REPORT DIGEST

 

SOUTHERN ILLINOIS

RESEARCH PARK, INC. (CARBONDALE)

 

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2007

AND

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

 

Summary of Findings:

Total this audit                  2

Total last audit                  0

Repeated from last audit   0

 

Release Date:

March 6, 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

782-6046 or TTY (888) 261-2887

 

This Report Digest and the Full Report are also available on

the worldwide web at

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

 

 

 

 

 

SYNOPSIS

 

 

 

·        Southern Illinois Research Park (SIRP) did not have a fraud risk assessment program in place.

 

·        SIRP did not adhere to proper cutoff procedures when recording revenues and expenditures as year end.

 

 

 

 


SOUTHERN ILLINOIS RESEARCH PARK, INC.

COMPLIANCE EXAMINATION AND FINANCIAL AUDIT

For The Period Ended June 30, 2007

 

FINANCIAL OPERATIONS (All Funds)

 

FY 2007

FY 2006

REVENUES

 

 

      Operating revenues..............................................

$256,866

$111,353

 

 

 

EXPENSES

 

 

      Operating expenses..............................................

$249,097

$123,239

 

 

 

            Operating income (loss)..................................

$7,769

($11,886)  

 

 

 

NONOPERATING REVENUES (EXPENSES)

 

 

Interest Income..........................................................

$2,910

$1,169

Grant Income.............................................................

$18,718

$212,326

      Net non-operating revenues..................................

$21,628

$213,495

 

 

 

Increase in net assets..................................................

$29,397

$201,609

 

 

 

NET ASSETS

 

 

Net Assets – beginning of year...................................

$360,229

$158,620

 

 

 

Net Assets – end of year............................................

$389,626

$360,229

 

 

 

OTHER SIGNIFICANT ACCOUNT BALANCES

AT JUNE 30,

2007

AT JUNE 30, 2006

Cash and Investments..................................................

Deposits with SIU.......................................................

Capital Assets, net......................................................

Total Assets.............................................................

Due to SIU.................................................................

Accounts Payable.......................................................

Deferred Revenue.......................................................

Total Liabilities........................................................

Net Assets – Invested in capital assets.........................

Net Assets – Unrestricted...........................................

Total Net Assets......................................................

 

$55,262

$101,749

$266,481

$425,283

$0

$6,926

$28,731

$35,657

$266,481

$123,145

$389,626

$60,358

$30,042

$278,618

$401,406

$31,940

$9,237

$0

$41,177

$278,618

$81,611

$360,229

INTERIM EXECUTIVE DIRECTOR

 

During the audit:  Mr. Kyle Harfst

Currently:  Mr. Kyle Harfst

 

 

 

 

 

 

 

 

 

 

 

 

 

 


No fraud risk assessment program in place

 

 

 

 


SIRP relies on external audits for identification of control weaknesses

 

 


Audits are not a substitute for management controls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIRP used improper cutoff when recording year end receipts and expenses, resulting in audit adjustments

 

 

INTRODUCTION

 

      This digest covers our compliance examination and financial audit of the Southern Illinois Research Park, Inc. for the period ended June 30, 2007. 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

FRAUD PREVENTION AND DETECTION PROGRAM

 

The Southern Illinois Research Park (SIRP) does not have a fraud risk assessment program in place. According to SIRP management, the SIRP 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.

 

      The SIRP relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, SIRP 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.

 

      The SIRP 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 No. 1, Page 20)

 

      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.  SIRP officials agreed with our recommendation.

 

 

 

INTERNAL CONTROL OVER RECEIPTS AND EXPENSES CUT-OFF

 

      SIRP did not adhere to proper cutoff procedures when recording revenues and expenditures at year end.  Our testing noted three instances where receipts and expenses were being recorded in the wrong period due to improper cutoff procedures.  Audit adjustments were posted to correct these errors; however, these errors resulting from the use of improper cutoff procedures were immaterial to the financial statements when considered in the aggregate. 

 

      SIRP hired a contract accounting firm in the middle of the year to assist in the journal entry and financial statement preparation.  It appears that June 30, 2006 accruals were cleared out through entries posted directly to net assets during fiscal year 2007, instead of properly reversing these accruals.   Posting these entries directly to net assets can lead to the misstatement of the SIRP’s financial statements and the misrepresentation of financial position to financial statement readers.

 

      Generally accepted accounting principles require the use of the accrual basis of accounting.   The instances described above are not in compliance with these standards. (Finding No. 2, Pages 21-22).

 

      We recommended, that SIRP management work with the contract accounting firm on a closer basis to consistently apply appropriate cutoff procedures on a monthly basis, in order to correctly reflect year end accruals.  SIRP officials agreed with our recommendation.

 

AUDITORS’ OPINION

 

Our auditors stated the June 30, 2007 financial statements of the Research Park, Inc. are fairly presented in all material respects.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KAL :pp

 

SPECIAL ASSISTANT AUDITORS

 

Crowe Chizek & Co., LLC were our special assistant auditors for this audit.