REPORT DIGEST ILLINOIS STATE UNIVERSITY FINANCIAL AUDIT, SINGLE AUDIT, AND COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2018 Release Date: January 23, 2018 FINDINGS THIS AUDIT: 9 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 6 -- 3 -- 9 Category 3: 0 -- 0 -- 0 TOTAL: 6 -- 3 -- 9 FINDINGS LAST AUDIT: 7 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 • (18-05) The University did not fully implement the Student Transfer Achievement Reform Act. • (18-07) The University did not always ensure compliance with the University Faculty Research and Consulting Act and University policies regarding outside employment. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NONCOMPLIANCE WITH THE STUDENT TRANSFER ACHIEVEMENT REFORM ACT The Illinois State University (University) did not fully implement the Student Transfer Achievement Reform Act (Act). During testing, we noted the following: • The University did not ensure all of its majors allowed for students transferring under the Act to take no more than 60 additional credit hours to complete the student’s program of study. • The University has not entered into agreements with the State of Illinois, Board of Higher Education to exempt majors which require more than 120 credit hours to graduate from the requirements of the Act. According to University officials, the following majors are not in compliance with the requirements of the Act described in the preceding two bullet points: 1) Accountancy BS/MPA – Accountancy and Information Systems 2) Accountancy BS/MPA – Professional Accountancy 3) Elementary Education – Bilingual/ Bicultural Teacher Education 4) Biological Sciences – Biology Teacher Education 5) Business Education – Business Teacher Education 6) Business Education – Training and Development 7) Early Childhood Education 8) Elementary Education 9) History – Social Sciences Teacher Certification 10) Middle Level Teacher Education 11) Music Education – Choral/General/ Keyboard 12) Music Education – Choral/General/ Vocal 13) Music Education – Instrumental/Band 14) Music Education – Instrumental/ Orchestra 15) Special Education – Specialist in Deaf and Hard of Hearing 16) Theatre – Dance Teacher Education 17) Theatre – Theatre Teacher Education (Finding 5, pages 22-23) We recommended the University implement controls to ensure that all majors allow for students to take no more than 60 additional credit hours in accordance with the Act. Also, we recommended the University enter into agreements with the Board to exempt majors requiring more than 120 credit hours from the requirements of this Act. University officials agreed with our recommendation. NONCOMPLIANCE WITH THE UNIVERSITY FACULTY RESEARCH AND CONSULTING ACT The University did not always ensure compliance with the University Faculty Research and Consulting Act and University policies regarding outside employment. During fiscal year 2018, faculty members reported 125 instances of outside employment to the University Provost. During testing, we noted the following: • 67 of 125 (54%) cases of outside employment had the Request for Approval of Secondary/Outside Employment Form (Form PERS 927) approved by the University’s Provost between one to 459 days late. • 48 of 123 (39%) cases of outside employment did not have the Annual Report of Secondary/Outside Employment Form (Form PERS 928) submitted by the faculty member by the deadline of August 31, 2018. The total number of cases was reduced to reflect two employees who retired prior to the due date of the Form PERS 928. (Finding 7, pages 26-27) This finding has been repeated since 2012. We recommended the University Provost implement internal controls to ensure faculty members with outside research, consulting services, or employment receive written pre-approval to conduct the requested activity and annually disclose the time spent on these activities in accordance with State law and University policy. University officials stated they agree with the recommendation and will continue to assess the faculty research and consulting approval process. University officials also stated additional modifications will be made to ensure more timely approvals and annual disclosures of outside research, consulting and employment activities. (For the previous University response, see Digest Footnote #1.) OTHER FINDINGS The remaining findings pertain to (1) inadequate controls over accounting and financial reporting, property and equipment, and procurement and contracting functions; (2) faculty time reports; (3) noncompliance with federal institutional eligibility requirements and eligibility requirements; and, (4) information security weaknesses. We will review the University’s progress towards the implementation of our recommendations in our next financial audit, Single Audit, and compliance examination. AUDITOR’S OPINIONS 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 accountants stated the University complied, in all material respects, with the requirements described in the report. This financial audit, Single Audit, and compliance examination was conducted by RSM US LLP. 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:djn DIGEST FOOTNOTES #1 – Noncompliance with the University Faculty Research and Consulting Act – Previous University Response 2017: The University agrees with the recommendation and will continue to assess the faculty research and consulting approval process. Additional modifications will be made to ensure more timely approvals and annual disclosures of outside research, consulting and employment activities.