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Policy 1108
Internal Controls

Date of Current Revision: October 2013
Primary Responsible Officer: Assistant Vice President for Finance

1. PURPOSE

This policy provides guidelines for implementation of internal control programs.

2. AUTHORITY

The Board of Visitors has been authorized by the Commonwealth of Virginia to govern James Madison University. See Code of Virginia section 23-164.6;23-9.2:3. The board has delegated the authority to manage the university to the president.

STATE OR FEDERAL STATUE AND/OR REGULATION

The State Comptroller mandates the implementation and annual assessment of agency internal control systems in order to provide reasonable assurance of the integrity of fiscal processes related to the submission of transactions to the Commonwealth's general ledger, submission of financial statement directive materials, compliance with laws and regulations, and stewardship over the Commonwealth's assets. The comptroller further requires that the documentation and assessment of internal controls be conducted in accordance with the state's Agency Risk Management and Internal Control Standards (ARMICS).

3. DEFINITION

Internal controls:
Procedures included in a process for management and other personnel designed with the specific purpose of providing reasonable, but not absolute, assurance that objectives are being achieved in the following areas:

  • effectiveness and efficiency of operations;
  • reliable financial reporting;
  • compliance with applicable laws and regulations, in addition to federal, state, university, and departmental policies, plans and procedures;
  • safeguarding of assets; and
  • accomplishment of goals and objectives in an efficient manner.

Types of internal control activities include:

  • proper authorization and approval;
  • documented review of information for accuracy, completeness and validity;
  • proper supervision;
  • physical security of assets;
  • written policies and procedures;
  • process documentation;
  • proper segregation of duties;
  • proper assignment and authorization to information systems, electronic applications and data; and
  • procedures to secure data.

4. APPLICABILITY

This policy applies to critical processes at the university and to all employees of the university.

5. POLICY

The university will maintain adequate internal controls.

6. PROCEDURES

6.1 Department heads implement and maintain adequate documentation regarding internal controls for their areas.

6.2 The Finance Office establishes internal control and conducts internal control reviews in accordance with ARMICS to determine whether adequate internal control measures exist to address potential risks in a cost-effective manner.

6.3 The Assistant Vice President for Finance can advise department heads on how to incorporate internal controls into new and revised processes and systems.

7. RESPONSIBILITIES

Vice presidents are responsible for ensuring that adequate internal controls are maintained in their respective divisions.

Academic unit heads and administrative department heads are primarily for maintaining adequate internal controls in their areas.

The Assistant Vice President for Finance establishes internal control policy, develops and publishes procedures, evaluates internal controls annually to determine operating effectiveness and issues a statement concerning internal controls to accompany the university's submission of its financial statements to the Department of Accounts. The Assistant Vice President for Finance also documents the agency's assessment of internal controls in compliance with ARMICS and the related comptroller's directive.

8. SANCTIONS

Sanctions will be commensurate with the severity and/or frequency of the offense and may include termination of employment.

9. EXCLUSIONS

None

10. INTERPRETATION

The authority to interpret this policy rests with the president and is generally delegated to Assistant Vice President for Finance

Previous version: February 2011
Approved by the President: November, 2002

Index Terms

ARMICS
Controls