetarium, where all cash and checks are receipted and delivered to the Cashier’s office. The College requires decentralized cash collection sites at other locations such as the Kirkpatrick Institute of Public Safety, Andrews Center in Starke, Blount Center downtown, the SF Gym, Dental Program, and Student Activities. These areas are required to use numbered receipt books checked out from the Office for Finance Cashiering office, or numbered sales orders. The Bursar monitors the use of these receipt books.
Cash Disbursements
All disbursements, with the exception of petty cash and certain electronic transfers, are made by check. All checks are prenumbered. The check signer plate is kept in the vault in the Cashier’s Office. Check stock is kept in the computer services area. A representative from the Office for Finance (independent of the Accounts Payable processes) checks out the signature plate on a daily basis and takes it to the Computer Services and remains present while the checks are being signed. This person then returns the plate immediately to the Cashier Office. The signed checks are given to a clerk independent of the accounts payable process for distribution. Petty cash disbursements must have original approved receipts and are limited to $100 maximum per reimbursement. Wire transfers are automated and restricted to limited users and specified beneficiaries. Other electronic transfers are restricted to limited users and specified beneficiaries. The bank accountant reconciles cash in ledger with cash in the bank on a daily basis.
Appropriations and Budgetary Controls
The Board of Trustees approves all budget amendments for the unrestricted, restricted, and un-expended plant funds. The College allocates the budget to specific departments. All departments are limited by these budgets and can spend the allocations through the use of the purchasing requisition system. ITS Department controls access to this system by user ids and passwords. The Office for Finance handles further control in the approving of purchase requisitions with access codes. The purchasing requisition system limits purchases based upon budgets that are input to the system by the Office for Finance. Budget adjustments are approved by appropriate department heads, reviewed by an appropriate Finance Staff member, and then approved by a second appropriate Finance Staff member.
Receivables
Personnel make posting of accounts receivable independent to those having access to incoming receipts. The Board of Trustees approves all bad debt write-offs. The accounting system based upon input from accounts receivable staff produces subsidiary ledgers. Management reviews these ledgers periodically.
Investments
Investments are registered in the name of the College. Electronic Funds Transfers are limited by use of pre-set repeat codes that have been authorized by the Chief Financial Officer. Investments are under the control of a properly authorized custodian. Authorized custodian performs purchases and sales based on the Investment Agreement and Policy with Santa Fe College. Upon the purchase or sale of securities, Investment Manager sends a notice via mail to SF detailing executed trades. Either the individuals listed in the Investment Agreement or their designee reviews the trade for compliance with the Investment Agreement and the Investment Policy. On a monthly basis, the trades are reconciled with the monthly Investment report of holdings and transactions by a person independent of this process.
Inventories
Periodic physical inventories are conducted by IPS and the Property Coordinator and are properly supervised. Those that handle the inventory do not perform any purchasing, billing, or accounting activities.
Accounts Payable
Accounts Payable subsidiaries are produced by the accounting system and periodically reviewed by management. Cutoff procedures at year-end are adhered to ensuring inclusion of items purchased during the previous year. Accounts Payable staff periodically reviews vendor statements. Accounts Payable staff is independent of Purchasing staff.
Fixed Assets
All capitalized equipment is marked with a property decal number upon receipt of equipment. Procedures are established to track transferring of equipment from one property custodian to another. A bar-coding system is in place to properly track College owned assets. A reconciliation is done by the Property Manager in conjunction with the Assistant Controller to ensure all capital purchases are properly recorded on the Accounting records. The District Board of Trustees approves all property dispositions. All stolen/missing items are identified through physical inventory processes. These items are investigated by the SF Police Department prior to being reported to the Board. Procedures are in place that requires employees to sign out college-owned equipment if there is a need to take the equipment off campus. Transportable items such as laptop computers are required to be brought in periodically and witnessed by the Property Manager. Various attestation methods are used to track PCs used off campus such as verification of computers by logging on to SF Network.
Payroll
The Payroll Department is separate from the Human Resources department. All changes in payroll deductions are documented and signed by the employee. Payroll records are verified prior to the running of the payroll checks. The college uses payroll certifications, time sheets, and load sheets, which are authorized by each budget signature authority as documentation for payroll checks, disbursed. Payroll checks must be picked up, if not mailed or electronically deposited, by the payee or the designated group representative. Proper ID is required when checks are picked up. Access to the Payroll system is limited to appropriate personnel by use of access codes and specially configured monitors.
Purchasing
Purchases must be supported by a signed purchase order. Purchasing personnel are independent of Accounts Receivable and Accounts Payable personnel. Requisitions submitted by departments must have proper approval. The purchasing system limits the encumbrance of funds that exceed a department’s budget. Proper coding of expenditures is maintained by limiting access to only those general ledger codes authorized by the State Accounting Manual for Florida Public Community Colleges.
Personnel
New employees are fingerprinted for the purpose of conducting criminal background checks for all employees of the College. This applies to the following positions: full-time, part-time non-student, volunteers, interns, and other positions of special trust or responsibilities of those in sensitive locations as designated by the President. Credit checks are also performed on certain financial positions.
Search committees are used for most full time positions. Documentation, such as original transcripts and letter of recommendation, is required prior to formal job offers. Prior to extending a job offer, proper approval must be obtained by the administration.