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Principles of Financial Management

I. Policy 

Each operating unit on campus requires financial resources in order to perform its role in the University's mission of research, teaching and public service.

Each unit head is responsible for ensuring that their units manage financial resources in an efficient and cost-effective manner.

Each unit head shall adopt the following principles and responsibilities to ensure sound financial management.

II. Principles 

Principle 1: A budget must be established to provide a tool to:

  1. project resources necessary to achieve a unit's goals and objectives,
  2. measure current financial performance,
  3. discover significant transaction errors, and
  4. detect substantial changes in circumstances or business conditions.

Principle 2: A budget must be realistic, reasonable and attainable.

Principle 3: A budget must be based on a thorough analysis that includes:

  1. a clear identification of the budget's purpose to the unit's mission, goals and objectives,
  2. a comprehensive assessment of the unit's financial needs in order to fulfill its goals, and
  3. a plan to increase resources or modify goals and objectives, if current resources fall short of meeting a unit's needs.

Principle 4: Actual financial results must be compared to the budget on a regular basis to:

  1. detect changes in circumstances or the business environment,
  2. discover transaction errors,
  3. measure financial performance,
  4. ensure unnecessary costs are being avoided,
  5. ensure that expenditures are reasonable and necessary to accomplish the unit's goals, and,
  6. transactions are adequately supported.

Principle 5: When actual financial results vary significantly from the budget, a manager must:

a. determine the cause,
b. evaluate the activity, and
c. take corrective action.

Principle 6: Units must operate within their budget. Where expenditures exceed budget, justification for such excess must be provided. Additionally units must develop a formal plan to eliminate deficits generated.

Principle 7: All expenditures must comply with all relevant policies, rules and regulations.

Principle 8: Each unit must evaluate the financial consequences before a new activity is started or a current activity is a changed or eliminated.

Principle 9: Each unit must ensure that the anticipated benefits are greater than the costs for any planned or ongoing activities.

Principle 10: Each unit must provide adequate safeguards to protect against the loss or unauthorized use of University assets.

III. Responsibilities 

Section 1: Planning and Budgeting


All planning and budgeting must include:

  1. A mission statement with goals and objectives for each unit. This statement should be simple, direct, attainable, and include measurable goals. It must be specific enough to be integrated into the overall planning and budgeting process.
  2. A thorough process for identifying, implementing and evaluating activities required to achieve the unit's goals which are based on prudent and supportable projections which have taken into account the needs and impact on certain key factors including:

  • student enrollment,
  • supporting and auxiliary services required,
  • supporting and auxiliary services required,
  • space, equipment and supplies requirements,
  • salaries and benefits,
  • anticipated revenue,
  • capital expenditures that are not included in the campus master plan, and
  • interdependency among units.
  • interdependency among units.
  1. Consistent use of proven methods for gathering and analyzing data.
  2. Sufficient detail and descriptive narration to clearly portray how all of the unit's operations are being financed, including;
  • all funding sources,
  • revenue estimates,
  • major expenditures by category,
  • major assumptions and forecasting methods used,
  • significant changes in current activities, and
  • contingency plans.

In addition, all budget data should be cross-referenced to the unit's stated goals and objectives.

  1. A cash management plan to maximize the cash resources available to the University.
  1. A thorough re-evaluation of all assumptions, analyses, plans and budgets used in the previous year's planning and budgeting process. Since goals and objectives may change from year to year, all data feeding into current plans and budgets must be reevaluated each year to ensure that they reflect today's environment.

For further information contact the Office of Academic Planning and Budget 

 Section 2: Monitoring and Evaluating Financial Data

All systems for monitoring and evaluating financial data must include:

  1. Monthly financial reports that are appropriate and accurate. These reports must:
  • be clear, concise and detailed,
  • identify all sources of revenue and expenditure,
  • provide budget verses actual comparisons,
  • clearly identify trends and special areas of concern, and,
  • highlight exception items.
  1. A method for reviewing revenue and expenses at the end of each ledger cycle:
  • If such a review reveals problems or exceptions, these must be addressed in time to take appropriate action before the next cycle ends, and
  • If reporting exceptions continue to occur, control procedures must be implemented to correct the situation.
  1. A monthly sampling of financial transactions. The sampling must be large enough to ensure:
  • the proper full accounting units are being posted to,
  • terms, conditions and restrictions imposed by University policy or external funding sources are being adhered to,
  • names appearing on salary and benefit transactions are valid and appropriate,
  • salaries reconcile to time sheet records, and
  • other expenditures are appropriate and include adequate supporting documentation.
  1. For each significant deviation, an examination must be completed to determine the cause, including:
  • deviations from policies or regulations,
  • deliberate decisions to depart from the budget,
  • transaction errors, or,
  • abuse of authority.
  1. A method for taking corrective actions, which includes:
  • revising plans or budgets to reflect changed circumstances,
  • changing or eliminating activities,
  • obtaining additional funding,
  • modifying goals or objectives,
  • correcting transaction errors,
  • altering future budget assumptions,
  • implementing new control procedures, or
  • documenting managerial decisions that depart from the budget.
  1. Documentation of the corrective actions, which includes:
  • why the variance occurred,
  • how the budget was revised,
  • what accounts were affected,
  • when the actions were taken, and
  • who authorized the actions.

For further information, please contact the Finance Office 

Section 3: Analyzing Costs, Benefits and Risks

Management must weigh the costs and risks before deciding to significantly add, change, or eliminate activities. This analysis is to be followed with a formal proposal which includes:

  1. a clear statement of purpose,
  2. a quantified statement of benefits to the unit, the University and any outside interests,
  3. references to previous similar proposals,
  4. references to other related activities and to other units that will be affected,
  5. a thorough quantification of all direct and indirect costs, FTE counts, space needs and capital expenditures,
  6. anticipated funding sources,
  7. potential problems,
  8. significant underlying assumptions, and,
  9. identification and assessment of all financial, service and organizational risks to the unit and to the University.

For further information, contact the Office of Academic Planning and Budget 

 Section 4: Safeguarding University Assets

University assets must be safeguarded from loss or unauthorized use. Adequate safeguards include that:

  1. All cash, checks or cash equivalents collections at major cashiering stations and collections in excess of $500 at subcashiering stations are deposited on the day they are received. Cash equivalents that total less than $500 at subcashiering stations may be deposited weekly.
  2. Cash equivalents that cannot be readily identified with a particular unit, must be deposited to the Full Accounting Unit specified by the Office of Accounting Services.
  3. All cash shortages and excesses must be promptly reported to a supervisor, who must investigate them immediately.
  4. All petty cash and change funds must be authorized by the Finance Office. Once established:
  • only one employee must be responsible for managing such funds, and
  • a second employee must monitor and review the fund to ensure honest and accurate disbursement.
  1. A physical inventory of all inventoriable equipment must be conducted at least once per year. All discrepancies must be promptly reported and investigated.
  2. Adjustments to asset records must be documented and approved.
  3. Access to any forms or on-line systems that can be used to alter financial balances must be restricted to employees who require such access to perform their University duties.
  4. Delinquent account balances must be carefully examined and all follow-up collection or write-off actions must be completed in a timely manner.

For further information, contact Internal Audit