To govern effectively, boards need accurate and timely financial information throughout the year, not just at year-end. To manage effectively, management needs the same information. We see a direct correlation between a strong year-end process to prepare financial statements and the ability to prepare quality financial information throughout the year. Strong, sustainable processes improve management’s decision-making ability and provide opportunities to use results analysis to communicate to Albertans the institution’s performance and accountability for results. The Minister of Advanced Education, through the department, must ensure the boards of governors of post-secondary institutions hold management accountable for sustaining strong internal control environments and improving identified control weaknesses in a reasonable period of time.Consistent with our prior report cards, we evaluated the following key indicators of effective financial processes and internal controls for each institution:
the quality of draft financial statements prepared for the board, as evidenced by the number of differences from public sector accounting standards our audit found
the time it took management to prepare complete and accurate year-end financial statements the number, age, and nature of current and outstanding recommendations
Effective control environments include clear policies, well-designed processes and controls to implement and monitor compliance with policies, and secure information systems. Such control environments help provide timely, accurate financial and non-financial information to manage and govern the institution. Recommendations not implemented promptly erode the effectiveness of the institution’s control environment. Weak control environments impact the quality of management and the board of governors’ decision making and can result in an institution not achieving its goals by operating in a cost-effective manner and managing operating risks.