REPORT DIGEST

 

SOUTHERN ILLINOIS UNIVERSITY EDWARDSVILLE FOUNDATION

 

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 13, 2007

 

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.auditor.illinois.gov

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

 

·        Edwardsville Foundation (Foundation) did not have a fraud risk assessment program in place.

 

·        The Foundation did not ensure that its cash reconciliations were performed on a timely basis.

 

 

 

 

 

 

 

 


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.