Governors State University 2000 Audit

REPORT DIGEST
GOVERNORS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT

(In accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2000

Summary of Findings:

Total this audit 5
Total last audit 6
Repeated from last audit 3

Release Date:
March 29, 2001

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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at

www.auditor.illinois.gov

SYNOPSIS

The University lacked controls over the monitoring of unemployment compensation resulting in questionable benefits paid to employees.

The University did not file accurate reports with the Office of the State Comptroller for funds held locally.

The University did not comply with the University Faculty Research and Consulting Act.

{Financial Information is summarized on the reverse page.}

GOVERNORS STATE UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2000

FINANCIAL OPERATIONS (CURRENT FUNDS)		FY 2000		FY 1999
REVENUES Appropriations Student tuition and fees Grants, contracts, and gifts Auxiliary enterprises Payments on behalf of the University Other Total		$24,865,450 11,541,097 11,201,507 972,350 6,456,725 11,077,416 $66,114,545		$23,319,900 11,227,033 10,208,772 1,180,355 5,592,034 9,451,351 $ 60,979,445
EXPENDITURES AND MANDATORY TRANSFERS Instruction Research Public Service Academic support Student services Institutional support Operation of plant Staff benefits Scholarships Auxiliary enterprises Mandatory transfers Total		$21,854,998 32,168 1,279,712 2,199,087 9,334,588 18,380,081 4,390,425 7,022,332 497,324 1,108,171 39,962 $66,138,848		$20,532,609 59,695 1,234,364 1,972,083 9,054,558 16,594,672 4,561,840 5,156,821 432,844 1,057,908 59,184 $60,716,578
SELECTED ACCOUNT BALANCES (ALL FUNDS)		JUNE 30, 2000		JUNE 30, 1999
Cash and short-term investments Library Books Buildings, land, and equipment Accrued compensated absences Fund balance		$6,345,306 9,601,338 66,264,542 8,144,909 74,779,119		$8,498,186 9,090,307 65,664,604 7,677,558 73,551,767
SUPPLEMENTARY INFORMATION		FY 2000		FY 1999
Employment Statistics (Full Time Equivalent) Appropriated funds: Faculty/administrative Civil service Student employees Nonappropriated funds: Faculty/administrative Civil service Student employees Total Employees		380.2 231.6 45.5 147.2 56.4 49.8 910.7		384.4 233.4 51.2 152.0 57.8 52.1 930.9
Selected Activity Measures Annual full-time equivalent students - undergraduate Annual full-time equivalent students - graduate Full-time equivalent cost per student	2,064 1,903 $13,263		2,079 1,952 $12,075
UNIVERSITY PRESIDENT
During Audit Period: Dr. Paula Wolff (7/1/99-3/31/00) Dr. Stuart Fagan (From 4/00) Currently: Dr. Stuart Fagan

Inadequate controls over unemployment benefit claims and payments

Inaccurate cash balances reported

Lack of approvals and filing annual reports

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

NEED TO IMPROVE CONTROLS IN MONITORING UNEMPLOYMENT COMPENSATION

The University failed to develop adequate controls over

the review of unemployment benefit claims and payments which resulted in questionable benefits being paid by the State.

During the audit period, 15 former employees of the University received $56,866 in unemployment benefits. In four of 15 (27%) of cases sampled, we questioned the appropriateness of $12,174 paid out in unemployment benefits, and noted the following:

A terminated employee was paid $3,840 in benefits without protest from the University to the Illinois Department of Employment Security (IDES).

The University did not timely protest $3,406 in benefits paid to an employee who resigned.

The University paid an individual for a back pay settlement. The individual, however, was also receiving unemployment benefits for the same period for which the back pay settlement was awarded.

The University did not report a vacation payout to IDES for an employee who received $1,704 in benefits. The payment of vacation in connection with a separation or layoff is treated as wages earned for the period so designated by the employer and can affect the eligibility of an unemployment benefit recipient in those designated weeks. (Finding 2, pages 22-23) This finding was first reported in 1999.

We recommended the University finalize its policies and procedures for review of unemployment benefit activity and protest all cases of potential ineligibility. Additionally, employing departments should provide the necessary supporting documentation to human resources so that timely evaluations of unemployment claims can be processed.

University officials agreed with our recommendation and stated they have implemented and approved comprehensive policy and procedural changes.

INACCURATE LOCALLY HELD FUND REPORTS

The University did not file accurate quarterly reports with the Office of the State Comptroller for funds held locally.

All of the University's locally held fund quarterly reports reflected inaccurate cash balances throughout the fiscal year. Cash balances in the current, student activity, agency, and loan and income funds as of June 30, 2000 totaled $6,345,306. (Finding 1, pages 20-21) This finding has been repeated since 1998.

We recommended the University continue to refine its procedures to ensure that all locally held fund reporting is consistent and accurate.

University officials agreed with the finding and recommendation and stated it will implement corrective action. (For previous Agency responses, see Digest Footnote #1.)

NONCOMPLIANCE WITH THE FACULTY AND RESEARCH CONSULTING ACT

The University did not comply with the University Faculty Research and Consulting Act.

The University Faculty Research and Consulting Act (110 ILCS 100/1) prohibits a full time faculty member from contracting or accepting anything of value for research and/or consulting services unless the faculty member has prior written approval of the President, or the President's designee. The Act also requires the faculty member to prepare an annual statement setting forth the amount of actual time spent on outside research or consulting services. (Finding 4, pages 27-28)

During our testing we noted 10 of 29 (34%) of the faculty requests for research and/or consulting work were approved after the work began. The approvals were between four and 13 weeks late and two files had no requests for approval. Five of 21 (24%) of faculty members did not file annual reports as required by the State law.

We recommended the University ensure that faculty members comply with the statute as required.

University officials stated that they would amend their existing procedures and notify faculty of the requirement at the beginning of each trimester.

OTHER FINDINGS

The remaining findings and recommendations were less significant and are being given attention by University management. We will review progress toward implementation of our recommendations during our next audit.

University responses were provided by Mr. Thomas Stepke, Director of Business Operations.

AUDITORS' OPINION

Our auditors stated the University’s financial statements as of June 30, 2000, and for the year then ended, are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were De Raimo, Hillger & Ripp.

DIGEST FOOTNOTES

#1 INACCURATE LOCALLY HELD FUND REPORTS

1999: "The University agrees with the finding and has implemented the recommendation effective with the December 31, 1999 reporting period."

1998: "Beginning with the second quarter of FY99, the University will include its income fund in the quarterly report to the Comptroller on local funds."