REPORT DIGEST

 

GOVERNORS STATE UNIVERSITY

 

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

(In accordance with the

Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2009

 

Summary of Findings:

Total this audit†††††††††††††††††††††† 5

Total last audit††††††††† †††††††††††††6

Repeated from last audit††††††† 1

 

Release Date:

February 11, 2010

 

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 provide the required notification to students regarding the timing of the disbursements of Federal Direct Student Loan proceeds and the studentís right to cancel the loan.

 

®      The University had subsidies between accounting entities (auxiliary enterprises and activities) during the current fiscal year.

 

®      The University incorrectly submitted invoices for reimbursement from State special appropriations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Financial Information is summarized on the reverse page.}

 

 

 

 


 

 


                                                       GOVERNORS STATE UNIVERSITY

                                    FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

                                                           For The Year Ended June 30, 2009

FINANCIAL OPERATIONS (CURRENT FUNDS)

FY 2009

FY 2008*

OPERATING REVENUES

†††† Student tuition and fees (net of scholarship allowances)...................

†††† Grants and contracts.................................................................................

†††† Auxiliary enterprises.................................................................................

†††† Sales and services of educational departments....................................

Other operating revenues........................................................................

††††††† †††† Total Operating Revenues...............................................................

OPERATING EXPENSES

†††† Instruction..................................................................................................

†††† Research.....................................................................................................

†††† Public service.............................................................................................

†††† Academic support.....................................................................................

†††† Student services........................................................................................

†††† Institutional support.................................................................................

†††† Operation and maintenance of plant......................................................

†††† Auxiliary enterprises.................................................................................

†††† Depreciation...............................................................................................

††††††† †††† Total Operating Expenses...............................................................

Operating loss................................................................................................

NONOPERATING REVENUES (EXPENSES)

††††††† State Appropriations..............................................................................

††††††† Payments on behalf of the University.................................................

††††††† Federal grants and contracts Ė Pell......................................................

††††††† Investment income.................................................................................

††††††† Investment income on debt proceeds.................................................

††††††† Interest on capital assets and related debt.........................................

††††††† Other nonoperating expenses...............................................................

††††††† Net nonoperating revenues..................................................................

††††††† Income before other revenues, expenses, gains and losses............

††††††† Transfers from the Capital Development Board.................................

INCREASE IN NET ASSETS.......................................................................

Net assets, beginning of year.................................................

Net assets, end of year.........................................................

 

$27,263,876

9,877,631

1,947,705

6,844,693

1,464,086

$47,397,991

 

$38,597,331

1,663,614

11,258,728

2,077,361

5,641,293

12,793,162

6,213,820

1,662,066

†††† 2,689,039

$82,596,414

($35,198,423)

 

$27,616,290

13,094,122

548,097

187,075

112,022

(56,063)

††††††† (16,617)

$41,484,926

$6,286,503

0

$6,286,503

†††††† $61,711,673

$67,998,176

 

$22,126,445

9,305,205

1,826,822

7,405,774

1,669,450

$42,333,696

 

$36,691,013

1,374,409

11,501,416

2,110,258

5,842,809

12,653,488

6,767,113

1,689,546

†††† 2,601,715

$81,231,767

($38,898,071)

 

$27,659,400

11,356,654

898,129

636,360

165,659

(434,799)

††††††† (6,408)

$40,274,995

$1,376,924

104,200

$1,481,124

†††††† $60,230,549

$61,711,673

SELECTED ACCOUNT BALANCES (ALL FUNDS)

JUNE 30, 2009

JUNE 30, 2008

Cash, cash equivalents, and trust escrow....................................

Capital assets...........................................................................

Accumulated depreciation..........................................................

Accrued compensated absences.................................................

Revenue bonds payable.............................................................

Certificates of participation........................................................

$39,181,187

112,194,907

47,343,708

5,570,287

8,662,159

19,578,931

$31,826,568

101,459,771

45,103,084

5,582,342

8,963,897

9,821,749

UNIVERSITY PRESIDENT

††† During Audit Period and Current: Dr. Elaine Maimon

*Certain reclassifications have been made to the 2008 amounts to conform to the current year presentation.


 

 

 


 

 

 

 

 

 

 

 

 


Some students did not receive the required notification

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Negative cash balances in some of the accounting entities

 

 

 

 

 

 

 

 

 


University Guidelines do not allow subsidies for more than one year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Supporting documentation submitted for reimbursement did not match the special appropriation expenditures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

NOTIFICATION OF DISBURSEMENT OF LOAN PROCEEDS NOT PROVIDED TO STUDENTS

 

††††† The University did not provide the required notification to students regarding the timing of the disbursements of Federal Direct Student Loan (FDSL) proceeds and the studentís right to cancel the loan.

 

††††† During our testing of 39 students that received FDSL we noted that 17 of 39 (44%) did not receive the required notification regarding the disbursement of loan proceeds.These students had 51 loan disbursements totaling $181,742 and did not receive the required notifications.

 

††††† Failure to properly notify its students regarding disbursements of loan proceeds may jeopardize future federal funding and results in a violation of the studentís rights. (Finding 1, Page 17)

 

††††† We recommended the University improve procedures and ensure that all students receive proper notification of loan proceed disbursements and their rights to cancel such loans.

 

††††† University officials agreed with the finding and stated that they have modified their computer program to ensure proper student notification.

 

SUBSIDIES BETWEEN ACCOUNTING ENTITIES

 

††††† The University had subsidies between accounting entities (auxiliary enterprises and activities) during the current fiscal year.

 

††††† During our testing of compliance with the Legislative Audit Commissionís University Guidelines, we noted the following accounting entities had negative cash balances at the beginning and the end of the fiscal year, (a negative cash balance is in effect an unbooked interfund payable/receivable) thereby causing a subsidy between funds to occur:

 

        University Service Departments

        Center for Performing Arts

 

††††† The Legislative Audit Commissionís University Guidelines of 1982, as amended in 1997, states (Chapter 3, Section D, Part 1) ďThere shall be no subsidies between accounting entities.Subsidies include cash advances and interfund payables/receivables outstanding for more than one year.Ē (Finding 4, Page 20)

 

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

 

††††† University officials agreed with the finding and stated that they will review their charge back processes and pricing levels for these accounting entities.

 

INCORRECT INVOICES SUBMITTED FOR REIMBURSEMENT REQUESTS FROM STATE APPROPRIATIONS

 

††††† The University incorrectly submitted invoices for reimbursement from State special appropriations.

 

††††† The General Assembly made the following special appropriations to the University for fiscal year 2009:

 

        The Institute for Urban Education $650,000

 

        The Center for Excellence in Health Education $325,000

 

        The International Trade Center $331,000

 

††††† All expenditures of the University are initially paid from University held local funds.After expenditure, the University then submits vouchers to the Office of the Comptroller to request reimbursement from State appropriated funds.

 

††††† We selected 7 of the 241 vouchers submitted by the University to the Office of the Comptroller for reimbursement and noted that 4 of the 7 reimbursements tested were charged to the special appropriations noted above, but the vendor invoices attached to the vouchers to support the reimbursement request had nothing to do with the special appropriations that were charged.For example:

 

        The University submitted its quarterly payment of $124,060 for the University wide telephone system for reimbursement under the special appropriation for the Institute for Urban Education.

 

        Several equipment invoices totaling $40,685 were submitted for reimbursement from the special appropriation for the Institute for Urban Education, but no equipment was purchased for the Institute for Urban Education according to the general ledger.

 

        Several contractual service invoices totaling $14,308 that were submitted for reimbursement from the special appropriation for the Center for Excellence in Health Education, but these actual contractual services did not pertain to the Center.

 

        Several equipment invoices totaling $137,601 were submitted for reimbursement for the special appropriation for the International Trade Center, however no equipment was purchased by the International Trade Center according to the general ledger. (Finding 5, Pages 21-22)

†††††††††††

†††††††††††

††††† We recommended that the University submit the proper documentation of actual program expenditures when requesting reimbursement from its special appropriations.

 

††††† University officials agreed with the finding and stated that they have provided the necessary training to the employee to ensure non-reoccurrence.

 

OTHER FINDINGS

 

††††† The remaining findings are reportedly being given attention by University officials.We will review progress toward implementation of our recommendations in our next audit.

 

 

AUDITORS' OPINION

 

††††† Our auditors state the Universityís financial statements as of June 30, 2009 and for the year then ended, are fairly presented in all material respects.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:TLK:pp

 

 

SPECIAL ASSISTANT AUDITORS

 

††††††† Our special assistant auditors for this audit were Borschnack Pelletier & Co.