Financial Reporting Certifications

(Last updated: June 24, 2022)

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Financial Reporting Certifications FY2022

Due Date: August 5, 2022

Frequently Asked Questions

As an LMU employee with budget authority you must sign an annual financial reporting certification. In order to clarify scope, responsibilities, or define terms, we have provided answers to the most frequently asked question below. Please refer to the below if you have a question regarding the certification that you are required to sign. If your question is not answered, please contact us at budget@lmu.edu.

What are internal controls?

Internal controls are processes, impacted by an organization's people and information technology (IT) systems, is designed to help the organization accomplish specific goals or objectives. Internal Controls are a means by which an organization's resources are directed, monitored, and measured. Internal Controls play an important role in preventing and detecting fraud and protecting the organization's resources, both physical and intangible. At the organizational level, internal control objectives relate to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations.

What is an accrual?

If you have received goods or services in the current fiscal year but have not received an invoice from the vendor, an accrual should be submitted to your Budget Manager so that the expense can be recognized in this year. For example, you may have received a new piece of equipment on May 1, 2022 but as of May 31, 2022 the invoice still has not arrived. You will have to notify your Budget Manager of the cost of the equipment. For goods or services for FY 2022 where an invoice has been submitted to the Accounts Payable (AP) Department, you will not have to notify your budget manager to accrue this invoice as AP will ensure that it is accrued.

How will I know that all significant transactions have been properly processed and recorded?

Review the LMU Budget vs Actual – Detail report in Workday (or delegate such review) and determine if the activity includes all significant expenditures that you would expect to see based on transactions that you have approved.

Who do I contact if I do not currently have Workday access?

Please contact your Divisional or College Budget Manager for assistance.

How do I know if a transaction is significant?

This will vary depending on the size of your budget. As a general rule of thumb, anything greater than $5,000 or 10% of your budget could be considered significant. If you need guidance, please contact your Budget Manager.

What types of cash must be reported?

All cash maintained in your area of responsibility or bank accounts that you have established should be included in the university’s financial record. This includes petty cash, cash collected from sales of journals, cash collected as part of a fundraiser, and prepaid cards (gas, Visa, MasterCard, American Express).

What types of contractual agreements might I have in my department?

Below are some examples of contractual agreements that you may have in your area of responsibility:

  • Software licensing and/or maintenance agreements
  • Service contracts in which LMU has agreed to provide certain services • Grant terms & conditions (private or governmental)
  • Leases

With respect to communication from regulatory agencies, what would you consider a deficiency in financial reporting practices?

Errors in a report submitted to an outside funding agency as support for such funding would be considered a deficiency in financial reporting practices. Additionally, any communication that indicates we may have a fine, penalty, or loss of funding for non-compliance should be reported. Unless you are receiving funding from outside sources you most likely would not receive this type of communication.

What regulatory agencies might I have exposure to in my department?

Below are examples of regulatory agencies (this list is not all inclusive):

  • Internal Revenue Service (IRS)
  • Environmental Protection Agency (EPA)
  • Occupational Safety and Health Administration (OSHA)
  • Department of Labor (DOL)

What if I am aware of instances of fraud but I have not reported it in fear of retaliation?

University policy prohibits retaliation for reporting misconduct. The Ethics Reporting Line is an anonymous reporting tool that you can use to report fraud.

What is a transaction?

A transaction is any event or condition recorded on your account. Examples are purchases (cash or credit card), interdepartmental charges, and payroll charges.

Which transactions require authorization?

All transactions require approval from someone other than the purchaser. This includes, but is not limited to proper time keeping and approval for payroll, ensuring that Procurement Card and Travel Expense Card transactions are properly reviewed and approved, and proper approval of all expense or travel reimbursements.

What are possible violations of laws or regulations?

Inaccurate reporting and approval of Federal work-study hours is a violation of federal regulations for student financial assistance. Disposing of electronic waste with regular trash could be an EPA violation. Not properly reporting overtime for nonexempt employees is an example of a violation of Department of Labor and IRS regulations.

What is considered a material impact to the financial statements?

The object of financial reporting is to provide information that is useful to help University stakeholders to make decisions. Any error that may influence decisions made by the users of the financial statements is a material impact.

What if I disclose a matter on the certification?

The Controller’s Office will contact you to determine if there is any financial statement impact to your reply. If there is a material impact to the financial statements, an adjustment will be made to the financial statements. A likely outcome, however, will be that the Controller’s Office will work with you on enhancing your internal control environment.

Will there be consequences for me personally if I disclose a matter in answering some questions on the certification?

No. The purpose of this document is to determine if we have financial reporting errors. We may, however, use this information to improve our internal control environment.

What is the carrying value of a University asset?

It is the value of an asset is based on the original cost of the asset less any discounts, depreciation, amortization, or impairment costs.

What are some examples of plans or intentions that will affect the carrying value of University assets?

The carrying value of an asset will be affected if the asset is damaged, enhanced / improved, or retired.

What is a guarantee?

A guarantee is an exchange of promises or agreement between parties that may be legally binding.

What is a related-party transaction?

A business deal or arrangement between two parties who are joined by a special relationship prior to the deal. For example, a business transaction between a member of the Board of Trustees and the University, such as a contract for the board member’s company to perform renovations to a University building, would be deemed a related-party transaction. Another example would be the university purchasing new vans through a dealership that is owned by the brother of a university vice president. It's not illegal, but it introduces a potential for conflicts of interest.

While the great majority of related-party transactions are perfectly acceptable, these types of transactions must be disclosed in our audited financial statements and tax returns.

What are receivables?

Generally, receivables are monies owed to the University for services provided, or for unconditional promises to give.

What are liabilities?

Generally, liabilities are monies owed by the University for goods and services, debt, refunds, awards, claims or potential losses.

What is a donor-imposed restriction?

A donor-imposed restriction is a stipulation and limitation on the use of contributed assets. These restrictions can be limited as to purpose, time, or both.

What is off balance sheet?

Off balance sheet is an asset or debt or financing activity not on the company's balance sheet. It could involve a lease or a separate subsidiary or a contingent liability such as a letter of credit. Operating leases are one of the most common forms of off-balance-sheet financing. In these cases, the asset itself is kept on the lessor's balance sheet, and the lessee reports only the required rental expense for use of the asset. Generally Accepted Accounting Principles in the U.S. have set numerous rules for companies to follow in determining whether a lease should be capitalized (included on the balance sheet) or expensed.