Audit Services
Helpful Hints
To assist departments in establishing and maintaining standard business practices and internal controls, Audit Services has provided some Helpful Hints or best practices based on frequent findings in past internal audits. These Helpful Hints are based on existing University policies and are not all inclusive. Departments are encouraged to review all business processes/procedures to identify risks and establish effective controls to mitigate those risks and to be familiar with the University of Guelph's Policies, Procedures and Guidelines.
- Petty Cash
- Cash Receipts
- Travel and Business Expense Claims
- Procurement Card
- Expenditures
- Independent Contractor vs. Employee
- Account Reconciliation
Petty Cash
Petty Cash is a liquid asset that can easily be misappropriated if adequate controls are not established. For more information please refer to the official Petty Cash Policy and Petty Cash Procedure.
The following best practices should be established:
- Given the liquidity of petty cash and the availability of a procurement card, departments should ensure there truly is a need for a petty cash fund (a number of small purchases or staff reimbursements which would be more costly or inefficient to process by cheque requisition, travel and business expense claim form or through use of a procurement card).
- Petty cash should only be used for small dollar reimbursements, where individual purchases may be no greater than $100.
- Petty cash should be maintained in a secure location (e.g., strong box or safe) and one employee should be responsible for the fund.
- Petty cash may not be used for payment of salaries or wages, and never for employee IOUs.
- A petty cash log, detailed petty cash vouchers (PCV’s) and receipts, must be kept for all purchases.
- The petty cash log should always be balanced e.g., total cash and receipts should always equal the petty cash fund balance.
- Replenishment of the petty cash fund is done through a Petty Cash Station Replenishment Envelope, approved by the Dean, Director, Chair or Department Head. Petty cash must not be replenished with miscellaneous departmental cash receipts.
- Normally, petty cash funds should not exceed $500.
Cash Receipts
Cash receipts (cash, cheques, credit cards) are subject to misappropriation if there are not adequate controls. For more information see Control of Revenue by University Departments.
The following best practices should be established:
- Try to minimize cash handling by using the bookstore to sell course-related material.
- Duties should be segregated so that the person receiving the cash and preparing the deposit is not also responsible for updating accounts receivable records or reconciling the deposit to cash receipt records (cash logs, cash register tapes, pre-numbered receipts, etc.).
- All donations/gifts should be sent to Alumni Affairs and Development for deposit and issuance of a charitable receipt.
- Cash receipts should always be recorded as revenue or recoveries, if it is an occasional minor reimbursement (e.g. employee reimbursement for long distance charges) it may be recorded against the object code in which the expense was incurred.
- Cash should be stored in a safe location, with limited employee access, until it is deposited (e.g. strong box, safe).
- All cheques should be made payable to the UniversityofGuelph.
- Using the Revenue Remittance Voucher (RRV), cash receipts should be deposited on a timely basis with the cashier at Revenue Control. Cash and negotiable instruments greater than $500 should be deposited daily with Revenue Control. Departments with less than $500 should not hold amounts in their department for more than one week. If the amount of cash is greater than $500, the depositor must be escorted to Revenue Control by another individual.
- Departments may never open an external bank account for deposit of departmental funds.
Travel and Business Expense Claims
The University provides reimbursement of reasonable expenses for University-approved travel and business expenditures. For more information please refer to the official travel and reimbursement policies –Travel and Business Reimbursement Policy.
The following best practices should be established:
- The individual traveling is responsible for making the most economical travel arrangements possible.
- Travel and Business Expense claims may be reimbursed only by submitting a properly completed and approvedTravel and Business Claim form.
- Travel claims must be approved by the next highest level of authority (e.g. Deans approve claims by Department Heads).
- Details regarding the business purpose of the trip, the destination and dates must be noted.
- Reimbursement for hospitality or entertainment expenses must include the names and organization of the persons entertained.
- Original boarding passes must be submitted for flight reimbursement, along with e-ticket or invoice noting method of payment.
- First class or business class air travel is not permitted without prior written approval of the Dean or Vice President.
- Travel claims should be submitted within 30 days of completion of travel.
- All expenditures must be supported by original invoice or receipt. No receipts are required for per diem meal allowances or for minor expenses that are impossible or difficult to receipt (i.e. public transit fares, miscellaneous gratuities).
- In the absence of receipts, a traveler may claim a per diem rate of $60 CAD per day (Breakfast $12.50, Lunch $12.50 and Dinner $35.00). Travelers may claim a meal per diem for an entire day or a partial day. A per diem cannot be claimed where meals are already included in conference fees or when included as part of the accommodation rate.
- Missing receipt forms must be signed by the traveler and the approver if original receipts have been lost (Missing Receipt Form).
- Credit card slips or statements are not acceptable proof on their own (i.e. the original restaurant receipt or supplier invoice must also be included).
- Additional restrictions apply for certain government funded programs including NSERC, SSHRC, CIHR, CRC, NCE.
Procurement Card
The University supplies faculty and staff with a U.S. Bank Visa Purchasing credit card on request. The intent is to provide a cost effective method of paying for small dollar transactions. For more information please refer to the official Procurement Card Policy.
The following best practices should be established:
- The procurement card should be kept in a safe location.
- The procurement card should not be used for restricted transactions: Materials/services covered by Blanket Orders, Systems Contracts (unless otherwise indicated), or University Purchase Agreements, travel related expenditures, personal purchases, alcohol, animals or vertebrates.
- Purchases may only be made by the individual to whom the card is issued.
- Transactions must be $3,000 or less including currency exchange and all taxes. Splitting transactions for purchases larger than $3,000 is prohibited.
- Transactions should be edited on US Bank’s website prior to posting to the general ledger to ensure the GST calculations and account codes are correct.
- The printed cardholder statement must be reconciled monthly with original receipts/packing slips attached and signed by the cardholder. Where no activity has occurred in the month, a monthly statement should still be printed, signed, approved and filed.
- The reconciled cardholder statement (with original receipts attached) must be approved by the person responsible for the account from which the payment is being made (usually the Department/Unit Head).
- The approved cardholder statement, along with supporting receipts, must be maintained in the department for 7 years and is subject to audit at any time.
Expenditures
Every unit has the responsibility to ensure that university expenditures are appropriate and cost effective. Purchasing methods include Low Value Purchase Order (LVPO), Purchase Requisition (High Value purchases), Procurement Card or individual reimbursements through the Travel and Business Expense Claim Procedures.
For more information see the Purchasing Policy.
The following best practices should be established:
- A Purchase Order must be used for purchases greater than $3,000. Either a Low Value Purchase Order or a Procurement Card, where possible, should be used for purchases less than $3,000.
- Competitive bid requirements are as follows (see Procurement Process – Dollar Limits for more information):
- greater than $3,000 but less than $10,000, one written quote is required.
- greater than $10,000 but less than $100,000, three or more written quotes are required.
- greater than $100,000, a formal bid process is required
- less than $25,000, one written quote is required.
- greater than $25,000, three or more written competitive price quotes are required.
- greater than $100,000, a formal bid process is required.
Purchase of goods or services with an estimated cost of:
Purchase of consulting services with an estimated cost of:
For information on construction contracts, see Capital and Renovation Project Furniture.
- To facilitate accurate university accounting of types of expenditures, ensure all expenditures are coded to the correct object code. Click here for a complete list of object codes.
- All entertainment expenses that are not direct reimbursements should be approved by the person at the next highest level (examples include catered staff functions, gifts, etc.).
- Ensure the total GST is clearly documented on the cheque requisition to get the maximum GST rebate. (Departments are only charged 35.72% of the GST invoiced).
Independent Contractor vs Employee
Departments often employ consultants for contract work within the University. Determining the employment vs. non-employment relationship can be complex. If an employment relationship exists the University is liable for withholding taxes and source deductions (i.e. CPP, EI, etc.). Failure to do so exposes the University to fines & penalties. See the Relationship Questionnaire and Cheque Requisition Procedures for further details.
The following best practices should be established:
- The Relationship Questionnaire must be completed prior to the start of the assignment/project to determine if an employee/employer relationship exists. This form must be signed by the chair or department head and the contractor to verify that an employee/employer relationship does not exist.
- Where there is no employee-employer relationship, a completed Relationship Questionnaire form along with the contract for services and a cheque requisition should be forwarded to Accounts Payable (for amounts less than $3,000) or Purchasing Services for larger amounts.
- For incorporated businesses, payments are made by purchase order submitted with the signed questionnaire to Purchasing Services with all applicable documentation (e.g. contract for services, GST registration number).
- Prior to the selection of the service provider or consultant, competitive bids are required where total fees are expected to exceed $25,000 (see Purchasing Services requirements).
- If the "consultant" is an employee of the University, normally, the payment should be made through the payroll system using an Employee Data Form. If you are unsure please contact Human Resources.
Account Reconciliation
Account reconciliation (the process of comparing the department's financial transactions to those in the general ledger) reduces the risk of inaccurate financial reporting.
The following best practices should be established:
- Every month all account transactions per the monthly account statement should be reconciled (agreed) to the original document (cheque requisition, procurement card statement, salary requisition, travel claim, etc.).
- Note that if a payment includes GST, the amount charged on the account will be less than the total invoice, as given the University GST rebate, most units are only charged 35.72% of the GST invoiced.
- There should be documentation/evidence of monthly account reconciliation which should be reviewed and approved by unit/department managers.
Note: Based on Policies and Procedures in effect as of March 2008.