The Quaestor - Volume 14, Issue 2

Accrual based accounting is recognizing an economic event at the time the transaction occurs, rather than when cash is exchanged. The RIT financial statements are prepared on the accrual basis of accounting.

Highlights of the FY19 Changes

Departments are now responsible for preparing their own accrual journal entries through the cutoff of final close, regardless of the dollar amount of the transaction.

Departments are responsible for marking the invoice payment form (IPF) or invoice with applicable notations to indicate whether the item has been accrued in the ledger for the respective fiscal year.

When departments submit invoices for payment in proximity to year-end close, Accounts Payable will verify if accrual entries have been posted for invoices ≥ $5,000. If the invoice has not been accrued, and it should be, Accounts Payable will prepare an accrual for the transaction for year-end close.

See the diagram below for Responsibility for Accrual Transaction Processing table. Additional information can also be found on the Controller’s Office website under “Year-End Closing Processes and Procedures.” The year-end close workshop is now an online course offered through RIT’s Center for Professional Development at the following link:

Year-End Online Workshop

If you have any questions or need additional information on accrual transaction processing please contact Accounts Payable (accpay@rit.edu, x54900) or Accounting (acctg@rit.edu).

According to the Framework, these principles are fundamental concepts that must be present and functioning in order to achieve an effective system of internal control. In addition, the Framework includes points of focus or characteristics that are examples of behaviors or processes that would be expected to be in place to demonstrate that the related principle is in fact present and functioning. This edition of the COSO Corner will summarize the seventeenth and final COSO principle, which is the last principle related to the Monitoring Activities component of the COSO Framework, as well as the related points of focus.

Principle 17 – The university evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action including senior management and the board of trustees, as appropriate. Important characteristics relating to this principle include:

• Assessing Results – While conducting monitoring activities, management may identify internal control deficiencies which have the potential to adversely affect the ability of the university to achieve its objectives. Deficiencies may surface from on-going evaluations, including managerial activities and everyday supervision of employees; and/or separate evaluations such as those performed by IACA or external parties such as regulators.
• Communicating Deficiencies – Communicating internal control deficiencies to the parties that have the knowledge and authority to take corrective action is critical for the university to achieve its objectives. Deficiencies may be reported to senior management and the board of trustees depending on the reporting criteria as established by regulators, standard-setting bodies, or the university. In considering what needs to be communicated, it is necessary to look at the implications of findings and the university’s reporting directives. Alternative communications channels should exist for reporting sensitive information such as illegal or improper acts (i.e., RIT’s Ethics and Compliance Hotline).
• Monitoring Corrective Actions – After internal control deficiencies are evaluated and communicated to those parties responsible for taking corrective action, management is responsible to track whether remediation efforts are conducted on a timely basis. Those responsible for taking corrective actions are usually different from those conducting the monitoring activities. For example, IACA provides the Audit Committee of the RIT Board of Trustees with periodic updates on the status of management action plans implemented to mitigate the control deficiencies identified within the course of our engagements.

Reference:
Committee of Sponsoring Organizations of the Treadway Commission (May 2013). “Internal Control – Integrated Framework”