FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE SUPPORTING DOCUMENTATION FOR FEDERAL EXPENDITURES
The University did not maintain adequate supporting documents for federal expenditures.
During our testing of vendor invoices for two different federal programs we noted that 5 out of 53 invoices and supporting documents could not be located by the University for testing. This resulted in total questioned costs of $15,594. (Finding 1, Pages 19-20)
We recommended the University adhere to its established policy and procedures to ensure the adequate retention of financial records.
University officials agreed with our recommendation and stated that they will ensure compliance with established policies and procedures.
ANNUAL CAMPUS SECURITY REPORT
The University did not provide currently enrolled students and current employees direct individual notice of the availability of its annual campus security report.
The University police publish annual crime statistics on the University's web site, but they do not provide direct individual notice to the students that this information is available.
The Department of Education Student Assistance General Provision (34 CFR Part 668, Subpart D, 668.41) requires that by October 1 of each year, the University must distribute to all enrolled students and current employees its annual security report.
The University agreed to comply with the requirements of the Federal Regulations concerning institutional and financial assistance information for students and prospective students, upon signing the U.S. Department of Education Student Financial Assistance Program Participation Agreement.
If the University fails to take corrective actions, the United States Secretary of Education could take action against the University by imposing sanctions. The type of sanction would depend on the severity of the violations. Possible sanctions could include the assessment of fines and in very severe violations, the limitation, suspension, or termination of the University from participation in the Title IV, HEA Programs. (Finding 2, Pages 21-22)
We recommended that the University establish policies and procedures to notify current students and employees of the annual availability of the campus security report.
University officials agreed with our recommendation and stated that they have developed policies and procedures that address this issue.
PROBLEMS WITH PROPERTY CONTROL PROCEDURES
The University did not fully comply with the State Property Control Act regarding 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 jurisdiction 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 items of equipment that could not be located or that were found in a location that was different from the property control listing.
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 3, page 23). 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 conduct semi-annual inventories of departments with a high degree of inaccuracy. The University will also conduct training sessions for staff responsible for property control. These sessions will focus on safeguarding, reporting, interim physical verification, disposition and equipment transfers. (See Digest Footnote for previous University responses.)
University responses to the findings were provided by the President, Dr. Elnora D. Daniel in a letter dated January 16, 2004.
AUDITORS’ OPINION
Our auditors state the financial statements of Chicago State University as of June 30, 2003 and for the year then ended are fairly presented in all material respects.
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WILLIAM G. HOLLAND, Auditor General
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SPECIAL ASSISTANT AUDITORS
Washington, Pittman & McKeever, LLC were our special assistant auditors for this audit.
DIGEST FOOTNOTE
CONTROLS OVER FIXED ASSETS - Previous Agency Responses
2002:
The University agrees with the recommendation. Of the eleven items not located, nine of these items were actually scrapped and reported to the Department of Central Management Services. The other two items missing had a police report filed. 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.
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.
