Project Name Capital Equipment - Implementation
Executive Sponsors Rebecca Blank, Chancellor
Sarah Mangelsdorf, Provost
Darrell Bazzell, Vice Chancellor for Finance and Administration
Managing Sponsor Darrell Bazzell, Vice Chancellor for Finance and Administration
Business Owners Martha Kerner, Assistant Vice Chancellor for Business Services, and Property
Control
Background Effective organizations, including institutions of higher education, have
developed and implemented internal control frameworks.
Currently UW-Madison does not have a comprehensive financial internal control framework. Operating in a highly decentralized environment, the University is exposed to multiple risks that could be mitigated with a planned and consistent approach to effective financial internal controls.
A comprehensive financial internal control framework is supported by a body of processes, policies and procedures which an organization uses to:
• accomplish its goals and objectives
• maintain compliance with laws and regulations (including detecting and preventing fraud) and internal policies
• ensure the reliability of data and financial information for effective decision-making
• protect its resources, both tangible (e.g., equipment, property or funding) and intangible (e.g., reputation)
The initiative (overall project) will create a framework for financial internal controls for UW-Madison, utilizing the Committee of Sponsoring Organizations (COSO) Internal Control Integrated Framework as a guide. It will define, articulate and continually assess the university’s control environment, financial risk, control activities, information and communication strategies and monitoring activities. Each financial process within the framework will be addressed as a process redesign project in partnership with the Office of Administrative Process Redesign (APR). Lean Six Sigma (LSS) will form the basis of the redesign
methodology. Unlike traditional LSS projects, outcomes of the projects may not be fully driven by efficiency or cost savings. Rather, they will be balanced with a defined standard of internal control.
Process redesign solutions will include an evaluation of:
• Internal Control Elements (segregation of duties, compliance to law, workflow approval, accountability, etc.)
• Staff Capabilities (roles, training, competencies, certification) • Organizational Structure (centralized/decentralized, shared service
opportunities, delegation)
• Technology (financial systems, security, access, data integrity and reporting capabilities)
• Audit (follow-up monitoring, evaluation, and corrective actions)
Project Statement This project is one of many within the Financial Internal Controls Initiative.
A 2014 chartered APR Capital Equipment Team developed a set of
recommendations and proposed future state process maps designed to ensure physical inventory accuracy, financial valuation accuracy and financial internal controls. The Capital Equipment Implementation Team is tasked with detailing and implementing the approved recommendations, as well as validating the new process to internal controls objectives.
The project will have 5 major components:
1. Preparation (detailing and documenting all areas + IT implementations) 2. Asset Management Software selection/installation
3. Training Departmental Property Administrators (DPAs) and others 4. Phase-in of campus rolling inventories
5. Process validation by UW-System
Process validation should occur prior to the start of DPA training, to prevent potential repeat training.
Project Closure & Re-Evaluation
The Project Team will conclude after processes are validated, delivered, and a control plan is established. At that time Property Control/Business Services resumes responsibility and maintenance of all related Property Control materials and activities (policy, processes, procedures, and training) generated under this implementation project team. After completion of one campus inventory cycle, the team will re-engage to measure the process against control plan and assess the need for Property Control to implement any significant process revisions.
Goal(s) Overarching project goals:
A. Implement new capital equipment property control process across campus B. Provide accurate capital equipment valuation and depreciation information
for financial reporting
C. Verify process is compliant with UW-System and UW-Madison’s financial internal controls objectives
Additional financial internal controls objectives that weren’t specifically listed in the first Capital Equipment Team’s recommendations include:
1. Develop policies and procedures to trigger asset capitalization using in use/service dates instead of payment dates. Current triggering on invoice
payment reports can cause both pre-mature and over-due capitalizations. 2. Establish a process and a general ledger account(s) to account for and track
proper material and labor costs associated with a capital equipment fabrication project that is currently in progress and not yet placed in service/operational.
3. Consider the requirements of the new Omni-Circular, and modify the prior proposed process accordingly to account for and track federally titled and/or funded assets to the most current guidance.
4. Evaluate/revise as needed previously proposed processes to ensure appropriate separation of duty across entire capital equipment life-cycle. 5. Ensure process/procedures also address the physical security of capital
equipment inventory items.
Deliverables Implementation of First Capital Equipment Team’s Process Maps and
Recommendations – Including:
• Overall process and materials to be validated for internal financial controls. • Development and implementation of a campus communication plan. • Document and implement capital equipment policies, processes and
procedures.
• Written description of DPA duties, required skills, competencies, and training requirements.
• Analytical support to campus units for evaluating and updating initial DPA assignments consistent with new DPA duties and unit’s asset activity and volume history.
• Definition and implementation of interim electronic workflow enhancements spanning asset entry through retirement/transfer.
• Selection and implementation of appropriate asset management software, including reporting evaluation and depreciation accuracy validation by Financial Reporting and Information Management Team.
• Complete training materials and scheduled training for DPAs and other key asset life-cycle process participants.
• Updated design and supply of inventory tags and adequate supply of barcode scanners to support rolling campus inventory schedule. • Plan for monitoring process performance and control.
• A summary of the costs associated with the development, delivery and maintenance of the defined technical solution for presentation to the Internal Controls Project Team.
• A plan for the conversion of asset inventory data into a system compatible with the institution-wide system as appropriate.
Scope / Boundaries Out of Scope: Interim Audit Preparations – It is important to maintain successful
Business Services/Property Control should separately conduct LAB Audit
preparation activities during the Fall of 2015 in advance of the Jan 2016 audit. It is anticipated that the new process will be sufficiently in place for the Jan 2017 audit, but Business Services will need to monitor progress and determine whether interim preparations will be needed again in the Fall of 2016. Out of Scope: Redesigned Disposal Process/SWAP - The first APR Capital Equipment Team recommended formation of a follow-on Disposal Process Re-Engineering Team. In lieu of that, they designed process maps and workflows that could be operationalized under the current practices and resources of SWAP. This Capital Equipment Implementation Team understands that they may have to adjust their approach for compatibility to a TBD new disposal/ SWAP process. In Scope: Ancillary Considerations for Asset Management Software – Elimination of shadow systems and movement to an institution-wide Asset Management Software/Database will provide optimum efficiency, internal control and data integrity. Selection of a capital equipment asset management system should consider scalable capacity and inherent capability to support a hierarchy and segregated use/access of the system for capturing other items which may not be capital equipment assets, but are worthy of record capture. This could include but is not limited to items like livestock, items individual departments wish to track (computers, smart phones, etc.), artwork, etc. Therefore, a broader team should be engaged with system evaluation and selection.
Dependencies: System Financial/IT Systems – It is acknowledged that System will influence parts of the financial internal control framework for UW-Madison, and that there are dependencies with IT systems that UW-Madison does not control.
Dependencies: Procure-to-Pay Project – It is understood that there is a parallel Purchase-to-Pay internal controls project that has an intersection at the front end of the Capital Equipment Asset Management process. Process and information hand-offs/exchanges at the intersection point will need to be cooperatively addressed by both teams.
Project Team Role Unit
Brendan Hedberg Sandy Fowler Janel Oster Carla Parker Mehdi Rezai Melissa Steinl Matt Thies Team Leader Team Member Team Member Team Member Team Member Team Member Team Member
Property Control – Business Services College of Agricultural & Life Sciences Facilities, Planning & Management Purchasing
College of Letters and Science SSEC/Vice Chancellor for Research & Graduate Education
Matt Griffith Tammie Hodgson Gerry Pelanek Accounting/Audit Expertise IT Scout Project Manager Business Services DoIT
Administrative Process Redesign
Subject Matter Experts /Special Tasks Role Unit Janet DesChenes Carl Johnson Patrick Lally Dennis Manthey Colleen Reilly Angela Seitler Communications
Departmental Property Administrator IT
Department Administrator
Departmental Property Administrator Unique CALS Assets
Administrative Process Redesign School of Medicine & Public Health Business Services
College of Engineering DoIT
College of Agricultural & Life Sciences
Project Timeline • Charter Approved for Team Recruitment: April 2015
• Team kick-off target: May-June 2015
• Milestone 1: Communication Plan, Definitions & Policies, DPA Activity Analysis – kick-off + 6-8 weeks
• Milestone 2: Electronic Workflow Requirements Defined and Asset Management Software Selected – kick-off + 12-14 weeks
• Milestone 3: Updated DPA Assignments Finalized – kick-off + 14-16 weeks • Milestone 4: Training Curriculum Requirements Defined – kick-off + 18
weeks
• Milestone 5: External Process Validation– kick-off + 24-26 weeks (Assumes minimum validation readiness of: policy/processes/procedures are detailed and documented and the training outline is complete. Duration of UW-System Validation is TBD, but assume at least a few weeks)
• Post Validation Results: Sponsor Check-In – kick-off + 27 weeks
• Milestone 6: Asset Mgmt Software operational, Training Pilot & First Unit(s) Inventory – kick-off + 32 weeks
• Milestone 7: 1 Full Campus Inventory Cycle Complete – Training Pilot Completed Successfully + 1 year
Notes:
1. This is an aggressive timeline based on unconfirmed overall resource assumptions, as well as TBD purchasing lead-time and degree of customization that will be required for selected Asset Management Software; all of which may affect final roll-out timeline.
2. Several earlier recommendations have high benefit to do near term and implementation is contained solely within Business Services. New bar code tag design and stop tracking components will be implemented ASAP. 3. This Implementation Plan assumes alternating batches of DPA training and
conducting inventory. DPA training would occur just prior to the
project will start with the smaller asset volume/less experienced units as the best test of training effectiveness/readiness.
4. The anticipated permanent rolling campus cycle would target the inventory of top asset-owning units to be conducted during the last 3 months prior to scheduled audits. If possible, the training roll-out plan will attempt to mirror and align to the planned permanent campus cycle.
Resource Request It is anticipated that team members will spend approximately 10% of their time
on this project until the training pilot is complete. It is projected to take ~8 months from kick-off until completion of the training pilot. After the training pilot, regular team meetings are not anticipated on an on-going basis. After one complete campus inventory cycle (~1 year after training pilot), the team will briefly re-convene to review process results and recommend any appropriate process changes to Property Control.
Document Revisions March 24, 2015 gap (draft)
April 9, 2015 mam (formatted) April 23, 2015 gap (timeline updates)
May 6, 2015 mam (members & header update) May 15, 2015 gap (final approval update)
Date(s) Approved by
