REPORT DIGEST

CHICAGO STATE UNIVERSITY

COMPLIANCE EXAMINATION AND SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  March 7, 2019

FINDINGS THIS AUDIT:  9

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  2 -- 7 -- 9
Category 3:  0 -- 0 -- 0
TOTAL:  2 -- 7 -- 9

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 Compliance Examination of Chicago State
University (University) for the year ended
June 30, 2018.  A separate Financial Audit
as of and for the year ended June 30, 2018,
was previously released on January 23,
2019. In total, this report contains 9
findings, one of which was reported in the
Financial Audit.

SYNOPSIS

• (18-5) The University had subsidies
between accounting entities during the
current fiscal year.
• (18-6) The University failed to fully
comply with the Fiscal Control and Internal
Auditing Act, International Standards for
the Professional Practice of Internal
Auditing, and State of Illinois Internal
Audit Advisory Board Bylaws.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

SUBSIDIES BETWEEN ACCOUNTING ENTITIES

The University had subsidies between
accounting entities during the current
fiscal year.

During our testing of compliance with the
University Guidelines, we noted the
“Student Activities” accounting entity had
negative cash balances at the beginning and
the end of the fiscal year totaling $4.0
million and $5.1 million, respectively.

A negative cash balance is, in effect, an
unrecorded interfund payable/receivable,
thereby causing a subsidy between funds to
occur. The “Student Activities” accounting
entity includes mandatory student fees and
the expenditure of all student activities
approved by the student government such as
student newspaper and athletic activities.

The University Guidelines (Chapter III,
Section D, Part 1) state: “there shall be
no subsidies between accounting entities.
Subsidies include cash advances and
interfund payables/receivables outstanding
for more than one year.” (Finding 5, pages
30-32)  This finding has been repeated
since 2009.

We recommended the University review the
activities of the accounting entities and
ensure fees charged for services are
sufficient to cover expenditures and ensure
subsidies between accounting entities do
not occur.

University officials agreed with the
finding. (For the previous University
response, see Digest Footnote #1.)

INTERNAL AUDIT

The Chicago State University (University)
failed to fully comply with the Fiscal
Control and Internal Auditing Act (Act),
International Standards for the
Professional Practice of Internal Auditing,
and State of Illinois Internal Audit
Advisory Board Bylaws.

During our review of the University’s
Office of the Internal Audit (OIA), we
noted the following:

• Audits of the University’s major systems
of internal accounting and administrative
controls including testing of the
obligation, expenditure, receipt and use of
public funds of the State and of funds held
in trust to determine whether those
activities are in accordance with
applicable laws and regulations were not
completed during fiscal years 2017 and
2018.

• No internal audit reports were completed
and issued during Fiscal Year 2018.

• The University’s Internal Audit division
did not undergo a peer review since the
last external assessment which was issued
on June 21, 2011. (Finding 6, pages 33-34)
This finding has been repeated since 2015.

We recommended the University ensure timely
performance of audits over all major
systems of internal accounting and
administrative controls as required by the
Act and promptly arrange an external
assessment of its internal audit activity
to comply with the Institute of Internal
Auditors’ Standards.

University officials agreed with the
finding. (For the previous University
response, see Digest Footnote #2.)

OTHER FINDINGS

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

AUDITOR’S OPINIONS

The financial audit report was previously
released. The auditors stated the financial
statements of Chicago State University as
of and for the year ended June 30, 2018 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, 2018.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the University for the year
ended June 30, 2018, 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.

This Single Audit and State Compliance
Examination was conducted by E.C. Ortiz &
Co., 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

DIGEST FOOTNOTES

#1 – Subsidies Between Accounting Entities
(previous response):
2017: The University agrees with the
recommendation.  The University continues
to take a holistic approach to reducing the
deficit. The University continues to engage
in activities which emphasize revenue
enhancement and operational efficiency.

#2 – Internal Audit (previous response):
2017:  The University agrees with the
recommendation. Testing of the obligation,
expenditure, receipt and use of public
funds is in progress and will be completed
within 30 days.  The University’s internal
preparation for the peer review is also in
progress and has also been scheduled for
completion within 30 days.  The University
identified the professional responsible for
conducting the review and requested
resources necessary to reimburse travel
costs.  Minimum CPE requirements were met
and exceeded for the 2017 calendar year and
a monitoring process has been implemented
to assure compliance for the 2018-2019
reporting period.