Monthly Cost Center Verifications
PS 05.A.14 sets general guidelines to be followed to ensure financial system verification of cost center activity. In order to minimize the risk of unauthorized uses of funds, entries in the financial system must be monitored monthly by all University of Houston-Downtown (UHD) departments. Cost center verifications are an important internal control for ensuring that authorized transactions post to the correct cost centers.
The following procedure explains the cost center verification process for the University of Houston-Downtown.
* For departments with multiple cost centers, run the 1063 Budget Summary to determine which cost centers have activity (review the Current Rev/Exp Column).
- Each month, the Department Business Administrator (DBA) or designee runs the 1074 Verification Worksheet for all cost centers in the department with activity for the period*. (Cost centers may be verified at the Cost Center Manager level or the college/division level, if desired.)
- DBA or designee reviews transaction spreadsheets or PDF to verify that all transactions
belong to that department.
- Review transactions that were generated at the department level, such as vouchers (expense only), SC vouchers, GL journals and requisitions. Verify that the document creator belongs to your department.
- Review P-Card and Travel Card transactions which have the last four digits of the card number in the transaction description. Verify that all cards and/or expenses belong to your department.
- Review other vouchers created by Accounts Payable (in addition to P-Card and Travel Card), such as vouchers for Purchase Orders (ex. copiers). Verify the vouchers are for goods or services requested by the department.
- Review postage, telecom, and any other centrally billed charges to ensure that the charges are reasonable and appropriate on the cost centers charged.
- Review encumbrance balances to ensure the appropriate amount, release PO encumbrances that will not be used anymore.
- It is not necessary to review system generated transactions, such as accounts payable liability, and payroll liability.
- It is not necessary to review payroll-related expense transactions on the Verification Worksheet, which summarize transactions from the HR System. Run the BOB Report in the HR System. Verify that all employees on the report are paid from the correct cost center and research any negative BBAs on the BOB report.
- DBA or designee verifies that employees are paid from the correct cost center.
- Run and review the BOB Report in the HR System. Verify that all employees on the report are paid from the correct cost center.
- It is not necessary to verify the amount of salary or wage received by each employee is correct, because this was done when the department ran the Trial and Final Payroll Verification Reports during the month when notified by the Payroll Department.
- DBA or designee verifies that budget balances are not exceeded, and equity balances are not in deficit.
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- Review the Verification Worksheet to verify that budget balances are not exceeded and to identify deficit equity balances.
- If negative budget balances or equity deficits exist, DBA or designee should review revenue and expense budgets to determine whether the negative budget or deficit will be corrected by fiscal year end and reduce budgets or transfer fund equity as needed for anticipated shortfalls.
- Once a month, the DBA or designee (i.e., verifier) completes the Cost Center Verification Log and notes any corrections or adjustments needed.
Alternatively, the verifier can send an email to the Cost Center Manager or designee with the same information contained in the Cost Center Verification Log (i.e., cost centers verified, accounting period, and a list of any needed corrections or adjustments, if any).
- No later than 60 days after the accounting period is closed, the Cost Center Manager or designee, who must be someone in higher authority than the person who performed the verifications and must be at the DBA level or higher, reviews the transactions in the 1074 Verification Worksheets that were previously verified and initials and dates the Cost Center Verification Log. Alternatively, the Cost Center Manager or designee can reply to the verifier’s email acknowledging review of the cost center verifications, instead of completing the Cost Center Verification Log.
All delegations of authority by the Cost Center Manager for someone else to review cost center verifications must be in writing by memo or email.
- Retain the following documentation in electronic form or paper for all the months
of the current and previous fiscal years:
- Monthly 1074 Verification Worksheets.
- Cost Center Verification Logs initialed by verifier and the Cost Center Manager or designee or the Cost Center Manager or designee’s reply email that the verifications have been reviewed.
- Memo or email from Cost Center Manager to Department Business Administrator or higher position delegating authority to review the Manager’s cost centers, if the Cost Center Manager does not want to perform the review.