REPORT DIGEST

DEPARTMENT OF CENTRAL MANAGEMENT SERVICES
– UNIVERSITY BENEFITS ANALYSIS SCHEDULES

COMPLIANCE EXAMINATION
FOR THE YEAR ENDED: JUNE 30, 2016

Release Date:  May 23, 2017

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  0 -- 0 -- 0
Category 3:  1 -- 0 -- 1
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: N/A

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park
Plaza, 740 E. Ash Street, Springfield, IL
62703
(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

The Department of Central Management
Services pays for the group insurance
costs for certain university employees on
behalf of all State-operated universities
in Illinois.  At the end of each fiscal
year, the Department prepares the
University Benefits Analysis Report that
summarizes exempt and non-exempt employees
and exempt and non-exempt funding.  These
amounts are utilized in the universities’
fiscal year financial reporting.  The
State Comptroller also uses these amounts
to determine the amount of on-behalf
revenue to allocate to the universities.

SYNOPSIS

•  (16-1) The Department used inaccurate
data during the calculation of the
University Benefit Analysis.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INACCURATE DATA USED DURING CALCULATION OF
THE UNIVERSITY BENEFIT ANALYSIS

During our examination of the University
Benefit Analysis for June 30, 2016, we
noted errors in the data used by the
Department of Central Management Services,
resulting in misstatements of the
estimated cost of health insurance
benefits paid on-behalf of State
universities and other entities.

Errors in the data used included the
following:
• Several errors were discovered in a
monthly report the Department uses to
obtain counts of employees covered by the
State Employees’ Group Insurance Program
for each component unit;
• The Department prepared the University
Benefits Analysis schedule for fiscal year
2016 using data as of July 31, 2016;
• Due to the fact that not all
contributions from universities related to
fiscal year 2016 payroll periods had been
received as of July 25, 2016, the date as
of which data was compiled for the
University Benefits Analysis, the
Department estimated receivables of
university contributions subsequent to
July 25, 2016; and,
• Consistent with prior years, the
Department prepared the University
Benefits Analysis schedule using
university headcount data as of June 30,
2016.  However, considering significant
declines in university headcounts during
fiscal year 2016, ranging from 10% to 40%,
it would have been more appropriate to
consider average covered employee counts
for the fiscal year. (Finding 1, pages
6-8).

We recommended the Department implement
procedures to ensure the preparation of
the University Benefits Analysis is based
on accurate and reliable data.  We also
recommended the Department consider the
reasonableness and consistency of monthly
contributions and covered employee count
data to identify irregularities which may
require adjustment for the University
Benefits Analysis.  Lastly, we recommended
the Department consider fluctuations in
the universities’ covered employee counts
during the year in assessing the
appropriate counts on which to base on-
behalf contributions.

The Department agreed with the
recommendations and stated Benefits will
run the report monthly to check for
reasonableness and consistency and
investigate any excessive fluctuations in
the number of covered employees.  The
Department also stated they will use
average covered employee counts for the
University Benefits Analysis calculation.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of management’s assertions
regarding the University Benefits
Schedules for the year ended June 30,
2016.  The accountants stated the Agency
complied, in all material respects, with
the requirements described in the report.

This compliance examination was conducted
by Sikich LLP.

JANE S. CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

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