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FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
IMPROPER CUT-OFF PROCEDURES FOR EXPENDITURES
The
University did not perform proper cut-off procedures for some of their
expenses.
We
noted the following in our audit of the financial statements originally
submitted by the University to the Office of the State Comptroller:
·
Six (6) vouchers paid subsequent to June 30, 2007
totaling $1,213,104 were initially reported as fiscal year 2008
expenses. These invoices were for
professional services performed and supplies and services received of
$975,387 and $237,717 during fiscal years 2007 and 2008, respectively.
·
Three (3) unpaid invoices as of June 30, 2007
totaling $666,962 were for professional services of $606,101 and $60,861
performed during fiscal years 2007 and 2008, respectively. The fiscal year 2007 expenses were not
properly accrued in the University’s general ledger.
·
The University paid the maintenance fee for the
Enterprise Resource Planning (ERP) system totaling $97,101 for the period
March 2007 to February 2008. A
portion of the maintenance fee for fiscal year 2008 amounting to $64,734 was
expensed during the current year instead of being recorded as a prepaid
expense.
The University
subsequently revised the financial statements and submitted revised
accounting reports to the Office of the State Comptroller to include the
adjustments necessary to properly record the transactions. (Finding 1, Pages 50-51 of
the Financial Statement Audit Report)
We recommended that the University establish procedures to
ensure that detailed invoices from partner schools are promptly obtained and
reviewed. In addition, year-end
cut-off entries for accruals should be reviewed to ensure that they are
complete and that they are charged to the proper account and to the correct
fiscal year.
University officials agreed with the finding and stated that
it will require its project directors to request invoices from partner
schools in a timely manner to facilitate fiscal year cut-offs and allow the
University to properly recognize expenses.
INADEQUATE MONITORING OF DISBURSEMENTS TO
PARTNER SCHOOLS FOR GRANT PROGRAMS
The
University did not properly monitor its disbursements to partner schools for
grant programs.
The University was the recipient of
various federal grants. To carry out
the objectives of the different grants, the University entered into contracts
with different schools (partner schools) to render professional services.
During our review of vouchers and other
supporting documentation we noted the following:
·
The University did not obtain supporting detailed
documentation for invoices submitted by the partner schools.
·
The University did not monitor the timely billing of
grant expenditures by these partner schools and was not monitoring the
submission of required quarterly expenditure reports.
·
Seven vouchers paid to five partner schools for 3
grant programs were for professional services totaling $653,859 and $511,500
performed during fiscal years 2006 and 2007, respectively. All of these vouchers, totaling
$1,165,359, were initially reported in the Schedule of Expenditures of
Federal Awards as 2007 expenditures.
·
Five vouchers paid subsequent to June 30, 2007 to
four partner schools for two grant programs were for professional services
totaling $866,057 and $237,717 performed during fiscal years 2007 and 2008,
respectively. All of these vouchers
totaling $1,103,774 were initially recorded as fiscal year 2008 expenses.
·
Two unpaid invoices as of June 30, 2007 from two
partner schools totaling $486,233 were for professional services of $425,372
and $60,861 performed during fiscal years 2007 and 2008, respectively. The fiscal year 2007 expenditures were not
initially recorded in the University’s general ledger.
The University subsequently recorded the
expenditures for fiscal year 2007 to reflect the proper balances in the
financial statements and on the Schedule of Expenditures of Federal Awards.
(Finding 3, Pages 15-17 of the Compliance Examination Report)
We recommended that the University
ensure that invoices are not processed for reimbursement until detailed
supporting documentation is obtained from the partner schools and reviewed by
the project director. We also
recommended that the University ensure that invoices from partner schools are
obtained on a timely basis and that partner schools submit their quarterly
reports on the required due dates.
University officials agreed with the
recommendation and stated that they will establish procedures to ensure the
timely submission of invoices and appropriate supporting detail from the
partner schools so that expenditures can be recorded accurately and in a
timely manner.
INADEQUATE CONTROLS OVER UNIVERSITY
EQUIPMENT ACQUIRED FROM GRANT FUNDS
The
University did not have adequate controls over its equipment acquired from
grant funds.
Part of the University’s work plan for
the Gaining Early Awareness and Readiness for Undergraduate Programs
(GEAR-UP) is the Parent Programs. In
this project, parents of GEAR-UP students participate in the parent
development sequence wherein participants who completed all three technology
class series annually will earn a refurbished computer to maintain their
computer skills, support their child’s education using technology, and have a
resource to use in the college application and financial aid process.
During our testing of 60 equipment
vouchers we noted that 22 refurbished computers with a total value of $6,446
were donated to grant participants but were not supported with the Grant
Transfer of Property forms.
During our review of deletions made
during the fiscal year, we noted a projector valued at $11,239 was donated
but the University could not provide the Grant Transfer of Property form to
evidence the transfer. (Finding
4, Pages 18-19 of the Compliance Examination Report)
We recommended the University adhere to
its procedures to ensure that transfers of equipment acquired from grant
funds are properly documented.
University officials agreed with the recommendation
and stated that they will strengthen procedures to document the appropriate
transfer of equipment from grant funded accounts and improve coordination
between the project directors and property control.
INADEQUATE CONTROLS OVER UNIVERSITY PROPERTY
AND EQUIPMENT
The University did not have adequate controls
over its property and equipment.
During the audit we performed various tests on
the property records. Some of the
items that we noted are as follows:
In our
physical identification of 108 items in the property records:
·
5 items, with a total value of $35,113 were not
tagged with the University decal.
·
8 items, with a total value of $21,675 were not
found.
·
3 laptops, with a total value of $7,147 assigned
off-campus to employees were not supported with Off-Campus Equipment Use
forms.
In our
review of the Property Listing as of October 31, 2006 submitted by the
University to the Department of Central Management Services (DCMS) on
November 13, 2006, we noted that 8 items with a total value of $30,051
purchased before October 31, 2006 were not reported.
In our
detailed testing of 60 equipment vouchers, we noted:
·
Equipment purchases before October 31, 2006 from 18
vouchers tested, with a total value of $139,543, were not included in the
Property Listing as of October 31, 2006 submitted by the University to
DCMS. 12 of the 18 vouchers with a
total value of $52,230 were not included in the June 30, 2007 Property
Listing.
·
Equipment purchases from November 1, 2006 to June 30,
2007 from 5 vouchers tested, with a total value of $53,542, were not included
in the Property Listing as of fiscal year-end.
·
Four vouchers representing purchases of new furniture
with a total value of $22,777 were not supported with a state property
surplus-new furniture affidavit that is required to be filed with the state
surplus administrator.
During
our review of surplus equipment as of fiscal year-end, we noted the
following:
·
Thirty (30) items with a total value of $429,064
reported in the property listing as surplus were not found. These items consisted of: a laser link, a
router, 16 servers, a piece of storage equipment, 4 projectors, a water
purifier, 2 printers, a laptop, 2 computers, and a stage platform. (Finding 5, Pages 20-26 of
the Compliance Report) (This finding was first reported in 2004)
We recommended the University: a) Adhere to its
procedures to ensure that the property and equipment records are accurately
maintained and updated; b) Conduct periodic physical inventories and update
property records with the results of the inventory; c) Improve its controls
over off-campus use of property and equipment by reviewing the forms
submitted by employees for completeness and accuracy; d) Ensure submission of
a complete Inventory of Equipment with DCMS and establish and maintain
internal control records over items valued less than $500; and e) Ensure that
staffing is adequate to accomplish the other recommendations.
University officials concurred with the finding
and stated that they believe the University has improved property control
since this finding was first reported and will continue those efforts in the
coming year. (For
previous University response, see Digest Footnote #1.)
NONCOMPLIANCE WITH REQUIRED CONTRACTING
PROCEDURES
The University did not comply with
certain required contracting procedures.
Some of the problems noted during our
tests of contractual service expenditures follow:
·
Nine of 30 contracts (30%) were not filed with the
Office of the State Comptroller as of fiscal year end. Four of the 9 contracts were executed in
the current fiscal year and were incurred against appropriated funds. The remaining 5 contracts were executed in
the current fiscal year and were incurred against locally held funds.
·
One of 21 contracts (5%) was not filed within 15 days
of execution. The contracts were
filed 41days late. The late filing
affidavit was not on file.
·
Two grant contracts totaling $650,066 were not
approved and executed prior to performance of services. An affidavit was not filed together with
the contract.
·
Seven of 30 contracts (23%) were not properly signed
or dated by the vendor or the University representative.
·
The contract obligation documents for four contracts
totaling $477,484 were not on file.
In our
detailed testing of vouchers, we also noted the following:
-
Payments for computer purchases to a single vendor
covered by a purchase order totaling $40,189 and payments for the
purchase of library books from a single vendor covered by a purchase
order totaling $35,000 did not show the justification for the sole
source purchase.
·
Contracts were not executed for the purchase of some
computers, cameras, and a car totaling $63,127. Purchase orders relating to those purchases were above the
threshold which required a contract. (Finding 7, Pages 29-32 of the
Compliance Examination Report) (This finding was first reported in 2005)
We recommended the University adhere to
its procedures to ensure all contracts over $10,000 are filed with the Office
of the State Comptroller in accordance with State statutes and
regulations. We also recommended that
an Affidavit for Late Filing should be completed for any contract liability
not filed within thirty (30) days of execution and that contract requirements
and signatures, sole source justification, and disclosure statements must be
obtained in all instances.
University officials concurred with the
recommendation and stated that they are taking the necessary steps to ensure
compliance with all required contracting procedures. (For previous University
response, see Digest Footnote #3.)
OTHER FINDINGS
The
remaining findings are reportedly being given attention by the
University. We will review the
University’s progress toward the implementation of our recommendations in our
next audit.
AUDITORS' OPINION
Our auditors stated the
University’s financial statements at June 30, 2007 and for the year then
ended are fairly presented in all material respects.
___________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
Our special
assistant auditors were E.C. Ortiz & Co., LLP.
DIGEST FOOTNOTE
#1 INADEQUATE CONTROLS OVER UNIVERSITY PROPERTY AND EQUIPMENT –
(Previous University Response)
2006: “The
University concurs with the recommendation that we should adhere to our
procedures to ensure that the property and equipment records are accurately
maintained and believes that the University has improved the property control
since this finding was first reported.
The University instituted two forms for the use of equipment off-campus
– the Off-campus Use of Property and Equipment Form and the Laptop Equipment
Agreement (which includes off-campus use).
The revised forms and additional review will improve control in the
noted area.”
“The University concurs that periodic physical inventories should be performed
and property records updated. The
University also agrees that additional
staffing likely is needed to accomplish this. The University has submitted a complete Inventory of
Equipment with DCMS in the time frame given to the University by DCMS.
The University has also instituted the tagging of items valued at less
than $500 with a “Property of the State of Illinois Northeastern Illinois University” tag.
Purchase orders of all equipment are kept on file with property control.”
#2 NONCOMPLIANCE WITH REQUIRED CONTRACTING PROCEDURES – (Previous
University Response)
2006:
”The University concurs with the recommendation that it adhere to its procedures that ensure all
contracts over $10,000 are filed with the Office
of the State Comptroller in accordance with State statutes and regulations. It is noted that mitigating circumstances can potentially delay timely filing and, accordingly,
an Affidavit for Late Filing must be filed within
thirty (30) days of execution.”
“The
University also concurs with the recommendation to obtain required vendor quotations, and perform
competitive solicitation procedures and advertisements. The University Purchasing Department will
review its internal bidding
procedures and revise where appropriate to meet requirements and the rules proscribed by the State of
Illinois Procurement Code.”
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