REPORT DIGEST

ILLINOIS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT

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

For the Year Ended:
June 30, 1999

Summary of Findings:

Total this audit 10
Total last audit 5
Repeated from last audit 1

Release Date:
March 23, 2000

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217)782-6046 or TDD (217) 524-4646
This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

 

  • The University’s preparation of financial statements was not timely or efficient, and was not completed until 5 months after the fiscal year-end.
  • The University’s property records at June 30, 1999 were not complete or accurate. The quarterly property report filed with the State Comptroller was $18.8 million lower than the amount reported in the financial statements.
  • Our audit disclosed two findings pertaining to the University’s controls over unemployment compensation. During FY1999 the State incurred almost $163,000 in unemployment benefits paid to former or current ISU workers.

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{Financial Information is summarized on the reverse page.}

ILLINOIS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT

For The Year Ended June 30, 1999

FINANCIAL OPERATIONS (CURRENT FUNDS)

FY 1999

FY 1998

REVENUES

Appropriations
Student tuition and fees
Grants, contracts, and gifts
Sales and services of educational departments
Auxiliary enterprises
Other
Payments on behalf of the University

Total

 

$ 81,022,202
71,173,814
26,790,657
6,013,483
48,407,538
7,226,482
25,544,950

$266,179,126

 

$ 75,539,325
65,726,710
23,995,515
4,750,694
47,622,407
8,007,389
23,317,765

$248,959,805

EXPENDITURES AND MANDATORY TRANSFERS

Instruction
Research
Public Service
Academic support
Student services
Institutional support
Operation of plant
Student Aid
Auxiliary enterprises
Mandatory transfers
Payments on behalf of the University
Other

Total

 

$ 75,365,755
12,695,092
9,710,556
12,218,533
21,889,310
19,523,683
22,941,175
16,816,373
36,007,729
13,367,345
25,544,950
852,818

$266,933,319

 

$ 64,945,030
11,811,497
8,022,928
15,174,524
22,562,602
17,437,799
19,321,888
15,453,200
36,907,225
10,275,135
23,317,765
995,647

$246,225,240

SELECTED ACCOUNT BALANCES (ALL FUNDS)

JUNE 30, 1999

JUNE 30, 1998

Cash and short-term investments
Investments
Buildings, land, and equipment
Accrued liability for compensated absences

Fund balances (deficit):

Unrestricted
Restricted
Loan
Plant

$ 161,148
60,692,339
414,919,016
22,007,971

 


( 446,733)
1,455,691
9,832,098
387,727,519

$ 1,637,130
62,445,480
394,205,788
22,532,208

 


4,933,946
3,334,991
9,792,703
364,324,349

SUPPLEMENTARY INFORMATION

JUNE 30, 1999

JUNE 30, 1998

Employment Statistics (Full Time Equivalent)

Faculty/administrative
Civil service
Student employees and miscellaneous contracts

Total Employees

 

1,639.5
1.320.5
740.3

3,700.3

 

1,565.6
1,315.6
743.4

3,624.6

Selected Activity Measures
Annual full-time equivalent students
Cost per full-time equivalent student, based on education and general expenditures from current funds


17,158

$7,930


17,148

$7,369

UNIVERSITY PRESIDENT

During Audit Period: Dr. David A. Strand
Currently: Dr. Victor J. Boschini, Jr.

 

 

 

 

 

 

 

The University preparation of financial statements and other financial reports was not timely or efficient

 

 

 

 

 

ISU staff did not complete the financial statements until 5 months after the University’s fiscal year-end

 

 

 

The University’s quarterly property report, filed with the State Comptroller, was $18.8 million lower than the amount shown in the financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The University lacked formal policies and procedures to review unemployment claims

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By improving the coordination and scheduling of extra help employees, the University could minimize the subsequent unemployment costs incurred by the State

 

 

 

 

 

 

 

 

INTRODUCTION

Our audit of Illinois State University (ISU) is issued in two reports. The Compliance Audit Report contains the audit findings and the supplementary financial information including the federal single audit disclosures. The Financial Audit Report contains the opinion on the financial statements.

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

TIMELINESS AND EFFICIENCY OF FINANCIAL REPORTING

The University’s preparation of financial statements and other financial reports was not timely or efficient. It required numerous combinations, eliminations, and allocations of amounts obtained from the general ledger system, together with information reported by each department and documentation from prior years.

University officials indicated that timing and efficiency was hampered this year due to the staff’s lack of familiarity with the University’s new accounting system. ISU staff did not complete the financial statements until 5 months after the University’s fiscal year-end. (Finding 1, pages 12-13)

The University’s delay in completing the financial statements also caused a delay in the University submission of its GAAP reporting package to the State Comptroller, which was due September 30. (Finding 2, page 14)

University officials agreed with our recommendation to establish and implement a method to prepare the annual University-wide financial statements and submit its GAAP reporting package in a timely and efficient manner.

INACCURATE PROPERTY RECORDS AND REPORTING

The University’s property records were not complete and did not agree with the financial statements. University staff had not reconciled the University’s detailed records with the amounts reported to the State Comptroller. We noted the University’s quarterly property report, filed with the State Comptroller, was $18.8 million lower than the amount reflected on the financial statements. In addition, the University’s records did not contain detail listings of the assets that made up land and site improvements for the auxiliary enterprises.

According to management, these problems resulted in part from difficulties encountered with the conversion of computerized property systems. Failure to maintain complete and accurate fixed asset information results in inaccurate financial information and reduces management oversight controls. (Finding 3, pages 15-16)

We recommended University officials complete the conversion of the University’s fixed asset system, update fixed asset records properly, compile a complete list of real property for the auxiliary enterprises, and reconcile the quarterly reports of fixed assets to both the University’s fixed asset accounting system and the general ledger system.

University officials accepted our recommendation and stated it will reallocate a supervisory position to the fixed asset area to assist the chief accountant in reviewing procedures and fulfilling the recommendations.

MONITORING UNEMPLOYMENT COMPENSATION AND CLAIMS

Our audit disclosed two findings pertaining to the University’s controls over the unemployment compensation paid on its behalf.

Similar to all State agencies and universities, the unemployment claims made by ISU’s extra help employees get paid from the General Revenue Fund appropriations, through the Illinois Department of Employment Security (IDES).

Each calendar quarter, the IDES bills ISU for 20 percent of the unemployment costs paid to its former workers. The remaining 80 percent of the costs is borne by the General Revenue Fund and is not chargeable to or repaid by the University.

Controls To Monitor Unemployment Claims

The University lacked formal policies and procedures to review unemployment claims paid to its former and current employees.

During FY 1999, 58 former or current ISU workers received nearly $163,000 in unemployment benefits. We tested 35 of these employee cases and discovered 9 audit exceptions, with questionable expenditures of State funds.

  • In three cases, individuals were employed by ISU while they were also receiving unemployment benefits. Questionable unemployment benefit payments made in these 3 cases totaled $1,128 for 8 weeks.
  • In four cases, the University did not protest potentially ineligible unemployment claims.
  • In two instances ISU failed to protest claims of faculty members with a history of rehire that were filing for benefits between academic terms. These two individuals went on to be paid $11,825 for 37 weeks of unemployment.
  • In one instance the University failed to protest that the individual resigned from employment. This individual was paid $2,152 for 8 weeks of unemployment.
  • In one instance the University failed to report/protest $567 in vacation payments. The individual received two weeks of unemployment benefits totaling $414.
  • In two cases, the University lacked the necessary documentation to determine the appropriateness of the benefits paid.

We noted that the University did not review the quarterly activity billing statements sent to it by the IDES. Prudent business practice would include a review of these statements to ensure that all charges were actually attributable to former University employees and ensure that properly executed protests to claims were indeed not charged to the University.

We also noted that the University was unable to provide documentation to support responses to the IDES wage inquiries and was untimely in other responses. (Finding 5, pages 19-21)

University officials accepted our recommendation to develop formal policies and procedures to review unemployment benefit activity for eligibility, review quarterly billing statements for accuracy, and respond to related inquiries promptly.

Unemployment Costs Not Reflected In University Budget

Although the University’s use of extra help employees resulted in additional unemployment costs being incurred by the State of Illinois, those costs were not reflected in the University’s budget.

During FY 1999, the State incurred almost $163,000 in unemployment benefits paid to former or current ISU workers. We estimate that about half of the charges pertain to extra help employees who work on an as-needed basis.

The University based its hiring and layoff decisions on the internal budgetary constraints of each University department, without considering the overall financial impact on the State of Illinois’ ultimate unemployment costs.

By improving the coordination and scheduling of extra help employees, the University could minimize the subsequent unemployment costs incurred by the State. (Finding 6, pages 22-23)

University officials agreed with our recommendation to evaluate the overall cost effectiveness of using and scheduling their extra help employees to reduce the overall costs, including unemployment benefits, to the State.

OTHER FINDINGS

The remaining findings and recommendations were less significant and are being given attention by University management. We will review progress toward implementation of our recommendations during our next audit.

University responses were provided by Mr. Ron Jones, Associate Vice President and Comptroller.

AUDITORS' OPINION

Our auditors state the financial statements of Illinois State University as of June 30, 1999, and for the years then ended are fairly presented in all material respects.

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JHL:pp

 

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this engagement were Clifton Gunderson L.L.C.