REPORT DIGEST

ILLINOIS STATE UNIVERSITY

FINANCIAL AUDIT, SINGLE AUDIT AND
COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2016

Release Date:  December 15, 2016

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 0 -- 1
Category 2:  1 -- 2 -- 3
Category 3:  0 -- 0 -- 0
TOTAL:  2 -- 2 -- 4

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
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

• (16-02) The University did not exercise
adequate internal control over the return
of grant and loan funds to the United
States Department of Education.

• (16-03) The University did not always
ensure compliance with the University
Faculty Research and Consulting Act and
University policies regarding outside
employment.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO ENHANCE CONTROLS OVER RETURNING
GRANT AND LOAN FUNDS

The University (University) did not
exercise adequate internal control over
the return of grant and loan funds to the
U.S. Department of Education (Department).
During testing, the auditors noted the
following:

• Eight of 25 (32%) unearned grant and
loan funds was not returned to the
Department until 48 to 198 days after the
University became aware the student had
withdrawn from the University.

• One of 25 (4%) unearned grant and loan
funds were not properly calculated,
resulting in the amount returned being
understated by $42. (Finding 2, pages
20-21)

We recommended the University implement
controls to ensure all returns of grant
and loan funds are properly calculated and
timely refunded.

University officials agreed with the
recommendation.

NEED TO IMPROVE COMPLIANCE WITH THE
UNIVERSITY FACULTY RESEARCH AND CONSULTING
ACT

The University (University) did not always
ensure compliance with the University
Faculty Research and Consulting Act and
University policies regarding outside
employment.

During testing, some of the issues noted
by the auditors included the following:

• 40 of 105 (38%) cases of outside
employment had the Request for Approval of
Secondary/Outside Employment Form approved
by the University’s Provost one to 371
days late.

• 77 of 105 (73%) cases of outside
employment did not have the Annual Report
of Secondary/Outside Employment Form
submitted by the faculty member to the
University’s Provost by the deadline of
August 31, 2016. (Finding 3, pages 22-23)
This finding has been repeated since 2012.

We recommended the University Provost
implement internal controls to ensure
faculty members with outside research,
consulting services, or employment receive
written pre-approval to conduct the
requested activity and annually disclose
the time spent on these activities in
accordance with State law and University
policy.

University officials agreed with the
recommendation and stated they will
continue to assess the faculty research
and consulting approval process to ensure
more timely approvals and disclosures.
(For the previous University response, see
Digest Footnote #1.)

OTHER FINDINGS

The remaining findings pertain to
inadequate controls over revenue
recognition and noncompliance with the
State Officials and Employees Ethics Act.
We will review the University’s progress
towards the implementation of our
recommendations in our next audit and
examination.

AUDITOR’S OPINIONS

The auditors stated the financial
statements of the University as of and for
the year ended June 30, 2016, are fairly
stated in all material respects.

The auditors also conducted a Single Audit
of the University as required by the
Uniform Guidance. Our auditors qualified
their opinion on compliance regarding the
return of Title IV funds for the Student
Financial Assistance Cluster. Except for
this matter, the auditors stated the
University complied, in all material
respects, with the types of compliance
requirements that could have a direct and
material effect on the University’s major
federal programs for the year ended June
30, 2016.

ACCOUNTANT’S OPINIONS

The accountants conducted a compliance
examination of the University for the year
ended June 30, 2016, as required by the
Illinois State Auditing Act. The
accountants stated the University
complied, in all material respects, with
the requirements described in the report.

FRANK J. MAUTINO
Auditor General

FJM:DJN

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for the
audits and examination were BKD, LLP.

DIGEST FOOTNOTES

#1 – Noncompliance with the University
Faculty Research and Consulting Act –
Previous University Response

2015: The University agrees with the
recommendation and will continue its
assessment of the faculty research and
consulting approval process. Additional
modifications will be made to ensure more
timely approvals and annual disclosures of
outside research, consulting and
employment activities.