REPORT DIGEST

 

NORTHERN ILLINOIS UNIVERSITY

 

FINANCIAL AND COMPLIANCE AUDIT

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

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                      4

Total last audit                      3

Repeated from last audit       0

 

Release Date:

February 26, 2004

 

 

 

 

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 TDD (217) 524-4646

 

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

SYNOPSIS

 

  • The University did not properly account for the transactions related to four performance contracts in the financial statements submitted with the GAAP Package to the State Comptroller.
  • The University did not deposit receipts in a timely manner.

 

 

 

 

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the next page.}

 

                                    NORTHERN ILLINOIS UNIVERSITY

                                  FINANCIAL AND COMPLIANCE AUDIT

                               For The Year Ended June 30, 2003 (in Thousands)

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

FY 2003

FY 2002

OPERATING REVENUES

     Student tuition and fees, net

     Grants, contracts, and gifts

     Sales and services of educational departments

     Auxiliary enterprises

     Other

          Total Operating Revenues

OPERATING EXPENSES

     Instruction

     Research

     Public service

     Academic support

     Student services

     Operation and maintenance of plant

     Institutional support

     Depreciation

     Staff benefits

     Student aid

     Auxiliary enterprises

          Total Operating Expenses

Operating loss

NONOPERATING REVENUES (EXPENSES)

     State appropriations

     Investment income

     Interest expense

     Gifts

     Net decrease in fair value of investments

Total Nonoperating Revenues

INCREASE (DECREASE) IN NET ASSETS

Net Assets, beginning of the year

Net Assets, end of the year

 

$70,901

47,639

19,254

78,279

1,903

$217,976

 

$105,260

13,415

21,606

24,282

10,742

29,389

18,169

26,187

43,521

8,075

60,068

$360,714

($142,738)

 

$160,691

602

(9,232)

20,106

(103)

$172,064

$29,326

169,506

$198,832

 

$61,900

36,148

19,249

74,781

506

$192,584

 

$106,673

12,215

20,091

23,660

11,011

22,816

19,368

26,270

44,367

9,683

68,520

$364,674

($172,090)

 

$172,349

2,509

(7,692)

0

(296)

$166,870

($5,220)

174,726

$169,506

ACCOUNT BALANCES (ALL FUNDS)

FY 2003

FY 2002

Cash and cash equivalents

Investments and marketable securities

Capital assets, net

Accrued compensated absences

Revenue bonds payable

$26,332

$26,775

$328,965

$24,174

$119,408

$23,686

$45,691

$293,809

$26,106

$122,933

SUPPLEMENTARY INFORMATION (In whole numbers)

FY 2003

FY 2002

Employment Statistics

Appropriated and Nonappropriated funds:

     Faculty/administrative

     Civil service

     Student employees

     Miscellaneous contracts

          Total Employees

Selected Activity Measures

Fall semester enrollment Ė Undergraduate

Fall semester enrollment Ė Graduate

Fall semester enrollment Ė Professional

 

 

2,170

1,497

517

125

4,309

 

16,298

3,251

409

 

 

2,136

1,534

540

124

4,334

 

15,722

3,008

373

UNIVERSITY PRESIDENT

 

 

During Audit Period: Dr. John G. Peters

Currently: Dr. John G. Peters

 

 

 

 

 

 

Assets and liabilities were understated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receipts totaling $294,264 were not deposited timely

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

IMPROPER ACCOUNTING OF PERFORMANCE CONTRACTS

The University did not properly account for the transactions related to four performance contracts in the financial statements submitted with the GAAP Package to the State Comptroller.

The University entered into multiple performance contracts for the installation of energy conservation measures and related upgrades at various University buildings. The contracts included installment agreements to pay the contractor for the costs of the project. The contracts also include a performance guarantee agreement where the contractor undertakes to reimburse the University for the difference between the total guaranteed savings and the actual savings realized over the installment period.

All of the projects have been completed and the University has title to the energy conservation measures and responsibility for their operations and maintenance. The total installment payments (principal and interest) made on these contracts were recognized as remodeling and renovation expenses when paid. However, generally accepted accounting principles required the University to capitalize the total costs of the project and depreciate the underlying improvements.

The initial financial statements reflected approximate understatements of the following accounts: assets, $5,967,611, liabilities, $5,825,478, and net assets by $141,833. Upon being notified by the auditors of the reporting and recording issues, the University submitted a revised GAAP package and financial statement to reflect the proper accounting of the performance contracts.

We recommended the University establish procedures to ensure that contracts, that include special terms and conditions, be carefully reviewed for proper accounting and recognition of related transactions. If necessary, accounting and reporting guidance should be obtained from technical resources to be in conformity with generally accepted accounting principles. (Finding 1, pages 19-21)

University officials concurred with our recommendation and stated that the GAAP filing and financial statement presentation was adjusted to conform to the proper presentation and recognition for these transactions.

RECEIPTS NOT DEPOSITED TIMELY

The University did not deposit receipts in a timely manner.

During our testing of University cash receipts, we noted that the Bursarís office deposited seven out of the 25 receipt batches tested, totaling $201,977, two to four days after the departmental deposit receipt date. We noted that three departments do not date stamp the supporting receipt documents nor maintain a copy of the check received. Lastly, we noted some departments did not deposit receipts with the Bursarís office timely. Receipts totaling $92,287 were deposited 1 to 60 days after receipt.

University Procedure No. 5-1 states that receipts are to be deposited daily with the Bursarís Office or an authorized depository bank. If the volume of receipts does not warrant a daily deposit, receipts should be deposited no later than five days after receipt or when they amount to $500, whichever comes first.

We recommended that the University establish procedures to review the timeliness of deposits and transmittals from the different receiving departments. Departments should be required to maintain supporting documents for the receipt items and indicate, via a date stamp, the actual date of the cash receipt. (Finding 4, Pages 26-27)

University officials agreed with our finding and stated that the Controllerís Office will remind all departments of their responsibility to make deposits on a timely basis.

 

OTHER FINDINGS

The remaining findings and recommendations were less significant and reportedly 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. Keith Jackson, Controller.

 

 

AUDITORSí OPINION

Our auditors stated the financial statements of Northern Illinois University as of June 30, 2003, 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 The Bronner Group.