REPORT DIGEST

SOUTHERN 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:
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

• Equipment purchased through the Honors Program was on loan to faculty members although the required loan forms were not on file.

• The University's manual accounts payable system is not effective or efficient.

• Federal grant reports were not all submitted to the grantor agencies on time.

{Expenditures and Activity Measures are summarized on the reverse page.}

FY 1997

FY 1996

$194,035,977
88,711,270
66,298,589
50,209,488
37,501,764
35,999,948
46,444,900
$519,201,936

$173,110,040
29,670,215
34,889,316
68,200,590
57,627,200
41,929,942
59,787,068
47,262,498
$512,476,869

$187,741,369
85,589,741
66,382,157
49,966,947
38,654,260
34,977,413
40,234,807
$503,546,694

$169,502,631
28,019,703
35,144,489
66,815,028
51,888,326
40,691,301
57,292,469
46,324,977
$495,678,924

AT JUNE 30, 1997

AT JUNE 30, 1996

$98,198,288
$809,698,770
$47,616,689
$68,257,123

$82,960,893
$771,731,023
$45,415,462
$51,882,012

FY 1997

FY 1996

6,794
2,416
9,210

18,465
8,217
26,682
$6,488

78%
79%

6,985
2,376
9,361

18,975
7,957
26,932
$6,294

75%
79%

Equipment on loan to faculty

Equipment loan forms not on file

Manual records are inefficient

Federal agencies require reports

Federal funding at risk

INTRODUCTION

Our 1997 audit of Southern Illinois University is presented in five volumes: State Compliance Audit; Federal Compliance Audit; Financial Audit; Housing and Auxiliary Facilities System Financial Audit; and Supplementary Financial Information Report. The State Compliance Audit presents eleven compliance findings, and the Federal Compliance Audit presents four findings.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

HONORS PROGRAM EQUIPMENT NOT ADEQUATELY CONTROLLED

The University did not maintain adequate records for all the equipment purchased through the Honors Program. Five of the six pieces of equipment charged to the Honors Program and selected for testing during the audit were on loan to faculty members. However, the appropriate University equipment loan request forms were not completed for these items. The total value of this equipment was $7,133. In addition, the University had no control procedure to ensure all equipment is retrieved from departing professors.

When an Honors course results in the faculty member teaching more than the required course load, the University sets aside funds for the faculty member to use for professional expenses which further the academic needs of students and programs. These funds are used for travel, commodities, contractual services and equipment. The lack of adequate equipment loan records or procedures may result in the loss of University equipment. (Finding 1, page 12 in State report)

We recommended the University strengthen its procedures over loaned property and equipment. Loan request forms should be completed and approved or the equipment should be returned if it is not being utilized for purposes that further the interests of the University. The University should emphasize to the professors that University equipment must be returned upon their departure.

University officials responded the recommendation was implemented.

ACCOUNTS PAYABLE DETAIL NOT ADEQUATE

The University does not maintain an adequate detail of accounts payable. At the Edwardsville campus, accounts payable were only calculated at year-end and a significant portion of the accounts payable were recorded based on the accounting department's inquiries of the University's various other departments. This data was then manually entered into a spreadsheet. Our review noted 9 items incorrectly classified resulting in an understatement of accounts payable of $234,338. At the Carbondale campus, the departments arrived at their accounts payable balance by producing a manual listing of invoices which were payable at year-end. These methods are quite time consuming and inefficient. (Finding 8, page 19 in State report)

We recommended the University establish an effective and efficient system for recording accounts payable.

University officials accepted our recommendation and said they will address the cause of the errors. They stated the University is implementing a new financial accounting system which will improve the capabilities of developing accounts payable data.

FEDERAL GRANT REPORTS NOT FILED TIMELY

Testing of 32 federal grants at the Carbondale and Edwardsville campuses revealed four of the grants had not submitted all required federal financial reports to the grantor agency on a timely basis. Grant reports not submitted on time were due to the following federal agencies:

U.S. Department of Interior
U.S. Department of Justice
National Endowment for the Humanities
Department of Health and Human Services

Each grant agreement specifies due dates for the various required reports.

Failure to submit federal reports on time has resulted from a combination of factors including lack of planning, the complexity of the reports, and failure to apply for an extension. Failure to meet the granting agency's requirements could result in the reduction, denial or termination of future federal funding. (Finding 1, pages 8-10 in Federal report)

We recommended the University develop a system to monitor and control the filing of federal reports in order to ensure timely submission.

University officials accepted our recommendation.

OTHER FINDINGS

The remaining findings are less significant and have been given appropriate attention by the University. We will review the University's progress towards the implementation of our recommendations in our next compliance audit.

Mr. Ron Cremeens, Executive Director of Audits, provided the University's responses.

AUDITORS' OPINION

Our auditors stated the June 30, 1997 financial statements of the University are fairly presented.

____________________________________
WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

Coopers & Lybrand L.L.P. were our special assistant auditors for these audits.