REPORT DIGEST

UNIVERSITY OF ILLINOIS

FINANCIAL AUDIT
For the Year Ended June 30, 2014

Release Date:  January 15, 2015

FINDINGS THIS AUDIT:  3

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

FINDINGS LAST AUDIT: 2

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
WILLIAM G. HOLLAND, 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

The University’s financial audit report
consists of three sets of financial statements
as follows – The financial statements of the
University, and the revenue bond financial
statements of the Auxiliary Facilities System
and the Health Services Facilities System.

This report contains only findings pertaining
to the Financial Statement Audit.

The State Compliance Examination and Federal
Single Audit Reports will be issued at a later
date.

SYNOPSIS

(14-1)  The University has not established
adequate internal controls over accurately
identifying and recording deferred expense
transactions and reporting prepaid expenses at
fiscal year-end for financial reporting
purposes.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER IDENTIFYING AND RECORDING
TRANSACTIONS NEED IMPROVEMENT

The University has not established adequate
internal controls over accurately identifying
and recording deferred expense transactions
and reporting prepaid expenses at fiscal year-
end for financial reporting purposes.

In relation to our testwork over expense
transactions, we reviewed 188 cash
disbursement transactions (totaling
$92,035,032 debits and $9,485,555 credits), 40
P-Card expense transactions (totaling
$74,597), and 40 T-Card expense transactions
(totaling $61,817) recorded during the fiscal
year. We also reviewed 89 cash disbursements
occurring subsequent to year-end (totaling
$97,515,256).  Additionally, we separately
reviewed 74 journal voucher expense
transactions recorded during the fiscal year
(totaling $45,259,569 debits and $32,317,240
credits).

During our review of these transactions, some
of the items that were not recorded in the
proper accounting period are as follows:

• Three supplies and services expenses cash
disbursements  (totaling $741,253) that were
recorded as expenses for fiscal year ended
June 30, 2014, should have been partially
deferred as of June 30, 2014 at an amount of
$376,097 and recognized as an expense for the
fiscal year ending June 30, 2015.

• Two supplies and services expenses cash
disbursements (totaling $1,375) that were
recorded as expenses for the fiscal year ended
June 30, 2014, should have been deferred as of
June 30, 2014 and recognized as an expense for
the fiscal year ending June 30, 2015.

• One supplies and services expenses cash
disbursement (totaling $1,026) that was
recorded as expense for the fiscal year ended
June 30, 2014, should have been deferred as of
June 30, 2014 at an amount of $1,026, and then
recognized as an expense for the fiscal year
ending June 30, 2015. (Finding 1, Pages 5-7)
This finding has been repeated since 2009.

We recommended the University continue to
review its process to assess the existence of
current period expenses and consider changes
necessary to ensure prepaid expenses are
accurately identified and recorded for
presentation in the University’s financial
statements.

University officials agreed with our finding
and stated that they have implemented
significant process enhancements. (For the
previous University response, see Digest
Footnote #1.)

OTHER FINDINGS

The remaining findings are reportedly being
given attention by the University.  We will
review the University’s progress towards the
implementation of our recommendations in our
next engagement.

AUDITOR’S OPINION

WILLIAM G. HOLLAND
Auditor General

WGH:TLK



SPECIAL ASSISTANT AUDITORS

KPMG were our Special Assistant Auditors.

DIGEST FOOTNOTES

#1 – Inadequate Year-End Expense Accruals, and
Revenue and Expense Deferrals Process –
Previous University Response

Accepted.  The University has already
implemented significant process enhancements
in this area.  Through analysis of the
exceptions identified in this audit, the
University will work to develop and implement
corrective actions to further improve the
year-end processed in this area.