REPORT DIGEST

SOUTHERN ILLINOIS UNIVERSITY

PHYSICIANS AND SURGEONS, INC.

FINANCIAL AUDIT

For The Year Ended June 30, 2008

FINANCIAL OPERATIONS (All Funds)		FY 2008	FY 2007
REVENUES
Operating revenues..............................................		$80,401,367	$77,146,826

EXPENSES
Operating expenses..............................................		85,018,881	79,737,734
Operating income (loss)..................................		($4,617,514)	($2,590,908)

NON-OPERATING AND OTHER REVENUES (EXPENSES)
Net Investment Income..............................................		$553,255	$677,347
Contributions/donations..............................................		(2,575)	(800)
Capital assets retired..................................................		(5,785)	0
Net non-operating revenues..................................		$544,895	$676,547
Decrease in net assets................................................		($4,072,619)	($1,914,361)

NET ASSETS
Net Assets – beginning of year...................................		$29,314,432	$31,228,793

Net Assets – end of year............................................		$25,241,813	$29,314,432

OTHER SIGNIFICANT ACCOUNT BALANCES		AT JUNE 30, 2008	AT JUNE 30, 2007
Cash and Deposits with SIU........................................ Investments................................................................. Net Patient Accounts Receivable................................. Estimated due from Illinois Department of Health and Family Services...................................................................... Total Assets.............................................................. Accounts Payable and Accrued Liabilities.................... Employee Salaries Payable.......................................... Total Liabilities......................................................... Net Assets – Invested in capital assets......................... Net Assets – Unrestricted............................................ Total Net Assets.......................................................		$9,261,651 $1,928,080 $17,069,401 $4,317,234 $33,883,054 $4,188,174 $3,706,246 $8,641,241 $1,055,651 $24,186,162 $25,241,813	$14,498,252 $845,700 $16,032,655 $3,977,617 $36,632,192 $3,041,563 $3,514,952 $7,317,760 $976,939 $28,337,493 $29,314,432
CHIEF EXECUTIVE OFFICER
During the audit: Mr. David J. Tkach Currently: Mr. David J. Tkach
No fraud risk assessment program in place P&S relies on external audits for identification of control weaknesses Audits are not a substitute for management controls	FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS FRAUD PREVENTION AND DETECTION PROGRAM Physicians & Surgeons, Inc. (P&S) does not have a fraud risk assessment program in place. According to P&S management, the P&S has established internal controls in order to prevent and detect fraud as well as errors that may occur; however, these controls and associated risks are not monitored on an on-going basis within a structured fraud prevention and detection program. P&S relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, P&S management has relied on the external audits for identification of control weaknesses. Accounting industry trends have increased organizations’ awareness of the prevalence of fraud. Many organizations rely in part on their auditors to uncover any internal fraud, but audits, even those of the highest quality, are not a substitute for management establishing good internal control. P&S is responsible for the development of internal controls and the monitoring of their operating effectiveness. Additionally, it is management’s responsibility to prevent and detect fraud. (Finding 1, Page 25) We recommended that management establish a continuous written fraud prevention, deterrence and detection program, and that the Board of Directors evaluate management's identification of fraud risks and its implementation of anti-fraud measures. P&S officials agreed with our recommendation. AUDITORS’ OPINION Our auditors stated the June 30, 2008 financial statements of the Southern Illinois University Physicians and Surgeons, Inc. are fairly presented in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:KMA :pp SPECIAL ASSISTANT AUDITORS Crowe Horwath LLP were our special assistant auditors for this audit.

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