REPORT DIGEST ILLINOIS BOARD OF HIGHER EDUCATION COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2015 Release Date: April 28, 2016 FINDINGS THIS AUDIT: 4 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 3 -- 1 -- 4 Category 3: 0 -- 0 -- 0 TOTAL: 3 -- 1 -- 4 FINDINGS LAST AUDIT: 3 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 SYNOPSIS • (15-1) The Board failed to exercise adequate control over the recording and reporting of State property. • (15-4) The Board approved expenditure vouchers which were incorrectly paid from certain appropriations. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER THE RECORDING AND REPORTING OF STATE PROPERTY The Board did not exercise adequate control over the recording and reporting of State property. Some of the conditions we noted follow: • The Board did not have a complete property listing in place during examination fieldwork. We requested Board property records on April 15, 2015, and a complete property listing was not provided for testing purposes until September 15, 2015. • The Board improperly recorded 85 equipment transactions throughout Fiscal Years 2014 and 2015, resulting in the 6/30/15 Quarterly Report of State Property (C-15) to be understated by $18,053. • We were unable to determine if the Board timely recorded 5 of 5 (100%) additions tested and 1 of 2 (50%) deletions tested, totaling $13,605 and $160, respectively, due to a lack of supporting documentation. (Finding 1, pages 9-10) We recommended the Board strengthen internal controls over the recording and reporting of State property. Specifically, we recommended the Board ensure all equipment transactions are accurately and timely recorded on its property records and accurately reported on the C-15s. We also recommended the Board submit timely all required reports to ensure the accuracy and reliability of Statewide property reporting. Board personnel agreed with our recommendations and stated they have assigned personnel to ensure transactions are reported accurately and reports are submitted timely. VOUCHERS INCORRECTLY PAID FROM CERTAIN APPROPRIATIONS The Board approved expenditure vouchers that were incorrectly paid from certain appropriations. Some of the conditions we noted follow: • Four vouchers, totaling $2,500, were paid from the Private College Academic Quality Assurance Fund (Fund 661) for faculty research performed to explore ways to prepare teacher candidates to enter the workforce. In addition, two vouchers, totaling $1,250, were paid from Fund 661 for faculty research performed to study the intersection of collaborate, informal, and digital learning. • One voucher, totaling $1,260, was paid from the Academic Quality Assurance Fund for software to be used by all Board staff in tracking time and benefits. • Fifteen vouchers, totaling $99,920, were paid for the Board’s search for an Executive Director. The vouchers were allocated to three different funds: nine vouchers, totaling $11,311, from the General Revenue Fund; one voucher, totaling $26,000, from Fund 661; and five vouchers, totaling $62,609, from the PBVS Quality Assurance Fund. Board personnel concluded it was reasonable to share the search costs amongst multiple funds; however, we could not determine a specific methodology use by the Board to determine which costs to allocate to each fund. (Finding 4, pages 15-17) We recommended the Board limit expenditures from appropriated line items to the purpose for which they are appropriated. Board personnel agreed with our recommendation and stated they have adopted a cost sharing methodology for use when expenditures should be shared across multiple appropriation lines. OTHER FINDINGS The remaining findings pertain to 1) failure to enforce compliance with rules and regulations over State grants and 2) inaccurate reporting of financial information for federal grants. We will review the Board’s progress toward implementation of our recommendations during our next regularly scheduled compliance examination. ACCOUNTANT’S OPINION We conducted a compliance examination of the Board for the two years ended June 30, 2015 as required by the Illinois State Auditing Act. The accountants stated the Board complied, in all material respects, with the requirements described in the report. FRANK J. MAUTINO Auditor General FJM:cmd AUDITORS ASSIGNED This examination was performed by the Office of the Auditor General’s staff.