REPORT DIGEST
IMSA FUND FOR ADVANCEMENT OF EDUCATION
Financial Audit
For the Year Ended June 30, 2010
Summary of Findings:
Total this audit: 1
Total last audit: 0
Repeated from last audit: 0
Release Date: January 27, 2011
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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(217) 782-6046 or TTY (888) 261-2887
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SYNOPSIS
• The Fund did not have appropriate controls to verify the
net assets classifications reported in the financial statements agreed to the
Fund’s accounting records.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
LACK OF CONTROLS OVER NET ASSET REPORTING
The IMSA Fund for Advancement of Education (Fund) did not
have appropriate controls to verify the net assets classifications reported in
the financial statements agreed to the Fund’s accounting records.
The Fund has used a consultant each of the last several
years to assist management with preparing financial statements in accordance
with Generally Accepted Accounting Principles (GAAP). Prior to fiscal year 2009, the Fund
maintained its formal accounting records on the cash basis and recorded accrual
adjustments outside of its formal accounting records. In fiscal year 2009, the Fund switched
accounting software. During the
preparation of the 2009 financial statements, certain interfund entries to eliminate
those accrual adjustments were overlooked by the consultant because the amounts
zeroed out across all funds. Fund
management did not verify that the net asset classifications on the financial
statements prepared by the consultant agreed with the Fund’s detailed
accounting records. The initial 2010
financial statements prepared by the consultant and provided to the auditors
continued this error. As a result, the
June 30, 2009 “restricted net assets, expendable” have been decreased and the
“unrestricted net assets” have been increased by $103,964 to correct this
error.
Fund management stated that a new accounting system was
implemented in fiscal year 2009.
Management and the consultant are still learning and adapting to
reporting from this new system.
We recommended Fund management thoroughly review the work of
its consultants to ensure the financial statements are properly presented.
(Finding 1, pages 26-27)
Fund management agreed and stated that the General Ledger of
the IMSA Fund is and was always in balance with respect to Net Asset
Balances. Due to the small accounting
staff working for the IMSA Fund, it was deemed necessary for the Fund to hire
outside assistance to help in preparing the year end statements and tax
forms. Because of this process, some
work papers were completed on spreadsheets outside of the ledger system. Transfers between Net Asset classes that were
booked on the ledger were not evident during this process and were
overlooked. In total, the Net Assets of
the Fund were reported correctly on the year end statements.
Going forward, with set up of a new ledger system behind us,
the Fund’s accounting staff is ready to decrease its dependence on outside
consulting for year end financial statements and next year, plans to produce
statements directly from the ledger thus eliminating this risk in the future. Also the staff will be more diligent in
verifying correct Net Asset classes as will as total Net Assets on the
financial statements.
AUDITORS’ OPINION
Our auditors stated the June 30, 2010 financial statements
of the IMSA Fund for Advancement of Education are fairly presented in all
material respects.
WILLIAM G. HOLLAND, Auditor General
WGH:AKS
AUDITORS ASSIGNED
Our special assistant auditors for this audit were Borschnack, Pelletier & Co.