REPORT DIGEST

 

NORTHERN ILLINOIS UNIVERSITY

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

 

Summary of Findings:

Total this year

     - Financial Audit             2

Total last year

     - Financial Audit             2

Repeated from last year

     - Financial Audit             1

 

Release Date:

March 25, 2008

 

 

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

http://www.state.il.us/auditor

 

 

 

INTRODUCTION

 

This report contains only findings pertaining to the Financial Statement Audit.  This audit contains two audit findings.  These two findings pertain to significant deficiencies in internal control over financial reporting.

 

Findings related to the State Compliance and federal Single Audit will be issued at a later date

 

SYNOPSIS

 

(Financial Statement Finding)

 

¨      The University did not provide the auditors with complete and accurate financial statements presented in accordance with generally accepted accounting principles.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


 

 

 

NORTHERN ILLINOIS UNIVERSITY

FINANCIAL AUDIT

For The Year Ended June 30, 2007 (in Thousands)

 

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

FY 2006

FY 2006

OPERATING REVENUES

  Student tuition and fees, net..................................................

  Grants, contracts, and gifts....................................................

  Sales and services of educational departments........................

  Auxiliary enterprises.............................................................

  Other...................................................................................

    Total Operating Revenues..............................................

OPERATING EXPENSES

  Instruction............................................................................

  Research..............................................................................

  Public service.......................................................................

  Academic support................................................................

  Student services...................................................................

  Operation and maintenance of plant......................................

  Institutional support..............................................................

  Depreciation..........................................................................

  Staff benefits........................................................................

  Student aid...........................................................................

  Auxiliary enterprises.............................................................

    Total Operating Expenses..............................................

Operating loss......................................................................

NONOPERATING AND OTHER REVENUES (EXPENSES)

  State appropriations..............................................................

  Investment income.................................................................

  Interest expense.....................................................................

  Gifts......................................................................................

  Net increase (decrease) in fair value of investments

Total Nonoperating and Other Revenues...........................

INCREASE IN NET ASSETS.............................................

Net Assets, beginning of the year..............................................

Net Assets, end of the year......................................................

 

   $110,265

       51,890

       19,048

       93,746

         3,210

   $278,159

 

   $119,477

       16,054

       25,101

       28,606

       12,692

       22,247

       30,674

       23,224

       57,672

       13,601

       74,961

   $424,309

($146,150)

 

 

   $161,180

         4,373

       (8,707)

               

            276

   $157,122

     $10,972

     202,683

   $213,655

 

    $100,632

        55,075

        22,344

        87,643

          2,205

    $267,899

 

    $114,033

        15,941

        27,210

        28,923

        12,600

        24,509

        30,718

        27,134

        52,619

        10,821

        68,102

    $412,610

   ($144,711)

 

 

    $157,514

          3,014

         (8,190)

          5,549

            (350)

    $157,537

      $12,826

      189,857

    $202,683

SELECTED ACCOUNT BALANCES

FY 2006

FY 2006

Cash and cash equivalents......................................................

Investments and marketable securities.....................................

Capital assets, net...................................................................

Accrued compensated absences.............................................

Noncurrent revenue bonds payable.........................................

$16,197

$86,145

$313,449

$23,470

$103,651

$12,073

$74,010

$298,150

$23,644

$107,885

UNIVERSITY PRESIDENT

 

 

During Audit Period:  Dr. John G. Peters

Currently:  Dr. John G. Peters

 

 

 



 

 

 

 

Failure to provide complete and accurate financial statements

 

 

 

 

 

 

$3.7 million cash payment was classified incorrectly

 

 

$5.3 million incorrectly netted against collections 

 

 

$1.2 million classification error

 

 

 

 

 

 

 

 

Edit checks

 

 

 

 

 

 

 

 

 

 

 

University agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

NEED TO IMPROVE CONTROLS OVER FINANCIAL STATEMENT PREPARATION

 

      The University did not provide the auditors with complete and accurate financial statements presented in accordance with generally accepted accounting principles. 

 

      Adjustments were made to the cash provided by and used in operating activities on the statement of cash flows.  These adjustments did not impact the overall amount reported as cash used in operating activities, but they did result in the following adjustments:

 

  • An increase in the amount reported as payment to employees of $3,737,000 and a corresponding decrease in payments to suppliers, and 

  • A $5,294,000 increase in the amount reported as loans to students and employees with a corresponding decrease in the amount collected on those loans. 

 

      In the Statement of Revenues, Expenses and Changes in Net Assets, we also noted that interest expense was overstated by $991,000, student aid was overstated by $559,000, and sales and service of educational activities was overstated by $264,000.  These overstatements were offset by an understatement of operations and maintenance expense of $1,286,000.  These amounts were not corrected.

 

      According to University personnel, the workpapers that create the statement of cash flows include edit checks for all totals, but do not include the possibility of offsetting errors within any given section of the statement.  (Finding 1, page 6)

 

      We recommended the University review its current process for preparation and review of the annual financial statements and allocate the resources necessary to ensure a thorough review of the financial statements by personnel possessing the appropriate skills and knowledge.

 

      University officials agreed with our recommendation and stated that it would completely review the financial statement process to ensure that these adjustments do not occur in the future.   

 

OTHER FINDING

 

      The other finding concerned the University’s fraud prevention and detection program.  We will review progress toward implementation of all recommendations during the next audit. 

 

 

AUDITORS’ OPINION

 

      Our auditors stated the financial statements of Northern Illinois University as of June 30, 2007, and for the year then ended, 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.