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FINDINGS,
CONCLUSIONS, AND RECOMMENDATIONS
FAILURE TO APPLY APPROPRIATE
ACCOUNTING PRINCIPLES
The
Foundation did not properly interpret and apply Government Accounting
Standards Board (GASB) Statement No. 33 Accounting
and Financial Reporting For Nonexchange Transactions.
The
Foundation received $752,888 from Northeastern Illinois University
(University) to set up a Gaining Early Awareness and Readiness for
Undergraduate Program (GEAR UP) scholarship.
The amount represented unspent grant funds from the GEAR UP program
that the University had obtained the approval from the U.S. Department of
Education to change the scope from the original proposal to establish a
scholarship component for this program.
The policy
for the administration of the scholarship includes requirements for the
eligibility of applicants, application process, requirement for the award,
eligibility for renewal, renewal application process, the amounts and use of
the scholarship funds, and the role of the Chicago GEAR UP Alliance
(Alliance). The funds will be
administered locally by the Alliance and awarded as scholarships to students
who had participated in the GEAR UP program.
The Foundation will hold and spend the funds as directed by the
Alliance.
As of fiscal
year-end, the funds were invested and restricted for use by this program and
no scholarships have been awarded.
However, we noted that the Foundation recorded the $752,888 as other
revenue, instead of deferred revenue.
The Foundation subsequently revised the financial statements to
include the adjustments necessary to apply the appropriate generally accepted
accounting principles.
According to
Foundation management, the above exception occurred due to the complexity of
the GEAR UP grant requirements which were not fully known at the time of
receipt of the grant. (Finding 1, pages 29-30)
We
recommended the Foundation improve its procedures for identifying
transactions that include special terms and properly account for such
transactions in accordance with accounting principles generally accepted in
the United States of America.
Foundation
management concurred with the finding and stated that they will strengthen
their procedures.
AUDITORS’ OPINION
Our
auditors stated the financial statements of Northeastern Illinois University
Foundation as of June 30, 2007, and for the year then ended, are fairly
presented in all material respects.
___________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors for this audit were E.C. Ortiz
& Co, LLP.
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