The transaction sampling process was developed by the PWRuP workgroup. Transaction sampling can help departments significantly reduce their month-end financial workload.

Click the links below to learn about departments' responsibilities for managing the transaction sampling process:

• Designation of responsibilities
• Management reporting
• Global versus target samples
• Separation of responsibilities
• Transaction testing and documentation
• Department filing systems

Designation of responsibilities: In transaction sampling, various managers and staff members have specific responsibilities within the process. These responsibilities can be designated in a variety of schemes, always supervised by the department's management service officer (MSO) and financial manager. Most departments arrange responsibilities according to the following model:

• MSOs oversee the review program at the department level. Responsibilities include:
  • Create management reports to monitor expenditure trends and sampling results.
  • Monitor percentage of completion for sampled transactions.
  • Establish process and hierarchy rules to optimize controls.
  • Determine if target samples should be added to expand the sampling coverage.
• Financial managers supervise staff in implementing the sampling program. Responsibilities include:
  • Train staff on all aspects of the department review process.
  • Conduct spot checks of reviewed items including documentation and conclusions.
  • Share concerns or questions about the process with the PWRuP workgroup.
• Fiscal assistants implement and document the transaction sampling process. Responsibilities include:
  • Audit all sampled transactions for allowability and allocability to fund sources.
  • Ensure complete documentation for all sampled items.
  • Note error types via drop-down codes.
  • Submit Electronic Non-Payroll Expense Transfers (ENPETs) for all errors noted during the process.
  • Manage filing systems for transaction documents.

Management reporting monitors the overall effectiveness of the sampling program and identifies opportunities for improvement at the department and central administrative levels. At this time, management reports must be created via QueryLink. A standard report for transaction sampling is under development, with a completion goal of December 2003. Quarterly report review is encouraged and should include the following:

• Expenditure population data such as number and dollar value of all transactions based on transaction type (i.e., sub-3, or rule class); and sampling strata (i.e., $1–$500)
• Data associated with sampled and reviewed transactions such as types of errors, frequency, and dollar value
• Analysis of the data (e.g., review of monthly trends, shifts in expenditure activity, underlying causes for recurring error types, adequacy of front-end controls by transaction type, etc.)

Global versus target profiles: The Controller's Office has set up transaction sampling based on a global profile. This profile automatically selects a number of transactions for review for each participating unit each month. These "global samples" equal the minimum number of transactions that must be reviewed each month.

In addition to the global profile, the department can add target profiles to increase sample sizes for select areas (i.e., fund, organization, program, or index). Target sampling examines additional transactions based on perceived risk. For example, managers may add target samples associated with:

• Department processes that have inherently weak controls due to minimal staff involvement at the front end (e.g., Bookstore or Marketplace Preview recharges, Express Card transactions)
• Contracts or grants that are approaching their award end-date
• Staff members who have expenditure authority yet demonstrate a misunderstanding of policies for allowability or allocability

Note: The use of target profiles is not encouraged for the first six months of implementing the transaction sampling process.

Separation of responsibilities is an essential component of good internal controls. This separation ensures that no individual can handle any single financial transaction in its entirety (initiation, pre-review and authorization, and post-review).

Most FinancialLink processes require an approval hierarchy for optimal separation. In transaction sampling, some units may modify IFIS approval hierarchies to enhance front-end controls. If you modify approval hierarchies, make sure the additional review makes sense in light of potential risk as well as related workload and staffing issues.

Transaction testing and documentation: If a transaction is selected for review, the fiscal assistant selects an error code from the drop-down menu in the ledger reviewer module. Note that multiple error codes can be assigned to a single transaction.

Department filing systems: If the department is the office of record for expenditures, the department must maintain documents such as packing slips, Express Card purchases, cash collections, department recharges, etc. Departments must set up filing systems that make it easy to retrieve documents associated with both sampled and non-sampled transactions.

After deciding to participate in transaction sampling, you may need to modify your filing systems. Make sure that the new filing systems address issues related to the ledger review process, offices of record by document type, department preferences, and space concerns. For filing system suggestions, please see SIO's Experience and Helpful Hints.

Questions? If you have technical questions about the Ledger Reviewer tool, contact Mojgan Amini, (858) 534-1023. For policy questions, contact Debbie Rico, (858) 822-2797.