Ancillary Locations Extend UK's Reach - and Responsibilities
Established in 1865 as a land-grant institution, the University of Kentucky (UK) has always made serving the people of the Commonwealth of Kentucky its mission. Today, UK continues to expand its impact on the lives of Kentuckians through its extensive network of clinics, partnerships, and projects that are focused on healthcare, agriculture, education, and research services. In fact, these ancillary facilities bring the University of Kentucky – and its full range of resources – to all 120 Kentucky counties as they work to address issues of importance to all Kentuckians. These ancillary locations include:
- UK HealthCare Clinics and Offices
- Other Colleges and Universities
- UK Affiliated Organizations
- Cooperative Extension Services
In the process, Kentuckians are exposed to UK’s brand through their friends and neighbors who are hired by UK to work in these facilities and represent UK in their communities. As UK employees, they are expected to be good stewards of their respective resources – in accordance with UK policies and procedures – regardless of where they are located or how their office is funded.
Trending Concerns for Ancillary Locations
University of Kentucky Internal Audit (UKIA) conducts reviews as well as advisory consultations and provides units with expert analyses and advice to maximize effectiveness and efficiency and minimize risks to the University. These ancillary locations are no exception. UKIA works with all facilities to ensure that policies and procedures are appropriate and executed across the state. Some of the most commonly found concerns are within the following categories:
- Cash Handling Procedures
- Inventory Control Protocols
- Vendor and/or Contract Management
- Administrative Procedures
- Information Technology
While the same issues are found in many reviews conducted across campus, the proximity of these ancillary locations to UK’s main campus makes it more difficult for the issues to be properly addressed and remedied.
Through its reviews, UKIA has noted that the employees in these affiliate organizations and/or remote locations often feel a dual-allegiance. Though UK employees, they see themselves first and foremost as active and essential members of their communities who desire to support local businesses through their work at UK. Moreover, their office’s distance and infrequent communication with UK’s main campus can cause the employees to feel disconnected from the University. Together, these conditions make it all the more important that employees of these ancillary locations align their practices with the University’s objectives and regulations.
Risk Mitigation Tips
UKIA understands that these units are sometimes small with limited personnel, yet the depth and complexity of their work make aligning with UK regulations more challenging. Additionally, access to subject matter experts, administrative expertise and other resources may be limited and information system capabilities may impede communication. To help overcome these challenges, UKIA notes three recommendations for each concern that are effective and workable in any size unit.
Cash Handling Procedures
As noted in many business journals, the number one indicator when it comes to occupational theft is access to cash. However, there are safeguards units can implement to reduce the opportunity of adverse cash events in ancillary locations and improve oversight. UKIA suggests these three critical activities:
- Accept alternate forms of payment to limit cash transactions.
- Create a checklist of the steps to complete transactions from point-of-sale to depositing.
- Create a database of subject matter experts so that employees know who to contact when a certain type of question or problem arises. These contacts can be on campus, at another location or even another department.
Inventory Control Protocols
Properly managing inventory is one of the most critical – and challenging – processes for any unit. UKIA suggests the following, ensuring proper separation of duties for each:
- Develop instructions for defining and counting inventory at each respective location. As simple as this sounds, these necessary tasks provide critical guidance for a function that may not be done frequently.
- Define each task as it relates to the inventory function and ensure that all staff know who is responsible for each function.
- Perform regular reconciliations and obtain proper approvals for any adjustments.
Vendor and/or Contract Management
Remote locations may limit vendor availability, necessitating the creation of new vendor accounts. However, these vendors may not be able to meet all specifications or offer the best quality merchandise. Here are three suggestions:
- Work with UK Purchasing to establish an approved list of vendors for your area, as proximity can drive vendor availability.
- Document your RFP process.
- If a single source exists in your area for services and is being considered, justification should be appropriately documented.
In smaller units, as these ancillary units typically are, daily operational tasks must either be shared amongst the personnel or handled by a single person. These activities range from budgeting to office management, but ensuring proper guidance is difficult when the office’s remote location precludes daily oversight. UKIA has three simple suggestions to assist ancillary locations with this challenge:
- Create an administrative manual describing common fundamental activities shared throughout the office.
- Consider templates or procedural guides for infrequent administrative activities.
- Create a training program for critical regulations to ensure understanding and awareness. These regulations may vary by industry, but adherence to certain regulations across all industries. Critical regulations include the Fair Labor Standard Act regarding Nonexempt Overtime Compensation and HIPAA and FERPA regarding the handling of sensitive information.
Prompt IT support may be more challenging at ancillary locations. Consequently, critical information systems activities are managed on-site. However, the vendors, processes and continuity plans should be approved and monitored by the Central Office to ensure consistency throughout. UKIA recommends these three simple activities to assist:
- Create a list of all applications in use by each ancillary location. Although many serve the same general purpose, the location could determine application requirements.
- Verify employee access to these applications is appropriate for the employees’ individual roles. Through fieldwork, UKIA has determined that ancillary employees generally have close to full privileges to local applications. This access could create segregation of duty concerns when local access is linked to SAP or central office access.
- Establish a deprovisioning process to use as employment turns over to help restrict both physical and logical access.
Please note that it is the unit’s responsibility to implement appropriate procedures and establish protocols to reduce risks associated with the above common ancillary concerns.
If you would like UKIA to assist your unit through a review or consultation, visit https://www.uky.edu/internalaudit/contact or contact UKIA at 859.257.3126.
If you would like to receive news and information about current risks, fraud concerns and more, please subscribe to UKIA’s listserv by sending an e-mail to LISTSERV@lsv.uky.edu with the following text in the message body: subscribe INTERNALAUDIT-L.