REPORT DIGEST GOVERNORS STATE UNIVERSITY SINGLE AUDIT AND COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2018 Release Date: March 19, 2019 FINDINGS THIS AUDIT: 19 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 7 -- 12 -- 19 Category 3: 0 -- 0 -- 0 TOTAL: 7 -- 12 -- 19 FINDINGS LAST AUDIT: 19 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 the Governors 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 29, 2019. In total, this report contains 19 findings, one of which was reported in the financial audit. SYNOPSIS • (18-02) The University did not timely return Title IV funds to the Department of Education. • (18-03) The University awarded and disbursed financial aid to an ineligible student. • (18-11) The University did not comply with the Abused and Neglected Child Reporting Act. • (18-13) The University did not comply with the Illinois State Collection Act of 1986. • (18-14) The University subsidized operations between accounting entities. • (18-18) The University did not comply with applicable property and equipment requirements. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS UNTIMELY RETURN OF TITLE IV FUNDS The University did not timely return Title IV funds to the Department of Education. We tested the Title IV calculations for 40 students who withdrew from the University and identified a $3,297 refund of an Unsubsidized Direct Loan which was not returned. After the auditors informed the University, the refund was returned to the Department of Education 449 days late. (Finding 2, pages 18-19) We recommended the University improve procedures to ensure required funds are returned to the Department of Education in a timely manner. University officials agreed with the finding and stated they have begun a process to prevent untimely returns in the future. FINANCIAL AID AWARDED TO INELIGIBLE STUDENT The University awarded and disbursed Federal Supplemental Educational Opportunity Grant (FSEOG) funds to a student who was not eligible for the award. During testing of returns of Title IV funds, it was noted an ineligible student was awarded and disbursed $350 from FSEOG. (Finding 3, pages 20-21) We recommended the University improve its controls to ensure each student meets the eligibility requirements prior to receiving financial aid. University officials agreed with the finding and stated they have begun a process to prevent awarding financial aid to ineligible students. CHILD ABUSE REPORTER TRAINING The University did not comply with the Abused and Neglected Child Reporting Act regarding training. We noted 9 of 35 (26%) employees did not receive the required reporter training within one year of initial employment. (Finding 11, page 36) This finding has been repeated since 2016. We recommended the University comply with the requirements of the Act and ensure all employees received the proper training within the required timeframe. University officials agreed with the finding and stated the University has updated its practices to work towards compliance. (For the previous University response, see Digest Footnote #1) NONCOMPLIANCE WITH THE ILLINOIS STATE COLLECTION ACT OF 1986 The University did not comply with the requirements of the Illinois State Collection Act of 1986 (Act). As of December 31, 2017, the University’s accounts receivable aging report included 2,119 accounts totaling $6,920,642 with receivable balances greater than $1,000 and in excess of 90 days past due. We tested a sample of 30 such accounts (totaling $113,125) and determined 5 of those accounts (totaling $12,890) had not been submitted by the University for placement with the Comptroller’s Offset System. We also noted 2 accounts (totaling $12,227) of foreign students which had also not been placed with the Comptroller’s Offset System. (Finding 13, page 38) This finding has been repeated since 2016. We recommended the University improve its procedures to ensure all debts owed to the University are placed in the Comptroller's Offset System once they exceed $1,000 and are 90 days past due. We further recommended the University work with the Comptroller to develop a solution to reporting foreign students who do not have a social security number. University officials agreed with the finding and stated the University is now current with placement of past due accounts with the Comptroller’s Offset System and is working with the Comptroller regarding foreign students’ accounts. (For the previous University response, see Digest Footnote #2) SUBSIDIES BETWEEN ACCOUNTING ENTITIES The University subsidized the operation of University activities between accounting entities during the fiscal year. Activities are functions which are self- supporting in whole or in part, which are directly related to instructional, research, or service units. During our testing of the University Guidelines, we noted the “University Service Departments” (an accounting entity) had a negative cash balance at the beginning of the fiscal year of $201,915 and the end of the fiscal year of $38,591. A negative cash balance is in effect an unbooked interfund payable / receivable, thereby causing a subsidy between entities to occur. (Finding 14, page 39) 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 and stated their review of the accounting entities is currently underway. INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT The University did not fully comply with the requirements applicable to its property and equipment. We selected a sample of 15 items from a listing of 115 items which were identified as unlocated equipment by the University when it performed its physical inventory as of September 15, 2017. Of the 15 items tested, 3 items were subsequently located by the University and observed by the auditors, 2 items were determined to be clerical errors, 1 item was located and transferred to State Surplus, 2 items were located and were scrapped, and the remaining 7 items were not located and deleted from the University’s inventory as lost items. We examined the University’s request for deletions form submitted to the Department of Central Management Services to request inventory deletion for the remaining physical inventory’s lost items. The form requested 63 items totaling $85,503, including 53 computers, servers, CPU’s and other storage devices totaling $71,391, be approved for deletion from the University’s inventory. The University did not immediately perform a complete assessment of missing computers and storage devices to determine whether they contained confidential information and whether notifications were required as outlined in the Personal Information Protection Act (815 ILCS 530/25). We also tested 25 computers that were sent to surplus according to the University’s property control records to determine whether the University complied with its procedures and maintained evidence the computers had been “wiped” prior to transfer. The University could not provide any evidence 11 (44%) of these computers were cleared of data and software before they were transferred to surplus. (Finding 18, pages 44-45) This finding has been repeated since 2016. We recommended the University improve the operation of its internal controls over the accountability of University equipment and comply with its procedures for documenting wiping of computer equipment prior to disposal. Further, we recommended the University perform timely assessments of all missing computer and data storage equipment to determine whether they contained confidential information and whether notifications under the Personal Information Protection Act are required. University officials agreed with the finding and stated they will continue to improve its property control process and reporting requirements. (For the previous University response, see Digest Footnote #3) OTHER FINDINGS The remaining findings are reportedly being given attention by the University. We will review the University’s progress towards the implementation of our recommendations in our next engagement. AUDITOR’S OPINIONS The financial report was previously released. 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 auditors also conducted a Single Audit of the University as required by the Uniform Guidance. The 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 auditors stated the University complied, in all material respects, with the requirements described in the report. This engagement was conducted by Borschnack, Pelletier & Co. 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:JGR DIGEST FOOTNOTES #1 – CHILD ABUSE REPORTER TRAINING 2017 – The University agrees with this finding and accepts the recommendation. The University has updated its practices and will initiate a campus wide training to be in compliance with the mandate over the next six months. #2 – NONCOMPLIANCE WITH THE ILLINOIS STATE COLLECTION ACT OF 1986 2017 – The University agrees with this finding and accepts the recommendation. As of the end of Fiscal Year 2017, the University was able to turn accounts over to the Comptroller’s Offset System through the Spring 2016 semester. The University is expecting to be current by the end of Fiscal Year 2018. #3 – INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT 2017 – The University agrees with this finding and accepts the recommendation. With the recent hiring of an additional staff member to monitor and track equipment, property control improvements were implemented. Equipment items are being researched, tracked and located in a more systematic manner. Reports that provides updates on additions and deletions are now generated monthly for data review and quality control. Property Control Officers were reminded in training of the importance of immediately notifying the GSU Police Department and Property Control in matters of loss or stolen items. Periodic trainings related to process, reporting and securing University tagged assets will be conducted throughout the fiscal year with departmental property control officers. Effective immediately, the University will review its handling of surplus inventory under the Information Technology Services area and will re-train staff on how to adequately document the clearing of data and software from hard drives in order to prevent the related finding to reoccur in the future. The University will continue to work on improving property control processes and entry/reporting accuracies.