REPORT DIGEST
GOVERNORS STATE UNIVERSITY
Financial Audit, Compliance Examination and Single Audit
For the Year Ended June 30, 2010
Summary of Findings:
Total this audit: 12
Total last audit: 5
Repeated from last audit: 2
Release Date: March 22, 2011
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, 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
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SYNOPSIS
• The University did not have adequate procedures over
verification of eligibility requirements for Trio-Cluster – Student Support
Services and Upward Bound (EXCEL and Greater Success for U) programs.
• The University did not have adequate record keeping over
its equipment acquired from federal funds.
• The University did not have adequate controls in
documenting and monitoring the match/cost share provided to the Teacher Quality
Partnership Grants.
• The University recorded indirect cost in excess of the
federally approved rate.
• The University did not comply with required contracting
procedures.
• The University did not comply with the University Faculty
Research and Consulting Act.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE PROCEDURES OVER VERIFICATION OF ELIGIBILITY
REQUIREMENTS
The University did
not have adequate procedures over verification of eligibility requirements for
TRIO Cluster-Student Support Services and Upward Bound (EXCEL and Greater
Success for U) programs.
In our eligibility
testing of 30 participants under the TRIO Cluster we noted the following:
• The University’s eligibility determination for five
participants was either not supported or does not agree with the supporting
documents on file.
• The University did not completely document its eligibility
determination for 15 participants. Items
on the verification portion of the application form, such as age, citizenship,
grade level, enrollment, first generation, income, or disability, were not
properly filled-out by program evaluators.
Failure to document
and verify the required eligibility information may result in providing
benefits or scholarship awards to ineligible applicants thereby resulting in
noncompliance with Federal regulations, policies and procedures. (Finding 1,
Pages 16-17)
We recommended that
the University verify the eligibility requirements for grant applicants and
maintain supporting documentation to ensure compliance with Federal
regulations.
University officials
accepted the recommendation.
INADEQUATE RECORD KEEPING OVER EQUIPMENT
The University did
not have adequate record keeping over its equipment acquired from federal
funds.
An inventory of the
University’s property and equipment is maintained in the Fixed Assets module
(property records) of the University’s Jenzabar information system (CARS). Asset details in the property records include
a description of the equipment, serial number, acquisition date, location,
asset status, unit acquisition cost, and disposition data, among others. However,
University equipment acquired from federal funds cannot be identified from the
property records as the source of funds is not indicated.
During our detailed
testing of R&D and TRIO Clusters, we obtained a general ledger listing of
equipment acquired from these federal funds during the fiscal year 2010 and
noted that the following items, each valued at $500 and above, were not
included in the property records:
• Four items of telephone and data answering equipment with
a total value of $2,248 acquired and charged to the R&D Cluster – Computer
and Information Science and Engineering grant fund.
• Three items of scientific equipment with a total value of
$6,546 acquired and charged to the R&D Cluster – Education and Human
Resources grant fund.
• Electronic data processing equipment valued at $4,171
acquired and charged to the TRIO Cluster – Student Support Services grant fund.
(Finding 2, pages 18-19)
We recommended that the University comply with federal
regulations by monitoring equipment acquired from federal funds
University officials accepted the recommendation and stated
that since this was brought to their attention, the University moved all
identified federal equipment into a separate property location in the inventory
system and that their new Enterprise Resource Planning system will have the
ability to track and identify federal equipment in the inventory system.
CONTROLS OVER FEDERAL MATCHING NEED IMPROVEMENT
The University did not have adequate controls in documenting
and monitoring the match/cost share provided to the Teacher Quality Partnership
Grants.
In our review of grant performance reports, we noted the
following:
• The final performance report for the budget period ended
September 30, 2009 for the Teacher Quality Partnership grant – Improving the
Preparation of Pre-Service Teachers in Real World Contexts program showed a
match of $125,634, which is $41,993 or 25% less than the required recipient’s
non-federal share of $167,627.
Additionally, we asked for the supporting documentation for the $125,634
presented on the final performance report but the University was not able to
provide it.
• The annual performance report for the April 15, 2010
reporting period for the Teacher Quality Partnership grant – Recruiting and Mentoring
of Teachers In Real-World Contexts program did not show any matching
amount. The required match should have
been $114,110.
Inadequate controls over federal matching resulted in
noncompliance with federal requirements and may result in the withholding of
funding for other eligible projects or activities. (Finding 4, pages 22-23)
We recommended that the University improve its procedures to
ensure compliance with federal requirements.
University officials accepted the recommendation and stated
that they are making improvements to their grant process and communication
procedures as well as hiring additional grant accounting staff to ensure
compliance.
INDIRECT COST RECORDED IN EXCESS OF THE FEDERALLY APPROVED
RATE
The University recorded indirect costs in excess of the
federally approved rate.
In our detailed testing of the Research and Development
Cluster – Minority Health and Health Disparities Research program we noted that
for the fiscal year ended June 30, 2010, the cost recorded represented 61% of
the program’s cost base, which is 6% in excess of the approved rate of
55%. This resulted in an excess indirect
cost of $9,336.
Pursuant to the Grant Award Notification issued by the
Department of Health and Human Services, the University’s cognizant agency for
the program, the approved indirect cost rate for the grant is 55% of payroll
and fringe benefit costs. (Finding 5,
pages 24-25)
We recommended that the University implement procedures to
ensure that indirect costs recorded are in accordance with the federally
approved rate.
University officials accepted the recommendation.
NONCOMPLIANCE WITH REQUIRED CONTRACTING PROCEDURES
The University did not comply with certain required
contracting procedures.
During our tests of 25 contracts, we noted the following:
• Four contracts totaling $3,074,064 did not have the three
signatures required for contracts of $250,000 or more.
• Two contracts each valued at more than $10,000 and a
contract for professional and artistic services valued at more than $5,000 were
not filed with the Office of the State Comptroller. These contracts were incurred against
locally-held funds.
• Three contracts each valued at more than $10,000 were not
filed with the Office of the State Comptroller within 15 days after execution
(three to nine days late). These
contracts were incurred against locally-held funds. (Finding 7, pages 28-29)
We recommended that the University ensure all contracts over
the threshold amounts are filed with the Office of the State Comptroller and
that the three signatures for contracts of $250,000 or more are obtained.
University officials accepted the recommendation and stated
that since this was brought to their attention, the University has modified the
contracting procedures to ensure compliance.
NONCOMPLIANCE WITH THE UNIVERSITY FACULTY RESEARCH AND
CONSULTING ACT
The University did not comply with the University Faculty
Research and Consulting Act.
Each year, the University’s Office of the President requests
all faculty members who intend to perform outside research and/or consulting
services to submit a Request for Advance Approval of University Faculty
Research and Consulting (Request).
Faculty members who intend to perform outside research and/or consulting
are required to obtain approval from the University President or the
President’s designee before performing outside services.
During our review of nine Requests and the related Annual
Statement of Time Spent on Outside Research and/or Consulting Services we noted
that three Requests were approved two to 78 days after the start of the related
services. In addition, two Annual
statements were not submitted by the faculty members to the University.
(Finding 9, pages 35-36)
We recommended that the University ensure that faculty
members comply with the University Faculty Research and Consulting Act as
required by statute.
University officials accepted the recommendation.
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.
AUDITORS’ OPINION
Our auditors state the University financial statements as of
June 30, 2010 and for the year then ended, are fairly presented in all material
respects.
WILLIAM G. HOLLAND
Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
E.C. Ortiz & Co., LLP were our special assistant auditors.