610 Reporting and Resolution of Institutional Losses
Approved by Board of Trustees
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office: Business and Finance
Responsible Officer: Associate Vice President, Business and Finance
This policy establishes the process for reporting and resolution of institutional losses at Middle Tennessee State University (MTSU or University) as governed by the MTSU Board of Trustees (Board).
Resources. Assets such as cash or other financial resources, supplies, inventories, equipment, other fixed assets, real property, intellectual property, or data.
A. Administrators at all levels of management should be aware of the risks and exposures inherent in their areas of responsibility, and should establish and maintain proper internal controls to provide for the security and accountability of all assets and other resources entrusted to them.
B. It is the responsibility of the University to establish a process to identify, report, and investigate losses of State or University funds, property, or other resources, whether by malfeasance or misfeasance.
C. Policy 71 Preventing and Reporting Fraud, Waste, or Abuse includes requirements for reporting suspected instances of fraud, waste, or abuse to Audit and Consulting Services, where such matters are subsequently reported to the Comptroller of the Treasury. T.C.A. § 8-19-501(a).
IV. Reporting and Resolution Process
A. Reporting Losses. For each reportable incident, the University must complete a Notification of Loss Report or Property Loss Report
1. The Notification of Loss Report should be used to report single incidents of shortages or losses of any asset, resource, or data immediately upon occurrence or discovery. This report should be used to report the loss or shortage of any amount which is the result of acknowledged or suspected fraud, waste, or abuse by either an employee or a non-employee (for example, a vendor, contractor, or student).
2. The Property Loss Report may be used to report property losses in any quarter in which losses occur and may include more than one (1) incident or loss of property. However, see Item 1 above if the property loss is a result of fraud, waste, or abuse.
3. The University must also report covered property losses to the State of Tennessee, Department of Treasury Division of Risk Management.
B. Reporting Resolution. The investigation unit identified on the notification report will file a Case Resolution Report at the conclusion of the investigation. Depending upon the nature and extent of the investigation, an Internal Audit Report may be issued in lieu of a Case Resolution Report.
C. Distribution of Reports. Each notification and resolution report should be submitted to the following officials or offices:
2. Vice President for Business and Finance,
3. Director of Audit and Consulting Services,
4. Board of Trustees through appropriate committee (no less than annually), and
5 University Police (as appropriate).
V. Requirements Regarding Losses and Shortages
A. Cash or Other Financial Resources. The University maintains cash, procurement cards, credit cards, and other financial resources to facilitate its business needs. The University must report cash shortages or losses equal to, or greater than, five hundred dollars ($500.00) immediately to Audit and Consulting Services and subsequently to the Board.
1. Some cash shortages result from human error and are the cost associated with doing business. However, objective reviews must be completed to eliminate misconduct and provide assurance that controls are effective.
2. Regardless of amount, management should routinely perform objective reviews of shortages or other losses to identify any unusual items, recurring issues, or a pattern of financial shortages.
B. Property. The University maintains inventory records for capitalized property and sensitive minor equipment, as required by Policy 686 Equipment/Movable Property Inventory Control. The University must report property losses to the Tennessee Comptroller of the Treasury at least quarterly.
1. Losses of physical property due to inventory shrinkage, vandalism, unexplained events, natural disasters, or acts of God should be reported to the Board on a quarterly basis on the Property Loss Report. A Case Resolution Report is not required to be submitted for such losses.
2. However, unexplained losses and those due to shrinkage or vandalism should be objectively reviewed by management to identify any unusual items, recurring issues, or a pattern of losses.
3. Occurrences that are potentially serious situations that would create public concern regardless of amount (i.e., the loss of certain chemicals) must be reported to the Board and the Office of Risk Management immediately, followed by a written report.
VI. Property Claims Process
Property Claims. Individual occurrences exceeding twenty-five thousand dollars ($25,000.00) must be reported to the Office of Business and Finance and the Tennessee Department of Treasury Division of Risk Management immediately, followed by a written report.
Each report of damage for a claim should include a detailed description of the loss and the estimated replacement cost. In addition to the reporting requirements noted above, the department where the loss occurred should also receive a copy of this report.
The University will evaluate each incident for making a determination concerning external reporting obligations, if any, and the feasibility of pursuing available legal remedies in cases of misconduct, including fraud, waste, or abuse.
References: T.C.A. § 8-19-501(a); Policies 71 Preventing and Reporting Fraud, Waste, or Abuse; 686 Equipment/Movable Property Inventory Control.