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Sec. 1 Purpose
This policy provides responsibilities for financial accounting and reporting requirements, establishing internal controls to ensure that funds are expended and recorded appropriately, and procedures for obtaining services by an external audit firm.
Sec. 2 Principles
U.T. System Administration and each institution are responsible for the accuracy and integrity of their financial statements. Management at each institution must provide an annual certification of compliance with financial reporting requirements and the fair presentation of the financial statements. The certification includes the acknowledgement of responsibility for establishing and monitoring internal controls.
Sec. 3 Requirement and Responsibility
Financial statements shall be prepared in accordance with Generally Accepted Accounting Principles, including standards established by the Governmental Accounting Standards Board, and in accordance with the Texas Comptroller of Public Accounts' Annual Financial Reporting Requirements.
Responsibilities outlined in this policy, include the design, implementation, and maintenance of internal controls relevant to the fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Sec. 4 Designation of Financial Reporting Officer
The Chief Administrative Officer of each institution and U.T. System Administration shall designate a single financial reporting responsible party, known as the Financial Reporting Officer.
4.1 Each institution’s Financial Reporting Officer is directly responsible to the respective Chief Administrative Officer for the integrity of the institution’s annual financial report.
4.2 The U.T. System Administration Financial Reporting Officer is directly responsible to the Chancellor for the integrity of the U.T. System Administration Annual Financial Report and the consolidated U.T. System Annual Financial Report.
Sec. 5 Duties of Financial Reporting Officer
Each Financial Reporting Officer has direct responsibility for the establishment of efficient and effective internal controls over the financial accounting system and financial reporting. Financial policies must comply with the directives of the Board of Regents and the requirement as covered in Section 3.
The Financial Reporting Officer shall develop or update a monitoring plan for the segregation of duties and reconciliation of accounts. The monitoring plan should be risk-based and establish the minimum requirements for the institution.
Sec. 6 Certification
The Chief Administrative Officer and Financial Reporting Officer will attest to the accuracy of the institution’s financial statements in an annual certification letter to the Financial Reporting Officer of U.T. System Administration. They will also certify compliance with the U.T. System Financial Code of Ethics and to knowledge of any violations of the Financial Code of Ethics.
6.1 Certification. The Chief Administrative Officer and Financial Reporting Officer will provide a certification according to the format specified in the attached letter in Appendix 1.
6.2 Financial Code of Ethics. The Financial Reporting Officer will certify compliance with the Financial Code of Ethics (UTS134) by those involved in the preparation of the annual financial report and whether, to the Financial Reporting Officer’s knowledge, any of those employees violated the Financial Code of Ethics. See Appendix 2 for the Financial Code of Ethics certification form.
Sec. 7 Internal Audit Risk Assessment and Certification of the Monitoring Plan
The institutional Chief Audit Executive shall perform an annual risk assessment of the Monitoring Plan. The institutional Chief Audit Executive will certify within 60 days of the fiscal year end, to the Financial Reporting Officer of the U.T. System Administration, whether an audit was performed based on the risk assessment and discussion with the institutional audit committee. See Appendix 3 for the Internal Audit Certification form.
Sec. 8 External Audit of the Financial Statements
An external audit firm may be engaged to express an opinion on the U.T. System financial statements or the financial statements of any of its institutions.
8.1 Contracts. The Audit, Compliance, and Risk Management Committee of the Board of Regents is responsible for contracting with any external audit firm for the expression of an opinion on the U.T. System financial statements or individual financial statements of any institution. If the contract exceeds $1 million, it must be approved by the Board of Regents.
8.2 External Audit Results. The results of any external audits that express an opinion on the financial statements of the U.T. System or any of its institutions should be presented to the Audit, Compliance, and Risk Management Committee of the Board of Regents.
8.3 Conflicts of Interest. An external audit firm engaged to express an opinion on the U. T. System financial statements or those of any institution must be free of any conflict of interest as prescribed by Regent Rule 20402, 2. Sec. 1.3.
Sec. 9 Approval Required by the State Auditor's Office
9.1 Texas Government Code Section 321.020(a) provides that a state agency may employ a private auditor to audit the state agency only if:
a) the agency is authorized to contract with a private auditor through a delegation of authority from the state auditor;
b) the scope of the proposed audit has been submitted to the state auditor for review and comment; and
c) the services of the private auditor are procured through a competitive selection process in a manner allowed by law.
9.2 General Appropriations Act prohibits funds appropriated in the Act to be used to enter into a contract with an independent audit entity or audit services, except as follows:
(1) an interagency contract with the State Auditor's Office (SAO) for the SAO to provide audit services to the agency or institution. At the discretion of the State Auditor and the Legislative Audit Committee, the SAO may conduct the audit, or the SAO may enter into a contract with an independent audit entity to conduct the audit; or
(2) a contract with an independent audit entity for the provision of audit services pursuant to §321.020, Government Code.
Financial Reporting Officer - person directly responsible to the respective Chief Administrative Officer for the integrity of the institution’s annual financial report.
Additional Definitions in Regent Rule 20402