REPORT DIGEST BOARD OF HIGHER EDUCATION COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2017 Release Date: July 10, 2018 FINDINGS THIS AUDIT: 3 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 1 -- 1 Category 2: 1 -- 1 -- 2 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 2 -- 3 FINDINGS LAST AUDIT: 4 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 SYNOPSIS • (17-01) The Board did not exercise adequate controls over the recording and reporting of State property. • (17-03) The Board did not review the implementation of the Student Transfer Achievement Reform Act. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROL OVER STATE PROPERTY The Board of Higher Education (Board) did not exercise adequate controls over the recording and reporting of State property. We noted the following issues during testing: • The Board did not maintain a listing of inventory items received from the Department of Central Management System (CMS). Therefore, 3 of 60 (5%) items selected for backwards testing could not be traced back to the Board’s property records. • During the examination period, the Board acquired 139 items. We noted the Board did not record the detail object code for 139 items (100%), the voucher number for 131 items (94%), and the purchase price for one item (1%) on its property listing. • Fourteen items transferred to CMS, totaling $7,438, were not reported on the Board’s quarterly Agency Report of State Property (Form C-15). Furthermore, 86 of 86 (100%) items, totaling $29,355, were improperly classified as deletions on the Board’s Form C-15s. These items were actually transfers to CMS. • We noted 4 items purchased, totaling $4,224, were not reported on the Board’s Form C-15s as additions. • Freight and installation charges, totaling $1,620, were not added to the values of various equipment items. • Thirteen of 120 (11%) items tested, totaling $6,187, were found in locations that did not match the locations listed on the inventory listing. • The Board did not file a New Furniture Affidavit with the State Surplus Administrator for one furniture purchase, totaling $3,235. (Finding 1, pages 10-12) This finding has been repeated since 2013. We recommended the Board strengthen its internal controls over the recording and reporting of State property by ensuring all equipment transactions are accurately and timely recorded on its property records and accurately reported on its Form C-15s. The Board accepted the recommendation and stated it will make the changes to ensure inventory reporting is improved. (For the previous Board response, see Digest Footnote #1.) FAILURE TO REVIEW THE IMPLEMENTATION OF THE STUDENT TRANSFER ACHIEVEMENT REFORM ACT The Board did not review the implementation of the Student Transfer Achievement Reform Act (Act). During testing, we noted the Board did not review the implementation of this Act and, therefore, it could not file a report with the General Assembly by May 31, 2017. During discussions with Board personnel about this matter, they indicated Board staff was unaware of this requirement. (Finding 3, page 15) We recommended the Board improve its process for monitoring new legislation and requirements to ensure compliance. Further, we recommended the Board review the implementation of the Act and submit a report on its findings to the General Assembly. The Board accepted the recommendation and stated it will review the Act and any future legislation to ensure compliance. OTHER FINDING The remaining finding pertains to inaccurate financial reporting for federal grants. We will review the Board’s progress towards the implementation of our recommendations in our next compliance examination. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Board for the two years ended June 30, 2017, as required by the Illinois State Auditing Act. The accountants qualified their report on State compliance for Finding 2017-001. Except for the noncompliance described in this finding, the accountants stated the Board complied, in all material respects, with the requirements described in the report. This compliance examination was conducted by the Office of the Auditor General’s staff. JANE CLARK, CPA Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:CMD DIGEST FOOTNOTES #1 – Inadequate Control over State Property – Previous Board Response 2015 – We agree. IBHE has assigned personnel that will strengthen the internal controls and reporting of State property. This will ensure all transactions are accurate and reports are submitted timely.