REPORT DIGEST

CHICAGO STATE UNIVERSITY

 COMPLIANCE EXAMINATION

(In accordance with the
Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2006

Summary of Findings:

Total this audit                        12

Total last audit                          9

Repeated from last audit           5

Release Date:

May 24, 2007

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

http://www.auditor.illinois.gov

SYNOPSIS

¨      The University did not properly interpret and apply generally accepted accounting principles in accounting and financial reporting for nonexchange transactions.

¨      The University did not properly account for compensated absences of employees due to inaccurate time reporting and untimely filing of time sheets.

¨      The University did not maintain promissory notes related to the Nursing Student Loan Program. Further, the University did not have supporting documentation and proper approvals for certain expenditures charged to Federal Programs.

¨      The University did not include scholarships received from other sources as part of student resources.  The condition caused an over-award of student financial aid.

¨      The University did not always follow travel policies of the Illinois Higher Education Travel Control Board and Property Control Rules of the Department of Central Management Services.

¨      The University did not always require travel reimbursement requests be submitted in accordance with the Illinois Travel Regulation Council’s travel rules or University’s policy and procedures.

¨      The University failed to add the working condition fringe benefits for personal use of a state vehicle to an employee’s federal and state taxable income. Further, the University did not calculate and report the taxable fringe benefits of family members traveling with the employee.

{Financial Information is summarized on the reverse page.}

Revenue should have been recognized and not deferred

Actual error of $291,883

Projected error of $584,602

Positive time reporting did not agree to the usage reported to the payroll department

Several positive time reporting cards could not be obtained

Promissory notes not maintained

Failure to maintain supporting documentation

Questioned costs totaling $43,689

Missing and incomplete supporting documentation

Questioned costs totaling $39,048

University did not always follow travel policies

Credit card charges were not always supported

Payment documentation did not identify any specific business purpose

No receipts were attached to the payment packages

Direct bill payments were not detailed on the travel voucher

Lack of receipts

Charges in excess of amounts allowed by the Higher Education Travel Control Board

Unallowable charges incurred during cruise

The University was charged for the most expensive room offered on the cruise

Exceptions were not presented to the Travel Control Board

The University was charged for the most expensive room

Fringe benefits were not properly reported on the employee’s W-2

Family member travel was not reported as a fringe benefit

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES NOT PROPERLY APPLIED

      The University did not properly interpret and apply generally accepted accounting principles in accounting and financial reporting for nonexchange transactions which are set forth in Governmental Accounting Standards Board Statement No. 33.

      We requested documentation to support the 6 largest grant revenue deferrals included in the University’s financial statements.  Upon review of the grant agreements provided along with the related documentation, we noted that 5 of these agreements did not stipulate an eligibility requirement.  Therefore, revenue should have been recognized and not deferred for these voluntary nonexchange transactions. The actual error identified was $291,883.  The auditors have recorded a passed adjustment of the projected error in the amount of $584,602. (Finding 1, Page 16)

      We recommended that the University improve its system for identifying eligibility requirements for voluntary nonexchange transactions and properly account for such transactions in accordance with generally accepted accounting principles.

      University officials agreed with the recommendation and stated that they will adopt measures to fully implement Government Accounting Standards Board Statement No.33.

INACCURATE REPORTING AND ACCOUNTING OF ACCRUED COMPENSATED ABSENCES

      The University did not properly account for compensated absences of employees of the University due to inaccurate time reporting and untimely filing of time sheets.

      We judgmentally selected 10 employees of the University and noted discrepancies with four (40%) of their submitted records related to compensated absences reporting.  We compared the days recorded on each employee’s positive time reporting cards required by the Ethics Act to the sick, vacation, and non-cumulative sick time cards submitted to payroll and noted the following discrepancies:

·        The accrued compensated absence usage reported on the positive time reporting did not agree to the usage reported to the payroll department on the sick, vacation, and non-cumulative sick time cards.  The usage of these days reported to payroll were understated by 10 days, 21 days, 12.5 days and 18 days respectively.  Therefore, the University’s compensated absence schedules do not accurately reflect usage for certain employees.

·        Several of the positive time reporting cards were not able to be obtained from the University.  Several of the positive time reporting cards were not turned in timely and some did not have a supervisor’s signature included on them. (Finding 2, Page 17)