REPORT DIGEST

GOVERNORS STATE UNIVERSITY

Financial Audit
For the Year Ended June 30, 2020

Release Date:  June 23, 2021

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT:  0

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.

INTRODUCTION

This digest covers the Governors State
University’s (University) Financial
Audit as of and for the year ended
June 30, 2020.  A separate digest
covering the University’s Compliance
Examination (including the Single
Audit) for the year ended June 30,
2020 will be released under separate
cover.

SYNOPSIS

• (20-01)	The University did not
have adequate internal control over
reporting its census data and did not
have a reconciliation process to
provide assurance census data
submitted to its pension and other
postemployment benefits was complete
and accurate.
University did not perform an initial
reconciliation of its census data

University lacked procedures for
eligibility to participate in SURS for
F and J visas employees

Former University F and J visas
employees still within SURS need a
review of their service credit

Three of three (100%) employees tested
had the start date of a leave of
absence untimely reported and was
determined the total potential impact
to total service credit could be off
by one to 3.5 years

Five employees termination or rehire
date(s) had been untimely reported and
was determined the total potential
impact to total service credit was off
between 0.0 to 1.75 years

University agreed with recommendation
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE INTERNAL CONTROLS OVER
CENSUS DATA

The University did not have adequate
internal control over reporting its
census data and did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment
benefits was complete and accurate.

During testing, some of the more
significant issues we noted include
the following:

* The University had not performed an
initial complete reconciliation of its
census data recorded by SURS and CMS
to its internal records to establish a
base year of complete and accurate
census data.

* The University lacked procedures to
separately identify its new employees
who held F and J visas to determine
whether these employees were eligible
to participate in SURS. Our review
identified eight employees with start
dates between 2011 and 2017 who could
potentially have too much service
credit, which would erroneously
increase the State’s SURS-related
pension liability. SURS’ records
indicated many individuals initially
employed at the University and then
moved to other public universities and
community colleges within SURS. As of
the end of fieldwork, SURS officials
were working to identify the
population of potentially impacted
participants across its employers for
review to determine if the participant
has received too much service credit.

* We performed an analysis of
transactions reported by the
University to SURS during the census
data accumulation period throughout
Fiscal Year 2018, noting three of
three (100%) employees with a
departure on a leave of absence had
the start date of the leave of absence
untimely reported to SURS by the
University. SURS determined the total
potential impact to each of these
employees’ total service credit was it
could be off by one to 3.5 years.

* As of the end of the census data
accumulation year on June 30, 2018, we
identified five employees where each
employee’s associated termination or
rehire date(s) had been untimely
reported to SURS. SURS determined
these errors resulted in the employees
being misclassified between the
active, retired, and inactive member
categories within SURS. The total
potential impact to each former
employee's total service credit was it
could be off between 0.0 and 1.75
years. (Finding 1, pages 70-74)

We recommended the University
implement controls to ensure census
data events are timely and accurately
reported to SURS and CMS.  Further, we
recommended the University work with
SURS and CMS to develop an annual
reconciliation process of its active
members’ census data from its
underlying records to a report from
each plan of census data submitted to
the plan’s actuary. Finally, we
recommended the University work with
SURS and other public universities and
community colleges to identify
employees initially hired by the
University with a visa who had not met
the Internal Revenue Service’s
substantial presence test.

University officials agreed with our
recommendation.


AUDITOR’S OPINION

The auditors stated the financial
statements of the University as of and
for the year ended June 30, 2020, are
fairly stated in all material
respects.

This financial audit 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