REPORT DIGEST

 

WESTERN ILLINOIS UNIVERSITY FOUNDATION

 

FINANCIAL AUDIT

For the One Year Ended:

June 30, 2007

And

COMPLIANCE EXAMINATION

For the Two Years Ended June 30, 2007

 

Summary of Findings:

Total this audit                 2

Total last audit                 0

Repeated from last audit  0

 

Release Date:

March 11, 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 Full Report are also available on the worldwide web at

www.auditor.illinois.gov

 

 

 

 

 

 

 

SYNOPSIS

 

 

    The Foundation did not properly record several transactions in accordance with generally accepted accounting principles.

 

    The Foundation did not have a formal written fraud prevention and detection program.

 

 

 


WESTERN ILLINOIS UNIVERSITY FOUNDATION

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Years Ended June 30, 2007

 

 

FINANCIAL OPERATIONS (ALL FUNDS)

 

FY 2007

 

FY 2006

 

 

OPERATING REVENUES

 

 

 

Gifts........................................................................

$2,887,336

$2,664,493

 

Sales and Services..................................................

443,696

302,126

 

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

$3,331,032

$2,966,619

 

 

OPERATING EXPENSES

 

 

 

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

Student Services....................................................

Institutional Support..............................................

Operation and Maintenance of Plant........................

Scholarships...........................................................

$648,202

338,678

815,742

184,038

1,510,435

$759,280

433,192

710,897

435,017

1,528,165

 

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

231,075

212,917

 

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

$3,728,170

$4,079,468

 

OPERATING LOSS.........................................

NONOPERATING REVENUES (EXPENSES)

Investment Income-Net..........................................

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

Additions to Permanent Endowments......................

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

            Increase in Net Assets...............................

NET ASSETS - BEGINNING OF YEAR........

NET ASSETS - END OF YEAR.......................

 

$(397,138)

 

$3,585,045

686,843

1,226,574

$5,498,462

$5,101,324

$24,642,125

$29,743,449

$(1,112,849)

 

$1,497,633

783,423

1,343,167

$3,624,223

$2,511,374

$22,130,751

$24,642,125

 

 

SELECTED ACCOUNT BALANCES

AT JUNE 30,

2007

AT JUNE 30,

2006

 

Cash and Cash Equivalents....................................

$704,798

$287,707

 

Investments...........................................................

$28,053,077

$23,411,513

 

Pledges Receivable, net........................................

$176,706

$245,156

 

Capital Assets, net.................................................

Total Assets......................................................

Total Liabilities.................................................

Total Net Assets...............................................

$922,670

$30,260,756

$517,307

$29,743,449

$933,979

$25,203,686

$561,561

$24,642,125

 

 

FOUNDATION EXECUTIVE OFFICER

During Audit Period:  Dr. Larry Mortier (retired eff. 7-29-05), Dr. Daniel Hendricks (eff. 8-15-05)

Currently:  Dr. Daniel Hendricks

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP not followed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Foundation officials agree with auditors

 

 

 

 

 

 

 

 

 

 

 


No formal written fraud prevention and detection program

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foundation officials agree with auditors

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

 

FAILURE TO APPLY APPROPRIATE ACCOUNTING PRINCIPLES

 

     The Foundation did not properly record several transactions and, as a result, did not properly apply the appropriate generally accepted accounting principles (GAAP).

 

        Cash equivalents as of June 30, 2007 reported in the original financial statements submitted to the auditors included investments held in one bank maturing beyond ninety days from the date of purchase totaling $3,182,466.  The Foundation subsequently revised the financial statements to include the adjustment to reclassify the cash equivalents to current and noncurrent investments.

 

•      The Foundation did not have a written policy for recording gifts in kind.  Gifts in kind received in fiscal year 2007 totaling $479,622 were not recorded in the Foundation’s books.  Some of these items received were auctioned during the year and the proceeds from the auction were recorded as sales.  The Foundation did not record gifts in kind in the financial statements because a formal gift recording policy was not established.

 

Failure to apply the applicable GAAP may result in inaccurate and incomplete financial statements.  The lack of a written policy for recording gifts in kind increases the risk that contributions in kind will not be fully accounted for in the financial statements.  (Finding 1, pages 25-26 in Financial Audit Report)

 

     Foundation officials agreed with our finding.  They stated the non-endowment trust account referred to in the finding had been reflected as cash and cash equivalents due to the government securities in it being publicly-traded which would make them highly liquid investments at a stated interest rate.  The financial statements were revised as a result of the audit.  They indicated a policy for recording in-kind gifts will be established.

 

 

 

LACK OF FRAUD PREVENTION AND DETECTION PROGRAM

 

     The Foundation does not have a fraud risk assessment program in place.  According to Foundation management, the Foundation has established internal controls in order to prevent and detect fraud as well as errors that may occur, however, these controls and associated risk are not monitored on an on-going basis.  The Foundation relies on current internal controls that have been put in place to prevent and detect fraud.  Additionally, Foundation management has relied on the external audits for identification of control weaknesses.

 

     The Foundation is responsible for the development of internal controls and the monitoring of their operating effectiveness.  In addition, it is management’s responsibility to prevent and detect fraud.  Therefore, the Foundation should implement a formal policy regarding evaluation of fraud risk and a system of controls to help prevent and detect fraudulent activity within the agency.  Preparing a written policy will serve to document the Foundation’s awareness and responsibility for fraud prevention and detection.  (Finding 2, pages 27-28 in Financial Audit Report)

 

     Foundation officials agreed with our finding and stated they will work with the University to develop a continuous fraud prevention, deterrence and detection program.

 

     We will review progress toward the implementation of our recommendations in our next examination.

 

 

 

 

AUDITORS’ OPINION

 

     Our auditors stated the June 30, 2007 financial statements of the Foundation are fairly presented in all material respects.

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

 

 

WGH:KMA:pp

 

SPECIAL ASSISTANT AUDITORS

 

     E.C. Ortiz & Co., LLP were our special assistant auditors.