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INTRODUCTION
Our 2005 audit and examination of the University of Illinois
is presented in three reports. The
financial part consists of two reports which include the various financial
statements of the University and other supplementary information. The Compliance Examination report
contains the compliance findings disclosed by our tests.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
CLASS TRIP NOT IN COMPLIANCE WITH UNIVERSITY POLICIES AND PROCEDURES
A trip to China taken by a University of Illinois at
Springfield (UIS) class was not handled in accordance with various University
policies and procedures. We reviewed
the procedures followed in connection with a 10 day class trip to China in
January 2005 which was associated with the College of Business and
Management. There were 15 students
enrolled in the class and the associated lab. A UIS Dean personally paid for the travel costs of the trip
totaling $48,429. After the trip, the
College of Business and Management billed and collected from the students
$1,300 each, primarily for airfare.
We noted the following problems:
¨ No formal policy exists for approving class trips and
establishing course fees at UIS.
¨ Reimbursement income was not properly offsetting the
travel expense on the University accounting records in accordance with
generally accepted accounting principles.
¨ The College of Business and Management (CBM) was not
authorized to collect or receive money and all checks received should have
been made payable to the University of Illinois not CBM.
¨ Checks were not deposited timely to the Bursar
Office.
¨ A personal credit card and travel advance were used
when University policies and procedures and prudent business practices call
for use of direct billing or Procurement Card whenever possible so that any
volume discounts, frequent flyer miles, or other such benefits accrue to the
University.
¨ The expense reimbursement report was not submitted on
a timely basis and an incorrect form was used.
University
officials indicated that international class trips are a fairly new concept
for this College and procedures had not been standardized. They stated College personnel were not
familiar with the University’s cash handling policies or the procedures used
by the other campuses for this type of activity.
Failure to
follow University policies and procedures could result in unnecessary costs
associated with travel, loss or misuse of funds, forgone benefits, or other
irregularities. (Finding 1, pages
10-12)
University
officials accepted our finding and stated UIS is in the process of developing
a student trips policy. Once the
policy is developed they will provide training.
INAPPROPRIATE PAYMENTS MADE
The University paid vouchers with inappropriate charges,
inadequate documentation and duplicate billings. University personnel became aware of questionable charges on
vouchers and requested that the Office of University Audits conduct an
internal audit of two co-investigators’ charges to federal awards. The Office of University Audits examined
charges from July 1999 through February 2005. They noted vouchers which contained inappropriate charges (i.e.
second hotel rooms for children, excessive per diems, transportation costs
without justification, excessive charges for luxury items, and airfare not in
compliance with policies), inadequate documentation, and duplicate billings
totaling $24,948. In addition, one
person was paid $33,643 of housing reimbursement without adequate approval
and support. The other person was
inappropriately paid a $5,000 lump sum, charged to a grant, and was overpaid
$2,965 of sabbatical salary in April 2001.
The first person also was paid $15,402 in excess of the allowable
sabbatical salary. Of the total
charges of $81,958 which were questionable, $35,054 was paid with federal
grant funds.
The cause of these inappropriate payments was an insufficient
review and approval of vouchers and a lack of communication between three
University departments when faculty members work on projects and there is
more than one department involved.
There was no designation of one person or department to review and
supervise the parties involved.
One individual is now deceased and the other has terminated
his employment with the University subsequent to the investigation. Per discussion with the University, the
departing employee agreed to a cash settlement and $12,804 was withheld from
his final termination payment. In
addition, per the University all unallowable costs on sponsored projects have
been transferred from grants and charged to unrestricted departmental
funds. In October 2005, the
University repaid federal agencies for $35,024 in federal questioned
costs. (Finding 2, pages 13-15)
We recommended the University emphasize the importance of the
review and approval of vouchers to avoid inappropriate charges being
paid. In addition, the University
should improve the communication between departments when faculty members are
working on projects for more than one department.
University officials accepted our recommendation and stated
their departments have been reminded of their responsibility to comply with
University policies and procedures as well as federal guidelines when
reviewing and approving expenditures.
CONTRACTS NOT FILED TIMELY
Our testing of twenty-six contracts revealed that ten were
not filed with the Office of the Comptroller at all and fifteen were not
filed timely. The late filings ranged
from twenty-one days to two hundred ninety-nine days late.
The Illinois Procurement Code (30 ILCS 500/20-80(b)) and the
Statewide Accounting Management System (Procedure 15.10.40) require State
agencies to file contracts for professional and artistic services exceeding
$5,000 and contracts for other goods and services exceeding $10,000 with the State Comptroller within
15 calendar days after execution.
University personnel stated that three of the contracts were filed;
however, the Office of the Comptroller does not have record of them. University personnel also stated that they
did not fully understand the requirements for filing contract amendments and
contracts formed with purchase orders.
The University misinterpreted the timing required for filing and filed
the contracts within the fiscal year of the contract rather than within 15
days of execution. (Finding 4, page
17)
University officials partially accepted our finding and
stated that, based on a finding in FY 2004, they changed procedures for
filing contracts in order to comply with State statutes and guidelines. They responded that three purchase orders
were not filed because they did not have separate contract agreements and the
filing requirements for those are currently under review.
TIME SHEETS NOT REQUIRED
The University did not require all employees to submit time
sheets as required by the State Officials and Employees Ethics Act (Act).
The Act required the Illinois Board of Higher Education
(IBHE), with respect to State employees of public universities, to adopt and
implement personnel policies. The Act
(5 ILCS 430/5-5(c)) states, “The policies shall require State employees to
periodically submit time sheets documenting the time spent each day on
official State business to the nearest quarter hour; contractual State
employees may satisfy the time sheets requirement by complying with the terms
of their contract, which shall provide for a means of compliance with this
requirement.” The IBHE adopted
personnel policies for public universities on February 3, 2004 in accordance
with the Act. The University has not
incorporated these policies into the Universities policies.
We noted most of the University’s employees did not submit
time sheets. Employees classified as
board members, faculty, and academic professionals generally track their time
using a “negative” timekeeping system whereby the employee is assumed to be
working unless noted otherwise. The
employees classified as civil service, academic hourly and graduates/students
are documenting time worked to the nearest tenth of an hour. (Finding 6, pages 20-23)
We recommended the University amend its policies to require
all employees to submit time sheets in compliance with the Act.
University officials did not accept the recommendation for
several reasons. They stated the
University relied on advice from the Office of the Executive Inspector
General that a system of “absence reporting” would be an appropriate method
of time keeping under the Act. The
University also stated that the auditors’ interpretation of the statute has
ramifications under the federal Fair Labor Standards Act and could result in
significant additional costs to the University.
In an auditors’ comment, we pointed out that the memorandum
from the Office of the Executive Inspector General, upon which the University
relied, states it is not a legal opinion.
Further, the auditors continue to believe that a positive timekeeping
system for State employees is required by the Act. If the University continues to disagree with this conclusion,
we further recommended that it seek a formal, written opinion from the
Attorney General’s Office on the requirements of this statutory provision.
UNIVERSITY PUBLICATIONS
The University did not include information required by the
Illinois Procurement Code on publications printed for the University. The Procurement Code (30 ILCS 500/20-105)
requires that “all books, pamphlets, documents, and reports published through
or by the State of Illinois or any State agency, board, or commission shall
have printed thereon ‘Printed by authority of the State of Illinois,” the
date of each publication, the number of copies printed, and the printing
order number.’ We interpret this
requirement as being applicable to State universities. University personnel stated they believed
this section of the statute does not apply to State Universities. (Finding 8, pages 25-26)
We recommended the University begin printing the information
required by the Illinois Procurement Code on all publications or pursue a
statutory change.
University officials accepted our recommendation and provided
examples of the problems they have with applying this requirement to
University publications. They said if
necessary they will seek legislative clarification.
OTHER FINDINGS
The remaining findings are reportedly being addressed by
University management. We will review
the University’s progress toward the implementation of our recommendations in
our next examination. University
responses were provided by Kathe Shinham, Assistant Vice President for
Business and Finance at Urbana-Champaign.
AUDITORS’ OPINION
The financial audit report contains four sets of financial
statements in the Annual Financial Report; and the revenue bond
financial statements of the Auxiliary Facilities System, the Willard
Airport Facility, and the Health Services Facilities System.
Our auditors state the June 30, 2005 financial statements are
fairly presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:KMA:pp
SPECIAL ASSISTANT AUDITORS
Clifton Gunderson LLP were our special assistant auditors.
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