REPORT DIGEST

CHICAGO STATE UNIVERSITY

COMPLIANCE EXAMINATION AND SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  April 8, 2020

FINDINGS THIS AUDIT:  10

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  4 -- 6 -- 10
Category 3:  0 -- 0 -- 0
TOTAL:  4 -- 6 -- 10

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 our federal Single Audit
and Compliance Examination of Chicago State
University (University) for the year ended
June 30, 2019.  A separate Financial Audit as
of and for the year ended June 30, 2019, was
previously released on January 30, 2020. In
total, this report contains 10 findings, one
of which was reported in the Financial Audit.

SYNOPSIS

• (19-7) The University had subsidies between
accounting entities during the current fiscal
year.
• (19-8) The University failed to fully comply
with the Fiscal Control and Internal Auditing
Act (Act) and International Standards for the
Professional Practice of Internal Auditing
(internal auditing standards).

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

SUBSIDIES BETWEEN ACCOUNTING ENTITIES

The University had subsidies between
accounting entities during the current fiscal
year.

During our testing of compliance with the
University Guidelines, we noted the following:

• The “University Facilities System Revenue
Bond Fund” (Bond Fund) accounting entity had a
negative cash balance at the end of the fiscal
year totaling $0.7 million.

• The “Student Activities” accounting entity
had negative cash balances at the beginning
and the end of the fiscal year totaling $5.1
million and $7.6 million, respectively.

A negative cash balance is, in effect, an
unrecorded interfund payable/receivable,
thereby causing a subsidy between funds to
occur. The Bond Fund accounting entity
operates the Student Union Building and
receives revenues from Student Union fees,
space rental, user fees, leased bookstore and
food service commissions. The “Student
Activities” accounting entity includes
mandatory student fees and the expenditure of
all student activities approved by the student
government such as student newspaper and
athletic activities.

The University Guidelines (Chapter III,
Section D, Part 1) state: “there shall be no
subsidies between accounting entities.
Subsidies include cash advances and interfund
payables/receivables outstanding for more than
one year.” (Finding 7, pages 31-33)  This
finding has been repeated since 2009.

We recommended the University review the
activities of the accounting entities and
ensure fees charged for services are
sufficient to cover expenditures and ensure
subsidies between accounting entities do not
occur.

University officials agreed with the finding
and stated an evaluation of necessary
expenditures was being conducted and new
protocols were issued to ensure all
expenditures are within the operating budget.

INTERNAL AUDIT

The University failed to fully comply with the
Fiscal Control and Internal Auditing Act (Act)
and International Standards for the
Professional Practice of Internal Auditing
(internal auditing standards).
During our review of the University’s Office
of the Internal Audit (OIA), we noted the
following:

• Audits of the University’s major systems of
internal accounting and administrative
controls including testing of the obligation,
expenditure, receipt and use of public funds
of the State and of funds held in trust to
determine whether those activities are in
accordance with applicable laws and
regulations were not completed during fiscal
years 2018 and 2019.

• OIA did not undergo a peer review since the
last external assessment issued on June 21,
2011, nor perform internal assessments as of
June 30, 2019.

• The design, implementation, and
effectiveness of the University’s ethics-
related objectives, programs, and activities
were not evaluated.

• There is no evidence that the internal audit
charter has been approved by the University’s
Board of Trustees (Board). (Finding 8, pages
34-36)  This finding has been repeated since
2015.

We recommended the University implement
controls to ensure completion of audits of
major systems of internal accounting and
administrative control at least once every two
years and documentation of approval of
internal plans and charter. We also
recommended the University promptly arrange
and external assessment of its internal audit
activity and evaluate the design,
implementation and effectiveness of the
University’s ethics-related objectives,
programs, and activities to comply with the
internal auditing standards.

University officials agreed with the findings
and stated as of September 2019, a permanent
Chief Internal Auditor has been hired, and
documented approval has been obtained for an
internal audit plan which gives consideration
to the recommended categories. University
officials also stated an evaluation of the
design, implementation, and effectiveness of
the University’s ethics program is currently
underway and the peer review was completed in
November 2019. Additionally, University
officials stated the Internal Audit Charter is
expected to be presented to the Board in March
2020.

OTHER FINDINGS

The remaining findings pertain to inadequate
control over financial reporting,
noncompliance with institutional eligibility
requirements, untimely reporting to National
Student Loan Data Systems, lack of adherence
to controls and noncompliance with Center for
STEM Education and Research, lack of adherence
to controls  and noncompliance with TRIO
cluster, inadequate controls over contractual
service expenditures, completion and retention
of employment eligibility verification forms
and weaknesses over system access. We will
review the University’s progress towards the
implementation of our recommendations in our
next engagement.

AUDITOR’S OPINIONS

The financial audit report was previously
released. The auditors stated the financial
statements of Chicago State University as of
and for the year ended June 30, 2019 are
fairly stated in all material respects.

The auditors also conducted a Single Audit of
the University as required by the Uniform
Guidance.   The auditors stated the University
complied, in all material respects, with the
types of compliance requirements that could
have a direct and material effect on the
University’s major federal programs for the
year ended June 30, 2019.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the University for the year
ended June 30, 2019, as required by the
Illinois State Auditing Act.  The accountants
stated the University complied, in all
material respects, with the requirements
described in the report.


This Single Audit and State Compliance
Examination was conducted by E.C. Ortiz & Co.,
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

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