REPORT DIGEST

 

UNIVERSITY OF ILLINOIS

COMPLIANCE EXAMINATION

(In accordance with the
Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2007

 

Summary of Findings:

Total this year

     - Financial Audit        5*

     - Compliance Audit   4

                                             9

Total last year

     - Financial Audit        3

     - Compliance Audit   4

                                             7

Repeated from last year

     - Financial Audit        1*

     - Compliance Audit   3

                                             4

*Financial Audit Previously Released

 

Release Date:

March 27, 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

(217) 782-6046 or TTY (888) 261-2887

 

This Report Digest and the Full Report are available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

INTRODUCTION

 

      The Financial Statement Audit for the year ended June 30, 2007 was previously released on February 26, 2008.  That audit contained five audit findings.  All five of these findings pertained to significant deficiencies in internal control over financial reporting.

 

      This report addresses federal and State compliance findings pertaining to the Single Audit and State Compliance Examination.  In total, this document contains four audit findings.

 

 

SYNOPSIS

(Federal and State Compliance Findings)

 

¨      Contracts and real estate leases were not filed with the State of Illinois, Office of the Comptroller and Secretary of State on a timely basis.

 

¨      Contracts and real estate leases were not in accordance with guidelines of the State of Illinois, Office of the Comptroller.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Financial Information and Activity Measures are summarized on the next page.}

 


UNIVERSITY OF ILLINOIS

Single Audit and Compliance Examination

For Year Ended June 30, 2007
 

FINANCIAL OPERATIONS

FY 2007

FY 2006 *

OPERATING REVENUES

 

 

        Tuition and fees, net..........................................................

                    $608,780,000

                    $554,856,000

        Federal grants, contracts and appropriations................

                      604,164,000

                      608,949,000

        State and private gifts, grants and contracts.................

                      197,592,000

                      176,805,000

        Hospital and medical activities.........................................

                      568,514,000

                      549,742,000

        Auxiliary enterprises, net...................................................

                      304,094,000

                      282,321,000

        Educational activities.........................................................

                      215,348,000

                      197,089,000

        Other.....................................................................................

                      129,537,000

                      120,546,000

                Total Operating Revenues........................................

                 $2,628,029,000

                 $2,490,308,000

OPERATING EXPENSES

 

 

        Instruction...........................................................................

                    $703,540,000

                    $666,200,000

        Research...............................................................................

                      561,876,000

                      556,874,000

        Public service......................................................................

                      326,348,000

                      300,990,000

        Academic support..............................................................

                      236,561,000

                      218,043,000

        Hospital and medical activities.........................................

                      431,762,000

                      406,466,000

        Auxiliary enterprises..........................................................

                      234,751,000

                      229,935,000

        On behalf payments for fringe benefits...........................

                      376,657,000

                      327,927,000

        Operation and maintenance of plant................................

                      218,028,000

                      229,038,000

        Institutional support..........................................................

                      167,172,000

                      150,572,000

        Depreciation........................................................................

                      191,679,000

                      185,105,000

        Scholarships and fellowships...........................................

                      198,016,000

                      185,155,000

        Other.....................................................................................

                        98,397,000

                        92,295,000

                Total Operating Expenses.........................................

                 $3,774,787,000

                 $3,548,600,000

Operating Income (Loss)...........................................................

            $(1,116,758,000)

            $(1,058,292,000)

NONOPERATING REVENUES (EXPENSES)

 

 

        State appropriations...........................................................

                    $665,752,000

                    $655,521,000

        Capital appropriations, gifts and grants..........................

                        20,828,000

                        65,600,000

        Private gifts and endowments..........................................

                      128,852,000

                      116,319,000

        On behalf payments for fringe benefits...........................

                      305,047,000

                      266,706,000

        Other, net.............................................................................

                        42,150,000

                        15,047,000

INCREASE IN NET ASSETS...................................................

                      $45,871,000

                      $60,901,000

Net assets, beginning of year...................................................

                 $2,369,985,000

                 $2,309,084,000

Net assets, end of year..............................................................

                 $2,415,856,000

                 $2,369,985,000

SUPPLEMENTAL INFORMATION (Unaudited)

FY 2007

FY 2006

Employment Statistics

        Chicago................................................................................

 

                               13,848

 

                              13,638

        Springfield............................................................................

                                    914

                                   885

        Urbana-Champaign.............................................................

                               14,788

                              14,711

                                Total..............................................................

                               29,550

                              29,234

Enrollment Statistics

        Undergraduate --

                Chicago........................................................................

 

 

                               15,006

 

 

                              15,150

                Springfield....................................................................

                                 2,758

                                2,634

                Urbana-Champaign.....................................................

                               31,472

                              30,909

                        Subtotal................................................................

                               49,236

                              48,693

        Graduate –

                Chicago........................................................................

 

                                 9,638

 

                                9,662

                Springfield....................................................................

                                 2,003

                                1,883

                Urbana-Champaign.....................................................

                               11,266

                              11,029

                        Subtotal................................................................

                               22,907

                              22,574

                                  Total............................................................

                               72,143

                              71,267

UNIVERSITY PRESIDENT

 

 

During Audit Period and Currently: Dr. B. Joseph White

 

* Items have been reclassified to correspond with the 2007 presentation.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Filing with State Comptroller up to 122 days late

 

Filing with Secretary of State up to 373 days late

 

 

 

 

State law requires filing of contracts and leases

 

 

 

 

 

 

 

 

 

 

 

University agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

Leases executed after lease term began

 

 

Contracts executed after the performance of services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

University agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

      The Single Audit and Compliance Examination is contained in two report documents.  One report contains compliance findings disclosed by our tests and certain supplemental information.  The other report contains supplementary financial information and special data requirements.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

CONTRACTS AND REAL ESTATE LEASES NOT FILED TIMELY

 

      Contracts and real estate leases were not filed with the Illinois Office of the State Comptroller and Secretary of State on a timely basis.

 

      Our testing of 50 contracts and real estate leases revealed that 22 (44%) were not filed timely with the Office of the State Comptroller.  The late filings ranged from 3 to 122 days late.

 

      Our testing of 25 real estate leases revealed that 14 (56%) were not filed timely with the Secretary of State.  The late filings ranged from 1 to 373 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 all other contracts and leases exceeding  $10,000 with the State Comptroller within 15 calendar days after execution.  In addition, the Illinois State Finance Act (30 ILCS 105/9(a)) requires State agencies to file all real estate leases with the Office of the Secretary of State within 15 calendar days after execution. (Finding 9, page 13) This finding was first reported in 2004.

 

      We recommended the University revise its procedures to ensure all applicable contracts and real estate leases are filed with the Office of the State Comptroller and Secretary of State in accordance with State statutes and related guidelines.

 

      University officials accepted our finding and recommendation.  (For the previous agency response, see Digest footnote #1.)

 

CONTRACTS AND REAL ESTATE LEASES NOT IN ACCORDANCE WITH GUIDELINES

 

      Contracts and real estate leases were not in accordance with guidelines of the Illinois Office of the State Comptroller.

 

      We examined 25 contracts and 25 real estate leases from all areas of the University.  The following problems were noted:

 

·        5 leases were executed after the lease term began.  The lease executions ranged from 13 days to 110 days late.

 

·        5 contracts were executed subsequent to the performance of services.  The contract executions ranged from 11 days to 157 days late.

 

·        5 leases omitted the federal identification number and did not include a Legal Status Disclosure Certification for the lessor.

 

·        1 lease did not include the Debt Certification Clause, the Felony Certification Clause, and the Environmental Barriers Act Clause. (Finding 10, pages 14-15) This finding was first reported in 2003.

 

      We recommended the University establish appropriate procedures to ensure all contracts and leases are completed, approved, and executed prior to the start of the services and lease term.  Further, the University should review procedures to ensure all appropriate clauses and certifications are obtained prior to execution for all real estate lease agreements.

 

      University officials accepted our recommendation and stated that they will continue to examine their routing procedures to ensure that contracts and leases are approved and executed prior to the start of the services and lease terms. (For the previous agency response, see Digest footnote #2.)

 

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. 

 

AUDITORS’ OPINION

 

      The financial audit reports were previously released.  Our auditors stated the June 30, 2007 financial statements were fairly presented in all material respects.

 

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:TLK:pp

 

SPECIAL ASSISTANT AUDITORS

 

      Clifton Gunderson LLP were our special assistant auditors.

 

DIGEST FOOTNOTES

 

#1 Contracts and Real Estate Leases Not Filed Timely – Previous University Response

Accepted.  The University continues to revise its procedures to ensure all contracts and real estate leases are filed with the Office of the Comptroller in accordance with State statutes and guidelines.  Filing is now based upon the execution date instead of the start date of the agreement.  Discussion with the Comptroller’s Office is ongoing regarding whether purchase orders also need to be filed.

 

 #2 Real Estate Leases Not In Accordance With Guidelines – Previous University Response

Accepted.  The University has invested substantial effort to improve its procedures.  Both campuses now utilize standard lease templates to ensure all appropriate clauses and certifications are included in all real estate lease agreements.  The University will continue to refine its procedures to ensure that all State requirements are met.