REPORT DIGEST

SOUTHERN ILLINOIS UNIVERSITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  March 21, 2019

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 1

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

INTRODUCTION

This digest covers the Southern Illinois
University Financial Audit as of and for
the year ended June 30, 2018.  Southern
Illinois University’s financial audit
report consists of three sets of financial
statements as follows - the financial
statements of Southern Illinois University
(the “University”); the financial
statements of the Housing and Auxiliary
Facilities System (HAFS), a segment
financial report of the University issued
for bondholders; and the Medical Facilities
System (MFS), a segment financial report of
the University issued for bondholders.

The University’s Compliance Examination
(including the Single Audit) covering the
year ended June 30, 2018 will be issued in
a separate report at a later date.

SYNOPSIS

• (18-1) The University overstated
depreciation expense for improvements
placed into service from construction in
process.

FINDING, CONCLUSION, AND RECOMMENDATION

INSUFFICIENT CONTROLS OVER DEPRECIATION
CALCULATION

The University overstated depreciation
expense by approximately $0.5 million for
building improvements placed into service
from construction in process during the
fiscal year.

We noted renovations were completed and
placed into service over a two-year period
of time. However, University personnel
recorded all construction in process costs
under a single asset number. The
depreciation calculation was performed
based solely upon the initial placed-in-
service date of the first portion of
renovations, rather than when each portion
of the renovation was acquired or placed in
service.  As a result, the University began
depreciating the Fiscal Year 2018 costs one
to two years before the acquisition date
and accordingly, depreciation expense was
overstated. (Finding 1, pages 5-6)

We recommended the University strengthen
and review its internal controls and
policies related to financial reporting
over construction in process and placed in
service dates specifically on projects that
might have staggered completion dates.  We
also recommended accounting staff obtain
any necessary information to make informed
decisions, consider whether more than one
asset number is warranted, and review
depreciation assumptions and calculations
for accuracy.

The University agreed with the finding and
stated they would put procedures in place
based upon the recommendation.

We will review the Agency’s progress
towards implementation of our
recommendation in our next financial audit.


AUDITOR’S OPINION

The auditors stated the financial
statements of the University, the Housing
and Auxiliary Facilities System, and the
Medical Facilities System as of and for the
year ended June 30, 2018 are fairly stated
in all material respects.

This financial audit was conducted by
Plante & Moran, PLLC.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

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