Northern Illinois University 2002 Audit

REPORT DIGEST
NORTHERN ILLINOIS UNIVERSITY ALUMNI ASSOCIATION

FINANCIAL AUDIT

For the Year Ended:
June 30, 2002

COMPLIANCE AUDIT

For the Two Years Ended
June 30, 2002

Summary of Findings

Total this audit 2
Total last audit 1
Repeated from last audit 1

Release Date:
February 25, 2003

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 Association submitted inaccurate and incomplete financial statements to the University for inclusion in the GAAP reporting package.

The Association failed to ensure that its cash balance at a bank was fully secured and collateralized.

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

NORTHERN ILLINOIS UNIVERSITY ALUMNI ASSOCIATION
FINANCIAL AUDIT
For the Year Ended June 30, 2002
COMPLIANCE AUDIT
For the Two Years Ended June 30, 2002

FINANCIAL OPERATIONS	FY 2002	FY 2001
REVENUES Gifts Royalties Net Investment Income (Loss) All Other Income Total Revenues	$13,314 1,716,068 (142,728) 0 $12,202,643	$198,367 98,644 (56,753) 37,773 $278,031
EXPENSES Scholarships and Fellowships Institutional Support and Other Expenses Total Expenses	$55,250 76,431 $131,681	$61,866 54,553 $116,419
SELECTED ACCOUNT BALANCES	AT JUNE 30, 2002	AT JUNE 30, 2001
Cash and Cash Equivalents Funds Held by NIU Foundation Accounts Payable Unrestricted Net Assets Restricted Non-expendable Net Assets Restricted Expendable Net Assets	$ 1,501,403 1,743,239 4,407 2,075,246 96,621 1,068,368	$ 0 1,817,265 32,003 132,230 1,549,708 103,234
ASSOCIATION OFFICIALS
During Audit Period: Executive Director: Lee McCauley Currently: Lee McCauley

Inaccurate and incomplete financial statements submitted for GAAP reporting

June 30 cash balance under-collateralized by $1,401,403

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO IMPROVE FINANCIAL REPORTING TO THE UNIVERSITY

The Northern Illinois University Alumni Association (Association) submitted inaccurate and incomplete financial statements to Northern Illinois University for inclusion in the University’s Generally Accepted Accounting Principles (GAAP) reporting package.

The Association's financial statements were prepared under the old reporting model and not under the new required Governmental Accounting Standards Board (GASB) Statement No. 35 format. In addition, the financial statements did not include a Statement of Cash Flows as required under the new format.

Association financial records are maintained by Northern Illinois University Foundation. According to the Foundation management, the Association was not able to restate their financial statements to the new reporting format in time for the University's preparation of its GAAP packages.

We recommended the Association require the Foundation to adhere to its reporting deadlines to the University to ensure a complete and accurate consolidation of transactions in the University GAAP package and the timely submission of reports. (Finding 1, pages 11 - 12)

Association officials concurred with the recommendation and stated that steps have been taken for a timely and accurate filing in the future.

FAILURE TO FULLY SECURE AND COLLATERLIZE CASH BALANCES

The Association failed to ensure that its cash balances were fully secured and collateralized.

As of June 30, 2002, the Association’s cash balance with a bank was under-collateralized by $1,401,403. The State

Officers and Employees Money Disposition Act requires that amounts in excess of federal deposit insurance coverage should be fully collateralized.

We recommended the Association monitor its collateral requirements and make a formal arrangement with its banks to automatically pledge securities for any amounts in excess of the Federal Deposit Insurance Corporation insured amount. (Finding 2, page 13)

Association officials concurred with the recommendation and stated arrangements have been made to provide for additional collateral from the bank.

Association responses were provided by Ms. Jean Jagodzinski, Controller.

AUDITORS’ OPINION

Our auditors stated the financial statements of Northern Illinois University Alumni Association as of June 30, 2002 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 on this audit were the Bronner Group.