Northern Illinois University Foundation 2002 Audit

REPORT DIGEST
NORTHERN ILLINOIS UNIVERSITY FOUNDATION

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 2
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 Foundation submitted inaccurate and incomplete financial statements to the University for inclusion in the GAAP reporting package.

The Foundation 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 FOUNDATION
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 Investment Income (Loss) Services Contract Revenue from NIU Expended for Plant Facilities All Other Income Total Revenues	$12,108,415 0 (515,887) 501,271 0 108,844 $12,202,643	$26,742,633 404,570 1,404,693 381,494 2,119,282 127,094 $31,179,766
EXPENSES Scholarships Support for University Departments and Programs Library books, equipment and property improvements and fundraising Administrative Services provided to NIU Administrative and Office Expenses Construction of Building Disposals and Retirements Total Expenses	$670,825 5,209,294 795,725 68,906 373,573 144,185 0 $7,262,508	$702,142 2,982,413 6,946,432 311,494 115,178 2,056,882 2,224,142 $15,338,683
SELECTED ACCOUNT BALANCES	AT JUNE 30, 2002	AT JUNE 30, 2001
Cash and Cash Equivalents Investments Land and Buildings Construction in Progress Accounts Payable Due to Northern Illinois University Deposits Held for Northern Illinois University Alumni Association Endowment Administered for NIU…………….. Unrestricted Fund Balance Restricted Non-expendable Restricted Expendable Invested in capital assets	$ 8,667,493 27,245,446 4,183,802 18,798,089 1,927,687 90,211 1,743,241 2,321,775 3,925,242 17,459,743 8,286,013 22,981,891	$ 1,928,478 44,392,240 4,026,152 2,056,882 885,968 991,990 1,817,265 0 2,585,901 20,776,110 19,286,709 6,533,576
FOUNDATION PRESIDENT
During Audit Period: Mallory M. Simpson Currently: Mallory M. Simpson

Inaccurate and incomplete financial statements submitted for GAAP reporting

June 30 cash balance under-collateralized by $741,916

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO IMPROVE FINANCIAL REPORTING TO THE UNIVERSITY

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

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

We recommended the Foundation develop an implementation plan that includes identification of all required adjustments so it conforms to generally accepted accounting principles. (Finding 1, pages 12 - 13)

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

As of June 30, 2002, the Foundation’s cash balance with a bank was under-collateralized by $741,916. 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 Foundation 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 14)

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

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

AUDITORS’ OPINION

Our auditors stated the financial statements of Northern Illinois University Foundation 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.