|
FINDINGS,
CONCLUSIONS, AND RECOMMENDATIONS
IMPROPER RECORDING OF ACCOUNTS
PAYABLE AND ACCOUNTS RECEIVABLE
The University did not properly follow
generally accepted accounting principles (GAAP) for the recording of
accounts payable and accounts receivable.
During our
fiscal year 2005 testing, we
noted the following instances of improper application of GAAP resulting in
a combined understatement of accounts payable of $196,985 and an
understatement of accounts receivable of $73,874:
·
All purchases from one vendor after June 2, 2005,
were automatically posted to fiscal year 2006 instead of fiscal year
2005. These transactions
totaled $17,938.
·
All purchases made on Purchasing cards after June
17, 2005, were automatically posted to fiscal year 2006 instead of fiscal
year 2005. The 467
transactions occurring in this time period totaled $161,923.
·
Nine invoices were noted that were not properly
recorded to the correct fiscal year.
The discrepancies on these invoices totaled $17,124.
·
The amount received in September 2005 as an
incentive payment for the use of the Purchasing card for the period of
June 1, 2004 through May 31, 2005, was posted to fiscal year 2006 instead
of fiscal year 2005. No
receivable for this amount was posted for fiscal year 2005. The amount of the incentive was
$73,874.
During our
fiscal year 2004 testing, we
noted the following instances of improper application of GAAP resulting in
a combined understatement of accounts payable of $330,939 and an
understatement of accounts receivable of $21,481:
·
All purchases from one vendor after June 6, 2004,
were automatically posted to fiscal year 2005 instead of fiscal year
2004. These transactions
totaled $26,593.
·
All purchases made on Purchasing cards after June
18, 2004, were automatically posted to fiscal year 2005 instead of fiscal
year 2004. The 274
transactions occurring in this time period totaled $68,217.
·
Thirty-one invoices were noted that were not
properly recorded to the correct fiscal year. The discrepancies on these
invoices totaled $236,129.
·
The amount received in July 2004 as an incentive
payment for the use of the Purchasing card for the period of June 1, 2003
through May 31, 2004, was posted to fiscal year 2005 instead of fiscal
year 2004. No receivable for
this amount was posted for fiscal year 2004. The amount of the incentive was
$21,481. (Finding 2, pages 29-30)
We
recommended that the University properly include all purchases, including
those on Purchasing cards, through June 30 of each year in the appropriate
fiscal year. We also
recommended that the University properly record receivable amounts that
are earned before June 30 of each year to the appropriate fiscal year.
University officials stated that
they have been consistent over many years in their recording of payables
and receivables and that their cut-off schedule considers the needs of
management to complete their financial statements in a timely manner. University officials also stated
that they will continue to monitor year-end spending to ensure all
material transactions are properly recorded in accordance with
GAAP.
In our
Auditor’s Comment we noted that since the potential adjustments were not
subject to an estimate, the University could and should have made the
adjustments to the financial statements, regardless of materiality. We continue to believe that these
type of adjustments should be recorded.
TIME SHEETS NOT
REQUIRED
The
University did not require all employees to submit time sheets as required
by the State Officials and Employees Ethics Act.
The Act required the Illinois Board of
Higher Education (IBHE), with respect to State employees of public
universities, to adopt and implement personnel policies. The Act (5 ILCS 430/5-5(c) states,
“The policies shall require State employees to periodically submit time
sheets documenting the time spent each day on official State business to
the nearest quarter hour.”
The IBHE adopted personnel policies for public universities on
February 3, 2004 in accordance with the Act. The University has not
incorporated these policies into the University’s
policies.
We noted
that the University’s salaried employees did not maintain timesheets in
compliance with the Act.
Employees’ time is tracked using time rosters, which are filled out
by each department’s Fiscal Agent.
The time rosters used are effectively a “negative” timekeeping
system whereby the employee is assumed to be working unless noted
otherwise. No time sheets
documenting the time spent each day on official State business to the
nearest quarter hour are maintained for the majority of the University’s
employees. The employees
documenting time to the nearest quarter hour were only Civil Service
biweekly-paid and student employees, who record time on time sheets to the
nearest quarter hour. (Finding 4, pages 33-34)
We
recommended the University amend its policies to require all employees to
submit time sheets in compliance with the Act.
The
University did not accept this finding. The University assumed compliance
with the statute based upon guidance from the Executive Inspector
General. The University
received a memo from the Executive Inspector General that stated that
absence reporting would be an appropriate method of time keeping under the
Ethics Act. Under this
system, an employee would only report time during their normal work
schedule that was not spent at work and provide the category of leave
taken for that time away.
In an auditor comment we noted that
the State Officials and Employees Ethics Act defines “State Agency” to
include “public institutions of higher learning…” 5 ILCS 430/1-5. Eastern Illinois University is
defined as a “public institution of higher learning” in Section 2 of the
Higher Education Cooperation Act…” 110 ILCS 220/2. Further, the State Officials and
Ethics Act defines “State employee” to be “any employee of a State
agency.” 5 ILCS 430/1-5.
As noted in
the finding, the State Officials and Employees Ethics Act requires “State
employees to periodically submit time sheets documenting the time spent
each day on official State business to the nearest quarter hour…” 5 ILCS
430/5-5 (c). This timekeeping
requirement went into effect March 1, 2004. The negative timekeeping system
used for several categories of University employees requires those
employees to report only time away from State business, not the time spent
each day on State business. Further, it is logical to assume that,
by adopting this language, the legislature meant to effect a change in the
method used by State employees to record their time – that is, to adopt a
positive timekeeping system.
Finally, the May 24, 2004, memorandum from the Office of Executive
Inspector General upon which the University relied in maintaining its
customary negative timekeeping system for several categories of its
employees clearly states that it “is not a legal
opinion.”
We continue
to believe that a positive timekeeping system for State employees is
required by the State Officials and Employees Ethics Act. If the University disagrees with
this conclusion, we further recommend that it seek a formal, written
opinion from the Attorney General’s Office on the requirements of this
statutory provision.
REQUIRED INFORMATION NOT INCLUDED ON PRINTED
MATERIALS
The University did
not include information required by the Illinois Procurement Code on
publications printed for the
University.
None
of the books, pamphlets, documents or reports published by or for the
University contain the information required by the Illinois Procurement
Code. (Finding 6, page 36)
We
recommended that the University begin printing the information required by
the Illinois Procurement Code on all publications or pursue a statutory
change.
The
University did not concur with the finding. University officials stated that
they believe that the General Assembly did not intend to apply the section
of the Procurement Code on state agency printing to academic materials
published by the state universities.
In an
auditor comment we noted that Universities are specifically enumerated as
“state agencies” for purposes of the Procurement Code (30 ILCS
500/1-15.100) Section 20-105 requires all “state agencies” to print
certain information on each publication. This section does not have an
exception for universities, therefore we continue to believe that it does
apply.
If the
University continues to disagree with this conclusion, we recommend that
it seek a formal, written opinion from the Attorney General’s Office on
the requirements of this statutory provision.
ETHICS TRAINING NOT BEING ADMINISTERED IN
COMPLIANCE WITH THE STATE OFFICIALS AND EMPLOYEES ETHICS
ACT
The University is
not ensuring that all new employees are receiving ethics training within
six months of being hired in compliance with the State Officials and
Employees Ethics Act.
We tested
25 new hires and noted that six employees did not receive ethics training
within six months of being hired by the University. (Finding 8, page
40)
We
recommended that the University implement a policy that ensures that all
new hires receive ethics training within six months of being hired in
order to comply with the Act.
The
University did not concur with the finding. University officials stated that
the instances of noncompliance occurred because the University was
awaiting training materials from the Office of the Executive Inspector
General.
In an
auditor comment, we acknowledged the fact that the Office of the Executive
Inspector General did not provide either on-line or off-line training
during the timeframe from January 1, 2005 through June 30, 2005, however
we continue to believe that it was still the responsibility of the
University to provide the ethics training.
OTHER FINDINGS
The remaining
findings are reportedly being given attention by the University. We will review the University’s
progress toward the implementation of our recommendations in our next
audit.
Mr.
Jeffrey L. Cooley, Vice President for Business Affairs, provided responses
to the findings and recommendations.
AUDITORS'
OPINION
Our
auditors state the Eastern Illinois University's financial statements as
of and for the year ended June 30, 2005 are fairly presented in all
material respects.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT
AUDITORS
Doehring,
Winders & Co. LLP were our special assistant auditors on this
engagement.
| 