REPORT DIGEST

UNIVERSITY OF ILLINOIS

COMPLIANCE EXAMINATION AND SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  March 17, 2020

FINDINGS THIS AUDIT:  12

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  1 -- 11 -- 12
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 11 -- 12

FINDINGS LAST AUDIT: 18

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 our federal Single Audit
and State Compliance Examination of the
University of Illinois for the year ended June
30, 2019.  A separate Financial Audit as of
and for the year ended June 30, 2019 was
previously released on January 16, 2020.  In
total, this report contains 12 findings, two
of which were reported in the Financial Audit.

SYNOPSIS

• (19-3) The University did not use at least
7% of its Federal Work Study funds for
students employed in community service
activities.
• (19-6) The University did not have proper
review and apply indirect cost rates for the
Research and Development Cluster and
Cooperative Extension Services Cluster program
awards.
• (19-9) The University did not establish
adequate internal controls over travel card
transactions.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FAILURE TO MEET COMMUNITY SERVICE REQUIREMENT

The University did not use at least 7% of its
Federal Work Study (FWS) funds for students
employed in community service activities.

At the University of Illinois at Chicago, we
noted the federal share of FWS funds used for
community service totaled $96,505, from a
statistically valid sample.  The total amount
of federal funds spent on FWS funds totaled
$2,824,193.  The University is reporting at
3.4% of community service used for FWS funds
out of the minimum 7% requirement.  The
University should have used at least 7%, or
$197,694, of its FWS funds toward community
service or obtained a waiver from the US
Department of Education.

At the University of Illinois at Springfield,
we noted the federal share of FWS funds used
for community service totaled $15,227, from a
statistically valid sample.  The total amount
of federal funds spent on FWS funds totaled
$246,595.  The University is reporting at 6.2%
of community service used for FWS funds out of
the minimum 7% requirement.  The University
should have used at least 7%, or $17,262, of
its FWS funds toward community service or
obtained a waiver from the US Department of
Education. (Finding 3, pages 22-23) This
finding has been repeated since 2017.

We recommended the University review current
processes for calculating and tracking the
students employed in community service
activities for its FWS funds to meet the
minimum 7% requirement.

University officials accepted our
recommendation.

INADEQUATE REVIEW AND APPLICATION OF INDIRECT
COST RATE

The University did not have proper review and
apply indirect cost rates for the Research and
Development Cluster and Cooperative Extension
Services Cluster program awards.

During our testing we noted 1 out of 40 (3%)
indirect cost transactions related to 1 award,
from a statistically valid sample, charged to
the Research and Development Cluster was not
adequately executed or reviewed using the
correct rate stated in the award agreement.
Specifically, the University used a rate of
25.4% instead of the agreed upon rate of 31.9%
which resulted in an under application of the
allowed amount of indirect costs totaling
$287.

During our testing we noted 3 out of 24 (13%)
indirect cost transactions related to 1 award,
from a statistically valid sample, charged to
the Cooperative Extension Services Cluster
were not adequately executed or reviewed using
the correct rate stated in the award
agreement. Specifically, the University used a
rate of 25.4% instead of the agreed upon rate
of 31.9% which resulted in an under
application of the allowed amount of indirect
costs totaling $177. (Finding 6, Pages 29-30)

We recommended the University review its
procedures relative to entering and reviewing
indirect costs rates before entering them into
its information systems to ensure the
appropriate rates are used to calculate
indirect costs charged to its federal
programs.

University officials accepted our
recommendation.

INADEQUATE CONTROLS OVER UNIVERSITY TRAVEL
CARD TRANSACTIONS

The University of Illinois (University) did
not establish adequate internal controls over
travel card (T-card) transactions.

The University operated a travel card program
allowing individuals traveling for University
business to pay for qualified travel expenses
and business meals, which were then directly
reimbursed by the University on a monthly
basis. The University’s policies require
employees assigned a travel card to complete
training on University travel card policies,
and sign an agreement stipulating they will
use the card in accordance with the University
policy.

The University’s policies also require
transactions incurred on a travel card to be
approved in the University’s travel card
system by the individual cardholder and an
assigned reviewer. However, during our test
work over 102 travel card transactions
(totaling $323,414), including 42 transactions
noted for unusual activity, we noted the
following:

• One purchase (totaling $6,959) exceeded the
cardholder’s single transaction limit amount.
This purchase was split between two different
T-card transactions. The required T-Card
Exception Request
Form was not properly approved by the
Department Head prior to using the T-Card as
required by the
University travel card policies;

• Fifteen transactions (totaling $112,573)
were paid in multiple installments, exceeding
the cardholder’s single transaction limit of
$4,999. The required T-Card Exception Request
Forms were not filed prior to using the T-
Cards for these purchases; and

• One transaction (totaling $8,971) was made
prior to completion of the required T-Card
Authorization
Form.

The University has approximately 3,756 active
travel cards, and the travel card expenditures
paid for the year ended June 30, 2019 totaled
$42,458,488. (Finding 9, Pages 34-35) This
finding has been repeated since 2016.

We recommended the University review its
current process for reviewing and approving
travel card transactions and consider any
changes necessary to ensure charges are made
in accordance with University policies and
procedures.

University officials accepted the
recommendation.

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 the
next engagement.

AUDITOR’S OPINIONS

The financial audit was previously released.
Our auditors stated the financial statements
of the University of Illinois as of and for
the year ended June 30, 2019 are fairly stated
in all material respects.

The auditors also conducted a Single Audit of
the University as required by the Uniform
Guidance.  Our auditors stated the University
complied, in all material respects, with the
types of compliance requirements that could
have a direct and material effect on the
University’s major federal programs for the
year ended June 30, 2019.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the University for the year
ended June 30, 2019, as required by the
Illinois State Auditing Act.  The accountants
stated the University complied, in all
material respects, with the requirements
described in the report.

The Single Audit and State Compliance
Examination was conducted by
CliftonLarsonAllen LLP.

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

FJM:TLK