REPORT DIGEST
WESTERN ILLINOIS
UNIVERSITY FOUNDATION
FINANCIAL AUDIT For the One Year
Ended: June 30, 2007 And COMPLIANCE EXAMINATION For the Two
Years Ended June 30, 2007 Summary of Findings:Total this audit 2 Total last audit 0 Repeated from last audit 0 Release Date: March 11, 2008
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 |
SYNOPSIS • The Foundation did not properly record several transactions in accordance with generally accepted accounting principles. • The Foundation did not have a formal written fraud prevention and detection program. |
WESTERN
ILLINOIS UNIVERSITY FOUNDATION
FINANCIAL AUDIT
AND COMPLIANCE EXAMINATION
For The Years
Ended June 30, 2007
FINANCIAL OPERATIONS (ALL FUNDS) |
FY 2007 |
FY 2006 |
|
OPERATING REVENUES |
|
|
|
Gifts........................................................................ |
$2,887,336 |
$2,664,493 |
|
Sales and Services.................................................. |
443,696 |
302,126 |
|
Total .......................................................... |
$3,331,032 |
$2,966,619 |
|
OPERATING EXPENSES |
|
|
|
Instruction.............................................................. Student Services.................................................... Institutional Support.............................................. Operation and Maintenance of Plant........................ Scholarships........................................................... |
$648,202 338,678 815,742 184,038 1,510,435 |
$759,280 433,192 710,897 435,017 1,528,165 |
|
Other.................................................................... |
231,075 |
212,917 |
|
Total.......................................................... |
$3,728,170 |
$4,079,468 |
|
OPERATING LOSS......................................... NONOPERATING REVENUES (EXPENSES) Investment Income-Net.......................................... Other..................................................................... Additions to Permanent Endowments...................... Total.......................................................... NET ASSETS - BEGINNING OF YEAR........ NET ASSETS - END OF YEAR....................... |
$(397,138) $3,585,045 686,843 1,226,574 $5,498,462 $5,101,324 $24,642,125 $29,743,449 |
$(1,112,849) $1,497,633 783,423 1,343,167 $3,624,223 $2,511,374 $22,130,751 $24,642,125 |
|
SELECTED ACCOUNT
BALANCES |
AT JUNE 30, 2007 |
AT JUNE 30, 2006 |
|
Cash and Cash Equivalents.................................... |
$704,798 |
$287,707 |
|
Investments........................................................... |
$28,053,077 |
$23,411,513 |
|
Pledges Receivable, net........................................ |
$176,706 |
$245,156 |
|
Capital Assets, net................................................. Total Assets......................................................Total Liabilities................................................. Total Net Assets............................................... |
$922,670 $30,260,756 $517,307 $29,743,449 |
$933,979 $25,203,686 $561,561 $24,642,125 |
|
FOUNDATION EXECUTIVE OFFICER |
During Audit Period: Dr. Larry Mortier (retired eff. 7-29-05), Dr. Daniel Hendricks (eff. 8-15-05) Currently: Dr. Daniel Hendricks |
GAAP not followed
Foundation officials agree with auditors
No formal written fraud prevention and detection program
Foundation officials agree with auditors |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
FAILURE TO APPLY APPROPRIATE ACCOUNTING PRINCIPLES The Foundation did not properly record several transactions and, as a result, did not properly apply the appropriate generally accepted accounting principles (GAAP). • Cash equivalents as of June 30, 2007 reported in the original financial statements submitted to the auditors included investments held in one bank maturing beyond ninety days from the date of purchase totaling $3,182,466. The Foundation subsequently revised the financial statements to include the adjustment to reclassify the cash equivalents to current and noncurrent investments. • The Foundation did not have a written policy for recording gifts in kind. Gifts in kind received in fiscal year 2007 totaling $479,622 were not recorded in the Foundation’s books. Some of these items received were auctioned during the year and the proceeds from the auction were recorded as sales. The Foundation did not record gifts in kind in the financial statements because a formal gift recording policy was not established. Failure to apply the applicable GAAP may result in inaccurate and incomplete financial statements. The lack of a written policy for recording gifts in kind increases the risk that contributions in kind will not be fully accounted for in the financial statements. (Finding 1, pages 25-26 in Financial Audit Report) Foundation officials agreed with our finding. They stated the non-endowment trust account referred to in the finding had been reflected as cash and cash equivalents due to the government securities in it being publicly-traded which would make them highly liquid investments at a stated interest rate. The financial statements were revised as a result of the audit. They indicated a policy for recording in-kind gifts will be established. LACK OF FRAUD PREVENTION AND DETECTION PROGRAM The Foundation does not have a fraud risk assessment program in place. According to Foundation management, the Foundation has established internal controls in order to prevent and detect fraud as well as errors that may occur, however, these controls and associated risk are not monitored on an on-going basis. The Foundation relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, Foundation management has relied on the external audits for identification of control weaknesses. The Foundation is responsible for the development of internal controls and the monitoring of their operating effectiveness. In addition, it is management’s responsibility to prevent and detect fraud. Therefore, the Foundation should implement a formal policy regarding evaluation of fraud risk and a system of controls to help prevent and detect fraudulent activity within the agency. Preparing a written policy will serve to document the Foundation’s awareness and responsibility for fraud prevention and detection. (Finding 2, pages 27-28 in Financial Audit Report) Foundation officials agreed with our finding and stated they will work with the University to develop a continuous fraud prevention, deterrence and detection program. We will review progress toward the implementation of our recommendations in our next examination. AUDITORS’ OPINION Our auditors stated the June 30, 2007 financial statements of the Foundation are fairly presented in all material respects. ___________________________________ WILLIAM G. HOLLAND, Auditor General WGH:KMA:pp SPECIAL ASSISTANT AUDITORS
E.C. Ortiz & Co., LLP were our special assistant auditors. |