REPORT DIGEST

UNIVERSITY OF ILLINOIS

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2022

Release Date:  February 16, 2023

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  1 -- 3 -- 4
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 3 -- 4

FINDINGS LAST AUDIT:  7

Category 1: Findings that are material
weaknesses in internal control and/or
a qualification on compliance with
State laws and regulations (material
noncompliance).
Category 2: Findings that are
significant deficiencies in internal
control and noncompliance with State
laws and regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the
Auditor General
FRANK J. MAUTINO, 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 Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

The University’s financial audit
report consists of three sets of
financial statements as follows – the
financial statements of the
University, the revenue bond financial
statements of the Auxiliary Facilities
System and the Health Services
Facilities System.

This digest covers the University of
Illinois’s Financial Audit as of and
for the year ended June 30, 2022.  The
University’s Compliance Examination
and Single Audit will be issued in
separate reports at a later date.

SYNOPSIS

• (22-1) The University did not have
adequate internal control over
reporting its census data and did not
have a reconciliation process to
provide assurance census data
submitted to its pension  and other
postemployment benefits plans was
complete and accurate.

• (22-3) The University has not
established adequate controls over
accurately identifying and recording
revenue and expense accrual
transactions for financial reporting
purposes.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE INTERNAL CONTROLS OVER
CENSUS DATA

The University of Illinois
(University) did not have adequate
internal control over reporting its
census data and did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment
benefits (OPEB) plans was complete and
accurate.

We noted the following during our
testing:

• The University had not performed an
initial complete reconciliation of its
census data recorded by State
Universities Retirement System (SURS)
to its internal records to establish a
base year of complete and accurate
census data.  In addition, after
establishing a based year, the
University had not developed a process
to annually obtain from SURS the
incremental changes recorded by SURS
in their census data records and
reconcile these changes back to the
University’s internal supporting
records.

• During our cut-off testing of data
transmitted by the University to SURS,
we noted 126 instances of an active
employee becoming inactive, 3
instances of an inactive employee
becoming retired, 3 instances of an
inactive employee becoming active, 2
instances of an active employee
becoming retired, and 2 instances of a
change in service credit were reported
to SURS after the close of the fiscal
year in which the event occurred.
SURS determined the potential impact
of each change in service credit was
off between ¼ of a year to 2¼ year.
There were also 10 instances
previously reported that impacted the
June 30, 2020 census data.

• We noted 5 employees were not
reported as eligible to participate in
SURS by the University until Fiscal
Year 2021. SURS determined the total
potential impact of this error was
each employee’s service credit was off
between ¾ of a year to 1¾ year.
(Finding 1, Pages 5-8)

We recommended the University continue
to work with SURS to complete the base
year reconciliation of Fiscal Year
2021 active members’ census data from
its underlying records to a report of
census data submitted to SURS’ actuary
and CMS’ actuary. After completing an
initial full reconciliation, the
University may limit the annual
reconciliations to focus on the
incremental changes to the census data
file from the prior actuarial
valuation, provided no risks are
identified that incomplete or
inaccurate reporting of census data
may have occurred during prior
periods.  Any errors identified during
this process should be promptly
corrected by either the University or
SURS, with the impact of these errors
communicated to both SURS’ actuary and
CMS’ actuary.

Further, we recommended the University
ensure all events occurring within a
census data accumulation year are
timely reported to SURS so these
events can be incorporated into the
census data provided to SURS’ and CMS’
actuary.

Finally, we recommended the University
ensure all eligible employees are
reported to SURS, along with any
required employee and employer
contributions.

University officials agreed with the
finding.


INADEQUATE CONTROLS OVER REVENUE AND
EXPENSE ACCRUALS

The University of Illinois
(University) has not established
adequate control over accurately
identifying and recording revenue and
expense accrual transactions for
financial reporting purposes.

The following errors were noted during
our testing:

• During our test work over 61
educational activity revenue
transactions totaling $156,880,550, we
noted three transactions (5%),
totaling $7,502,740, were recorded as
revenues for Fiscal Year 2022, but
should have been partially accrued as
of Fiscal Year 2021 at an amount of
$3,205,340. The estimated projected
impact of these errors is an
understatement of opening net position
and an overstatement revenue of $12.2
million. Management elected not to
record the adjusting entry for these
errors.

• During our test work over 41 medical
service plan revenue transactions
totaling $3,102,304, we noted six
transactions (15%), totaling $366,978,
were recorded as revenues for Fiscal
Year 2022, but should have been
partially accrued as of Fiscal Year
2021 at an amount of $230,907. Upon
discovery of these cutoff errors, the
University re-analyzed the medical
service plan accruals and concluded
that $2,011,034 of revenue recorded in
Fiscal Year 2022 should have been
recorded in Fiscal
Year 2021. Also, $2,807,017 of revenue
recorded in Fiscal Year 2023 should
have been recorded in Fiscal Year
2022. Management elected not to record
the adjusting entry for these errors.

• During our test work over 14 other
nonoperating revenue transactions
totaling $43,391,523, we noted one
transaction (7%), totaling
$24,924,672, was recorded as revenue
for Fiscal Year 2022, should have been
partially accrued as of Fiscal Year
2021 at an amount of $9,446,451. The
amount noted above is the expected
total error for this account.
Management elected not to record the
adjusting entry for this error.

• During our test work over 13
auxiliary expense transactions (not
under indenture) totaling $33,896,880,
we noted one transaction (8%),
totaling $5,292,432, that was recorded
as expense for Fiscal Year 2022,
should have been partially accrued as
of Fiscal Year 2021 at an amount of
$2,108,981. The estimated projected
impact of this error is an
overstatement of opening net position
and expense of $5.7 million.
Management elected not to record the
adjusting entry for this error.

• During our test work over 33
institutional support expense
transactions totaling $4,254,176, we
noted one transaction (3%), totaling
$50,000, that was recorded as expense
for Fiscal Year 2022, should have been
partially recorded as a prepaid
expense at an amount of $44,932. The
estimated projected impact of this
error is an understatement of prepaid
expenses and an overstatement of
expense of $2.8 million. Management
elected not to record the adjusting
entry for this error.

• During our test work over 13
deferred grant accrual transactions
totaling $51,658,785, we noted one
transaction (8%), totaling $1,829,840,
that was recorded as unearned revenue
for Fiscal Year 2022, should have been
partially recognized as revenue as of
Fiscal Year 2022 at an amount of
$1,438,520. The estimated projected
impact of this error is an
overstatement of unearned revenue and
an understatement of revenue of $4.6
million. Management elected to record
the adjusting entry for the estimated
amount of the error.

• During our test work over 24 grant
receivable transactions totaling
$23,024,782, we noted one transaction
(4%), totaling $1,250,000, was
recorded as a receivable and revenue
for Fiscal Year 2022, should have been
recorded as of Fiscal Year 2023 in its
entirety. The estimated projected
impact of this error is an
overstatement of grant revenue and
receivables of $10.2 million.
Management elected to record the
adjusting entry for the estimated
amount of the error. (Finding 3, Pages
11-13)

We recommended the University continue
to review its process to assess the
existence of current period revenues
and expenses and consider changes
necessary to ensure they are
accurately identified and recorded for
presentation in the University’s
financial statements.

University officials agreed with the
recommendation.

OTHER FINDINGS

The remaining findings pertained to
inadequate controls over fiduciary
fund accruals and weaknesses in
controls over Electronic Health Record
System and are reportedly being given
attention by the University.  We will
review the University’s progress
towards implementation of our
recommendations in our next
engagement.

AUDITOR’S OPINION

Our auditors stated the financial
statements of the University, the
Auxiliary Facilities System and the
Health Services Facilities System as
of June 30, 2022, and for the year
then ended, are fairly stated in all
material respects.

This financial audit was conducted by
RSM US LLP.

JANE CLARK
Division Director

This report is transmitted in
accordance with Section 3-14 of the
Illinois State Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:TLK