REPORT DIGEST BOARD OF HIGHER EDUCATION COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2019 Release Date: September 3, 2020 FINDINGS THIS AUDIT: 3 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 2 -- 1 – 3 Category 3: 0 -- 0 -- 0 TOTAL: 2 -- 1 -- 3 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 • (19-01) The Board did not exercise adequate controls over the recording and reporting of State property. • (19-02) The Board did not enforce compliance with rules and regulations regarding the administration of State grants awarded. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER THE RECORDING AND REPORTING OF STATE PROPERTY The Board of Higher Education (Board) did not exercise adequate controls over the recording and reporting of State property. During testing, we noted the following: • Fourteen of 120 (12%) items tested, totaling $10,022, were found in locations that did not match the locations listed on the Board’s inventory listing. • Three of 60 (5%) items tested, totaling $35,424, did not have visible property tags. • Freight and installation charges, totaling $12, were not added to the value of one equipment item purchased during the examination period. • One item purchased, totaling $1,067, was not added to the Board’s inventory records or reported on the Board’s Agency Report of State Property (Form C-15). (Finding 2019-001, pages 12-13). This finding has been repeated since 2013. We recommended the Board strengthen its internal controls over the recording and reporting of State property, including: • updating property records to reflect changes in equipment locations; • marking property with visible property tags; • capitalizing freight and installation charges in accordance with SAMS; and, • timely adding purchased property to inventory records and the Board’s Form C-15. The Board agreed with the finding and stated it will work with staff to ensure the strengthening of its property control records. FAILURE TO ENFORCE COMPLIANCE WITH GRANT AGREEMENTS The Board did not enforce compliance with rules and regulations regarding the administration of State grants awarded. We selected a sample of four of the Board’s grant programs active during Fiscal Year 2018 and Fiscal Year 2019 to test. The four grant programs resulted in 20 grant agreements between the Board and various entities. During our testing, we noted the following conditions: • For 12 of 20 (60%) grant agreements tested, the agreements were not signed prior to the start of the grant period. The grants were signed between 1 and 159 days late. • We noted 2 of 20 (10%) audit reports tested were not submitted timely. The audit reports were submitted 13 and 14 days late. • We noted 6 of 20 (30%) close-out reports tested were not submitted timely. The close-out reports were submitted 14 to 88 days late. • We noted 14 of 80 (18%) quarterly reports tested were not submitted timely. The quarterly reports were submitted 1 to 69 days late. • 57 of 67 (85%) reports tested did not contain the required certification by the grantee. • Differences in expenditure reporting between the grantee’s quarterly reports and their close-out audit reports were noted for 3 of 20 (15%) grantee reports tested. As a result, we were unable to determine if the grantees maintained accounting systems or records to provide accurate, current, and complete disclosures of all financial transactions as required by the grant agreement. In addition, we performed testing of 6 reports due during the examination period that were derived from agreements active during Fiscal Year 2017, and we noted 2 (33%) evaluation reports were submitted 2 and 10 days late. (Finding 2019-002, pages 14-16). We recommended the Board strengthen its internal controls to enforce compliance with rules and regulations regarding the administration of State grants awarded, including: • ensuring grant agreements are signed by all parties prior to the start of the grant periods; • working with grantees to ensure required reports are submitted timely; • ensuring grant reports contain all required certifications; and, • ensuring discrepancies between grantee quarterly reports and close-out audit reports are resolved. The Board agreed with the finding and stated it will work on the timely execution of grant agreements along with continuing to work with grantees on submitting certified reports timely. OTHER FINDING The remaining finding pertains to the Board not being staffed as required. We will review the Board’s progress towards the implementation of our recommendations in our next compliance examination. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Board for the two years ended June 30, 2019, as required by the Illinois State Auditing Act. The accountants stated the Board complied, in all material respects, with the specified requirements. This compliance examination was conducted by the Office of the Auditor General’s staff. 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:cgr