In early August 2015, a new online tool (web-based application) was launched to help make the important task of monthly account reconciliation easier for administrators across campus. MIT policy requires that a person familiar with activity on a cost object review the financial transactions as part of a DLC’s overall system of internal controls.
“The new tool is very efficient,” says Ana Ludwig, HR & Financial Assistant in the School of Humanities, Arts, and Social Sciences. “It has really cut down the time it takes me to review my monthly transactions.”
This new application is designed to highlight the high-risk transactions that should be double-checked at month-end to ensure that the financial policies and procedures a DLC has in place are effective. The application is meant to serve as evidence of the monthly review but is not intended to change or replace a DLC’s current process for gathering and saving receipts, packing slips, documentation, and other backup.
Most DLCs across the Institute have established their own unique process for handling month-end financial review and control (FRC). These processes include checking off paper Summary Statements and Detailed Transaction Reports (DTRs) mailed by the Office of the Vice President for Finance (VPF), reviewing transactions in SAPgui, or using reports generated in BrioQuery and/or Cognos. With the help and vision of MIT community members, an opportunity was identified to make the FRC process simpler and more efficient for staff, as well as to extend the Institute’s financial oversight and control capabilities.
The goals of the new FRC application include:
- Providing guidance and setting minimum standards on which transactions should be reviewed during the monthly FRC process
- Eliminating the need for printed Summary Statements and DTRs as the main methods for performing FRC
- Eliminating the need for a paper sign-off sheet
Using the new application
Community members who have experience using the FRC Review Report in Cognos will recognize that the new online tool has a similar look-and-feel but adds new key features:
- Selects and highlights in yellow the minimum level of transactions that should be focused on during the monthly review. These highlighted transactions fall into two categories:
- High-Risk Transactions (JVs, equipment, items over $2,500, etc.)
- 10% random sampling
- Provides the option of selecting "Visual Review,” “Document (or Detailed) Review” or “Issue Identified"
- Removes transactions from view as they are reviewed and saved, leaving a running list of all transactions still requiring review
- Data will remain in the tool for a rolling six-month period and will be moved to Monitoring reports
- The activity for a new month will automatically appear once the month is closed
- Keeps a web-based record of FRC, eliminating the need to print and retain a signoff sheet
DLC involvement and outreach
The application is the result of collaboration among MIT community members, Information Systems and Technology (IS&T), and VPF. To help transition community members to performing monthly FRC using the new application, individuals from VPF, IS&T and the MIT Audit Division traveled to schools and administrative areas throughout the months of August and September to give demos and answer questions.
“What we like most about the FRC tool is that it advocates a risk-based approach and efficient documentation of the review process,” says Elvie Mahoney, Audit Services Manager at the MIT Audit Division. “The report functionality of the tool will help account managers to oversee the completion of the FRC process more effectively.”
Through the local demos, as well as the two community-wide sessions held this summer, VPF has been gathering feedback and comments on how the tool is currently being used and how it can be improved for the future. While the tool was designed as a one-size-fits-all solution for the entire Institute, DLCs are urged to use the tool in the way they see fit for their areas. Some DLCs may wish to continue reviewing 100% of transactions and are welcome to make that determination based on the level of risk that is most appropriate for that area.
An FRC Application Training Guide with step-by-step instructions and an FAQ overview are available on the MIT Knowledge Base. VPF Financial Accounting and Reporting staff members are available to provide business assistance as needed. Technical issues or questions may be directed to IS&T at firstname.lastname@example.org.