REPORT DIGEST

CHICAGO STATE UNIVERSITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  January 23, 2018

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 4

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 the Chicago State
University’s Financial Audit as of and for
the year ended June 30, 2018.  The
University’s Compliance Examination
(including the Single Audit) covering the
year ended June 30, 2018 will be issued in
a separate report at a later date.

SYNOPSIS

• (18-1) The University did not exercise
adequate internal control over its checks
written to others that had not been cashed
by the recipients of those checks (stale
checks).

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROL OVER UNCLAIMED PROPERTY

The University did not exercise adequate
internal control over its checks written to
others that had not been cashed by the
recipients of those checks (stale checks).

During our audit we noted the following:

• The University did not have adequate
controls in place to ensure the value of
its aged stale checks, along with a report
on the identities of the entities that were
sent the stale checks, were timely remitted
to the State Treasurer as unclaimed
property.  At June 30, 2018, we identified
stale checks dating back to nine years ago,
with a total value of $255,006 in stale
checks greater than three years old payable
to vendors and students and $56,768 in
stale checks greater than one year old
payable to current and former employees.

Through December 31, 2017, the Uniform
Disposition of Unclaimed Property Act (765
ILCS 1025/8.1(a)) noted property held by a
government shall be presumed abandoned
after five years.  Further, the Act (765
ILCS 1025/11(a)) required the University to
annually report property presumed abandoned
as of June 30 to the State Treasurer, along
with a report with information about the
owner of the property and the history of
the transaction, by November 1.

On and after January 1, 2018, the Revised
Uniform Unclaimed Property Act (Act) (765
ILCS 1026/15-201) notes property held by a
government shall be presumed abandoned
after three years and wages or
reimbursements to employees shall be
presumed abandoned after one year.
Further, this Act (765 ILCS 1026/15-403(a))
requires the University to report property
presumed abandoned as of June 30 to the
State Treasurer, along with a report with
information about the owner of the property
and the history of the transaction, by
November 1.

• The University did not ensure its stale
checks were considered and properly handled
when it issued new payments to vendors,
students, and employees.  The University
began an analysis of its stale checks
during Fiscal Year 2018 that concluded
during Fiscal Year 2019 and determined
$133,000 in stale checks should be written
off as the University had already settled
these stale checks with the vendor,
student, or employee.  The University
recognized miscellaneous revenue of $59,300
in Fiscal Year 2018 and $73,700 in Fiscal
Year 2019 when it wrote off these amounts,
as it had previously recognized an expense
for these transactions when the amount was
repaid during prior periods.  As a result
of the auditors bringing this issue to the
University’s attention, a proposed
adjustment was records by the University in
order to correct the final financial
statements.

• Historically, the University has adopted
a process where it removes stale checks
from its bank reconciliation and records a
liability for the amount due on the stale
check to the vendor, student, or employee,
which totaled $311,774 at June 30, 2018.
As the holder of a stale check has the
claim to the cash held by the University
represented by the amount of the stale
check, the University should not recognize
any assets on its financial statements and
should account for the stale checks as
reconciling items between its cash account
and the cash balance in its bank account
until either (1) a new check is written to
the holder of the stale check or (2) the
value of the stale check is remitted as
abandoned property to the State Treasurer.
As a result of the auditors bringing this
issue to the University’s attention, a
proposed adjustment was recorded by the
University in order to correct the final
financial statements.  (Finding 1, pages
58-60)

We recommended the University:
• continue its evaluation of stale dated
checks and properly report these amounts to
the State Treasurer when the property is
deemed abandoned under the Act;
• review its internal controls over voucher
processing to ensure stale checks are
considered prior to re-issuing a check to a
vendor, student, or employee; and,
• ensure stale checks are not reported as
assets or liabilities on its financial
statements and are routinely monitored
during its bank reconciliation process.

University officials agreed with the
recommendation and stated they have
initiated training of their staff to
evaluate stale dated checks and report
amounts to the State Treasurer in
compliance with the Act. Additionally, the
University stated they have reviewed their
processes regarding stale checks to ensure
vendors, students or employees are not
receiving double payment.

AUDITOR’S OPINION

The auditors stated the financial
statements of the University as of and for
the year ended June 30, 2018 are fairly
stated in all material respects.

The financial audit 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