REPORT DIGEST CHICAGO STATE UNIVERSITY Financial Audit For the Two Years Ended June 30, 2015 Release Date: December 17, 2015 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 0 -- 1 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 1 -- 1 FINDINGS LAST AUDIT: 3 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 WILLIAM G. HOLLAND, 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 This digest covers the Chicago State University’s financial audit as of and for the year ended June 30, 2015. The Chicago State University’s compliance examination (including the Single Audit) covering the year ended June 30, 2015 will be issued at a later date. SYNOPSIS • (15-1) The University failed to properly account for accrued compensated absences. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INACCURATE ACCOUNTING OF ACCRUED COMPENSATED ABSENCES The University did not properly account for accrued compensated absences. During our testing of accrued compensated absences, we noted the following: • We selected a sample of 5 employees from employment categories that do not vest accrued leave and noted that 1 of the employees selected was included on the accrued compensated absences schedule. We reviewed the employee’s contract and verified the employee was not eligible for vested accrued leave. We brought this information to the attention of the University and asked them to go through their records and remove all individuals that were not allowed to accrue absences. The University reviewed their records and indicated that there were no other individuals required to be removed. The noted employee’s accrued leave ($15,216) was removed from the listing prior to the preparation of the financial statements. • We also tested a sample of 19 employees to determine if the University was properly accounting for leave time earned and used during the year. We noted four employees in our sample that had beginning accrued leave time that did not agree to the prior year schedule prepared by the University. The differences in beginning balances ranged from accruals that were 44.25 hours under to accruals that were 70.21 hours over previously reported amounts. We also noted one employee that was shorted 8 hours of accrued leave during the fiscal year. The total projected misstatement based on our sample was $61,595 of additional expense that was run through the current year Statement of Revenues, Expenses and Changes in Net Position. • We tested 6 of 12 employees that received sick leave payouts during the fiscal year. Of the 6 employees tested, we noted that three of them received a payout for 100% of their sick time ($6,256 over the allowed amount). The projected error in payments made was $7,531. (Finding 1, pages 51-52) This finding was first reported in 2011. We recommended the University improve its processes to account for accrued leave to ensure records and reporting are accurate and that employees are paid appropriately. We further recommended the University recoup the inaccurate sick leave payouts. University officials agreed with our finding and stated they will improve their process between the Office of Human Resources and Finance/Administration to ensure that the appropriate accrued leave is captured in the general ledger and they will continue their practice to recoup any overpayments. (For the previous University response, see Digest Footnote #1.) AUDITOR’S OPINION Our auditors state the financial statements of the Chicago State University as of and for the year ended June 30, 2015 are fairly presented in all material respects. WILLIAM G. HOLLAND Auditor General WGH:TLK SPECIAL ASSISTANT AUDITORS Our Special Assistant Auditors for this audit were Borschnack Pelletier & Co. DIGEST FOOTNOTES #1 - Inaccurate Accounting of Accrued Compensated Absences – Previous University Response - The University accepts the Auditors’ recommendation. All employees from the Human Resources and Accounting functions that are integral to this process will receive training to expand their knowledge of the entire process. The Accounting function will also collaborate with Human Resources and the Information Technology Department to develop reporting that details all employee information required for this calculation. This reporting will also be validated throughout the fiscal year for integrity. Human Resources will continue efforts to reinforce the timeliness and accuracy of employee time inputs into its automated Web Time Entry system.