REPORT DIGEST

NORTHEASTERN ILLINOIS 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:
July 22, 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 did not adequately plan the selection and implementation of its new academic and administrative computer system which cost over $850,000.

• The University deviated from its established accounts receivable procedures by not placing past due student accounts on hold and by not sending out notices of offset claims on a timely basis.

• The University's efforts to define and correct impending computer problems due to the impact of the year 2000 are not fully adequate.
  
  
  
  
  
  
  
  

{Financial Information is summarized on the reverse page.}

FY 1997

FY 1996

• REVENUES
  State Appropriations
  General Revenue Fund
  Education Assistance Fund
  Payments on behalf of University
  Student tuition and other fees
  Grants (principally federal awards)
  Commuter center sales and services
  Parking revenue
  Other sources
  Total
  
• EXPENDITURES AND MANDATORY TRANSFERS
  Instruction
  Research
  Public Service
  Academic Support
  Student services and Programs
  Institutional support
  Operation of plant
  Scholarships and Fellowships
  Auxiliary enterprises
  Mandatory transfers
  Total

$30,941,035
3,463,000
7,059,031
18,278,192
10,469,531
128,595
639,417
2,537,247
$73,516,048


$23,954,644
415,714
5,528,805
4,977,117
6,462,496
17,107,680
7,271,000
5,959,664
2,046,540
287,153
$74,010,813

$29,907,041
3,362,100
6,285,554
17,809,190
10,169,434
157,263
721,272
2,598,714
$71,010,568


$23,533,250
243,169
5,431,473
4,967,804
6,161,049
16,610,224
7,416,812
5,579,971
2,272,849
315,047
$72,531,648

JUNE 30, 1997

JUNE 30, 1996

$10,126,519
35,689,599
67,370,683
12,589,424

(9,325,738)
365,195
1,838,096

93,268,241
1,973,721
$(10,659,067)

$5,702,193
33,894,395
66,493,951
12,178,542

(8,802,345)
127,849
1,773,567

90,340,376
2,828,128
$(10,070,086)

FY 1997

FY 1996

202
328
444
420
1,394

5,369
1,547
$6,233
$7,116

203
330
455
442
1,430

5,438
1,564
$5,943
$7,687

During Audit Period: Dr. Salme H. Steinberg
Currently: Dr. Salme H. Steinberg

$850,000 spent on computer system that does
not adequately meet the University's needs

Accounts receivable procedures not followed

Year 2000 Planning Deficiencies for Computer Systems

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE PLANNING IN SELECTION AND IMPLEMENTATION OF NEW COMPUTER SYSTEM

The University did not adequately plan the selection and implementation of its new academic and administrative computer system. Although the project was originally targeted to be completed by November 1996, it was still incomplete at the conclusion of our current audit.

The University purchased a software package that did not meet its needs and required extensive modifications. Also, the University paid for the software before it was delivered, and the software package was not adequately tested before implementation. The University paid the vendor over $850,000 for the new academic and administrative computer system. When the new system did not perform as expected, the University was left without a working financial package. As a result, the University was unable to prepare auditable financial statements in a timely manner. The University has abandoned these new financial and purchasing software modules, and it was receiving these services from another vendor at an estimated monthly cost of over $10,000. (Finding 2, pages 14-15)

We recommended the University review the contractual requirements for the new computer system and take appropriate action to address noncompliance with the original terms of the agreement. The University should also develop a planning framework to ensure required components of computer system development projects are adequately addressed.

The University agreed with this finding and stated that they are in contract negotiations with the vendor regarding the academic and administrative system.

DEVIATION FROM ESTABLISHED ACCOUNTS RECEIVABLE PROCEDURES

The University did not follow its established accounts receivable procedures by not placing holds on past due student accounts we tested totaling $14,000 and by not sending prompt notices of offset claims totaling $5,600 to students. Consequently, these students were allowed to register for classes without taking care of their past due accounts. (Finding 4, page 18)

We recommended the University enforce current collection procedures to allow for timely holds on student accounts and issuance of notices of offset claims.

The University agreed with our recommendation and stated that it is reinforcing its procedures and assigning additional personnel to the accounts receivable collections process.

YEAR 2000 PLANNING AND IMPLEMENTATION DEFICIENCIES

The University's current efforts to define and correct impending computer problems due to the impact of the year 2000 are not fully adequate. The year 2000 can cause problems with computer-based systems due to the manner that computers process calendar dates. This problem can cause significant business problems if not identified and corrected.

Since the University uses computer systems to process information to meet its mandates and objectives, addressing the technical issues surrounding the upcoming millennium is important. The University's efforts to implement a year 2000 compliant system failed and formal year 2000 plans have not been developed and communicated at this point in time. In addition, technical areas such as local and wide area networks, telecommunication, physical security system, and facility and maintenance systems have not been formally addressed.

The corrective work requires considerable programming effort to examine numerous lines of source code in order to locate and fix the date fields, and correct them. If the University does not give high priority to this issue, systems relied upon to meet mandates and objectives could have serious problems. The University needs to have a plan in place where the scope of the impact has been inventoried, and corrective process defined and scheduled or implemented. (Finding 3, page 16)

The University has accepted our recommendation to assess this problem, develop a plan, and devote the necessary resources to implement corrective action.

OTHER FINDINGS

The remaining findings and recommendations have been given appropriate attention by the University. We will review progress toward implementation of our recommendations in our next audit.

Responses to the findings were provided by Cleve McDaniel, Vice President of Administrative Affairs.

AUDITORS' OPINION

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

_____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:ROQ:ak

SPECIAL ASSISTANT AUDITORS

Deloitte & Touche LLP were our special assistant auditors for this audit.