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INTRODUCTION
University of Illinois Research Park, LLC is an Illinois
Limited Liability Research Park created by the Board of Trustees of the
University of Illinois. The Research
Park exists to develop and operate a park to encourage and facilitate
research and development and to foster economic growth within the State using
the University’s intellectual assets.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
USE OF UNIVERSITY RESOURCES
The
Research Park used University of Illinois facilities, assets, services, and
resources without consideration paid to the University. The University and the Research Park were
not tracking the expenses incurred by the University on behalf of the
Research Park until it was brought to their attention as a result of the
audit. In addition, the transactions
were not initially recorded on the financial statements of the Research Park.
The Research Park was formed on March 15, 2000 and is a
component unit of the University of Illinois. It is recognized by the University as a University Related
Organization (URO) pursuant to a contract between the University and the
Research Park.
During the year ended June 30, 2006 the Research Park
received legal services, management oversight, and the use of facilities for
which the University failed to bill the Research Park or to charge the cost
of these expenses to the Research Park’s ledger account. As a result, the Research Park did not
provide any consideration to the University for these resources provided by
the University. Total resources used
for the year ended June 30, 2006 were estimated to be $158,332. This amount was subsequently recorded on
the Research Park’s Statement of Revenues, Expenses and Changes in Net Assets
as revenue and as an expense.
University Guidelines adopted November 30, 1982, (as
amended September 10, 1997) by the Legislative Audit Commission state that
the University may allow the University Related Organization to use
University facilities, assets, services, and resources provided that such use
is supported by consideration at rates charged other University users, if
such charges are regularly made, or at the cost of furnishing such services
if no internal charges are in existence.
The Guidelines also require that the University budget
processes or the contract will expressly identify all support provided the
URO. Revenue accounts will be
maintained to identify all payments received from the URO for repayment of
funds advanced and as reimbursement for the use of university assets,
facilities or services. If the URO
maintains separate financial records, companion entries will, of course,
appear in these records as well.
Research Park personnel stated that they entered into an
agreement adopted by the Board of Trustees on November 11, 2004 whereby the
“University desires to make available to the Research Park such support
necessary to meet the University’s objectives.” Because the Research Park has no other sources of funding it
is, therefore, necessary for the University to provide support to the
Research Park. (Finding 1, Pages 10-11)
We recommended that the Research Park work with the
University to establish a system for tracking the use of University resources
and that appropriate amounts be recorded on the Research Park’s financial
statements.
Research Park personnel agreed with the finding and stated
that they will work with the University to implement the recommendation so
that appropriate amounts can be recorded in their financial statements.
UNIVERSITY SUBSIDIES
The Research Park failed to pay an amount owed to the
University of Illinois at June 30, 2005 within the next year.
University Guidelines state any university funds advanced
to a University Related Organization (URO) or receivables from a URO shall be
repaid to the source from which obtained within one year of the date of the
transaction.
As of June 30, 2005, the Research Park owed the University
$280,578 related to infrastructure cost for a building. This balance plus additional charges
incurred in the year ended June 30, 2006 remained unpaid as of June 30, 2006.
Research Park personnel stated that because they are
unfunded except by support from the University, there are no clear mechanisms
for them to repay infrastructure costs incurred for Research Park development
that are contractually the responsibility of the Research Park. (Finding 2,
Page 12)
We recommended that the Research Park repay the amount owed
to the University and that the Research Park not incur costs or commit to
projects for which they do not have committed funding.
Research Park officials stated a memorandum of
understanding has been produced between the Research Park and the Office of
the Vice President for Technology and Economic Development to fund the debt
incurred by the Research Park for the infrastructure costs associated with
the building and that the money will be repaid by June 30, 2007.
AUDITORS’ OPINION
Our
auditors stated the Research Park’s June 30, 2006 financial statements are
fairly presented in all material respects.
____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were Clifton
Gunderson LLP.
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