What You Should Know
An essential component of financial management is a regular review to identify errors, anomalies, potential compliance issues, and significant budget variances. The overall objective of financial review is to contain risk to the University by determining if transactions are accurate and appropriate. Regular reviews provide an important check that funds are used appropriately to achieve unit objectives, that funds governed by external restrictions or university designations are appropriately utilized, and that funds are moved consistent with University expenditure guidelines, Fund classification rules, and Chart of Accounts (COA) guidelines.
All financial managers should review, research, validate and when necessary, correct issues. When issues require further analysis, contact relevant department and University Offices including the Office of the Provost and the Office of Finance and Treasury.
Financial Review vs. Transaction Review
Financial Review is the review of overall financial health of a unit with a focus on Fund, Department, Individual Program, Sponsored Awards & Projects, Capital Projects and any other material (i.e. significant) financial activity.
Departments should identify the key chartstrings to be reviewed and monitored. Generally speaking, a review of key chartstrings should include:
- Fund (across Departments and/or Programs)
- Department by Fund
- Individual Programs by Fund (Faculty Programs)
- Sponsored Awards and Projects
Financial Review Focus
For identified critical chartstrings, review should focus on:
Transaction Review is the targeted and selected review of particular financial transactions or groups of transactions to confirm that they are correct, reasonable, appropriate, and necessary in order to meet a valid business purpose.
Fiscal year and inception to-date activities (for Sponsored Research and Capital Projects) may call for a different set of reviews.
Financial review should occur at least monthly with additional reviews periodically throughout the year. It is a best practice to perform a review of your A0000 budget at the start of the fiscal year (July). During the fiscal year, at least a quarterly review is recommended; emphasis should be on reviewing LA and A0000 intensively in May in preparation for year end close. A thorough analysis of variance to budget should be performed starting in May through the close of the fiscal year (June).
Report and Discuss Findings
Findings from reviews should be shared and discussed with those in departmental oversight and management roles. When necessary, perform corrections and document reasons for significant variances. At any time, departments should contact the Office of Finance and Treasury for review guidance. Additionally, individuals may contact Princeton’s Institutional Compliance Program to address any larger scale compliance concerns.
In many departments it is also common to prepare review packages for particular chartstrings. If available standard reports do not meet a specific department or manager’s needs, contact the Financial Service Center for guidance about how to obtain needed information. Information and reference guides for available financial reports can be found in the Reporting section of the website.
Fund Assignment from Multiple Sources
You do not need to allocate every expense against all funds in that faculty member's portfolio. You should pick one Fund to charge against unless there is a specific reason to charge more than one Fund. To give ourselves the most flexibility in spending, we should always try to use our most restricted funds first, while meeting the restrictions/designations of the Funds. If the expenditure does not meet the restrictions/designations of the most restricted Fund in the portfolio, you would go to the next most restricted Fund. This approach allows you to save your least restricted Funds and thus providing flexibility in future spending.
The Fund Classification system will be helpful in this regard because you will be better able to distinguish which Funds are most restricted. You will spend Class 5 Funds first and Class 1 Funds last.