|
Reconciliations not
timely
Checks outstanding
more than 6 months
University said the
reconciliations were late due to staffing issues
Withdrawal dates
did not agree or were not reported
Reconciliations not
performed
Error in system to
extract data for reporting
Timesheets not
maintained for salaried employees
No basis for
allocating salary expenses to the University Related Organizations
University disagrees
with auditor recommendation
Auditor’s comment
Internal audit did
not perform any post implementation review of the University’s new Banner
System |
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS INADEQUATE CONTROLS OVER BANK RECONCILIATIONS
During our review of the monthly bank
reconciliations, we noted the following:
·
21 of
36 (58%) bank reconciliations were prepared 16 to 210 days after the month
end.
·
Long
outstanding checks from the General Fund and Payroll disbursement accounts
were not promptly investigated and disposed.
As of the June 30, 2008, there were 152 outstanding checks totaling $17,834
from the disbursement accounts that were issued more than 6 months prior to
the date of the bank statement. According to University personnel, the bank reconciliation was late due to staffing issues. (Finding #1, pages 21-22) This finding was first reported in 2005.
We recommended the University establish
procedures to perform and review bank account reconciliations in a timely
manner. In addition, long outstanding
checks should be reviewed and disposed of promptly. University officials responded that
staffing issues have been corrected and bank reconciliations were current at
June 30, 2008. (For the previous
University response, see Digest Footnote #1.) INADEQUATE CONTROL OVER REPORTING AND RECONCILIATION OF FINANCIAL AID
INFORMATION The University did not ensure timely and accurate reporting of information as required in the administration of Federal Title IV programs. In addition, the University did not ensure that direct loan information is reconciled on a monthly basis. During our testing, we noted the following: · During our review, the University records of withdrawal dates for 14 of 40 (35%) students tested did not agree with the withdrawal dates per National Student Loan Data System (NSLDS) records. In addition, 24 of 40 (60%) students tested who were determined as withdrawn per University records were not reported as such per NSLDS records.
·
Monitoring
procedures were not performed to ensure that the direct loan reconciliation
against loan records of the Department of Education is made by a responsible
employee for all months as required by Federal regulations. No loan
reconciliation was performed for the months of July 2007 through March 2008.
Also, cash drawdown reconciliations for the months of February and March 2008
were not prepared. According
to University personnel, because the Registration Office is new with the
reporting requirement, there was an error in the parameters that was set up
in Banner System to extract student information to be reported to NSLDS. Monthly direct loan reconciliations were
not performed because of miscommunication and misunderstanding of the
requirement of the Direct Loan School Guide.
(Finding #3, pages 25-26) This finding was first reported in
2006. University officials accepted our recommendation to establish procedures to ensure that reports are accurately filed as required by the Federal Financial Aid Program and to ensure that the employee responsible for the reconciliation is clear with the requirement to perform the reconciliation on a monthly basis. (For the previous University response, see Digest Footnote #2.) TIME SHEETS NOT REQUIRED The University
did not require all employees to submit time sheets as required by the State
Officials and Employees Ethics Act (Act). We noted that the University’s salaried employees did not maintain timesheets in compliance with the Act. Employees’ time is tracked using time rosters, which are filled out online by each employee or each department’s representative. The time rosters used are effectively a “negative” timekeeping system whereby the employee is assumed to be working unless noted otherwise. The employees documenting time to the nearest quarter hour were only Civil Service biweekly-paid and student employees. Since timesheets are not maintained for all employees, there was no adequate basis for allocating salary expenses between the University and the University Related Organizations (URO). The UROs are the Foundation and the Alumni Association. According
to the University personnel they relied upon an opinion received from the
Office of the Executive Inspector General and General Counsel for the Office
of the Executive Inspector General that a system of “absence reporting” would
be an appropriate method of time keeping under the Act. (Finding #5, pages 29-31) This
finding has been repeated since 2005. We recommended the University amend its policies to require all employees to submit time sheets in compliance with the Act. University officials disagreed with our recommendation based upon guidance received from the Executive Office of Inspector General. In an auditor’s comment, we noted that a positive timekeeping system for State employees is required by the State Officials and Employees Ethics Act and necessary to provide a basis for allocating expenditures between the University and the UROs. Despite the fact that the Act’s timekeeping requirements went into effect March 1, 2004, the University still is not obtaining timesheets from all of its employees and, consequently, this finding is being repeated for the fourth consecutive audit. (For the previous University response, see Digest footnote #3.) DEFICIENCIES IN THE INTERNAL AUDITING
DEPARTMENT The University did not ensure that its internal auditing program complies
with the Fiscal Control and Internal Auditing Act. During
our review of the Internal Auditing Department (Department), we noted no post
implementation review was conducted of the University’s new information
system, the Banner System (System) implemented during the last two fiscal
years. Four of the 5 modules were
implemented in fiscal year 2007 while the last module was implemented in
fiscal year 2008. There was no internal audit review of the design and
operation of controls for any of the modules implemented. The
Fiscal Control and Internal Auditing Act (30 ILCS 10/2003) (Act) requires that
internal auditing program includes reviews of the design of major new
electronic data processing systems and major modifications of those systems
to ensure the systems provide for adequate audit trails and accountability. (Finding
#7, page 34) University officials concurred with our
recommendation to perform a post-review of the information system modules
implemented to timely detect whether system controls are operating
effectively as designed. OTHER FINDINGS The remaining findings
are reportedly being given attention by the University. We will review the University’s progress
toward the implementation of our recommendations in our next examination.
AUDITORS' OPINION Our auditors stated the University's financial statements as of and for the year ended June 30, 2008 were fairly presented in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JAF:pp SPECIAL ASSISTANT AUDITORS E.C. Ortiz & Co. LLP were our special assistant auditors on this engagement. DIGEST FOOTNOTES #1:
INADEQUATE CONTROLS OVER BANK RECONCILIATIONS – Previous University
Response We agree that the bank reconciliation process is
an important element of the University’s system of internal controls. We have had difficulty in this area due to
retirements and the training of new personnel. This situation will be corrected. #2: INADEQUATE
CONTROL OVER REPORTING AND RECONCILIATION OF FINANCIAL AID INFORMATION –
Previous University Response We
concur with the auditor’s recommendation.
A delay in the issuance of regulations for the two new Federal
programs, SMART and ACG, caused changes necessary in our software for Fall,
2006 to be delayed. Once the software
was updated, the required reporting was done.
We have modified our procedures and developed additional reports to
insure accurate and timely reporting and reconciling. #3:
TIMESHEETS NOT REQUIRED – Previous University Response The University assumed its procedures were in
compliance with the time reporting requirements of the State Officials and
Employees Ethics Act (the “Ethics Act”) based on guidance received from the
Executive Inspector General. The
University received a memo from the Office of the Inspector General that
states: “it appears that a system of
‘absence reporting’ would be an appropriate method of time keeping under the
Ethics Act. Under this system, an
employee would only report time during their normal work schedule that was
not spent at work and provide the category of leave taken for that time
away.” |
