Northeastern Illinois University 2001 Audit

REPORT DIGEST
NORTHEASTERN ILLINOIS UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT

(In accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:
June 30, 2001

Summary of Findings:

Total this audit 3
Total last audit 3
Repeated from last audit 1

Release Date:
March 26, 2002

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

The University lacked controls over the monitoring of unemployment compensation resulting in questionable benefits paid to employees.
The University failed to fully monitor the subgrantees for the Federal Gear-Up program.

{Financial Information is summarized on the reverse page.}

NORTHEASTERN ILLINOIS UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2001

FINANCIAL OPERATIONS (CURRENT FUNDS)	FY 2001		FY 2000
REVENUES State Appropriations General Revenue Fund Education Assistance Fund Capital Development Fund Payments on behalf of University Student tuition and other fees Grants (principally federal awards) Student Union sales and services Parking revenue Illinois Future Fund Other sources Total EXPENDITURES AND MANDATORY TRANSFERS Instruction Research Public Service Academic Support Student services and Programs Institutional support Operation of plant Scholarships and Fellowships Auxiliary enterprises Mandatory transfers Total	$36,636,100 5,973,944 920,941 11,269,364 23,911,604 20,638,946 142,920 870,577 0 4,013,977 $104,378,373 $31,454,819 246,981 11,370,932 7,083,955 6,009,667 20,434,014 10,872,017 8,787,979 2,103,903 375,705 $98,739,972		$34,530,391 5,799,999 2,079,316 9,806,842 22,900,574 14,500,346 144,658 822,523 19,982 4,007,272 $94,611,903 $29,275,289 199,401 7,283,411 6,654,168 5,848,781 18,212,841 10,535,847 8,015,391 2,166,619 1,322,812 $89,514,560
SELECTED ACCOUNT BALANCES (ALL FUNDS)	JUNE 30, 2001		JUNE 30, 2000
Cash and short-term investments Equipment Buildings and Land Accrued compensated absences Fund balances (deficit): Unrestricted Restricted	$21,052,850 43,355,323 91,842,851 11,865,943 $134,343,479 5,421,234	$17,666,966 43,071,021 88,320,741 13,061,443 $124,480,788 5,455,148
SUPPLEMENTARY INFORMATION	FY 2001	FY 2000
Employment Statistics Administration Faculty Civil Service Students Total Employees Selected Activity Measures Annual full-time equivalent students - Undergraduate Annual full-time equivalent students - Graduate Full-time equivalent cost per student - Undergraduate Full-time equivalent cost per student - Graduate	222 371 473 401 1,467 6,251 1,435 $6,880 $9,779	213 361 451 411 1,436 6,137 1,464 $6,376 $9,349
UNIVERSITY PRESIDENT
During Audit Period: Dr. Salme H. Steinberg Currently: Dr. Salme H. Steinberg

Questionable unemployment benefit claims and payments paid to State employees

Subgrantee audit reports not received by the University as required

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

LACK OF CONTROLS IN MONITORING UNEMPLOYMENT COMPENSATION

The University failed to develop adequate controls over the review of unemployment benefit claims and payments. This resulted in questionable benefits being paid by the State to employees who were still receiving a paycheck from the University.

In our follow-up testing from the prior year audit, we sampled 15 University employees who received $39,363 in unemployment benefits. In 20 percent (3 of 15) of the cases sampled, we questioned the appropriateness of $1,586 paid out in unemployment benefits. Two questionable cases were for employees receiving a paycheck and unemployment check simultaneously. In one case, a student received unemployment but the University was unable to find any unemployment claim information. (Finding 2, pages 18-19) This finding has been repeated since 1999.

We recommended the University further develop its policies and procedures for the review of unemployment benefit activity by instituting a control whereby the individual that processes unemployment activity could verify and protest cases where benefit recipients were simultaneously working and receiving unemployment. Further, the University should maintain all necessary documentation regarding unemployment claims.

University officials responded they have further developed their policies and procedures for review of unemployment benefit activity by instituting an additional control. (For previous University responses, see Digest footnote 1.)

FAILURE TO FULLY MONITOR SUBGRANTEES

The University has a five year $31.3 million dollar Federal grant for the Gear-Up program to provide or guarantee low-income students financial assistance to attend an institution of higher education. For fiscal year 2001, total expenditures for this program were $5,912,638.

During fiscal year 2000, the University passed through $732,829 of funds received to six subgrantees. The subgrantees were paid on a reimbursement basis from quarterly progress and expenditure reports received from them and reviewed by the University. The grant agreement required the subgrantee to provide the University with a current certified audit report no later than six months after the subgrantee’s fiscal year (by December 31, 2000).

Prior to our inquiries, the University had received no reports for the fiscal year 2000 subgrants and had done no follow-up. After our inquiry, the University requested and received 3 of 6 (50%) of the required audit reports before the end of our fieldwork. Federal regulations require pass through entities to properly monitor subgrantees to ensure that subrecipients have complied with audit requirements. (Finding 1, pages 16-17)

We recommended the University develop procedures to properly monitor and administer subgrants.

University officials agreed with our recommendation and stated they will implement the procedures necessary for compliance, as well as actions to take for noncompliance.

OTHER FINDINGS

The remaining finding and recommendation is less significant and is reportedly being given attention by University management. We will review progress toward implementation of our recommendations in our next audit.

University responses were provided by Mark Wilcockson, Vice President for Finance and Administration.

AUDITORS' OPINION

Our auditors stated the University’s financial statements at June 30, 2001 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 Nykiel, Carlin & Co.

DIGEST FOOTNOTES

#1 LACK OF CONTROLS IN MONITORING UNEMPLOYMENT COMPENSATION

2000: "The University concurs with the recommendation and will further develop and improve its policies and procedures for the review of unemployment benefit activity. In particular, as recommended by the Office of the Auditor General, the University will assign the responsibility of monitoring and protesting, if applicable, unemployment claims to a specific unit within the Personnel Department and secure the necessary training to fulfill their responsibilities."

1999: "The University is in the process of developing formal policies and procedures for the review of unemployment benefit activity that includes protesting all cases of potential ineligibility so that State resources are adequately protected. In addition, the University is consulting with legal counsel to ensure that citizens’ rights are not jeopardized, thereby, placing the University at risk."