REPORT DIGEST

SOUTHERN ILLINOIS UNIVERSITY EDWARDSVILLE FOUNDATION

COMPLIANCE EXAMINATION AND FINANCIAL AUDIT

For The Period Ended June 30, 2007

FINANCIAL OPERATIONS (All Funds)	FY 2007	FY2006
REVENUES
Operating revenues............................................................	$1,070,360	$1,076,447

EXPENSES
Operating expenses...........................................................	3,484,375	2,939,247
Operating loss.............................................................	($2,414,015)	($1,862,800)

NON-OPERATING REVENUES (EXPENSES)
Contributions...........................................................................	$3,154,425	$5,360,822
Net investment income ............................................................	2,101,746	760,713
Bad debt.................................................................................	(372)	(16,762)
Increase (decrease) in present value-interest in trusts................	130,825	256,814
Bond interest expense..............................................................	(75,281)	(75,281)
Grants to other organizations....................................................	(500)	(4,600)
Payments to annuitants............................................................. Gain on sale of assets...............................................................	(48,986) 343,913	(48,986) 0
Other non-operating expenses..................................................	1,987	(5,544)
Net non-operating revenue.................................................	$5,607,757	$6,227,176
Income before permanent endowments....................................	$3,193,742	$4,364,376
Additions to permanent endowments..................................	841,205	3,227,727
Increase in net assets...................................................	$4,034,947	$7,592,103

NET ASSETS
Net Assets – beginning of year.................................................	$29,829,418	$22,237,315
Net Assets – end of year.........................................................	$33,864,365	$29,829,418

OTHER SIGNIFICANT ACCOUNT BALANCES	AT JUNE 30, 2007	AT JUNE 30, 2006
Cash, Deposits, and Investments.................................. Total Assets.............................................................. Revenue Bonds Payable.............................................. Total Liabilities......................................................... Net Assets – Invested in capital assets......................... Net Assets – Restricted............................................... Net Assets – Unrestricted............................................ Total Net Assets.......................................................	$24,713,307 $36,219,499 $1,650,000 $2,355,134 $400,564 $32,119,800 $1,344,001 $33,864,365	$18,928,962 $32,196,115 $1,650,000 $2,366,697 $463,011 $27,958,345 $1,408,062 $29,829,418
CHIEF EXECUTIVE OFFICER
During the audit: Mr. Gary Giamartino Currently: Mr. Gary Giamartino

No fraud risk assessment program in place

The Foundation relies on external audits for identification of control weaknesses

Audits are not a substitute for management controls

Cash reconciliations were completed 30 to more than 90 days after the statement date

INTRODUCTION

This digest covers our compliance examination and financial audit of the Foundation for the period ended June 30, 2007.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FRAUD PREVENTION AND DETECTION PROGRAM

The Foundation does not have a fraud risk assessment program in place. According to Foundation management, the Foundation 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 Foundation relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, Foundation 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 Foundation 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 31)

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.

Foundation officials agreed with our recommendation.

BANK RECONCILIATIONS NOT COMPLETED TIMELY

The Foundation did not ensure that its cash reconciliations were performed on a timely basis. Specifically, ten out of the 12 (83%) monthly bank reconciliations were completed more than 30 days after the statement date, and of these, three were completed more than 90 days after the statement date.

Timely bank reconciliations:

may uncover differences that may need further investigating;
help to safeguard cash by detecting errors on the part of the bank and/or the organization when recording activities in accounts;
identify recording errors and other problems;
help to create stronger internal control, whereby accountability over cash assets is greatly enhanced; and
help ensure that account balances are accurate, and that they reflect the true financial position of the organization, so governing bodies can make more informed decisions.

Although no errors were noted as a result of the untimely completion of the reconciliations, completing bank reconciliations in a timely fashion helps ensure that items such as these are discovered in a manner that would limit the adverse operational effects to the Foundation. (Finding No. 2, page 32)

We recommended that the Foundation implement procedures to ensure that bank reconciliation’s be completed no later than 30 days after the end of the statement period.

Foundation officials agreed with our recommendation.

AUDITORS’ OPINION

Our auditors stated the June 30, 2007 financial statements of the Foundation 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.

SYNOPSIS