Index

Financial Management

Budget

Introduction/Background

Date of last assessment:  October 1999  

Departmental Overview

Laboratory Mission

The Stanford Linear Accelerator Center (SLAC) is dedicated to experimental and theoretical research in elementary particle physics and in those fields that make use of its synchrotron radiation facilities, including biology, chemistry, geology, material science and electrical engineering.  This includes the development of new techniques in particle acceleration and detection, and of synchrotron radiation sources and associated instrumentation.  The Center is operated as a national user facility for the Department of Energy by Stanford University.

Organizational Mission

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  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

Identification of Self-Assessment Report Staff

Names, titles, affiliations of participants

Marty Sorensen, Accounting Officer

Scope of Self-Assessment 

Improvements

• We have continued improving Accounting Operations at SLAC. We are finally seeing an end to the use of the fiche reader to get details on costs as we enter our third fiscal year with PeopleSoft, and our on-line tools such as the SLAC Expense Drilldown (SED) and Analytical Reporting Facility (ARF).

• We have improved our knowledge of collections made by wire deposit from foreign countries. We have introduced automated modem calls to Sanwa bank for our daily draw down and bank activity. This is important, given the Babar collaboration’s international nature.

•  We have created a large and growing database of cashed checks, making it easier for Accounts Payable and Payroll staff to research payment problems and questions.

• We have created online reports for determining the status of Work In Process (BSC 2311) in Property Accounting. This is not only an improved report, but also a reduction in the time required to make the information available.

• We have added internal controls in the daily cash collections and our payment processes.

• We have started a monthly forum of Lab-wide financial people, involving Budgets, Accounting and Division Planners to expedite problem solving and improve communication.

• We have added several new reports to our online Analytical Reporting Facility.  We have improved our Travel and Accounting web pages, adding  more online forms and information.  We have made our General Ledger information on travel more detailed so that we can track costs during the year to make sure we are in compliance with targets set for travel spending.

• We have improved the quality of the information in our General Ledger and Labor Tables, especially the time-dated information on shop rates.

In summary, the staff of the SLAC Accounting department has performed in an outstanding fashion this fiscal year (in completing tasks, in meeting deadlines, in providing service, and in making improvements).  They have sustained this outstanding level of performance while coping with a number of unusual and adverse conditions.  Examples of some of these adverse conditions are:

•   For most of the year we were without our Asset Accountant due to illness.

• Early this fiscal year, we abruptly lost the manager and one of the Accounting Assistants in the Travel Office, leaving us with only one experienced person in that office. We were able to hire replacement staff by the beginning of the calendar year, but the new staff required training. At the same time, changes to our contract required that we change our travel policies to conform more closely to Federal travel regulations. Also during the beginning of the fiscal year Stanford University changed the travel reservations vendor, which consumed a great deal of staff time.

• In the middle of the year, the requirement was put on SLAC Accounting to prepare a Cost Accounting Standards Disclosure Statement. This took the full-time effort of one of our accountants.

Also during the year we worked on a major upgrade of PeopleSoft from Version 6 to Version 7.5. This was an enormous drain on our manpower resources.

• The two Accounting Assistants in Payroll were new at the beginning of the second fiscal quarter, and one of the two resigned after only a month.

 Discussion of Individual Performance Objectives

Performance Objective #1: Financial Stewardship

Performance Measure 1.1.a: Cost effective discounts are taken according to DOE guidelines.

For Fiscal Year 2000, there were a total of 972 payments for which discounts were available. We took 926 discounts, and lost 46 of them for a rate of discounts taken (number) of 95%.

For Fiscal Year 2000, available discounts amounted to $25,365. We took discounts totaling $24,097, which is 95% of discounts available (dollar value). There were no effects on the budget from these lost discounts, i.e., no projects were over budget because of lost discounts.

Cost Effective Discount Index  

A total index of 95 equals a rating of excellent.

Performance Measure 1.2.a: Reduce the amount of delinquent accounts receivable 90, 91-180, and over 180 days old.

The values used for FY 2000 are those of the third quarter.  The amounts over 180 days old have been referred to the U.S. Treasury.

                                                                                                                                                                                    2000                1999

Total receivables                                  $1,636,242      $1,302,884

Delinquent receivables                          $39,079           $160,605

Del. Over 90 days                                 $2,284             $52,012

Foreign del. Over 180 days                     $0                   $0

Delinquent over 180 days                       $0                   $0

Over 90 days as a percent of total           0.14%              3.99%

SLAC has performed in an outstanding manner in receivables.  No receivables were delinquent for more than 180 days.   The value of receivables more than 90 days old is less than 1% of the value of total receivables, and all eligible non-Federal receivables more than 180 days old have been referred to the Treasury.

Performance Measure 1.3: Cash management includes, at a minimum, monitoring Travel Department Card and Sanwa/Mellon banking services.

Travel Department Cards are monitored to assure appropriate use and prudent management.

The Travel Department Cards have been in use at SLAC for a little over a year.  These are American Express credit cards that are assigned to individuals working in various SLAC departments. They are the responsibility of the Laboratory to pay, unlike personal Stanford American Express cards.

Department cards may be used for students and others who do not have a credit card, to obtain airline tickets, American Express Traveler’s checks, and to reserve hotel rooms.

30 Department cards have been issued to Departments at SLAC.  On average, only 5 cards are used in any given month.

In this fiscal year, for the first eleven months, there were $82,000 in transactions charged to these Department cards. The average was $7,500 a month, ranging from $1,700 to $21,000.

The charges become delinquent after 60 days. At the end of August 2000, there were no delinquent amounts.

Sanwa/Mellon banking services are monitored to assure minimum balances are maintained, services charges are correct, and issues are promptly resolved.

The service contract with Sanwa Bank, and Mellon as the correspondent bank, continues to meet our needs. There have been no ongoing problems with service charges. There was one charge, which was inappropriate. We had transmitted our payroll deposit early in the morning and the Los Angeles office had not recognized it in time for the draw down. This was resolved quickly in favor of the Laboratory.

mfsor\z:\Assessments\PM00\Assessment Charts.xls

A quick look at the chart of daily balances for the last two years shows a good improvement in 2000 in daily positive balances, where the bank has drawn down from the U.S. Treasury in excess of actual needs for the day. This means the Bank is putting solid effort into controlling the activities that cause daily balances.

Performance Measure 1.4a: Revenues/collections are promptly collected, recorded, and properly classified.

SLAC’s performance was outstanding since 100% of collections were promptly and properly recorded and classified.  All collections are reviewed before final month end posting, and a comparison is made between the daily mail posting of checks received and the data entered into PeopleSoft Accounts Receivable.  We prepare our deposits to coincide with Loomis Fargo Armed Delivery services to make sure that collections are promptly deposited.

Performance Objective #3:  Effective Internal Controls and Audit Findings Follow-up.

Stanford University Audit Group Review

Information Technology Controls Review

The Internal Audit Group reviewed the general Information Technology (IT) controls function. The report (available upon request) was issued dated August 31, 2000, Reference Number: 00-237. The primary focus of the audit was to evaluate the adequacy of the existing Windows NT security configuration, and to review the security and system administration policies and procedures.

Summarized herewith are the recommendations and corrective actions contained within the report.

Review current File and Directory Permission on the BSD-EPN Primary Domain Controller (PDC).

Recommendation:      SLAC Windows NT administration from the Server Support & Architecture group should review all the file permissions and access restrictions to these and other directories and change them to the recommended permissions.

Corrective Action:     As part of the change control process SCS has exported the file and the registry permission of the PDC to the change control database, Visual SafeSource.   The file permissions on the PDC were reviewed and were changed to the recommended access where appropriate.  For example, root boot files (C:\boot.ini) must be read by all users, including SYSTEM.  IAD’s recommendation of administrators only access to files such as boot.ini would cause system boot up problems.  Therefore, instead of giving full control to users, we changed the permission to Read only. 

Delete the default setting for password filtering on the PDC’s registry

Recommendation:

1. Since SLAC is not using File and Print services for NetWare clients the EPNWCLNT entry should be removed, as it does not serve a purpose.

2. The security policy on the Windows NT server should be changed to seven characters to accurately reflect SLAC’s written policy

Corrective Action:

1.  The EPNWCLNT entry has been removed.
2. The EPN password policy was corrected and now is set to seven characters.

Review password policies on individual User accounts.

Recommendation:      The Computer Security Group in consultation with Server Support and Architecture Group should review the 30 accounts for which this option has been enabled.  It’s understood that for certain system services password cannot expire.

After review, appropriate changes should be made and the “password never expires” option should be deselected if a case is established that these accounts are not for system services.  Document the reason why the account in question needs to be an exception to the global policy.          

Corrective Action:     SCS has reviewed the accounts which have the “password never expire” option enabled.  These accounts belong to service accounts, training accounts, MetaFrame profile creation accounts or certain administrative accounts.  Training accounts are only temporarily enabled for the period of a class for the trainers (users), then they are immediately disabled until the next use.  Training accounts do not have privileges to work in any production data, only training/test instances of the database.  These accounts will be added to the change control documentation.

Review User accounts periodically to ensure that they belong to valid employees.

Recommendation:     

1. Inactive employee accounts should be disabled or the accounts should be locked out, in case they are accidentally enabled.

2. It is the responsibility of the department to inform the Window’s NT System administrators of employee terminations. A periodic user review and comparison with the HR terminated employee list could be conducted by the Windows NT System administrators. Alternatively, conduct a review of inactive accounts of users who have not logged in for a given period.

3. For housekeeping purposed a review should be undertaken by the Windows NT and database administrators to ensure whether all the multiple accounts are necessary. Also, in most cases, the username that is used to login to the system should match the actual user using the account to ensure accountability.

Corrective Action: We are in the process of creating a new exit procedure to ensure all appropriate parties have been informed when an employee is departing. We have created a new on-line list of all services and properties including all computer accounts belonging to each person at SLAC.

A new computer account policy was presented to the Associate Directors’ Committee on Computing on September 8, 2000.  The Committee approved disabling of accounts if a person is in status “Gone”.  “Gone” includes any person who is no longer associated or affiliated with SLAC.  We hope to have both the new exit procedure and the new computer account policy in place by the beginning of the new calendar year.

Re-evaluate the advances User right called “Bypass Traverse Checking” granted to the “Everyone” group

Recommendations:  It is recommended that the “Everyone” group should be given access to this advanced User right.

Corrective Action:  The Bypass Traverse Checking right has been removed from the “Everyone” group

FY99 Allowable Cost

The Internal Audit Group reviewed the Allowable Cost for FY99. The report (available upon request) was issued dated May 5, 2000, Reference Number: 00-204. The primary focus of the audit was to review the system of internal controls and examine transactions to determine whether costs incurred during the period October 1, 1998, through September 30, 1999 (FY99) were allowable under the terms of contract DE-AC03_76SFO0515, Modification M339.

Summarized herewith are the recommendations and corrective actions contained within the report.

Periodically reconcile the accrual and the actual payments for staff fringe benefits.

Recommendations:

1. The Accounting Officer should immediately request the University to refund overpayment.
2. The Accounting Officer should periodically reconcile the accrual and the actual payments for staff fringe benefits.

Corrective Action:

1. The Accounting Officer deducted the $9,752.03 overpayment from the Check Voucher for SU Receivable Accounting for February 2000.  The voucher (net amount) was paid in March 2000.
2. The Accounting Officer has assigned one of his staff to reconcile on a monthly basis the accrual and actual payments for staff fringe benefits.

Enhance the procedures for monitoring sales tax payments.

Recommendations:

1. The Accounting Officer should enhance the procedures for monitoring sales tax.
2. The Purchasing Officer should remind AP processors of their responsibility to carefully ensure that sales tax payments are reviewed and appropriately processed.

Corrective Actions:

1. At the end of April 2000, the Accounting Officer implemented procedures to review sales tax charges after month-end closing.  Refunds will be requested from vendors if sales tax was erroneously paid.
2. On April 17, 2000, the Purchasing Officer issued a written memorandum to the Supervisor of Accounts Payable to remind her staff of their responsibility to carefully review all payments to ensure that any sales tax payments are appropriate.

Comply with the calculation of leave pay requirements of University Administrative Guide Memo 22.5 and improve the review procedures on negative leave balances.

Recommendations:

1. SLAC management should ensure compliance with the University Administrative Guide Memo 22.5.
2. The SLAC Payroll Office Manger should immediately make the necessary final payments to the terminated employees.
3. The SLAC Accounting Officer and the Payroll Office Manager should improve the review procedures on negative leave balances and reemphasize the need for a careful review of leave balances due to terminated employees.

Corrective Actions:

1. SLAC management indicated that when SLAC implemented the PeopleSoft HR/Payroll systems, SLAC Human Resources instituted a simplified version of the vacation accrual policy in an effort to minimize system customization and/or manual interventions in the vacation accrual proration process.  This simplified approach is accurate more than 90% of the time.  However, SLAC recognizes that it is not always consistent with the University policy and has rescinded this procedure.   Payroll Department is now calculating the vacation accrual for terminating employees in strict accordance with University Guide Memo 22.5.
2. In March 2000, the SLAC Payroll Office paid the payments due to the two terminated employees.
3. Now negative balances are reviewed at the beginning of the month by Payroll Office staff as soon as the new Leave Balance Reports are printed.  Overdrawn balances are reported to immediate supervisors and necessary action is taken to follow up and coordinate with SLAC Human Resources when employees are on disability.  The Assistant Accounting Officer reviewed with the Payroll Office staff the need to be careful when preparing final payment checks to employees to make sure that leave balances are taken into account accurately. 

Immediately ask the employee to return the inappropriate reimbursement to the petty cash fund.

Recommendations:  The Accounting Officer should immediately ask the employee to return the inappropriate reimbursement.

Corrective Actions:  The employee returned the inappropriate reimbursement to the petty cash fund on March 3, 2000.

Agreed Upon Procedures Performed at SLAC for FY 1999 in Accordance with OMB Circular A-133

The Internal Audit Group reviewed the Agreed Upon Procedures Performed at SLAC for FY 1999 in Accordance with OMB Circular A-133. The report (available upon request) was issued dated June 7, 2000, Reference Number: 00-234. The Internal Audit Group focused on documenting the internal control system and performing tests for compliance with the OMB A-133 requirements in FY 1999. 

Summarized herewith are the recommendations and corrective actions contained within the report.

Recommendations:  No instances of material noncompliance with applicable federal laws and regulations were observed.

Review of Proper Authorization of Purchase Requisitions and Associated Documentation at SLAC.

The Internal Audit Group conducted a review of the Proper Authorization of Purchase Requisitions and Associated Documentation at SLAC.   The report (available upon request) was issued dated July 6, 2000, Reference Number: 00-236. The audit was limited to the review of purchase requisitions for proper authorization and supporting documentation in accordance with SLAC policies and procedures.  In addition, to determine whether all the costs incurred and charged to the Contract were allowable.

Summarized herewith are the recommendations and corrective actions contained within the report.

Recommendations:  SLAC purchase requisitions were properly authorized and supported.  In addition, the costs charged to the Contract were allowable.   

Review of Personal and Sensitive Property

The Internal Audit Group conducted a review of Personal and Sensitive Property.   The report (available upon request) was issued dated September 20, 2000, Reference Number: 00-235.

Summarized herewith are the recommendations and corrective actions contained within the report.

Continue to ensure that managers and employees follow required procedures before moving personal and sensitive property.

Recommendation:  The Manager of SLAC’s Property Control group should continue to remind managers and employees regarding the required procedures before moving personal and sensitive property.

Corrective Action: The Manager of SLAC’s Property Control group stated that the rating period in which SLAC receives a “Needs Improvement” rating was the first time that a statistical inventory was conducted, and it brought to their attention that many employees needed to be reminded of their responsibilities toward property management. As a result, in early FY 2000, SLAC embarked on an extensive “Property Awareness Campaign.”

• Focus groups were held early in FY2000 with Administrative Associates and Computer Administrators to gain insight into why people were not reporting the movement of property.

• The Laboratory Director reissued his memo regarding the protection and use of government property to all employees.

• The Property Control Group sent every property custodian a detailed property listing of property assigned to them, along with an updated property brochure.

• Posters were placed on bulletin boards throughout the sire asking “Did you remember to notify Property Control when you transferred bar coded equipment to a new custodian or location?

• Property newsletters are issued throughout the year with updates on how SLAC is doing relative to keeping track of property movements.

• Improvements have been made in the property section of the Business Information Systems (BIS) on the web.

• A “New Employee Orientation” handout was developed and implemented, which spells out employee responsibilities toward property.

 

SLAC FY 2000 Audit Timeline
Audit	Target Time	Completion Date
Review current File and Directory Permission on the BSD-EPN Primary Domain Controller (PDC)	Nov. 2000
Delete the default setting for password filtering on the PDC’s registry		Already in place by the time the audit report was submitted.
Review password policies on individual User accounts		Already in place by the time the audit report was submitted.
Review User accounts periodically to ensure that they belong to valid employees.	In progress	March 2001
Re-evaluate the advances User right called “Bypass Traverse Checking” granted to the “Everyone” group		Already in place by the time the audit report was submitted.
Periodically reconcile the accrual and the actual payments for staff fringe benefits.		Already in place by the time the audit report was submitted.
Enhance the procedures for monitoring sales tax payments.		Already in place by the time the audit report was submitted.
Comply with the calculation of leave pay requirements of University Administrative Guide Memo 22.5 and improve the review procedures on negative leave balances.		Already in place by the time the audit report was submitted.
Immediately ask the employee to return the inappropriate reimbursement to the petty cash fund.		Already in place by the time the audit report was submitted
Agreed Upon Procedures Performed at SLAC for FY 1999 in Accordance with OMB Circular A-133		No action necessary
Review of Proper Authorization of Purchase Requisitions and Associated Documentation at SLAC.		No action necessary
Property Control		Already in place by the time the audit report was submitted.

Performance Measure 3.1.b Accurate: Complete and Supported Travel Cost Reporting

Given the new requirements in FY2000 to report travel costs funded by the DOE, SLAC seeked guidance and definitions from the DOE/OAK Budget Division and the Contracting Officer.  New General Ledger Accounts were then set up to capture travel costs of visitors who are employees of other DOE contractors.  Travel costs incurred earlier in FY2000 were reviewed to ensure that travel of other DOE contractors were properly categorized.  New reports were then generated from the SLAC BIS database to gather the data for accurate travel reporting to satisfy DOE requirements and for internal control against the travel target.  All through FY2000 reports of travel costs have been provided on time to DOE.  Documentation was provided immediately to DOE whenever requested.   No validations were conducted by OAK in FY2000.  Based on the above, the performance during this rating period is excellent.

Performance Objective #4: Accurate and timely data recording

Performance Measure 4.1a: DOE required accounting reports are provided by the due date and meet content requirements.

SLAC has consistently delivered the reports on time without any need to change the information. Resubmits and extensions of time were not required. Our performance on this measure has been excellent.

Performance Measure 4.2a: FY1999 audited financial statements are prepared in accordance with DOE requirements.

SLAC’s financial statements for FY 1999 were complete and accurate and supported by documentation. We continued our practice, instituted last year, of reviewing our PeopleSoft General Ledger Accounts and MARS Balance Sheet Accounts during July and August to be better prepared for yearend close and financial statement analysis. We have improved on the number and quality of reports in our Analytical Reporting Facility to get better and faster information for review. SLAC’s performance on this measure was excellent.

Performance Objective #5: Construction Projects Closed and Capitalized

Performance Measure 5.1.a: Projects are closed upon beneficial occupancy and capitalized in accordance with DOE requirements.

A plan was developed for the closing and capitalizing of all projects. SLAC also improved on the process by shortening the time it takes to prepare the Work In Process documentation and making the data available on the Web as well as on spreadsheets.  Our performance was outstanding.

Attached is a complex Excel spreadsheet with worksheets for GPP, AIP, Equipment, GLAST, Babar, et cetera. This was used to plan the closing and capitalization of projects.

Performance Objective #6:  Effective and efficient indirect cost management

Performance Criterion 6.1:  SLAC manages its indirect rates

Performance Measure 6.1a:  Using 1996 as a baseline, track and trend FY1997 through FY2000 indirect costs.  Demonstrate that the costs are efficiently managed.

Process used to meet objectives/measures:  SLAC ensures efficient management of its indirect costs by treating them as “direct cost”.  Budgets for indirect functions are individually developed and justified and go through the same rigorous review and approval process as direct programmatic function budgets.

Findings:  The Indirect Rate chart illustrates that SLAC’s operating indirect costs as a percent of the direct operating costs have steadily declined from the FY1996 benchmark of 35.3% to 29.7% in FY2000.  Although the actual dollars expended for operating indirect support in FY2000 are higher than the dollars expended in FY1996, the percentage decline in indirect costs as a percentage of operating costs demonstrates that SLAC has been able to effectively control its operating indirect costs such that they have not grown at the same rate as the operating direct costs. 

  Indirect Rate

$ x 1,000

Discussion:  The Departments charged with carrying out SLAC’s indirect functions must compete for funding along with the research programs and must justify their requests based on the services to be provided.  The budget is allocated based on an assessment of Laboratory mission priorities and goals.  All functional elements of the Laboratory are held accountable for their assigned budget.  The Laboratory’s indirect rate is derived from the indirect budgets rather than the budgets being derived from the indirect rate.  Over the last several years, as the direct programs have grown, the indirect functions at SLAC have been able to control their growth at a rate lower than that of the direct programs.  However, if, in the future, the direct programs shrink, the indirect programs will probably shrink at a slower rate resulting in an increase in the indirect rate.

Performance Measure 6.1.b:  SLAC will adequately complete and provide to DOE the Cost Accounting Standards (CAS) Disclosure Statement as determined by the Contracting Officer.

Process used to meet objectives/measures:  SLAC partnered with DOE Oakland in establishing a schedule for the preparation and submission of the CAS Disclosure Statement.  SLAC is working with staff from the business evaluation and performance division of Oakland in the preparation of the CAS Disclosure Statement.

Findings:  The first milestone is to submit by November 10, 2000, a draft of the CAS Disclosure Statement to Oakland for comment.  We should be able to meet that milestone ahead of schedule.  SLAC took the initiative in seeking DOE Oakland’s assistance in understanding the CAS Disclosure Statement requirements in order to ensure that the first draft product would be well-prepared and timely. 

Performance Measure 6.1.c:  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 cost for the FSC Report.  FSC Report was prepared following the applicable guidelines and submission requirements.

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.  The FSC Report (FSCR) Peer Review of SLAC found that "SLAC has complied with the FSCR guidelines and definitions resulting in acceptable accuracy."  In the review report, SLAC was commended "for the high quality of the report considering this was SLAC's first submittal of the report."   This equates to a performance rating of outstanding.