Performance Based Management

Self-Assessment Report

October 2004

Home

Finance/Accounting

Introduction/Background

Date of last assessment: October 2003

Departmental Overview

The Stanford Linear Accelerator Center is the lead Department of Energy (DOE) laboratory for electron-based high energy physics. It is dedicated to research in elementary particle physics, accelerator physics and in allied fields that can make use of its synchrotron radiation facilities—including biology, chemistry, geology, materials science and environmental engineering. Operated on behalf of the DOE by Stanford University, SLAC is a national user facility serving universities, industry and other research institutions throughout the world. Its mission can be summarized as follows:

• Perform world-class research in high energy physics, particle astrophysics and cosmology, and in the use of synchrotron radiation

• Provide accelerators, detectors, instrumentation and support for national and international research programs in elementary particle physics and allied fields that use synchrotron radiation

• Advance the art of accelerators and related devices through development of sources of high energy particles and synchrotron radiation, plus new techniques for their scientific utilization

• Advance the critical technologies necessary to maintain its leadership and excellence in particle physics, accelerator physics, particle astrophysics and cosmology, and synchrotron radiation

• Transfer practical knowledge and innovative technology to the private sector

• Contribute to the education of the next generation of scientists and engineers, and to the scientific awareness of the public

• Achieve and maintain excellence in matters of environmental concern and provide for the safety and health of its staff and the general public.

• SLAC Accounting is part of the Business Services Division Finance Office.
• The major responsibilities of the department are:
• General ledger maintenance and reconciliation and journal entry operations
• Work Order maintenance
• FIS/MARS, other DOE and Stanford University financial reporting
• Cost reporting and cost data files
• Accounts payable
• Accounts receivable and collections and bank deposit operations and reconciliation
• Payroll
• Labor database maintenance
• Property accounting
• Bank operations
• Contract labor data maintenance and payments
• Stores accounting and stores file maintenance
• Requisition and purchase order commitment maintenance
• Shop rate and vehicle charge-out maintenance
• Travel accounting

Names, titles, affiliations of participants

Marty Sorensen, Accounting Officer

Discussion of Individual Performance Objective

Goal #1

Performance Objective:         1.0       Financial Stewardship

Performance Criterion:          1.1  Accounts receivable delinquencies are minimized.

Findings:

The assessment of SLAC’s Accounts Receivable aging is based on the receivables over 90 days and over 180 days. There are no receivables outstanding more than 180 days, and there are two receivables totaling $3,537 out of a total receivables of $1,306,787. This is a performance level of outstanding.

Performance Criterion:          1.2 Improvements are made to accounting processes.

Findings:

SLAC Accounting made several major improvements in FY04.  These include:

1. Creation of a Labor Forecast to meet accelerated closing requirements. In order to help the DOE Chicago Office meet new, earlier deadlines for transmittal of closing MARS data, Accounting worked with our support programmers to develop a new Labor Forecast. The new requirements mandated by the DOE meant that SLAC had to transmit MARS before completing  payroll and labor processing at month end. SLAC can not change the payroll processing because of  contractual obligations related to its status as a School and Department of Stanford University. In order to meet both these obligations, Accounting developed, tested, and implemented this new Labor Forecast to use with MARS. It is used every month except the last month of the fiscal year.
2. Automation of the recording of purchase card data. Cardholders now enter their accounting data (charge number, expense category, property control information, purchase description, and comments) online on the web at the Bank. As Monthend nears, Accounting downloads the data from the bank, and sends out email to the cardholders who have entered invalid charge numbers. This greatly improves the accuracy of the data and reduces the research time at Monthend. This data is also used by the Purchasing Department to study purchasing activities by the cardholders, and allows Property Control to follow up on cardholder purchases as well. This new system is thus not only an improvement in efficiency for Accounting,  but also an improvement for the Laboratory in the content of cost information, and an improvement for internal control.
3. New Charge Number Workflow to complement the new charge number attributes database. Last year we created the new charge number attributes database. Called the AID Table, it contains all the attributes for any given charge number, whether SLAC, DOE or Stanford. This year, 2004, we added some new attributes to improve the efficiency of our reporting. We implemented a new workflow among Division Planners, Accounting and the Budget Office. This clearly identifies the attributes for new charge numbers.
4. STARS: SLAC has spent a great deal of effort in creating an internal STARS database for reporting to DOE Headquarters. We have compared that data each month to our MARS submission, and have therefore demonstrated that we are ready to start actual transmission of STARS data to the DOE when required. We have also made sure that we will be able to do this even if the STARS program begins during the middle of FY2005, and not at the fiscal yearend boundary.
5. Compliance with Check 21, the Check Clearing for the 21st Century Act. This law, effective October 28, 2004, is designed to foster innovation in the payments system of the nation. But it has a greater potential for fraud because under Check 21, banks can destroy original checks very quickly. SLAC now has Positive Pay with payee validation on both Accounts Payable and Payroll checks to reduce the opportunity for fraud.
6. Creation of a database to help reconcile Inventory Payables. This new table enables an accountant to view inventory stocking records along side payment voucher records. It greatly facilitates the identification of  inventory receivers and the related accounts payable vouchers. Further enhancements to the PeopleSoft inventory system itself in 2005 will make this reconciliation even better by including blanket order releases in the table, thus reducing the manual effort to complete the reconciliation and improving internal control.
7. Distribution of the Monthend closing schedule, each month, to all the Division Planners, the Budget Office and Accounting. This improves coordination of the Monthend close.
8. The Travel Reimbursement Office has implemented a new online Foreign Travel Request database, which makes searching for outstanding requests much faster, and it also allows comparison of different requests for any given individual, which is more efficient for reviewing both expense reports and ongoing requests.
9. Images of cleared checks are now received on a CD in both Payroll and Accounts Payable, thus allowing faster response to questions about when payments were made.
10. New payroll queries run during the payroll process allow the staff to check on undesirable conditions related to garnishments, paychecks, employees with no pay, non-standard hours, negative deductions, and other issues. This is very important because of our tight closing schedule where we have to meet both DOE and Stanford University schedules.

Provide for effective internal controls and ensure timely and effective resolution and/or follow-up on external and internal review group findings of a financial nature.

Financial findings are prioritized to achieve timely resolution within the metric guidelines.

SLAC will partner with OAK in prioritizing finding to achieve maximum resolution response by SLAC.  SLAC will produce reports showing the delta between labs scheduled resolution dates and the actual resolution dates.

Outstanding:                 96‑100% of all events are resolved on schedule.

Excellent:                      86‑95% of all events are resolved on schedule.

Good:                           75%‑85% of all events are resolved on schedule.

Marginal:                      50%-74% of all events are resolved on schedule.

Unsatisfactory:              Less than 50% of all events are resolved on schedule.

 SLAC Audit of Allowable Costs for FY 2004

The objective of this audit was to review the system of internal controls and examine transaction to determine whether costs incurred during the period October 1, 2002, through September 30, 2003, were allowable under the term of the contract.

Recommendations:

Immediately seek reimbursement of laundry costs incurred during travel by the employee’s spouse.

Resolution:

On January 26, 2004, the employee reimbursed the $49.55 by check.  The amount was deposited to SLAC’s bank account on January 28, 2004.  In addition, the Assistant Director of the Business Services Division indicated that beginning July 2003, in accordance with the Federal Travel Regulation (FTR), for foreign travel the laundry costs are no longer separately reimbursed at SLAC.  These costs are part of the meal and incidental expenses (M&IE) per diem.

1.      100% Audit of Bank One MasterCard™ Transactions Cycle Date:09/23/2003 – 10/20/2003

The SLAC Purchasing Officer, Robert Todaro, commissioned a 100% audit of all purchase card transactions for the October 2003 cycle.  Under the supervision of the program administrator this was conducted.  The following are a list of policy violations:

1. Missing approving official’s signature and date
2. Non-compliance with 30 day spending limit
3. Sales tax payment ($82.87)
4. Missing or insufficient purchase/discrepancy log
5. Missing or insufficient receipt for each transaction posted
6. Missing documentation
7. Missing SLAC shipper
8. Single purchase Limit/Splits
9. Unauthorized items
10. No advance authorization for purchase
11. Possible Missing property control government sticker/barcode
12. Counter Signature
13. Other

348 violations were sited (~23.7% of transactions for the cycle).

Resolution:

All open finding were resolved and the audit was closed as of 9/7/2004.  A copy of the final report is available if needed.

1. DOE-OIG Statement of Cost Incurred and Claimed (SCIC) for FYs 1999 - 2003

Audit of the SLAC accounting records and internal control structure were conducted in July 2004 by the Department of Energy Inspector General.  There were no findings and the DOE-IG signed off on the SCIC for FY1999 – 2003 SLAC submitted to DOE.

Stanford University Internal Audit Review of SLAC Purchasing Controls

2. In August, 2004 an audit was conducted by the Stanford University Internal Audit Department.  The primary objective of the audit was to evaluate the existing controls in the following areas:

1. Purchasing Office’s policies and procedures, compliance and training;
2. Management of the Purchasing Office;
3. Flow down clauses on purchase orders and subcontracts;
4. Selecting sources; and
5. Pricing and negotiation

The recommendation of this audit was that the Purchasing Officer should continue to implement the corrective actions that were developed during the FY 2003 self assessment, and to measure the achievement of all actions taken.  

Based upon the review performed, which included observations, interviews, discussions, reviews of reports, and tests of records, the report concluded that the existing SLAC Purchasing controls are adequate and effective to ensure that the integrity and accuracy of the purchasing system are upheld.  A copy of the audit report dated August 31, 2004, entitled “Review of SLAC Purchasing Controls” is available upon request.

Review of SLAC Controls Over Blanket Order Releases

In May 2004, the Stanford University’s Internal Audit Department performed a review of the controls on blanket order releases at SLAC.  The primary objective of this audit was to assess the adequacy and effectiveness of the existing controls over blanket purchase orders.

Recommendation:

The Purchasing Officer should ensure that all invoices from Corporate Express are properly reviewed and approved by account or department approvers before payment is made.

Resolution:

SLAC Purchasing Management concurs with this recommendation. 

Target Completion Date:   Completed September 30, 2004

Recommendation:

The Purchasing Officer should ensure that proper review and approval of all on-line BPO purchases (releases) are in place.

Resolution:

SLAC Purchasing Management concurs with this recommendation. 

Target Completion Date:            Completed October 31, 2004

      Recommendation:

The Purchasing Officer should notify the Accounts Payable Department that in the future, all invoices for BPOs must be matched with blanket order release forms before payments are processed

Corrective Action: SLAC Purchasing Management concurs with this

 recommendation.

Target Completion Date:            Completed September 30, 2004

SLAC FY 2004 Audit Timeline

Based on the following this measure rates “Outstanding”:

1.      Delta completion date of completion date of “0”,

2.      zero material findings,

3.      proactive leadership in addressing and correcting internal and external audit findings,

4.      aggressiveness of corrective actions schedules.

Performance Measure 3.1.a: 

Policies, data, and reports consistent with Cost Accounting Standards (CAS) compliance and DOE requirements; financial practices are consistent with approved CAS Disclosure Statement.

Process used to meet objectives/measures: 

SLAC partnered with DOE Oakland to develop a CAS Disclosure Statement that was fully satisfactory to Oakland and comprehensive in describing SLAC cost accounting practices.  SLAC has accounting policies and procedures in place to support and ensure that application of its accounting process are consistent with the approved CAS Disclosure Statement.  If an exception to SLAC’s CAS Disclosure Statement is desired, it must be submitted via SLAC’s CFO to the SLAC Director for approval.  If approval is granted by the Director, the CFO is responsible for ensuring that SLAC’s CAS Disclosure Statement is appropriately revised and submitted to DOE prior to the initiation of the change.  To date, no exceptions have been allowed.

Findings: 

SLAC’s financial management practices and process are fully compliant with its approved CAS Disclosure Statement and DOE requirements.  This is verified by the pricing review conducted by DOE/OAK-BEPD on reimbursable work.  The review confirmed that the indirect cost allocation practices used by SLAC are in compliance with the CAS and DOE requirements.  This equates to a performance rating of “Outstanding”.

Performance Measure 3.1.b: 

SLAC prepares and submits the Functional Support Cost Report (FSC) in accordance with DOE requirements.

Process used to meet objectives/measures: 

SLAC partnered with DOE Oakland to identify the appropriate categorization of costs for the FSC Report.  The FY03 FSC Report was prepared following the applicable guidelines and submission requirements and submitted on time.  It was peer reviewed and found to be complete, that there was ample supporting documentation, and that all DOE requirements had been met.

Findings: 

SLAC submitted its FSC Report on time and in accordance with DOE guidelines.  It was complete and accurate with adequate supporting documentation.  All issues were resolved with DOE Oakland prior to the formulation and submission of the FSC Report.  This equates to a performance rating of “Outstanding”.

Performance Measure:         3.1.b                                                                                      

Adequate internal controls are in place to ensure that travel costs reported are accurate, complete, and have supporting documentation.

Performance Assumption:

SLAC will partner with DOE in addressing issues related to travel costs to meet DOE requirements.  When requested by DOE, SLAC will provide documentation showing total travel costs of SLAC employees.  Travel costs exclude travel performed under work-for-other agreements, travel of subcontractors, travel of users to participate in experiments at DOE user facilities, relocation costs or costs of travel management centers.

Findings:

SLAC’s performance on Measure 3.1.b was “Outstanding”. All our travel costs are accurate and satisfy DOE requirements. Each and every travel expense report reimbursed is supported by adequate documentation. There is 100% review of expense reports submitted by travelers to the Travel Reimbursement Office.  In addition, the timeliness of reimbursement is tracked each month and distributed within the Business Services Division. The graph below shows how the Travel Reimbursement Office staff have been successful in keeping reimbursements on time. The standard is 12 days, and they consistently beat that standard..

As required by DOE, travel costs reported to DOE excluded travel performed under work-for-other agreements, travel of subcontractors, travel of users to participate in experiments at DOE user facilities, relocation costs or costs of travel management.  Travel costs reported are complete, accurate, and are identified through general ledger codes.  Supporting documentation was provided promptly to DOE whenever requested.

Goal #2 Effectiveness and Efficiency: Achieve cost effective and efficient Financial Management operations by applying available resources to continuous improvement efforts.

Performance Objective #1: Timely and Accurate data recording

Performance Criterion 1.1 Financial data is recorded and reported consistently, accurately, and timely.

1.1.a    Financial data is recorded and reported consistently, accurately, and timely.

Findings:

SLAC’s performance has been “Outstanding”. All reporting to the DOE has been consistently on time and accurate.

1.2.a    FY2003 (last year’s) audited financial statements are prepared in accordance with DOE requirements.

Findings:

In 2003, all SLAC financial statements were prepared in accordance with DOE requirements. In addition, SLAC has continued to use the SLAC documents public directory, for all accounting reports, both quarterly and annually, to the DOE and Stanford University.  This continues to give SLAC a basis to compare annual financial statements to make sure all requirements are being met. SLAC analyzed inventory in preparation for FY03 yearend. In addition, each month SLAC reviewed the Accounts Receivable balances, so that there were no surprises at yearend 2003. Because of this preparation and analysis, and the fact that there have been no audit findings relative to SLAC’s financial statements, performance has been “Outstanding”.

Performance Objective #2: Construction Projects

2.1 Construction projects are capitalized in accordance with DOE requirements.

Findings:

SLAC’s performance on construction projects was “Outstanding”. All construction projects were capitalized according to beneficial use, and other DOE requirements. Two years ago, Accounting, the Budget Office, and Property Control instituted a new coordinated review procedure. In 2004 the Site Engineering & Maintenance group were added to the review. This continued, expanded, constant communication has resulted in outstanding management of the budget and accounting aspects of construction projects. Staff of the SLAC Budget Office and Accounting Office have done an outstanding job of watching projects as they unfold and keeping SLAC’s commitment to meeting this objective.

Performance Measure 3.1.a: 

Policies, data, and reports consistent with Cost Accounting Standards (CAS) compliance and DOE requirements; financial practices are consistent with approved CAS Disclosure Statement.

Process used to meet objectives/measures: 

SLAC partnered with DOE Oakland to develop a CAS Disclosure Statement that was fully satisfactory to Oakland and comprehensive in describing SLAC cost accounting practices.  SLAC has procedures and process in place to ensure that the assimilation and analysis of its financial data is consistent with the approved CAS Disclosure Statement.

Findings: 

SLAC’s financial management practices and process are fully compliant with its approved CAS Disclosure Statement and DOE requirements.  This is verified by the review conducted by DOE/OAK-BEPD on user charges for proprietary research.  The review confirmed that the indirect cost allocation practices used by SLAC are in compliance with the CAS and DOE requirements.  This equates to a performance rating of “Outstanding”.