REPORT DIGEST

CHICAGO STATE UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT

(In accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:
June 30, 2002

Summary of Findings:

Total this audit 8
Total last audit 7
Repeated from last audit 4

Release Date:
June 12, 2003

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State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

 

 

 

SYNOPSIS

 

 

  • The University did not maintain its property control records in accordance with the State Property Control Act.
  • The University disbursed Federal expenditures from a prior budget year in the current year without written authorization from the granting agency.
  • The University did not comply with internal and external policies and procedures established for telecommunication expenditures incurred during the fiscal year.

 

 

 

 

 

 

 

 

 

 

 

{Financial Information is summarized on the reverse page.}

CHICAGO STATE UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2002

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

FY 2002*

OPERATING REVENUES

Student tuition and fees (net of scholarship allowances of $5,445,710)
Auxiliary enterprises (net of scholarship allowances of $190,915)
Grants and contracts
Other

Total Operating Revenues

OPERATING EXPENSES

Instruction
Research
Public services
Academic support
Student services
Institutional support
Operation and maintenance of plant
Scholarships and fellowships
Loan cancellations
Auxiliary enterprises
Depreciation

Total Operating Expenses

Operating Income (Loss)

NONOPERATING REVENUES (EXPENSES)

State appropriations
State fringe benefits
Interest on capital asset – related debt
Other nonoperating revenues (expenses), net
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Capital Appropriations

Capital appropriations

INCREASE IN NET ASSETS

Net assets, beginning of the year (restated)
Net assets, end of the year

 

$13,918,162
3,316,061
22,759,331
1,336,588

$41,330,142

 

$41,129,436
2,325,950
5,549,168
6,768,456
8,539,822
11,608,745
8,766,233
6,226,043
58,262
4,364,696
2,916,505

$98,253,316

$(56,923,174)

 

$43,528,600
11,190,553
(1,377,957)
1,097,187
$54,438,383

($2,484,791)
6,149,057
$3,664,266


$29,101,327
$32,765,593

SELECTED ACCOUNT BALANCES

JUNE 30, 2002

Cash and investments
Capital assets, net of accumulated depreciation
Revenue bonds payable
Accrued compensated absences

$7,446,531
$69,346,307
$24,500,000
$8,789,164

SUPPLEMENTARY INFORMATION (Unaudited)

FY 2002

Employment Statistics

Faculty/administrative
Student employees

Total Employees

Selected Activity Measures

Students (Spring Term)
Undergraduate
Graduate
Total Students
Full-time equivalent costs per student

 

986
393

1,379

 


4,899
1,987
6,886
$5,625

UNIVERSITY PRESIDENT
During Audit Period: Dr. Elnora Daniel
Currently: Dr. Elnora Daniel

* Due to the change in accounting principles related to the implementation of GASB Statements No. 34,35,37,38,and 39 comparative information was not presented. Comparative information will be presented in future periods.

 

 

 

Need to improve controls over property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Need to improve cash management and reporting for federal grants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Need to monitor and comply with telecommunication policies and procedures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

PROBLEMS WITH PROPERTY CONTROL PROCEDURES

We noted instances of non-compliance with the State Property Control Act regarding the University's fixed asset records and reports. The State Property Control Act states "each responsible officer shall maintain a permanent record of all items of property under his jurisdictions and control."

Several different types of exceptions were noted during our testing of property. The exceptions that occurred were in the functions of recording, tagging, and disposing of equipment. Additionally, there were several exceptions noted with regards to the location of the equipment when we performed a physical inventory inspection.

Strong internal controls dictate that the University update and maintain a permanent and accurate record of property and equipment. Failure to maintain control over equipment could result in theft or misuse of equipment. (Finding 7, pages 33-34). This finding has been repeated since 1997.

We recommended the University maintain accurate records of equipment in accordance with established internal control to ensure compliance with statutory requirements.

University officials responded that they agree with the recommendation. The University plans to hold re-orientation sessions for staff responsible for property control. These sessions would include training on reporting, interim physical verification of property assignments, disposition and transfers. The property accountant will perform reconciliations of equipment purchases with property additions in the fixed asset system. The University will continue its efforts to maintain accurate records of equipment. See Digest Footnote #1 for previous agency responses.

PROBLEMS IN MONITORING FEDERAL GRANTS

The University's systems for compliance with the federal regulations for cash management and reporting need improvement. When a funding period is specified, the recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the Federal awarding agency. Also, an entity that receives government assistance is responsible for ensuring that the entity complies with the laws and regulations applicable to its activities.

We noted the following exceptions:

  • Three of the federal grants tested had their current year expenditures reduced by the amount over-expended in the prior year. This distorted the current year expenditures by $51,598.
  • A program selected for testing disbursed expenditures totaling $121,396 from budget year 2000 funding to the current year without a written authorization from the granting agency.
  • Two federal programs were not included on the Schedule of Federal Awards prepared by the University.

Failure to adequately monitor federal awards may result in a future loss of funds due to noncompliance with federal requirements. (Finding 4, pages 26-28).

We recommended the University establish policies and procedures that ensure compliance with federal rules and regulations and that expenditures are reported on the Schedule of Federal Awards in the period to which they are applicable in accordance with OMB Circular A-110. This practice will prevent the distortion of current year expenditures and does not preclude the reconciliation of the Schedule of Federal Awards to the general ledger.

University officials responded that they agree with the recommendation. They stated that they would adopt proper policies and procedures to ensure compliance with the applicable federal rules and regulations.

TELECOMMUNICATION POLICIES AND PROCEDURES NOT FOLLOWED

The University did not ensure compliance with telecommunication policies and procedures regarding cellular phone usage and personal and long distance telephone calls.

Telecommunication policies and procedures on cellular telephones, pagers and calling cards are not readily accessible to all employees and are not specific as to issuance, usage and revocation of these devices. There were two instances of unauthorized purchases of cellular telephones and four phones that were not registered with the Office of Telecommunications. Additionally, the University did not review the usage for unusual and/or personal phone calls for one month selected for testing.

Per our discussions with University personnel, they cited these errors as due to a lack of adequate controls and insufficient staff allocated to this area.

Adequate internal controls dictate that management establishes procedures to ensure that telecommunication policies are adhered to and followed.

The failure to adhere to these policies and procedures could result in unauthorized expenditures and increases the risk that irregularities could exist without being detected. (Finding 6, Pages 31-32)

We recommended to the University that they establish and comply with policies and procedures to ensure telecommunications expenditures are for authorized purposes.

University officials stated that they agreed with the recommendation and that they have implemented certain controls that would address this finding. Documentation of the corrective action taken by the University will be available to us during next year’s audit.

OTHER FINDINGS

The remaining findings are reportedly being given attention by University officials. We will review progress toward implementation of our recommendations in our next audit. University responses to the findings were provided by the President, Dr. Elnora D. Daniel in a letter dated April 4, 2003.

AUDITORS’ OPINION

Our auditors state the financial statements of Chicago State University and its Revenue Bonds as of June 30, 2002 and for the year then ended are fairly presented in all material respects.

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:TLK:pp

SPECIAL ASSISTANT AUDITORS

Washington, Pittman & McKeever, LLC were our special assistant auditors for this audit.

DIGEST FOOTNOTE

#1 CONTROLS OVER FIXED ASSETS - Previous Agency Responses

2001: The University agrees with the recommendation. The policy and procedures pertaining to equipment location transfers have been routed to all fiscal officers. Periodic equipment inventory by the staff of the Property Control Office have been expanded. The University will continue its efforts to maintain accurate records of equipment.

2000: The University concurs with the recommendation. The actual locations of the twenty-three equipment items were identified during the physical inventory and the equipment records were updated accordingly. The twenty-two items not initially located were all subsequently found by University personnel. The University has updated the property records for the correct location of all property items as identified in the reconciliation of the physical count conducted. The University will continue its efforts to maintain accurate records of equipment and will implement appropriation policies and/or procedures to comply with the statutory requirements and internal control procedures. This finding should not repeat in fiscal year 2001.

1999: We agree. We are in the process of performing a comprehensive physical inventory of equipment. We will also be able to reconcile physical inventory to the property control records and general ledger. Any differences will be investigated and resolved. The University has a policy on equipment transfers, which we will enforce. We have also required that tag numbers accompany the supporting documentation in order to process an item for payment. This will assure that all new purchases are inventoried and tagged.

1998: We agree. The University will comply with SAMS classification guidelines for capital leases. Also, additional inventory testing for property and control will be performed.

1997: We agree.