We will establish a center to provide the skills and tools necessary to help Cornell staff members perform their daily financial activities and implementing new internal control strategies.
Now more than ever, Cornell employees need the tools and knowledge necessary to respond to internal control risks, resolve financial issues, and implement new accounting standards, and we aim to provide the training necessary to accomplish those tasks.
We will organize and establish practices so that technology use and data analysis are central to our planning and decision-making. Synergies and efficiencies will support financial applications and build skills in data analytics analysis, helping us achieve continuous, data-driven improvements and creating a strong foundation for all of our initiatives.
Each campus unit will implement an internal control plan, guided by risk and materiality assessments, based on DFA’s plan and using Lean Six Sigma (LSS) principles. These plans are based on risk and materiality assessments and will apply the principles of LSS methodology to streamline processes.
We will use Lean Six Sigma (LSS) principles to implement an internal control plan guided by a risk and materiality assessment. DFA’s plan, with its tools, templates, and best practices, will guide units in implementing their own plans.
The Internal Control—Integrated Framework (the COSO Framework) was developed by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The COSO was established 1985 to sponsor the National Commission on Fraudulent Financial Reporting, which is an independent private-sector initiative that studied the underlying factors that can cause fraudulent financial reporting. It also developed recommendations for public companies and their independent auditors, for the U.S. Securities and Exchange Commission (SEC) and other regulators, and for educational institutions.
Materiality is assessed by determining how much of a unit’s financial information could be misstated, by error or fraud, without affecting the decisions of reasonable financial information users. Materiality is informed by management’s risk appetite and tolerance, considering quantitative as well as qualitative factors, which may include perceived reputational risk or compliance with regulations.
Risk appetite and tolerance is determined by management’s ability to tolerate deviation from acceptable outcomes relative to their objectives.
Reconciliation is the process of comparing two sources or systems (e.g., comparing the general ledger with another source, typically a subsidiary ledger, statement, or other source system). Further, reconciliation involves resolving any discrepancies that may have been discovered, including recording necessary adjustments to either source being reconciled.
Account and object code monitoring is the process of periodically assessing an account balance or object code for reasonableness and investigating underlying accounting activity for any unexpected results. The process should be used for all accounts and object codes, particularly those not reconciled on a regular basis. Monitoring is not as involved as the account reconciliation process. For more informaiton on this activity, see Monitoring Operating Activity on the Accounting website.