REPORT DIGEST

ILLINOIS STATE UNIVERSITY

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

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

For the Year Ended:

June 30, 2004

Summary of Findings:

Total this audit                      1

Total last audit                      5

Repeated from last audit       1

Release Date:

March 16, 2005

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 is also available on

the worldwide web at http://www.state.il.us/auditor

SYNOPSIS

¨       The University did not comply with the requirements of the University Faculty Research and Consulting Act.

{Financial Information is summarized on the reverse page.}

FINANCIAL OPERATIONS (CURRENT FUNDS)

FY 2004

FY 2003

OPERATING REVENUES

     Student tuition and fees (net of scholarship allowances).............................

     Grants and contracts....................................................................................

     Auxiliary facilities........................................................................................

     Other operating revenues.............................................................................

             Total Operating Revenues................................................................

OPERATING EXPENSES

     Instruction....................................................................................................

     Research.......................................................................................................

     Public service................................................................................................

     Academic support........................................................................................

     Student services............................................................................................

     Institutional support....................................................................................

     Operation and maintenance of plant............................................................

     Auxiliary facilities........................................................................................

     Depreciation.................................................................................................

     Payments on behalf of the University.........................................................

     Other operating expenditures.......................................................................

             Total Operating Expenses.................................................................

Operating loss.................................................................................................

NONOPERATING REVENUES (EXPENSES)

         State Appropriations................................................................................

        Payments on behalf of the University......................................................         Investment income.....................................................................................

        Interest on capital assets and related debt.................................................

        Other nonoperating revenues (expenses)...................................................

        Net nonoperating revenues

        Income (loss) before other revenues, expenses, gains and losses

        Transfers from the Capital Development Board.......................................

        Capital grants and gifts..............................................................................

INCREASE IN NET ASSETS........................................................................

Net assets, beginning of year.............................................................................

Net assets, end of year......................................................................................

$84,579,827

25,501,492

58,447,697

19,007,753

$187,536,769

$89,875,267

12,611,868

10,497,928

9,710,201

23,930,788

21,971,127

18,334,823

42,582,625

12,340,446

102,777,101

23,270,014

$367,902,188

($180,365,419)

$78,904,476

103,615,384

556,012

(3,029,410)

8,614,026

 $188,660,488

$8,295,069

  14,782,721

6,153,982

$29,231,772

       $214,380,397

$243,612,169

$82,569,129

25,881,096

56,249,152

17,869,133

$182,568,510

$88,431,986

13,256,459

9,542,071

9,896,318

23,228,784

22,659,568

20,868,544

44,860,174

12,370,535

35,138,037

23,543,618

$303,796,094

($121,227,584)

$85,316,120

35,819,931

1,190,912

(3,827,125)

8,498,230

 $126,998,068

$5,770,484

  11,412,336

467,292

$17,650,112

       $196,730,285

$214,380,397

SELECTED ACCOUNT BALANCES (ALL FUNDS)

JUNE 30, 2004

JUNE 30, 2003

Cash and short-term investments.................................................................

Capital assets...................................................................................................

Revenue Bonds Payable................................................................................ .

Accrued compensated absences..................................................................

$40,079,756

236,356,688

55,918,240

19,005,384

$36,123,457

217,077,430

58,751,606

19,509,424

SUPPLEMENTARY INFORMATION

FY 2004

FY 2003

Employment Statistics (Full Time Equivalent - Average Number)

Appropriated funds:

      Faculty/administrative...............................................................................

      Civil service.................................................................................................

      Student employees....................................................................................

Miscellaneous contracts...........................................................................

Nonappropriated funds:

      Faculty/administrative...............................................................................

      Civil service.................................................................................................

      Student employees....................................................................................

            Total Employees..................................................................................

1,301.3

625.4

140.6

137.3

450.0

547.6

  374.6

3,576.8

1,370.4

680.2

149.3

146.4

429.4

588.1

  439.9

3,803.7

Selected Activity Measures

Annual full-time equivalent students –all students...................................

Costs per full-time equivalent student.........................................................

18,570

$7,984

18,707

$7,938

UNIVERSITY PRESIDENT

During Audit Period:  Dr. C. Alvin Bowman, President

Currently:  Dr. C. Alvin Bowman, President

The University stated that some faculty did not completely follow University procedures to seek timely prior approval.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NONCOMPLIANCE WITH THE UNIVERSITY FACULTY RESEARCH AND CONSULTING ACT

      The University Faculty Research and Consulting Act (110 ILCS 100/1) states that no full time member of the faculty of a state-supported institution of higher learning may undertake, contract for or accept anything of value in return for research or consulting services for any person other than that institution on whose faculty he serves unless 1) he has prior written approval of the President of the institution based on a request that estimates time to be spent and 2) he submits to the President an annual statement of actual time spent on such outside services. University policy states annual reports must be submitted to the College Dean by August 31.

      During our testing of 25 faculty requests for approval of outside employment, we noted 10 of 25 (40%) requests tested were not approved prior to start of outside employment.

      The University stated that some faculty did not completely follow University procedures to seek timely prior approval.

      Failure to seek prior approval for outside employment results in non-compliance with State statutes and University policy. (Finding 1, page 12) This finding was first reported in 2003.

      We recommended that the University establish and implement procedures to ensure requests for approvals of outside employment are done in a timely manner.

University officials agreed with our recommendation and stated that they had established regular notifications to all chairpersons, directors, and deans to ensure awareness of the requirements of the University Faculty Research and Consulting Act.  (For previous University response, see Digest Footnote)

      University responses to the findings were provided by University Comptroller Greg Alt in correspondence dated January 20, 2005.

AUDITORS’ OPINION

      Our auditors stated the University’s financial statements as of June 30, 2004 and for the year then ended, are fairly presented in all material respects.

                       ____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:CML:pp

SPECIAL ASSISTANT AUDITORS

      Our special assistant auditors for this audit were Clifton Gunderson, LLP.

DIGEST FOOTNOTE

NONCOMPLIANCE WITH THE UNIVERSITY FACULTY RESEARCH AND CONSULTING ACT – Previous University Response

2003: Accepted.  The University agreed with the recommendation to modify its procedures to ensure requests for approvals of outside employment and filing of annual reports are done more timely.  The Provost’s Office will send information to department chairpersons annually to ensure faculty awareness of the University Faculty Research and Consulting Act and the requirements for approvals and annual reports.  Also, University policy will be revised to require annual reports to be submitted by August 31 of each year to better correlate with faculty presence on campus.