Certification of Internal Controls Over the Payment Process

Certification of Internal Controls Over the Payment Process Presented by OSC: Linda Herald, CIA, CGAP; Casey Horton; Bernard J. Mc. Hugh, CPA, CISA; Joseph Motzer; Holly Reilly, CPA, CIA; Christina Teator, CPA, CFE Special Guest: Jennifer O’Neill New York State Archives 1

Agenda • • Requirement Background 2017 Results 2018 Requirement 2019 Requirement 2

Overview of Requirement State Finance Law Section 110 • Certification or approval of vouchers shall be made by the head of the department, or by those designated by the head of the department to do so. • The heads of the commissions, divisions and offices within the executive department shall be treated as department heads. 3

Overview of Requirement NYCRR Title 2, Chapter I, Part 6. 6 • Agency head must submit an internal controls certification to OSC certifying their agency has established such a system of internal control over the payment process. • Maintain adequate internal controls over the payment process to support the validity of the agency claim certification for processing payments. • Required certification annually or upon change of the agency head. 4

Importance of Controls over Payment Processes • Support certification of payments as being just, true and correct. • Reduce improper payments. 5

Annual Requirement • Certification Form due on or before April 30 th: BSEInternal. Control. Cert@osc. state. ny. us • Agency head required to submit the annual certification. • Agency head may also be required to assess the internal controls for one or more particular areas each year. • Maintain documentation to support assessment of controls over the payment process. 6

Certification Resources Guide to Financial Operations (GFO) XII. 4. D contains: • Frequently Asked Questions • Internal Control Assessment Programs 7

2017 Requirement • Certify internal controls over the payment process • Assess controls over receiving 8

2017 Results 74 % Satisfactory 25% Satisfactory with Weaknesses 1% Unsatisfactory Sample Testing • Satisfactory with Weaknesses 9

Best Practices • One certification form submitted per BU • Documentation to consider maintaining: – Methodology to support sample size – Testing steps – Summary of testing results – Recommendations – For corrective action plans: • Control weaknesses identified • Corrective action plan/compensating control • Implementation date 10

2018 Requirement • Certify internal controls over the payment process. • Assess controls over obtaining and retaining records to support payments. • Form due on or before April 30, 2018. • Provide back-up documentation as requested from OSC. 11

2018 Requirement • Objective: To ensure the agency obtained and retained sufficient, appropriate original source documentation to support claims for payment. 12

2018 Requirement • Determine if the agency has adequate processes to obtain sufficient, appropriate evidence to provide reasonable assurance vendor performance complied with deliverables. • Determine if the agency ensures protection, authenticity, reliability, integrity, and usability of imaged records. • Determine if the agency maintained the supporting documentation for the time frames consistent with State records retention laws. 13

2018 Requirement • GFO – XII. 4. D Certification of Internal Controls over the Payment Process Evidence and Record Retention Audit Program – XIV. 9 Statewide Financial System Imaging and Attachment Guidance – XII. 3 Record Retention – Accounts Payable Vouchers and Land Claims – XIII. 3 Record Retention – Travel and Expense • New York State Archives – Digital Imaging Guidelines – Managing Records Guidance 14

2019 Requirement • Procurement Card Purchases • Contracts Requiring Electronic Payments 15

Questions ? 16

Contact Us BSEInternal. Control. Cert@osc. state. ny. us 17