REPORT DIGEST WESTERN ILLINOIS UNIVERSITY Compliance Examination and Single Audit For the Year Ended June 30, 2015 Release Date: March 3, 2016 FINDINGS THIS AUDIT: 8 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 7 -- 8 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 7 -- 8 FINDINGS LAST AUDIT: 9 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 This digest covers the Western Illinois University Compliance Examination and federal Single Audit as of and for the year ended June 30, 2015. Western Illinois University’s Financial Audit covering the year ended June 30, 2015 was issued in a separate report on January 14, 2016. In total, this report contains 8 findings, one of which was reported in the Financial Audit. SYNOPSIS • (15-3) The University did not identify security sensitive positions in written policy or conduct timely pre-employment background checks of applicants hired for such positions. • (15-7) The University subsidized operations of University activities between accounting entities. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NONCOMPLIANCE WITH THE CAMPUS SECURITY ENHANCEMENT ACT The University did not have adequate policies and procedures to identify security sensitive positions and conduct pre- employment background checks. The University did not have an adequate process to identify security sensitive positions for all employee classifications. Further, background checks were performed 12-31 days after employment for 2 of 4 (50%) security sensitive positions tested. (Finding 3, pages 23-24) This finding was first reported in 2012. We recommended the University adopt written policies and procedures to establish processes to identify security sensitive positions for all employee classifications and perform background checks in accordance with the Act. University officials agreed with the finding and stated they implemented a new background investigation policy requiring all new employees be subject to a pre-employment background investigation. (For the previous University response, see Digest footnote #1.) SUBSIDIES BETWEEN ACCOUNTING ENTITIES The University subsidized operations of University activities between accounting entities. The University Stores and Service Centers accounting entity had negative cash balances at the beginning and the end of the fiscal year totaling $1.6 million and $1.8 million, respectively. A negative cash balance is, in effect, an unrecorded interfund payable/ receivable, thereby causing a subsidy between funds to occur. (Finding 7, pages 32-33) This finding was first reported in 2012. We recommended the University continue to annually review the activities of each accounting entity, ensure that fees charged for services are sufficient to cover expenditures, and take corrective action so subsidies do not continue. University officials agreed with the finding and responded they restructured a service center to offload expenses and maintain a cash positive operation. Officials also stated they will continue to monitor all accounting entities for negative trends and make necessary adjustments. (For the previous University response, see Digest footnote #2.) OTHER FINDINGS The remaining findings are reportedly being given attention by the University. We will review the University’s progress towards the implementation of our recommendations in our next audit. AUDITOR’S OPINION The financial audit report was previously released. The auditors stated the financial statements of the Western Illinois University as of and for the year ended June 30, 2015, are fairly stated in all material respects. The auditors also conducted a Single Audit of the University as required by OMB Circular A-133. Our auditors stated the University complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of the University’s major federal programs for the year ended June 30, 2015. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the University for the year ended June 30, 2015, as required by the Illinois State Auditing Act. The auditors stated the University complied, in all material respects, with the requirements described in the report. FRANK J. MAUTINO Auditor General FJM:lkw SPECIAL ASSISTANT AUDITORS Our Special Assistant Auditors for this engagement were E.C. Ortiz & Co., LLP. DIGEST FOOTNOTES #1 NONCOMPLIANCE WITH THE CAMPUS SECURITY ENHANCEMENT ACT - Previous University Response 2014 - The University agrees with the finding. The University will implement procedures to become compliant with regulation. Additional training has occurred for staff completing crime reports and they are now using consistent source data. #2 SUBSIDIES BETWEEN ACCOUNTING ENTITIES - Previous University Response 2014 - The University agrees with the finding. The University will review and modify existing procedures to monitor accounts and entities that do not have sufficient revenues to cover planned expenses.