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FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
INADEQUATE DOCUMENTATION FOR FEDERAL PROGRAM EXPENDITURES
The
University did not have supporting documentation and proper approvals for
expenditures charged to federal programs and charged lodging and airfare
costs in excess of customary standard travel costs to the program. As a result, we questioned costs totaling
$20,179.
During
our review of federal programs, we noted the following:
·
The University
could not provide documentation for six of eighty expenditures tested
totaling $13,255.
·
Two of forty
expenditures totaling $4,324 were for prepayments of hotel and conference
room accommodations, however the University did not reconcile the prepaid
costs and actual invoice that was subsequently received.
·
One of forty
expenditures totaling $1,050 was an advance payment of travel per-diem for
student meals, however the University never followed up on the funds advanced
and as a result the actual expenses were $240 less than the advance. The $240 was never refunded to the
University or credited to the grant account.
·
Five of forty
payment packages did not include a vendor invoice to support the payment
made, thus, timing and allowability of expenditure could not be verified.
·
Two of forty
payment packages were for hotel accommodations, which were charged at lodging
rates that were excessive ($329 and $199 per night).
·
Two of forty
expenditures were for travel or services provided after or before the grant
period (outside the period of availability).
·
Two of forty
expenditures were not properly approved prior to services being provided or
travel being taken. (Finding 1, Pages
16-17) This finding was first reported in 2003.
We
recommended the University improve control procedures to ensure that payments
are only made once a proper invoice with appropriate documentation and
approval is received. The University
should maintain a filing system that allows them to locate supporting
documentation, including documentation of the necessity for any non-standard
travel costs, for all invoices paid.
Additionally, we recommended the University timely reconcile travel
advances with actual invoices submitted by travelers and recoup any funds due
to the University
University
officials agreed with our recommendation and stated that they will strengthen
compliance with its established policies and procedures related to
documentation, filing, approvals and appropriate documentation for
non-standard travel costs. (For the previous University response, see Digest
footnote #1.)
FAILURE TO PROVIDE MATCHING FUNDS FOR FEDERAL PROGRAM
The University failed to provide required matching funds for
a Federal Award Program.
During our audit, we requested documentation of the match it
had provided for the Federal Program.
The University did provide us with evidence of its matching
contribution made for the project year that ended August 31, 2005, however
the University could not provide documentation of the match that should have
been for the project year that ended August 31, 2004. That match should have been $10,074.
University officials believe that the match was made however
they were unable to identify the accounting transaction in the general
ledger. (Finding 2, Page 18)
We recommended the University improve its policy for
monitoring its compliance with the terms of grant agreements.
University Officials agreed with our recommendation and
stated that they will develop additional compensating controls for monitoring
compliance with the terms of grant agreements.
INADEQUATE CONTROLS OVER EQUIPMENT AND RELATED RECORDS
The
University’s had instances of inadequate controls over its property and
equipment and related records.
Several
different types of exceptions were noted during our testing of property and
equipment. The exceptions that
occurred were in the recording, safeguarding and in locating items of
property and equipment.
Strong internal
controls dictate that the University update and maintain a permanent and
accurate record of property and equipment.
Failure to maintain control over equipment could result in theft or
misuse of equipment. (Finding 4,
pages 20-22). This finding has been repeated since 1997.
We recommended the
University adhere to its procedures to ensure that the property and equipment
records are properly maintained and that equipment be adequately safeguarded.
University
officials responded that they agree with the recommendation and stated they
will ensure its policies and procedures related to property equipment records
are observed and that University assets are safeguarded. (For the previous
agency response, see Digest footnote #2.)
FAILURE TO FILE CONTRACTS WITH THE STATE COMPTROLLER
The
University did not file all contracts with the Illinois Office of the
Comptroller.
Our testing of 25 contractual
service expenditures included 19 expenditures required to have written
contracts. None of the 19 contracts
were filed with the State Comptroller’s Office. (Finding 5, page 23)
We recommended the University
implement procedures to ensure all contracts over $10,000 are filed with the
Illinois Office of the Comptroller in accordance with State statutes and
guidelines.
The University agreed with the
recommendation. University officials
stated that they began implementing this in September 2005.
TIME SHEETS NOT MAINTAINED IN
COMPLIANCE WITH THE STATE OFFICIALS AND EMPLOYEES ETHICS ACT
The
University did not require time sheets for all if its employees in compliance
with the State Officials and Employees Ethics Act (Act).
The Act requires the University
(through policies adopted by the Illinois Board of Higher Education) to adopt
personnel policies consistent with the Act.
The Act (5 ILCS 430/5-5(c) states, “the policies shall require State
employees to periodically submit time sheets documenting the time spent each
day on official State business to the nearest quarter hour.”
Of
the 25 employees’ time sheets that were examined, 7 (all faculty members) did
not submit time sheets documenting the time spent each day on official State
business to the nearest quarter hour.
(Finding 6, pages 24-25)
We
recommended that the University require all employees to maintain time sheets
in compliance with the Act.
The
University disagreed with this finding.
University officials responded that the Office of the Executive
Inspector General had stated that a system of absence reporting would be an
appropriate.
In
an auditor comment we noted that the State Officials and Employees Ethics Act
defines “State Agency” to include “public institutions of higher learning…” 5
ILCS 430/1-5. Chicago State University is defined as a public institution of
“higher learning” in Section 2 of the Higher Education Cooperation Act…” 110
ILCS 220/2. Further, the State
Officials and Ethics Act defines “State employee” to be “any employee of a
State agency.” 5 ILCS 430/1-5.
As
noted in the finding, the State Officials and Employees Ethics Act requires
“State employees to periodically submit time sheets documenting the time
spent each day on official State business to the nearest quarter hour…” 5
ILCS 430/5-5(c). This timekeeping
requirement went into effect March 1, 2004.
The negative timekeeping system used for University faculty requires
those employees to report only time away from State business, not the
time spent each day on State business. Further it is logical to assume that, by adopting this language,
the legislature meant to effect a change in the method used by State
employees to record their time – that is, to adopt a positive timekeeping
system. Finally, the memorandum from
the Office of the Executive Inspector General upon which the University
relied in maintaining its customary negative timekeeping system for faculty
employees clearly states that it “is not a legal opinion.”
We
continue to believe that a positive timekeeping system for State employees is
required by the State Officials and Employees Ethics Act. If the University disagrees with this
conclusion, we further recommend that it seek a formal, written opinion from
the Attorney General’s Office on the requirements of this statutory provision.
NON-COMPLIANCE
WITH TRAVEL REGULATIONS
The
University’s employees submitted travel reimbursement requests for travel
claims that were not in accordance with the Illinois Travel Regulation
Council’s travel rules or University’s policy and procedures.
Several different types of
exceptions were noted during our testing of travel reimbursements and the
related invoices. The exceptions that
occurred were for lack of detailed receipts and/or inadequate documentation,
lack of approval, duplicate charges and lodging rates in excess of those allowed
by the Travel Control Board.
Failure to properly adhere
to the travel regulations may result in the University making an
inappropriate payment of State funds. (Finding 8, pages 27-28)
We recommended the
University establish procedures to ensure travel expenditures are proper and
comply with established regulations and policies.
University officials agreed
with the finding and have stated that they have assigned a veteran employee
to handle travel expenditures to ensure that vouchers are processed properly
and will conduct University-wide employee training on travel policies and
procedures.
OTHER FINDINGS
The remaining
findings are reportedly being given attention by University officials. We will review progress toward
implementation of our recommendations in our next audit.
University
responses to the findings were provided by the Mr. Alan D. Robertson, in a
letter dated February 7, 2006.
AUDITORS’ OPINION
Our
auditors state the financial statements of Chicago State University as of June
30, 2005 and for the year then ended are fairly presented in all material
respects.
___________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
Our
special assistant auditors for this audit were Nykiel Carlin & Co., LTD.
DIGEST FOOTNOTE
#1
INADEQUATE SUPPORTING DOCUMENTATION FOR FEDERAL EXPENDITURES -
Previous University Response
The University agrees with the
recommendation. The University will
strengthen compliance with its established policies and procedures related to
documentation, filing, approvals and appropriate documentation for
non-standard travel costs.
Additionally, the University believes that these were isolated
incidents; however, the University will commit its resources to improve its
controls to ensure the above conditions do not repeat in the future. The University will also reconcile travel
advances with actual vendor invoices in a timely manner and will properly
document the necessity for any non-standard travel costs.
#2 FIXED ASSET REPORTING – Previous University Response
The University agrees with
the recommendation. The University
will ensure its policies and procedures related to property and equipment
records are observed and that the University’s assets are safeguarded.
The
University has adopted several measures to reduce the number of exceptions in
the area of property control. The
following measures were taken during the year:
·
Conducted two (2) training sessions for the staff responsible for the
property in their respective departments prior to the fiscal year 2004 annual
physical inventory required by the Department of Central Management Services
(DCMS).
·
Published the federal, State and the University’s rules, regulations,
policies and procedures covering areas such as property additions, deletions,
dispositions and transfers.
·
Provided detailed instructions to fill out various forms used while
transferring or disposing of property to ensure Property Control System is
updated immediately.
The sixteen (16) on campus
incidents of theft were abnormally high in FY’04. The University operates in a higher crime area, but the campus
security and crime rates are excellent, overall. The one incident occurred, involving eighteen (18) notebook
computers, at a grant partner’s facility and the University is working with
them for restitution.
The property control staff
will perform a mid-year inventory of departments with a large number of audit
exceptions. The University believes
that the extra inventories and training will reduce the audit exceptions in
property control.
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