Procedure No. 600.5

Atlantic Cape Community College follows the Uniform Guidance Internal Control Requirements (Title 2 U.S. Code of Federal Regulations Part 200).

The 2 CFR section 200.303 requires that non-Federal entities receiving Federal awards must:

1.  establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee Sponsoring Organizations of the Treadway Commission (COSO),
2. comply with Federal statutes, regulations, and the terms and conditions of the Federal awards,
3. evaluate and monitor compliance with statutes, regulations, and the terms and conditions of the Federal awards,
4. take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings,
5. take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive.

Internal Control – Definition

Internal Control represents those processes by which an organization assures operational objectives are achieved efficiently, effectively, and with reliable, compliant reporting. The five components of internal control are as follows:

1. A Control Environment that sets the tone for the organization. This influences the control consciousness of staff and is the foundation for all other components of internal control.
2. A Risk Assessment process that involves the identification and analysis of relevant risks to the achievement of objectives, and forming a basis for how the risks should be managed.
3. Control Activities that include the policies and procedures that help ensure management directives are carried out and documented.
4. Information and Communication systems or processes that support the identification, and exchange of information in a way and time frame that enable people to successfully carry out their responsibilities.
5. Monitoring processes used to assess the quality of internal control performance over time.

Internal Control – Objectives

The objectives of internal control over compliance are as follows (2 CFR 200.62):

1. Transactions are properly recorded and accounted for in order to:
   1. Permit the preparation of reliable financial statements and federal reports;
   2. Maintain accountability over assets; and
   3. Demonstrate compliance with Federal statutes, regulations, and the terms and conditions of the Federal award;

2. Transactions are executed in compliance with:
   1. Federal statutes, regulations, and the terms and conditions of the federal award that could have a direct and material effect on a federal program; and
   2. Any other federal statutes and regulations that are identified in the Compliance Supplement; and

3. Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition.

With respect to Federal and State awards, a system of internal control is expected to provide reasonable assurance that the College’s objectives relating to compliance with Federal statutes, regulations, and the terms and conditions of the Federal or State award will be achieved.

Internal Control is an on-going process that provides many benefits. Internal Control provides confidence regarding the achievement of objectives, and helps reduce risks affecting the achievement of grant objectives and compliance. Processes, which are conducted within or across operating units or functional areas, are managed through the fundamental management activities, such as planning, executing, and checking. Internal control is integrated within these processes. Controls are monitored to ensure they are functioning and to determine whether updates need to be established.

While it is the responsibility of management to maintain effective internal control, it is a College-wide expectation for all staff to follow established controls. The College is committed to a strong system of internal controls. Each key business process has established controls and documentary evidence to support transactions (including Human Resources, Payroll, Procurement, Cash receipt and cash disbursement, student registrations, financial aid).

Management exercises judgement in balancing cost and benefit in designing, implementing and operating internal controls. Consideration of the specific risks of Federal and State awards and operations are taken into consideration. Both entity-wide and specific controls are taken into consideration.

When evaluating internal control for Federal and State awards consideration is given to ensure allowability of costs, reasonableness of costs, allocable costs, and whether prior written approval is required. Line item budgeting and requisition approvals are established to help ensure these are met.

Compensating controls are additional controls put in place where risk is determined to be high and are used to discover, prevent and or mitigate mistakes.

Annual Audit

The College engages an external audit firm to annually audit the College’s compliance for each  major program and report on internal control over compliance as required by the Uniform Guidance and State of New Jersey Circular 15-08-OMB.

The Budget, Finance and Audit committee of the Board of Trustees holds annual entrance and exit conferences with the external audit firm.  The reports of the external audit firm are included in the Comprehensive Annual Financial Report, reported annually at a Board of Trustees public meeting  and submitted to the respective Federal and State agencies.

Back to the  Policies and Procedures Main Menu