|
P-Card transactions
not handled in accordance with University policy
5,700 active cards
with transactions totaling $116,181,802
Some transactions
were reconciled by the system instead of an employee
Sales tax was paid on
some transactions
Access rights not
performed on a regular and recurring basis
Journal Voucher
entry authority
Security access
rights were not generally reviewed
Filing with State
Comptroller up to 1,812 days late
Filing with
Secretary of State up to 236 days late
State law requires
filing of contracts and leases
Leases executed
after lease term began
Contracts executed
after the performance of services
Accidents were not
reported timely Receipts were not
maintained
Business purpose of
the travel not documented |
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 NEED TO IMPROVE P-Card transactions were not always handled in accordance with University of Illinois Office of Business and Financial Services Policies and Procedures. The University uses a credit card, referred to as a P-Card to simplify small dollar purchases. University employees may be issued a P-Card with the approval of their Department Head or Fiscal Officer. The P-Card works like any personal credit card and is billed monthly to the University. Vendors are paid directly by the issuing bank and the University pays the bank with a single monthly payment. Purchases are tracked through the P-Card web based computer software and are automatically posted to the University’s general ledger system. The University’s P-Card program has six defined roles: 1) department head, 2) department card manager, 3) cardholder, 4) software reconciler, 5) software approver, and 6) financial statement reconciler. The University has established a Corporate Card Office to provide management over the University P-Card Program. The University has approximately 5,700 active P-Cards and the year-to-date volume of P-Card transactions totaled $116,181,802. We examined 66 P-Card transactions from all areas of the University. Some of the problems we noted are as follows: · 41 transactions with conflicting P-card roles, that included 8 transactions that had the cardholder established as the software reconciler of their own transactions and 25 transactions having the same individual as the financial statement reconciler and the software reconciler. · 4 transactions were shown in the P-Card web based computer software as automatically reconciled by the system, rather than by an employee. · 5 transactions included sales tax paid by the University. · 1 transaction was for a purchase made by someone other than the cardholder. (Finding 3, Pages 16-17) This finding was first reported in 2006. We recommended the University review the segregation of duties surrounding P-Card transactions and emphasize the importance of a timely and adequate review, approval, and reconciliation of all transactions. We also recommended that the University ensure that the Policies and Procedures, including all modifications, are clearly understood and followed by all personnel involved in the P-Card Program. University officials accepted our finding and recommendations and stated they will continue to emphasize the importance of segregating duties and performing timely and adequate review, approval, and reconciliation of all transactions. (For the previous agency response, see Digest footnote #1.) NEED TO ENHANCE SYSTEM ACCESS CONTROLS Review of user access rights within the University’s financial systems (e.g. accounts payable, accounts receivable, payroll, fixed assets, etc) was not performed on a regular and recurring basis. Three units (Payroll, Academic Computing and
· The University had approximately 2,300 users with journal voucher entry authority. · All users with journal voucher entry authority had entry limits of $999,999,999.99 or less without regard to specific job duties. · The University had created five charts of accounts. Approximately 400 of the users with journal voucher entry authority also has access to the University Administration chart of accounts. · Four users with journal voucher entry rights were identified with substantial modification authorities for the security rule codes of the system. Two of these users were designated as Unit Security Coordinators. · At least 23 users had both journal voucher entry rights and the rights to modify two security rule codes. Even though an internal audit recommended that user access rights be reviewed at least annually by unit security coordinators, such reviews were not performed. Our testing of compliance on three units indicated security access rights were not generally reviewed. (Finding 5, Pages 20-21) We recommended that the University perform recurring, documented reviews of user access within the University’s financial systems. Specifically, the University should review individual access rights; limit dollar entry limits to those commensurate with job responsibilities; segregate journal voucher entry capability from the capability to modify the chart of accounts; and segregate journal voucher entry capability from the capability to modify associated security rule codes. University officials accepted our finding and recommendations and stated they will develop improvements to procedures to address the recommendations noted in the finding. 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 49 contracts and real estate leases revealed that 21 (43%) were not filed timely with the Office of the State Comptroller. The late filings ranged from 1 to 1,812 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 5 to 236 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 8, page 24) 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 #2.) FAILURE TO COMPLY WITH GUIDELINES FOR CONTRACTS AND REAL ESTATE
LEASES Contracts and real estate leases were not in accordance with guidelines of the Illinois Office of the State Comptroller. We examined 24 contracts and 25 real estate leases from all areas of the University. The following problems were noted: · 6 leases were executed after the lease term began. The lease executions ranged from 2 days to 42 days late.
·
6 contracts were executed subsequent to the
performance of services. The contract
executions ranged from 12 days to 115 days late.
·
7 leases omitted the federal identification number
for the lessor.
·
1 lease did not include a completed, signed
and notarized Real Estate Disclosure form. (Finding 9, pages 25-26) 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 finding and recommendations and stated that they will continue to examine and improve its 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 #3.) USE AND MAINTENANCE OF UNIVERSITY VEHICLES The University did not report certain automobile accidents involving University vehicles to the Department of Central Management Services in a timely manner. The University also did not maintain appropriate documentation for all individuals allowed to drive University vehicles and did not properly maintain all University motor vehicles. During our testing of the operation of University vehicles, we noted the following exceptions: · The University reported 120 accidents involving University vehicles to the Department of Central Management Services during fiscal year 2008. Of the 94 accidents reported by the Urbana Campus, 81 (86%) were not reported timely and ranged from 1 to 73 days late. Of the 26 accidents reported by the Chicago Campus, 16 (62%) were not reported timely and ranged from 2 to 104 days late. · We tested five departments that were assigned University vehicles on an ongoing basis at the Urbana Campus. Of those, two departments allowed employees to use the vehicles without maintaining the required Departmental Driver Approval Form. · Of the three University vehicles selected on the Urbana Campus for maintenance documentation testing, one of the vehicles did not have regular oil changes. (Finding 10, Pages 27-28) We recommended that the University improve procedures to ensure that accident reports are submitted to the Department of Central Management Services in a timely manner. We also recommended that the University ensure that the policies and procedures are clearly understood and followed by all personnel responsible for the oversight of University vehicles within each department. University officials accepted our finding and recommendations and stated they will improve procedures to ensure that accident reports are submitted timely and that the policies and procedures are clearly understood and followed by all personnel responsible for University vehicles. INADEQUATE DOCUMENTATION RELATED TO TRAVEL A Department at the Chicago Campus had inadequate internal controls in place over travel expenses. We examined 25 travel expense transactions totaling $16,294, from a single University department with total travel expenses of $157,052 and noted the following:
· 11 transactions did not have supporting receipts for airline charges totaling $5,604. · Of the 14 transactions in which receipts were provided, 7 transactions did not have the business purpose of the travel documented totaling $4,592. The University of Illinois Office of Business and Financial Services Policies and Procedures addressing P-Card travel transactions provides that the P-Card transaction number be documented on a copy of the ticket or itinerary and attached to the travel voucher form. Additionally, the specific purpose of the travel must be documented. (Finding 12, Page 30) We recommended that the University review the business purpose of travel and accompanying documentation for this department and ensure that the Policies and Procedures are clearly understood and followed by all personnel involved. University officials accepted our finding and recommendations and stated they will work with the department to ensure that Policies and Procedures are clearly understood and followed. 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, 2008 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 University P-Card – Previous
University Response Accepted. In order to improve the understanding of
the Policies and Procedures by all personnel involved in the P-Card program,
the University has implemented a mandatory retraining program for all
existing cardholders and a mandatory training program for all new
cardholders. The training will also be
required for P-Card renewals, which occur once every two years. All trainings and retrainings must be
completed by each employee prior to the issuance of their P-Card.
#2 Contracts and Real Estate Leases
Not Filed Timely – Previous University Response Accepted. The University continues to monitor and
examine its procedures to ensure contracts and leases are filed in compliance
with State statutes and related guidelines. #3 Real Estate Leases Not In
Accordance With Guidelines – Previous University Response Accepted.
The University will continue to examine its routing procedures to
ensure that contracts and leases are approved and executed prior to the start
of the services and lease terms. The
University Office of Real Estate Planning and Services now use standard lease
templates which include all appropriate clauses and certifications, and the
certifications and clauses on the lease templates will be reviewed and
updated at least annually. |
|
|
|
