The financial organization and management, as well as the system of reporting, ensure the integrity of institutional finances, create appropriate control mechanisms, and provide a basis for sound financial decision-making.
OUS has internal management directives that require university presidents to report directly to the Chancellor concerning any events that substantially affect the well being of the institution. The Chancellor is then required to inform the OUS Board. The President recommends to the Chancellor any proposals for significant changes of policy, plans, budget or standards requiring approval of the Board or Chancellor. The Chancellor decides whether to take action or to recommend that the Board take action. OUS internal management directives also delineate the expectations for university presidents to attend board meetings to discuss matters that affect their institutions.
In 2001, at the recommendation of the outside auditors, a project was undertaken to design and put in place a Fiscal Accountability Framework. This project seeks to delineate financial authority and responsibility between the Chancellor's Office and the state universities. It also creates a process for updating fiscal policies and strengthening management review of financial information. Project reports and recommendations have been presented to the OUS board quarterly since April 2003. The format of these reports is consistent across all OUS institutions and allows for data comparability.
The OUS Controller's Office prepares the report, which is reviewed and revised by each campus. Portland State's President is in attendance at each OUS board meeting when these reports are reviewed. This also offers an opportunity for the board to query the President about progress in particular areas.
As shown in the Portland State Organization Chart, the Vice President for Finance and Administration reports directly to the President. The Associate Vice Presidents for Finance and Planning (Budget) and for Business Affairs Functions report to the Vice President for Finance and Administration (FADM). Under the Provost, an Associate Vice Provost for Academic Personnel and Budget works closely with the Associate Vice President for Finance and Planning.
The Finance and Administration organization chart shows that Budget and Business Affairs functions are centralized under the Vice President for Finance and Administration. Business Affairs contains Research Accounting, Specialized Accounting, Auxiliary Accounting, Purchasing, and Accounts Payable. The breadth of these areas reflects the size and complexity of the institution.
Each dean and director has an executive assistant, who works on budget and accounting matters within the school or college. The FADM mission to provide leadership in finance for the University, and involves working closely with individual academic interests.
The federal government requires an annual federal compliance and internal control audit of expenditures charged to federal grants and contracts. The audit, performed for the state of Oregon as a whole, follows the requirements of OMB Circular A-133. Expenditure authority and budget monitoring are delegated to department heads. The OUS fiscal policy manual outlines roles and responsibilities, as well as policies and procedures for budgeting, accounting, and fiscal reporting and monitoring. A complete guide to closing the fiscal period and preparing for the external audit and financial statement preparation and review are outlined in the OUS Controller's Division year-end/fiscal audit procedures.
Institutional funds, as a general rule, cannot be deposited in commercial banks. All cash receipts, including gifts or endowments, are to be immediately deposited with the Oregon State Treasury. Similarly, investment moneys are deposited in the State Treasury, pooled with other funds, and invested by the Oregon Investment Council, not by the institution itself. The institution does not receive interest earnings on most funds under its control.
There are clearly defined cash management policies, approved by the Oregon State Treasury and Oregon State Board of Higher Education, and implemented by the institution. According to OUS Internal Management Directive (IMD) Budget Policies, funds, including gifts, are deposited promptly into the Oregon State Treasury. Implementation of these policies is supported by a Portland State business office memo, which reiterates the need to adhere to state policies. Portland State also adheres to policies in the OUS Financial Administration Standard Operating Manual, and in Oregon law related to cash management by the institution.
Portland State is subject to OUS Internal Management Directives that require all accounting records and reports to be in conformity with generally accepted accounting principles. OUS is audited on an annual basis by an independent certified public accountant. According to the 2003 auditor's report, in a letter to the State Board of Higher Education (p. 20), "The changes within its financial position and its cash flows for the years then ended are in conformity with accounting principles generally accepted in the United States of America."
During 2003-2004, two new reserves were established to cover possible shortfalls or cuts in appropriations due to legislative mandates. One reserve was established to offset the impact of (Measure 30) being defeated. The second reserve met a PERS retirement reserve requirement (HB2187). OUS recently approved a reserve policy for OUS institutions to promote prudent financial management.
Portland State University undergoes an annual independent audit as part of the OUS system. Periodic OUS internal audits are performed by the Internal Audit Division. A management letter is published as part of the documents produced in the audit process.
All of Portland State's fiscal operations and corresponding internal controls are subject to review by the OUS Internal Audit Division. The university collaborates with the Internal Audit Division to provide input into the audit plan, assemble necessary data for audits, ensure recommendations are reasonable and practical, and implement recommendations as appropriate.
Reviews completed by the OUS Internal Audit Division include an examination of procedural steps to conduct an exit conference, develop a draft report, obtain management responses to suggestions, and follow-up in six to twelve months to ensure that agreed upon changes have been implemented. Similar reviews conducted by the Oregon Secretary of State Audits Division includes a request for an agency response detailing actions taken to correct identified deficiencies. Again, follow-up is conducted in subsequent periods to insure institutional responsiveness. The OUS Fiscal Policy Manual requires institutions to implement recommendations provided by the external auditors.
Portland State is audited for Federal A-133 compliance through the state of Oregon. In addition, OUS contracts with an outside entity, through the State Board of Higher Education, to perform an annual independent audit.
Internal audit, housed under OUS, performs routine audits as well as special requests. Although Portland State does not have an internal audit function, numerous evaluations are performed through the Office of Business Affairs. Internal audit reports are available in hard copy through the Office of Business Affairs at Portland State, or through Internal Audit at OUS.
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