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REPORT DIGEST
THE ALUMNI ASSOCIATION
OF FINANCIAL
AUDIT For the Year Ended: June 30, 2008 Release Date: January 22, 2009
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
To obtain a copy of the
Report contact: Office of the Auditor
General
782-6046 or TTY (888) 261-2887 This Report Digest and the
Full Report are also available on the worldwide web at
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SYNOPSIS
· The Edwardsville Alumni Association (Alumni Association) did not have a fraud risk assessment program in place. · The Alumni Association’s controls over the journal entry process allows for management override. |
THE
ALUMNI ASSOCIATION OF
FINANCIAL AUDIT
For The Year Ended June 30, 2008
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FINANCIAL
OPERATIONS (All Funds) |
FY 2008 |
FY 2007 |
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REVENUES |
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Operating revenues.................................................... |
$327,469 |
$291,082 |
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EXPENSES |
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Operating expenses.................................................... |
413,859 |
326,553 |
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|
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Excess (deficiency) of revenue over expenses....... |
($86,390) |
($35,471) |
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NON-OPERATING REVENUES
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Contributions............................................................. |
$190 |
$31 |
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Investment Income..................................................... |
7,913 |
11,383 |
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Net change in fair value of investments........................ |
(31,341) |
23,601 |
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Total non-operating revenue................................. |
($23,238) |
$35,015 |
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Decrease in net assets.......................................... |
($109,628) |
($456) |
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NET ASSETS |
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Net Assets – beginning of year................................... |
$260,088 |
$260,544 |
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Net Assets – end of year............................................ |
$150,460 |
$260,088 |
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OTHER SIGNIFICANT
ACCOUNT BALANCES |
AT JUNE 30,
2008 |
AT JUNE 30,
2007 |
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Cash and Investments....................................................... Total Assets...................................................................
Deferred Revenue............................................................ Total Liabilities.............................................................
Net Assets – Unrestricted................................................ Total Net Assets...........................................................
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$295,076 $311,819 $128,496 $161,359 $150,460 $150,460 |
$381,618 $385,899 $105,683 $125,811 $260,088 $260,088 |
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EXECUTIVE DIRECTOR |
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During the audit: Mr. Steve Jankowski Currently: Mr. Steve Jankowski |
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No fraud risk
assessment program in place
The Association
relies on external audits for identification of control weaknesses
Audits are not a
substitute for management controls
The Alumni
Association’s controls over journal entries allow for management override
Management override
could result in inappropriate journal entries being made by management |
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS FRAUD PREVENTION AND DETECTION PROGRAM The Alumni Association does not have a fraud
risk assessment program in place. According to Alumni Association management,
the Alumni Association 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 Alumni Association relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, Alumni Association 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 Alumni Association 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 22) 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. Alumni Association officials agreed that establishing a
formal assessment program would provide a framework for a regular, on-going
review of internal controls and will evaluate the development of this program
during the current fiscal year. SEGREGATION OF DUTIES OVER JOURNAL
ENTRIES The
Alumni Association has designed and implemented a system of controls over the
journal entry process that allows for management override. Specifically, the
journal entry process in place at the Association does not restrict the
Director of Financial Affairs from having the authorization to approve a
journal entry and the ability to post a journal entry into the general
ledger. This demonstrates a weakness in the design of the control
system. However, during our testing,
no journal entries were noted that were posted by the Director of Financial
Affairs.
We recommended the Alumni Association implement a system of controls to ensure that management does not have the ability to override the controls currently in place. Alumni Association officials agreed that the risks of management override of controls should be minimized through appropriate segregation of duties and will continue to evaluate how to improve controls. AUDITORS’ OPINION Our auditors stated the June 30, 2008 financial statements of the Alumni Association 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. |