REPORT DIGEST

ILLINOIS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT
(In accordance with the Single Audit Act and OMB Circular A-133)
For the Year Ended:
June 30, 1997

Summary of Findings:

Release Date:
April 23, 1998

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

SYNOPSIS

• The University's accounting system is outdated and inefficient for preparing financial statements and various other financial reports. This finding has existed since 1994.

• The University did not have adequate controls in place to prevent duplicate payments to vendors.

{Financial Information is summarized on the reverse page.}

FY 1997

FY 1996

$ 72,640,299
60,669,540
21,877,686
4,510,286
43,155,356
6,993,306
20,107,378
$229,953,851

$ 60,635,646
12,974,852
6,353,737
13,880,139
21,963,578
16,609,790
16,383,150
1,753,262
13,802,293
34,598,136
8,491,611
20,107,378
$227,553,572

$ 69,842,498
57,686,564
20,811,867
4,367,330
40,451,582
5,998,567
17,429,487
$216,587,895

$ 57,381,148
12,337,731
6,727,064
14,359,027
22,039,252
14,276,963
15,107,560
3,171,112
13,572,821
32,273,203
6,755,292
17,429,487
$215,430,660

JUNE 30, 1997

JUNE 30, 1996

$ 4,433,987
57,037,818
382,238,507
22,319,691
62,583,932

1,543,385
2,505,806
9,781,124
351,058,432

$ 6,406,043
30,812,484
364,046,919
21,510,810
45,859,684

(11,851)
1,572,780
9,582,455
329,419,508

FY 1997

FY 1996

1,165.6
762.7
293.1

353.6
566.3
402.4
3,543.7

16,365
4,294

1,222.1
791.2
254.0

551.6
375.7
454.3
3,648.9

16,408
4,299

Outdated accounting system in need of upgrade

New accounting system needs to be a high priority

Sixteen of 59 refund receipts tested were refunds of duplicate payments

Lack of controls resulted in overpayments to vendors and inefficient use of Sate funds.

FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS

ACCOUNTING SYSTEM IS OUTDATED AND NOT EFFICIENT

The accounting system utilized by the University Comptroller's Office is outdated and is not efficient for preparing financial statements and various other financial reports. The various areas within the Comptroller's Office have ten different nonintegrated accounting systems which have evolved over time. These various systems process information throughout the year and each system independently generates financial information. Preparation of the University's agency-wide financial statements is difficult because numerous combinations, eliminations, and allocations of amounts from the ten nonintegrated systems must be made.

An efficient and effective accounting system should facilitate the preparation of agency-wide financial statements, simplify daily record keeping, and enable individuals in various areas of the Comptroller's Office to have access and use the information from other areas. (Finding 1, page 12) This finding has been repeated since 1994.

University officials agreed with our recommendation to make the upgrading of the accounting system a high priority. They stated a financial software package has been purchased and several specialized teams are working diligently on this project with implementation scheduled for July 1, 1998. For the previous University responses, see Digest Footnote 1.

DUPLICATE PAYMENTS TO VENDORS

During our review of refund receipts, we noted that 16 of 59 (27%) receipts, totaling $9,906.68, were refunds of duplicate payments made to vendors. University employees pick up merchandise from the vendors and submit the vouchers to the respective departments for payment. The vendors also send original invoices to the departments, which in turn forward them to the Comptroller's Office to be paid.

Prudent business practices require controls to be in place to ensure that vendors are only paid once for services rendered. (Finding 2, page 13)

University officials agreed with our recommendation to establish procedures to ensure that vendors are not paid twice for the same charge and that the payment process should be initiated from the vendor invoice only.

OTHER FINDINGS

The remaining findings and recommendations were less significant and are being given appropriate attention by University management. We will review progress toward implementation of our recommendations during our next audit.

University responses were provided by Mr. Ron Jones, Assistant Vice President and Comptroller.

AUDITORS' OPINION

Our auditors state the June 30, 1997 financial statements of Illinois State University are fairly presented.

_____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

Geo. S. Olive & Co. LLC were our special assistant auditors for this audit.

DIGEST FOOTNOTE

#1 ACCOUNTING SYSTEM IS OUTDATED AND NOT EFFICIENT - Previous Agency Responses

1996: "The University agrees with the recommendation to make the upgrading of the accounting system a high priority and management is continuing to strive for a fully implemented system. A financial accounting package has been purchased and several implementation teams are meeting on a regular basis."

1995: "The University agrees with the recommendation to make upgrading of the accounting system a high priority and is currently in the process of examining vendor software packages."

1994: "The University agrees to make the upgrading of the accounting system a high priority. A team has been formed and initial review and planning began in July 1994."