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, 1999

Summary of Findings:

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

Release Date:
March 29, 2000

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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 http://www.state.il.us/auditor

 

 

 

 

 

SYNOPSIS

 

  • Federal Direct Loan Program costs of approximately $6.2 million were questioned due to lack of required reconciliations of records. Because of this finding, the auditors’ opinion on compliance with requirements applicable to major federal programs was qualified.
  • The University did not establish adequate controls over its library books which are valued at a cost of $9 million dollars.
  • The University did not file accurate locally held fund reports which had cash balances of approximately $8.4 million dollars.
  • The University lacked controls over the monitoring of unemployment compensation resulting in questionable benefits paid to employees.

 

 

 

 

 

 

 

 

 

{Financial Information is summarized on the reverse page.}

 

GOVERNORS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT

For The Year Ended June 30, 1999

FINANCIAL OPERATIONS (CURRENT FUNDS)

FY 1999

FY 1998

REVENUES

Appropriations
Student tuition and fees
Grants, contracts, and gifts
Auxiliary enterprises
Payments on behalf of the University
Other

Total

 

$23,319,900
11,227,033
10,208,772
1,180,355
5,592,034
9,451,351

$ 60,979,445

 

$ 21,987,971
11,159,726
8,166,495
906,173
5,030,595
9,037,133

$ 56,288,093

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

 


$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

 


$ 19,016,033
32,863
1,294,556
1,907,433
7,536,293
15,869,606
4,209,149
5,399,935
359,618
953,958
67,735

$ 56,647,179

SELECTED ACCOUNT BALANCES (ALL FUNDS)

JUNE 30, 1999

JUNE 30, 1998

Cash and short-term investments
Library Books
Buildings, land, and equipment
Accrued compensated absences
Fund balances (deficit):

Unrestricted
Restricted
Loan
Net investment in plant
Income Fund

$8,498,186
9,090,307
65,664,604
7,677,558
(4,330,059)

129,762
3,309,378
74,442,686
(913,739)

$3,461,317
8,737,867
63,065,941
8,271,503
(4,592,926)

30,768
3,165,838
71,257,863
(1,086,788)

SUPPLEMENTARY INFORMATION

FY 1999

FY 1998

Employment Statistics (Full Time Equivalent)
Appropriated funds:

Faculty/administrative
Civil service
Student employees

Nonappropriated funds:

Faculty/administrative
Civil service
Student employees

Total Employees


384.4
233.4
51.2


152.0
57.8
52.1

930.9

 


348.6
232.6
39.1



149.0
58.2
53.1

880.6

Selected Activity Measures

Annual full-time equivalent students - undergraduate
Annual full-time equivalent students - graduate
Full-time equivalent cost per student

 

2,079
1,952
$12,075

 

2,052
1,837
$12,071

UNIVERSITY PRESIDENT

During Audit Period: Dr. Paula Wolff
Currently: Dr. Paula Wolff

 

 

 

 

No reconciliations of Federal Direct Loan Program

 

 

 

 

 

 

 

 

 

 

Inadequate physical security system

 

 

 

 

 

 

 

 

 

 

 

Inaccurate cash balances reported

 

 

 

 

 

 

 

 

 

Inadequate controls over unemployment benefit claims and payments

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

FEDERAL DIRECT LOAN PROGRAM NOT RECONCILED

The University’s disbursements for the Federal Direct Loan Program were not reconciled prior to fiscal year 1999. Testing of the University’s Federal Direct Loan Program disclosed that reconciliations in progress for the period from 09/01/96 through 6/30/98 had not been completed.

Due to these deficiencies, program costs of $6,194,196 were classified as questioned costs, and the auditors’ opinion on compliance with requirements applicable to major federal programs was qualified. (Finding 1, pages 20-22) This finding has been repeated since 1996.

We recommended the University continue to implement procedures to ensure compliance with federal regulations and work with the Department of Education to expedite a resolution of the reconciliations of prior year amounts. University officials agreed with our finding and recommendation and stated they have submitted required documentation and will continue to work toward resolution with the Department of Education. (For previous agency responses, see Digest Footnote 1)

INADEQUATE CONTROLS OVER LIBRARY BOOKS

The University’s controls over library books were inadequate. During testing of the library’s physical security system, we noted that it was not adequate to safeguard library books from loss or theft. Although the University has an alarm system installed at the entrance/exit to the library, it does not always detect books that have not been properly checked out. Library books are carried at a cost of $9,090,307 on the University’s balance sheet. (Finding 3, pages 25-26) This finding has been repeated since 1995.

We recommended the University review its procedures for the tagging of library books and training its library staff.

University officials agreed with the finding and recommendation and stated they will institute an ongoing training program for circulation desk staff. (For previous agency responses, see Digest Footnote 2)

INACCURATE LOCALLY HELD FUND REPORTS

All of the University's locally held fund quarterly reports filed with the Office of the Comptroller reported inaccurate cash balances throughout the fiscal year. Cash balances in the current, student activity, agency, and loan funds as of June 30, 1999 totaled $8,396,492.

The total fourth quarter cash balances reported were $391,108 less than the final total balance of $8,396,492. (Finding 2, pages 23-24)

We recommended the University review its procedures to ensure that all locally-held funds reporting is consistent and accurate.

University officials agreed with the finding and recommendation and stated it has implemented corrective action.

LACK OF 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, 25 former/current employees of the University received $82,243 in unemployment benefits. To test controls over unemployment benefit processing, we selected a sample of 20 Fiscal Year 1999 benefit recipients to determine the appropriateness of payments. We noted the following:

  • In five cases employees received $34,699 in questionable benefits for 129 weeks because the University failed to protest the unemployment claims.
  • In two cases reviewed, the University failed to report/protest benefits to persons who had received $7,421 in vacation payments which count as wages. These individuals received 12 weeks of unemployment benefits totaling $3,133.
  • In one case reviewed, the benefit recipient was employed by the University while he was also receiving unemployment benefits paid by the State. Questionable unemployment benefit payments made in this case totaled $1,408 for 16 weeks.
  • In seven cases reviewed, the University lacked documentation to evaluate the appropriateness of benefits paid.

In addition, the University did not review quarterly activity/charge statements sent by IDES and was unable to provide documentation to support responses to IDES wage inquiries and was untimely in other responses. (Finding 5, pages 30-32)

We recommended the University develop formal policies and procedures for review of unemployment benefit activity to ensure state resources are adequately protected.

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

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, 1999 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 FEDERAL DIRECT LOAN PROCEDURES NOT RECONCILED

1998: "All data years prior to FY98 have been submitted to the Department of Education. Final reconciliation is anticipated to be completed by the end of February 1999. Procedures are in place to ensure monthly reconciliation thereafter."

1997: "The University will implement the recommendation."

1996: "The University agrees with the finding and has implemented the recommendation.

The Financial Aid Office is now sufficiently staffed to minimize federal noncompliance. As of November 1996, work with the U.S Department of Education and its direct loan servicer has rectified 90 percent of the data problems."

# 2 INADEQUATE CONTROLS OVER LIBRARY BOOKS

1998: "The University FY99 budget includes funds for replacing the sensitive/desensitize stations in the library security system."

1997: "The University will arrange for the manufacturer to check the alarm system to assure it is operating properly. Library staff, particularly those assigned to the circulation desk, will receive additional security training."

1996: "The library security system upgrade equipment is on order and the upgrade will be completed in fiscal year 1997."

1995: "The review and upgrade of library security systems has been addressed as part of the library’s five-year strategic plan."