REPORT DIGEST

REPORT DIGEST

NORTHERN ILLINOIS RESEARCH

FOUNDATION

(and Related Subsidiary)

FINANCIAL AUDIT

For the Year Ended:

June 30, 2008

AND

STATE COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2008

Summary of Findings:

Total this audit 1

Total last audit 0

Repeated from last audit 0

Release Date:

April 30, 2009

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

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

INTRODUCTION

This digest covers our initial financial audit and State compliance examination of the Northern Illinois Research Foundation (Foundation) for the year ended June 30, 2008.

The Foundation’s first project is the Northern Illinois Proton Treatment and Research Center (NIPTRC). NIPTRC is a limited liability corporation with NIRF as its sole corporate member. NIPTRC will provide proton beam therapy, a highly advanced form of radiation therapy to treat cancer, in a 115,000 square foot facility currently being constructed in West Chicago, Illinois.

SYNOPSIS

¨ The Foundation did not have adequate controls in place to provide auditors with complete and accurate financial statements.

{Expenditures and Activity Measures are summarized on the reverse page.}

NORTHERN ILLINOIS RESEARCH FOUNDATION

FINANCIAL AUDIT AND STATE COMPLIANCE EXAMINATION

For the Year Ended June 30, 2008 (Initial Engagement)

FINANCIAL OPERATIONS	FY 2008
REVENUES Revenues.......................................................................................... Total revenues............................................................................	$ - -
EXPENSES Institutional support........................................................................... Total expenses............................................................................ Decrease in net assets..................................................................	260,000 260,000 $ (260,000)
STATEMENT OF NET ASSETS	AT JUNE 30, 2008
Capital assets, net............................................................................. TOTAL ASSETS........................................................................... Accounts payable and accrued liabilities............................................ TOTAL LIABILITIES.................................................................. Unrestricted ..................................................................................... Invested in capital assets................................................................... TOTAL NET ASSETS..................................................................	$ 756,000 756,000 1,016,000 1,016,000 (1,016,000) 756,000 $ (260,000)
FOUNDATION BOARD PRESIDENT
During Audit Period: Mr. Gerald Zielinski Currently: Mr. Gerald Zielinski

Controls lacking for preparation of complete and accurate financial statements

$81,000 in accounts payable were not recorded

$260,000 in legal fees were improperly capitalized

Inadequate segregation of duties

FINDING, CONCLUSION, AND RECOMMENDATIONS

NEED TO IMPROVE THE FINANCIAL REPORTING PROCESS

The Northern Illinois Research Foundation and Related Subsidiary (Foundation) did not have adequate controls in place to provide auditors with complete and accurate financial statements.

Adjustments were made to the financial statements for the following items as a result of questions raised in the audit process.

· Record an additional $81,000 of accounts payable at June 30, 2008.

· Record $260,000 to expense certain legal fees and costs that were improperly capitalized.

Currently one individual processes all of the financial transactions for the Foundation. In some cases there is an additional review of the transactions, such as additional check signors, but not all transactions or entries are reviewed by a second individual.

Foundation management stated that invoices received from subcontractors were both late and inaccurate. This led to multiple adjustments of the financial statements. The size of the current operations did not allow for enough staff to completely segregate all aspects of financial processing and reporting. (Finding 1, pages 10-11 in the compliance report)

Foundation officials accepted the recommendation to review its current method for processing financial transactions and preparing the annual financial statements. The Foundation should allocate resources to ensure a thorough review of the financial statements by personnel possessing the appropriate skills and knowledge.

AUDITORS’ OPINION

Our auditors state the Foundation’s financial statements as of June 30, 2008 are fairly presented in all material respects.

______________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were Clifton Gunderson, LLP.