At the University of Iowa, we are required to sign a document at the end of the annual financial audit. This document is called a Management Representation Letter and it is signed by university officials in Finance and Operations. This is called Financial Certification. After receiving the Management Representation Letter, the State Auditor’s Office will issue an audit opinion as to whether our financial statements are presented fairly in conformity with generally accepted accounting principles.
By signing the Management Representation letter, the university is confirming the following:
- We are responsible for the fair presentation of our financial statements in conformity with U.S. generally accepted accounting principles.
- We are responsible for adopting sound accounting policies.
- We are responsible for establishing and maintaining internal controls.
- We are responsible for preventing and detecting fraud.
In order for central Finance and Operations to confidently submit our financial certification, we need to communicate and collaborate with collegiate and auxiliary business units using the financial sub-certification process. Higher education has a high degree of decentralization of financial operations. In an effort to clarify business units’ (1) accountability for financial reporting and (2) responsibility for establishing underlying internal controls, we implemented Financial Sub-certification. Deans/VP's, Senior Business Officers, Senior HR reps and Directors of central units are required to certify annually.
The Annual Financial Sub-certification is intended to serve two purposes:
- To provide reasonable assurance of the underlying numbers in the University's financial statements, and
- To provide reasonable assurance of a sufficient and effective internal control structure that can identify weaknesses in financial processes and systems