REPORT DIGEST

REPORT DIGEST

ILLINOIS MATHEMATICS &

SCIENCE ACADEMY

FINANCIAL AUDIT AND COMPLIANCE

EXAMINATION

For the Year Ended:

June 30, 2006

Summary of Findings:

Total this audit 5

Total last audit 7

Repeated from last audit 1

Release Date:

June 5, 2007

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

http://www.auditor.illinois.gov

SYNOPSIS

· The Illinois Mathematics and Science Academy did not competitively procure professional services and did not accurately complete contractual obligation documents.

· The Academy maintained local fund deposits in excess of Federal Deposit Insurance Corporation coverage and pledged collateral.

· The Academy did not transfer funds into the IMSA Income Fund in a timely manner.

{Expenditures and Activity Measures are summarized on the reverse page.}

ILLINOIS MATHEMATICS AND SCIENCE ACADEMY

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Year Ended June 30, 2006

STATEMENT OF ACTIVITIES	FY 2006	FY 2005
REVENUES AND OTHER SOURCES Charges For Services............................................... Operating Grant Revenue......................................... Interest/Investment Income....................................... State Appropriations................................................ Payments Made on Behalf of the Academy............... Other Sources.......................................................... TOTAL REVENUES AND SOURCES.............. EXPENDITURES Education................................................................. Employment and Economic Development.................. TOTAL EXPENDITURES.................................. CHANGES IN NET ASSETS............................	$1,797,060 1,495,555 39,250 16,322,900 0 0 $19,654,765 $21,039,017 8,400 $21,047,417 $(1,392,652)	$1,793,995 5,208,097 20,434 15,832,900 996,842 159,683 $24,011,951 $23,562,506 0 $23,562,506 $ 449,445
SELECTED ACCOUNTS – STATEMENT OF NET ASSETS	FY 2006	FY 2005
Assets: Cash and Cash Equivalents............................................. Receivables, Net............................................................ Capital Assets, Net........................................................ Liabilities: Accounts Payable/Accrued Liabilities.............................. Deferred Revenues......................................................... Compensated Absences (Short Term)............................ Compensated Absences (Long Term)............................. Net Assets...........................................................................	$3,016,817 55,879 23,780,098 $1,434,104 552,159 294,000 481,000 $25,567,842	$2,770,919 55,451 25,573,246 $1,455,710 394,625 78,275 782,000 $27,111,966
SUPPLEMENTARY INFORMATION (unaudited)	FY 2006	FY 2005
Average Number of Employees......................................	238	218
ACADEMY PRESIDENT
During Audit Period: Stephanie P. Marshall, Ph.D. Currently: Stephanie P. Marshall Ph.D.

The Academy did not solicit bids for professional and artistic service contracts

Noncompliance with State Finance Act

20% transfers tested were deposited into IMSA Income Fund late

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER PROCUREMENT AND CONTRACT DOCUMENTATION

The Illinois Mathematics and Science Academy did not competitively procure professional services over $20,000 and did not accurately complete contractual obligation documents.

The Academy awarded and identified two contacts over $20,000 as professional and artistic services - small purchases and did not solicit bids for the services. The Illinois Procurement Code (Code) requires all professional and artistic contracts over $20,000 or more be subject to a competitive request for proposal process prior to the contract being awarded. In addition, the Academy did not have properly completed Contract Obligation Documents (CODs) on three of the contracts tested. The CODs did not include information required by the Statewide Accounting Management System (SAMS). (Finding 1, pages 10-11)

We recommended the Academy ensure it competitively procures contracts when required by the Code and ensure its contractual documents are accurately completed.

The Academy’s response stated that they did not believe the two contracts met the criteria for professional and artistic services. However, the Academy will review its understanding of what the Illinois Higher Education Procurement Code defines as professional and artistic services and revise its procedures for identifying professional and artistic services to help ensure contracts are bid as appropriate. In addition, the Academy will comply with the SAMS procedures for completing COD documents for multi-year contracts.

BANK BALANCES EXCEED COLLATERAL

The Academy maintained local fund deposits in excess of Federal Deposit Insurance Corporation (FDIC) coverage and pledged collateral.

Sufficient collateral was not obtained for the Academy’s local fund for 5 of 12 months during the examination period. The State Finance Act states whenever such funds retained in the excess of the FDIC, a bond or pledged securities should be obtained. The market value of the bond or pledged securities should at all times be equal to or greater than the uninsured portion of the deposit. (Finding 2, pages 12-13)

We recommended the Academy comply with the State Finance Act and obtain sufficient collateral to secure its account balances.

The Academy responded that the problem of collateral deficiencies has been discussed with its bank and the bank’s responsibility to comply with the existing pledge agreement. Academy personnel are now monitoring the month-end balance in the Academy’s collateral account to ensure that the bank is meeting the terms of the pledge agreement.

UNTIMELY TRANSFERS INTO THE IMSA INCOME FUND

The Academy did not transfer funds into the IMSA Income Fund in a timely manner.

The Academy is required to deposit all items received into a special fund in the State Treasury known as the “IMSA Income Fund”, except certain items of income to be retained in its own treasury. Therefore, the Academy deposits money received for fees, food services, and student activities into the locally held IMSA Operating Fund and then transfers the excess monies into the IMSA Income Fund. 4 of 20 (20%) transfers tested were deposited into the IMSA Income Fund late. The State Finance Act requires all items received by the Academy be deposited without delay and no later than 10 days after receipt of such items of income. (Finding 3, page 14)

We recommended the Academy implement policies and procedures to ensure timely deposits into the IMSA Income Fund in compliance with statutory requirements.

The Academy’s response stated that it will modify its procedures to ensure more timely transfers into the IMSA Income Fund.

OTHER FINDINGS

Other findings dealt with property control weaknesses and lack of control over local fund investing. We will review the Academy’s progress toward implementation of all our recommendations in our next audit.

AUDITORS’ OPINION

Our auditors stated the financial statements of the Academy as of June 30, 2006, and for the year ended, are fairly presented in all material respects.

__________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:CML

AUDITORS ASSIGNED

This audit was performed by the Office of the Auditor General’s staff.

SYNOPSIS

ACADEMY PRESIDENT