MGIC - Financial Reporting

Financial Reporting

Purpose

The purpose of this policy is to establish the standards and expectations governing how reporting of financial activity conducted through the Maryland Global Initiative Corporation (MGIC)’s United States (U.S.) based financial system is prepared, reviewed, approved, and maintained.

Background

MGIC is a mechanism through which the University of Maryland, Baltimore (UMB) and Affiliate Entities can effectively conduct business outside the United States. The MGIC finance function supports this purpose by processing payments to foreign vendors, service providers, research collaborators, project partners, and other parties in an efficient manner that mitigates institutional risk, promotes compliance with applicable laws and regulations, and reflects sound partnership principles in alignment with UMB’s Core Values.

MGIC’s financial reporting practices are designed to comply with:

• Reporting requirements as an affiliated business entity of the University System of Maryland (USM)
• Maryland state regulations applicable to nonprofit, non-State entities
• S. federal laws governing financial reporting and nonprofit accountability

MGIC’s reporting framework is grounded in:

• Generally Accepted Accounting Principles (GAAP) applicable to U.S. entities (primary framework)
• International Accounting Standards
• Recognized accounting practices used across nonprofit organizations

Lastly, MGIC’s financial reporting is guided by the principles of:

• Transparency in presenting financial results and underlying assumptions
• Accuracy in recording and summarizing financial activity
• Consistency in applying accounting methods and reporting formats
• Accountability in documenting and supporting all reported figures

These principles ensure that MGIC’s financial information can be trusted by internal leadership, external partners, auditors, and regulatory bodies.

The MGIC mechanism is administered by the International Operations (IO) division of UMB’s Administration and Finance department. The IO finance team manages the payment process, accounting of transactions, and financial record-keeping for MGIC’s U.S.-based activity in compliance with this policy.

Policy Statement

Monthly Financial Report Package

1. IO shall produce a complete, accurate, and timely Monthly Financial Report of MGIC financial activity which presents true and fair values per GAAP. The required elements of the Monthly Financial Report include:
2. Funds Availability Statement: A comprehensive report outlining the opening balances, closing balances, funds received, and funds disbursed during the month, along with comparative information from prior periods for each financial account.
3. Profit and Loss Statement: MGIC’s monthly revenue and expense activity, reflecting operational performance.
4. Cash Flow Summary: A summary of cash inflows and outflows, and statement of net cash position, to monitor liquidity and support forecasting of funding needs.
5. Bank reconciliation: A complete reconciliation of MGIC’s operating bank accounts for the reporting period, extracted from the MGIC accounting system. (See MGIC Policy on Banking and Money Transfers).
   • MGIC does not maintain petty cash funds, cash‑on‑hand balances, or corporate credit cards. Therefore, no additional cash or credit card accounts require reconciliation beyond the organization’s primary operating account.
6. Bank Statements: Official bank records supporting the reconciliation and cash balances.
7. Funds Receipt Vouchers with supporting documentation: Records of all incoming funds received during the period, including reimbursement receipts and related backup.
8. Payment Voucher Forms (PVFs) with supporting documentation: Documentation for all disbursements made from the MGIC accounts during the period, including invoices and approvals (See MGIC Policy on Payment of Expenses)

Annual Fiscal Year-End Close

1. At the close of each fiscal year (June 30), MGIC is required to complete a defined set of fiscal year‑end closeout reports. Requirements for the Annual Report include:
   1. Banking and Money Transfer Accounts and Authorities, listing:
      • Authorized signatories for each account, including authority levels. (See MGIC Signature Authorities policy).
      • All personnel with access to online banking and money transfer portals, detailing each individual’s permissions (e.g., view only, review, approve) and authority level.
      • Documentation from Mobile Money Transfer (MMT) service providers listing personnel with authority levels on MMT accounts, when applicable.
   2. Administrative Privileges for Accounting Software, listing all personnel with access to the MGIC accounting system, including permissions (e.g., view only, review, approve) and administrative privileges.
   3. Year‑end journal entries to record all accruals and adjustments in the June monthly financial report.
   4. Verification of all account balances.
   5. Physical inventory of capital and designated non‑capital equipment (See MGIC Policy on Property Management).
   6. Review of insurance coverage (See MGIC Policy on Insurance).

Tax Reporting

1. MGIC must comply with statutory filings and reporting requirements of the jurisdictions in which it conducts taxable business activity. This includes United States federal information returns for MGIC payees subject to U.S. income tax; Maryland State Department of Assessments and Taxation Annual Report; and other applicable State filings. This also includes statutory filings that may be required in foreign countries where the MGIC corporation maintains a dormant registration. (See MGIC policy on Tax Payment and Reporting, and MGIC policy on Corporate Governance).
2. MGIC is not required to file U.S. Internal Revenue Service (IRS) Form 990, Return of Organization Exempt from Income Tax, per IRS Determination dated 23 October 2014.

University System of Maryland Business Entity Reporting

1. MGIC must comply with the University System of Maryland (USM) Policy on Business Entities: https://www.usmd.edu/regents/bylaws/SectionVIII/VIII-13.00.pdf.

Audits and Financial Reviews

1. An annual audit or financial review shall be conducted in accordance with applicable standards and organizational requirements. The results of the audit or financial review shall be formally presented to the Board or management for review and oversight.

Financial Accounting and Reporting Controls

1. All funds received from the State of Maryland or other approved sources to reimburse MGIC’s expenditures paid on behalf of Requesting Units are recorded as revenue during the month of receipt. Each payment will be applied directly to the corresponding invoice to ensure proper matching of revenue and expenses. These transactions are recorded in the Profit and Loss Statement within the Monthly Financial Report.
2. MGIC financial transactions are initiated through a Payment Voucher Form (PVF). Employees who initiate financial transactions are prohibited from entering or posting those same transactions into the MGIC accounting system. Posting authority is restricted to persons other than those who initiate PVFs to ensure proper segregation of duties, protect data integrity, and prevent manipulation or unauthorized changes.
3. Monthly bank reconciliations must be performed by an employee who does not authorize payments and does not disburse funds from MGIC bank accounts.
4. MGIC shall maintain role separation across the reporting cycle, with the responsibilities for preparing, reviewing, and approving monthly reports assigned to separate authorized individuals. No employee may perform more than one of these functions to maintain independence, objectivity, and reporting accuracy. Temporary delays in reporting may be unavoidable when employee absences do not enable role separation.
5. MGIC Finance Reports approved by the IO Assistant Vice President (AVP) in their capacity as MGIC VP – Policy & Administration must be sent to the UMB Controller (in their capacity as MGIC Treasurer) or equivalent oversight authority. This additional review provides a second level of assurance on the accuracy, completeness, and compliance of MGIC financial activity and documentation.

Auditable Files

1. All approved MGIC financial reports, including the supporting documentation for reported transactions, are maintained in UMB’s enterprise platform (currently IO’s Teams channel) as the auditable file, and may be made available to the MGIC Board of Directors or other relevant stakeholders as requested and justified.
2. All accounting records are maintained in the MGIC accounting system (currently QuickBooks) with user access and in-system approval workflows authorized and kept current by the IO Finance Manager to ensure segregation of duties and protection of sensitive data.

Scope

This policy applies to all UMB and MGIC personnel who are involved in the MGIC Financial Accounting and Management function.

Responsibilities

1. IO Senior Accountant or equivalent position: Ensures all MGIC financial activities are supported by complete, accurate, and compliant documentation. Reviews and validates financial activity but does not post transactions into QuickBooks, maintaining proper segregation of duties within the financial reporting process. Prepares PVFs for higher-level approval; issues receipt vouchers and invoices for reimbursement; performs bank reconciliations through the accounting system; and produces the complete Monthly Financial Report and Fiscal Year-End Report for review and approval.
2. IO International Finance Manager, or equivalent position: Provides oversight and quality assurance of MGIC financial reporting. Reviews and clears PVFs and financial reports ahead of MGIC VP approval. Posts all finance transactions to the MGIC accounting system. Generates U.S. federal tax information returns and forms, and supports tax filing. Manages accounting system and online banking and taxation portal access and workflows, and ensures MGIC financial statements and filings are accurate, timely, and compliant.
3. IO Director, International Risk Management or equivalent: Prepares and submits annual USM Business Entity Report, Maryland SDAT Annual Report, and foreign statutory filings as applicable.
4. AVP-IO (in their capacity as MGIC VP – Policy & Administration): Maintains policy and ensure IO division’s compliance. Reviews and approves MGIC monthly financial reports, fiscal year-end close reports, tax information returns and non-US filings, and other periodic reports.
5. UMB Controller (in their capacity as MGIC Treasurer): Reviews MGIC Monthly Financial Reports. Supports audit disclosures and reviews MGIC audits and statements.
6. MGIC Board of Directors: Approves MGIC audit reports and audited financial statements.

Procedures

See IO Standard Operating Procedures

Documentation Requirements

• Payment Voucher Form (PVF)
• MGIC financial reports and associated component Statements
• MGIC accounting system records
• MGIC finance supporting documentation
• Tax and statutory filings to government and USM authorities
• MGIC audit and financial review reports

References

• MGIC Policy on Banking and Money Transfers
• MGIC Policy on Corporate Governance
• MGIC Policy on Insurance
• MGIC Policy on Payment of Expenses
• MGIC Policy on Property Management
• MGIC Policy on Signature Authorities
• MGIC Policy on Tax Payment and Reporting