REPORT DIGEST ILLINOIS STATE UNIVERSITY FINANCIAL AND COMPLIANCE AUDIT (In accordance with the Single Audit Act and OMB Circular A-133) For the Year Ended: Summary of Findings: Total this audit 10 Release Date: State of Illinois WILLIAM G. HOLLAND To obtain a copy of the Report contact: |
SYNOPSIS
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{Financial Information is summarized on the reverse page.} |
ILLINOIS STATE UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 1999
FINANCIAL OPERATIONS (CURRENT FUNDS) | FY 1999 |
FY 1998 |
REVENUES Appropriations Total |
$ 81,022,202 $266,179,126 |
$ 75,539,325 $248,959,805 |
EXPENDITURES AND MANDATORY
TRANSFERS Instruction Total |
$ 75,365,755 $266,933,319 |
$ 64,945,030 $246,225,240 |
SELECTED ACCOUNT BALANCES (ALL FUNDS) | JUNE 30, 1999 |
JUNE 30, 1998 |
Cash and short-term
investments Investments Buildings, land, and equipment Accrued liability for compensated absences Fund balances (deficit): Unrestricted |
$ 161,148 60,692,339 414,919,016 22,007,971
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$ 1,637,130 62,445,480 394,205,788 22,532,208
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SUPPLEMENTARY INFORMATION | JUNE 30, 1999 |
JUNE 30, 1998 |
Employment Statistics
(Full Time Equivalent) Faculty/administrative Total Employees |
1,639.5 3,700.3 |
1,565.6 3,624.6 |
Selected Activity
Measures Annual full-time equivalent students Cost per full-time equivalent student, based on education and general expenditures from current funds |
$7,930 |
$7,369 |
UNIVERSITY PRESIDENT | ||
During Audit Period: Dr. David A. Strand |
The University preparation of financial statements and other financial reports was not timely or efficient
ISU staff did not complete the financial statements until 5½ months after the Universitys fiscal year-end
The Universitys quarterly property report, filed with the State Comptroller, was $18.8 million lower than the amount shown in the financial statements.
The University lacked formal policies and procedures to review unemployment claims
By improving the coordination and scheduling of extra help employees, the University could minimize the subsequent unemployment costs incurred by the State
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INTRODUCTION Our audit of Illinois State University (ISU) is issued in two reports. The Compliance Audit Report contains the audit findings and the supplementary financial information including the federal single audit disclosures. The Financial Audit Report contains the opinion on the financial statements.
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS TIMELINESS AND EFFICIENCY OF FINANCIAL REPORTING The Universitys preparation of financial statements and other financial reports was not timely or efficient. It required numerous combinations, eliminations, and allocations of amounts obtained from the general ledger system, together with information reported by each department and documentation from prior years. University officials indicated that timing and efficiency was hampered this year due to the staffs lack of familiarity with the Universitys new accounting system. ISU staff did not complete the financial statements until 5½ months after the Universitys fiscal year-end. (Finding 1, pages 12-13) The Universitys delay in completing the financial statements also caused a delay in the University submission of its GAAP reporting package to the State Comptroller, which was due September 30. (Finding 2, page 14) University officials agreed with our recommendation to establish and implement a method to prepare the annual University-wide financial statements and submit its GAAP reporting package in a timely and efficient manner. INACCURATE PROPERTY RECORDS AND REPORTING The Universitys property records were not complete and did not agree with the financial statements. University staff had not reconciled the Universitys detailed records with the amounts reported to the State Comptroller. We noted the Universitys quarterly property report, filed with the State Comptroller, was $18.8 million lower than the amount reflected on the financial statements. In addition, the Universitys records did not contain detail listings of the assets that made up land and site improvements for the auxiliary enterprises. According to management, these problems resulted in part from difficulties encountered with the conversion of computerized property systems. Failure to maintain complete and accurate fixed asset information results in inaccurate financial information and reduces management oversight controls. (Finding 3, pages 15-16) We recommended University officials complete the conversion of the Universitys fixed asset system, update fixed asset records properly, compile a complete list of real property for the auxiliary enterprises, and reconcile the quarterly reports of fixed assets to both the Universitys fixed asset accounting system and the general ledger system. University officials accepted our recommendation and stated it will reallocate a supervisory position to the fixed asset area to assist the chief accountant in reviewing procedures and fulfilling the recommendations. MONITORING UNEMPLOYMENT COMPENSATION AND CLAIMS Our audit disclosed two findings pertaining to the Universitys controls over the unemployment compensation paid on its behalf. Similar to all State agencies and universities, the unemployment claims made by ISUs extra help employees get paid from the General Revenue Fund appropriations, through the Illinois Department of Employment Security (IDES). Each calendar quarter, the IDES bills ISU for 20 percent of the unemployment costs paid to its former workers. The remaining 80 percent of the costs is borne by the General Revenue Fund and is not chargeable to or repaid by the University. Controls To Monitor Unemployment Claims The University lacked formal policies and procedures to review unemployment claims paid to its former and current employees. During FY 1999, 58 former or current ISU workers received nearly $163,000 in unemployment benefits. We tested 35 of these employee cases and discovered 9 audit exceptions, with questionable expenditures of State funds.
We noted that the University did not review the quarterly activity billing statements sent to it by the IDES. Prudent business practice would include a review of these statements to ensure that all charges were actually attributable to former University employees and ensure that properly executed protests to claims were indeed not charged to the University. We also noted that the University was unable to provide documentation to support responses to the IDES wage inquiries and was untimely in other responses. (Finding 5, pages 19-21) University officials accepted our recommendation to develop formal policies and procedures to review unemployment benefit activity for eligibility, review quarterly billing statements for accuracy, and respond to related inquiries promptly. Unemployment Costs Not Reflected In University Budget Although the Universitys use of extra help employees resulted in additional unemployment costs being incurred by the State of Illinois, those costs were not reflected in the Universitys budget. During FY 1999, the State incurred almost $163,000 in unemployment benefits paid to former or current ISU workers. We estimate that about half of the charges pertain to extra help employees who work on an as-needed basis. The University based its hiring and layoff decisions on the internal budgetary constraints of each University department, without considering the overall financial impact on the State of Illinois ultimate unemployment costs. By improving the coordination and scheduling of extra help employees, the University could minimize the subsequent unemployment costs incurred by the State. (Finding 6, pages 22-23) University officials agreed with our recommendation to evaluate the overall cost effectiveness of using and scheduling their extra help employees to reduce the overall costs, including unemployment benefits, to the State. 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. Ron Jones, Associate Vice President and Comptroller. AUDITORS' OPINION Our auditors state the financial statements of Illinois State University as of June 30, 1999, and for the years then ended are fairly presented in all material respects.
_____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JHL:pp
SPECIAL ASSISTANT AUDITORS Our special assistant auditors for this engagement were Clifton Gunderson L.L.C. |