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STANDARD
9 - FINANCIAL RESOURCES
Page
4 of 4
FRS is an accounting system and a database system. Through
the use of data-fields, referred to by FRS as attributes,
information can be coded and extracted by categories defined
by NACUBO (National Association of College and University
Business Officers) by source of funds, by fund group, by department,
by vice chancellor, and by a variety of other attributes.
The system has a powerful report writer that allows trained
users to extract information in many different ways. Unfortunately,
training on the system is limited and requires a level of
computer expertise that most individuals do not have. It is
expected that this problem with access to information will
be resolved with the installation of the new PeopleSoft integrated
management information system over the next few years.
The accounting system has been set up with a hierarchical
model. For example, the Department of History has an account
that has its operational budget. For reporting purposes, a
user can extract a report that gives only the Department of
History, or all Departments reporting to the Dean of Arts
and Sciences, or all Colleges and other areas reporting to
the Provost or, the top level, all areas reporting up to the
Chancellor. A report can be generated that displays only activity
related to the Instruction category or the Institutional Support
category. The flexibility of the FRS system is a powerful
tool in analyzing spending and reporting on it.
On an annual basis, UMD participates in the University system's
financial audit. This process was put in place in 1991, when
the campus joined the University system. Through FY97, the
campus received an unqualified opinion accompanied by a number
of audit comments that relate to process within the organization.
The Division of Administrative and Fiscal Services works with
the public accounting firm to resolve and/or make progress
on resolving these audit comments. Copies of these audit comments
with management responses are available in the NEASC workroom.
For FY98, the University received a qualified opinion from
the public accounting firm. This qualified opinion was the
result of concerns related to the University's ability to
transition through FY00. The University was informed that
a qualified opinion was issued by the public accounting firm
for all its FY98 audits. The qualified opinion was not specific
to the University or to the Dartmouth campus. It was done
by the auditing firm as a safety net for possible Y2K problems
that the audit firm, and no firm, can foresee or predict.
A second annual audit involves federal funding. The campus
receives federal funds for financial aid and for a variety
of grant activities. A public accounting firm performs this
audit and its focus is on compliance with the regulations
governing the use and distribution of federal funding. The
major two activities reviewed are student financial aid and
federal grants and contracts. Audit comments are usually aimed
at specific compliance exceptions and processes. Administration
and Fiscal Services, along with the Financial Aid Office and
the Office of Grants and Contracts, works with the accounting
firm on resolving these issues.
The campus has an internal audit staff member who has been
assigned to UMD by the Internal Audit Department of the President's
Office. On an ongoing basis, this individual performs a variety
of compliance audit work. One specific focus of this audit
operation is the "post audit" of the campus procurement card
(ProCard). Returning to the issue of accountability and adding
the additional concept of employee empowerment, the campus
has distributed responsibility for appropriately controlling
the spending of small dollar amounts for certain types of
purchasing activity to individual employees in departments
rather than in the central Purchasing Department. This change
in the locus of control responsibility is aimed at streamlining
processes and, eventually, allowing the reallocation of personnel
resources. To date, the ProCard has been very successful on
the Dartmouth campus. It has reduced paperwork and resulted
in savings.
A variety of other audit activities take place on campus.
In the past this has included surprise cash counts performed
by the Internal Audit Department, year-end closing audits
done by the Office of the State Auditor, and a fixed asset
audit performed by the Internal Audit Department. These "ad
hoc" audits are usually done on a surprise basis. Campus staff
do not know that the auditors are coming to the campus until
they show up.
FRS provides the capability to sort financial information
in a variety of different ways. Hard coded reports can be
supplemented, through Computing Information Systems and certain
financial staff, with "ad hoc" reporting sorts.
Many groups across the University system are meeting to discuss
the implementation of PeopleSoft. Within the planned implementation,
the financial records system will be designed to reflect the
educational activities of higher education institutions. The
implementation will incorporate the NACUBO revenue and expenditure
categories, the capability of extracting information required
to generate indirect cost rates and a variety of other capabilities
necessary for the institution's ongoing operation and reporting.
The internal mechanisms to evaluate the financial management
of the institution exist at multiple points on the campus
and within the campus operations. The institution looks to
existing Human Resources policies and procedures to ensure
that staff employed in the financial management area have
the appropriate educational and experiential credentials to
be responsible for the financial management of a complex public
higher education institution. The externally-mandated (by
the Board of Higher Education) financial ratio model and the
use of peer-normative data provide ongoing tools to evaluate
and assess the financial management performance of the institution.
Lacking in the internal mechanisms that are currently in place
on campus is an appropriate Strategic Plan, including a vision
statement and goals and objectives, for the management of
the campus.
Ongoing operating deficits culminated in a negative fund
balance as of the end of Fiscal Year 1999 of approximately
$4M. The Dartmouth campus is committed to setting in place
the appropriate campus mechanisms and activities to generate
continuing operating surpluses.
In her first public campus forum, Interim Chancellor, Jean
MacCormack, discussed the lack of cohesive and comprehensive
institutional planning and budgeting on the Dartmouth campus
and her professional commitment to setting in place the appropriate
planning and budgeting policies and tools for ongoing campus
use. She committed herself and her administrative team to
campus-wide activities that would appropriately link vision
and mission to assessment and resource allocation. The Provost
and the Vice Chancellor for Student Affairs were given leadership
roles in the planning process. The Interim Vice Chancellor
for Administrative and Fiscal Services was given the responsibility
for providing the necessary tools and mechanisms to allow
planning and budgeting to happen.
The Dartmouth campus is cautiously optimistic about its financial
resources and its financial stability. As a community, there
is continued concern about the appropriate funding of ongoing
operational activities, strategic initiatives, and capital
projects, including both new capital and deferred maintenance.
It is extremely important that the budget model approved by
the campus community be implemented to allow open discussion
and debate of financial resource issues on the Dartmouth campus.
The Interim Chancellor and her senior management team have
committed themselves to the implementation of this process
as a core component of institutional planning.
FY 2000 was supposed to be the first year that utilized the
new budget process for requesting sustaining budgets. Unfortunately,
the total sustaining budget request exceeded the available
resources and the sustaining budget was not funded for the
beginning of the fiscal year. Additional analysis is taking
place and a preliminary budget was loaded during November
1999. It is anticipated that a final budget will be set in
place by February 2000. Implementation of the new budget process
will be incremental because of the strained condition of the
campus's financial resources.
The campus is setting in place the tools for the appropriate
management of its financial resources and the restoration
of its financial stability and health. The Interim Chancellor
has invited staff from the Boston campus to come to Dartmouth
to assist in the development of computerized programs for
financial analysis. Administrative Redesign strategies and
activities are being revisited for additional savings and
reallocation opportunities. Revenue enhancement activities
in the Division of Continuing Education and in Auxiliary Services
are being researched. Discussion is taking place on such issues
as surcharges on trust fund activities and alternate models
for additional compensation that generate more value added
to central budget resources. The campus is moving to a decentralized
financial model that will allow managers more opportunities
to reallocate resources and prioritize projects within their
specific areas. All of these activities will contribute to
the return to financial health and stability.
The new organizational model that has the Interim Vice Chancellor
for Administrative and Fiscal Services reporting on a dotted
line to the President's Office provides the campus with a
high level of external support and oversight for its financial
activities. The creation of the position of Assistant Provost
for Planning, Programming, and Academic Budgeting acknowledges
the need for appropriate overall planning, and funds that
need. It emphasizes the campus's commitment to planning and
creates a locus of accountability for that process. The Interim
Chancellor brings to the campus a proven track record in campus
management, specifically including tenure as the Vice Chancellor
for Administrative and Fiscal Services at the UMass Boston
campus. The campus has an open and participatory approved
budget process that is being implemented. The tools are in
place for the Dartmouth campus to appropriately manage its
financial resources and restore health and stability to its
finances. It is expected that this restoration process will
take about five fiscal years.
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