REPORT DIGEST

 

ILLINOIS STATE UNIVERSITY FOUNDATION

 

COMPLIANCE EXAMINATION

For the Two Years Ended

June 30, 2006

 

Summary of Findings:

Total this audit 1

Total last audit 2

Repeated from last audit 1

 

Release Date:

 March 29, 2007

 

 

 

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 Foundation and University Athletic Department did not properly control pre-numbered raffle tickets.

 

 

 


ILLINOIS STATE UNIVERSITY FOUNDATION

COMPLIANCE EXAMINATION

For the Year Ended June 30, 2006

 

FINANCIAL OPERATIONS

FY2006

FY2005

 

OPERATING REVENUES

 

 

 

Service contract with University.....................................

$260,000

$260,000

 

Other Operating Revenues.............................................

60,836

47,090

 

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

320,836

307,090

 

OPERATING EXPENSES

 

 

 

Student Aid, scholarships and awards............................

$1,844,541

$1,396,026

 

Expenditures on behalf of ISU departments and programs

 

3,355,438

 

3,385,697

 

Other Operating Expenses.............................................

925,716

862,439

 

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

6,125,695

5,644,162

 

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

($5,804,859)

($5,337,072)

 

NONOPERATING REVENUES (EXPENSES)

 

 

 

Contributions gifts and donations................................

$11,169,963

$5,717,834

 

Interest on capital related debt.......................................

(17,509)

(39,970)

 

Investment income (loss)...............................................

5,464,006

4,301,005

 

Expenditures for ISU capital projects.............................

(3,636,069)

(7,296,582)

 

Other............................................................................

776,942

752,524

 

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

$13,757,333

$3,434,811

 

Income (loss) before additions to permanent endowments.............................................................................

$7,952,474

($1,902,261)

 

Additions to permanent endowments.............................

$2,112,453

$3,900,171

 

Increase in net assets...............................................

$10,064,927

$1,997,910

 

 

 

 

 

NET ASSETS

 

 

 

Net Assets-beginning of year ........................................

$68,024,475

$66,026,565

 

Net Assets-end of year.................................................

$78,089,402

$68,024,475

 

 

OTHER SIGNIFICANT ACCOUNT BALANCES

AT JUNE 30, 2006

AT JUNE 30, 2005

 

Cash and Investments........................................................

$72,849,633

$61,264,675

 

Total Assets....................................................................

$79,377,672

$69,224,808

 

Long-Term liabilities..........................................................

$551,946

$697,040

 

Total Liabilities...............................................................

$1,288,270

$1,200,333

 

Net Assets Restricted-Nonexpendable............................

$47,640,533

$41,025,261

 

Net Assets Restricted-Expendable..................................

$27,419,289

$24,311,808

 

Total Net Assets.............................................................

$78,089,402

$68,024,475

 

MANAGING DIRECTOR

During Audit Period: Dr. Susan Kern (July 1, 2004 to June 30, 2005) Dr. Dianne Ashby (current)

Currently: Dr. Dianne Ashby


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potential revenue for tickets not accounted for was estimated to be $19,000 and $25,000 for fiscal years 2006 and 2005, respectively

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

Our report covers the compliance examination for the two years ended June 30, 2006.

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

NEED TO IMPROVE CONTROLS OVER RAFFLE TICKETS

 

The Foundation and University Athletic Department did not properly control pre-numbered raffle tickets. The proceeds of the raffle went to the Foundation.

 

During our testing we noted the Athletic Department held a raffle to benefit athletics during both fiscal year 2006 and 2005. Approximately 20,100 and 17,600 tickets were distributed for sale for fiscal years 2006 and 2005, respectively. The individuals selling the tickets were asked to return unsold tickets. Tickets not accounted for approximated 4,300 and 5,400 for 2006 and 2005, respectively. The potential revenue for tickets not accounted for was estimated to be $19,000 and $25,000 for fiscal years 2006 and 2005, respectively. The events generated $34,000 and $38,200 of revenue for the Foundation in fiscal years 2006 and 2005, respectively.

 

Failure to adequately control raffle tickets and receipts does not promote accountability. In addition, purchased tickets could be excluded from the raffle drawing. (Finding 1, page 10) This finding was first reported in 1998.

 

We recommended that the Foundation work with the Athletic Department to improve procedures to track and account for pre-numbered raffle tickets. Further, the Athletic Department should account for all unsold tickets to ensure all funds raised have been properly turned over to the Foundation and included in the raffle drawing.

 

Foundation officials stated the raffle is not a function of the Foundation and the Foundation does not run or manage any part of the raffle. However, since the proceeds of the Athletic Department raffle are deposited with the Foundation, the Foundation will work with Athletics with the goal of Athletics adopting appropriate internal controls associated with the current raffle. Whether or not a raffle that results in funds deposited to the Foundation will continue beyond fiscal year 2007 will be determined once the current raffle has been completed and evaluated. (For previous Foundation response, see Digest Footnote)

 

 

AUDITORS' OPINION

 

Our auditors stated the financial statements of the Illinois State University Foundation as of June 30, 2006, and for the year then ended, are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:CML:pp

 

 

 

SPECIAL ASSISTANT AUDITORS

 

Our special assistant auditors for this engagement were Nykiel, Carlin & Co.

 

 

DIGEST FOOTNOTE

 

LACK OF CONTROLS OVER PRE-NUMBERED RAFFLE TICKETS Previous Foundation Response

 

2004: Accepted. Foundation officials agreed with our recommendation and stated they will work with the Athletic Department to develop and implement procedures to track pre-numbered raffle tickets including a reconciliation of funds received and unsold tickets.