REPORT DIGEST

 

NORTHERN ILLINOIS UNIVERSITY

COMPLIANCE EXAMINATION

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

For the Year Ended:

June 30, 2007

 

Summary of Findings:

Total this year

   - Financial Audit            2*    

   - Compliance Audit        4

                                            6

Total last year

   - Financial Audit            2*

   - Compliance Audit        2

                                            4

Repeated from last year

   - Financial Audit            1*

   - Compliance Audit        1

                                            2     *Financial Audit Previously Released    

 

Release Date:

May 22, 2008

 

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

www.auditor.illinois.gov

 

 

 

INTRODUCTION

 

      The Financial Audit for the year ended June 30, 2007 was previously released on March 25, 2008.  That audit contained two findings which pertained to significant deficiencies in internal control over financial reporting (numbers 1-2) and one prior year finding not repeated (number 3). 

 

      This report addresses findings pertaining to the State Compliance Examination and Federal Single Audit conducted in accordance with OMB Circular A-133.  In total this document contains four audit findings (numbers 4-7). 

 

SYNOPSIS

 

 

·        The University understated its cash and investment balances reported to the Illinois Office of the Comptroller on its locally held funds report for June 30, 2007 by $31 million.

 

·        The University did not obtain timely approval for outside research or consulting activities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 


NORTHERN ILLINOIS UNIVERSITY

COMPLIANCE EXAMINATION

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

For The Year Ended June 30, 2007

 

 

COMPARATIVE SCHEDULE OF INCOME FUND REVENUES AND EXPENSES

FY 2007

FY 2006

INCOME FUND REVENUES

  Tuition, net of waivers...........................................................

  Material fees........................................................................

  Extension...............................................................................

  Interest income.....................................................................

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

    Total Income Fund Revenues.........................................

INCOME FUND EXPENSES

  Personal services..................................................................

  FICA/Medicare....................................................................

  Contractual services..............................................................

  Travel..................................................................................

  Commodities.........................................................................

  Award/grants and matching funds..........................................

  Equipment and library books..................................................

  Telecommunications...............................................................

  Automotive...........................................................................

  Capital repairs and permanent improvements..........................

  CMS health insurance...........................................................

  Unemployment compensation benefits....................................

    Total Income Fund Expenses..........................................

 

$97,087,230

5,496,245

5,346,207

2,298,091  1,028,749

$111,256,522

 

$65,003,835

1,666,255

22,622,266

1,102,634

1,801,989

1,463,457

  126,643

1,303,225

177,651

 4,867,241

1,204,000 

39,449

$101,378,645

 

$90,350,856

5,290,947

5,025,919

1,718,248 1,053,854

$103,439,824

 

$58,246,785

1,452,603

20,548,519

1,084,272

1,971,448

2,533,050

2,013,070

1,269,631

185,173

13,088,449

1,204,000

28,839

$103,625,839

SUPPLEMENTARY INFORMATION (Unaudited)

FY 2007

FY 2006

Employment Statistics

Appropriated and Nonappropriated funds:

  Faculty/administrative............................................................

  Civil service..........................................................................

  Student employees................................................................

  Miscellaneous contracts.........................................................

    Total Employees..............................................................

Selected Activity Measures

Fall semester enrollment – Undergraduate................................

Fall semester enrollment – Graduate.........................................

Fall semester enrollment – Professional....................................

 

 

2,210

1,462

521

   147  

4,340

 

17,107

3,043

385

 

 

2,187

1,453

533

   148  

4,321

 

16,768

3,077

415

UNIVERSITY PRESIDENT

 

 

During Audit Period and Currently:  Dr. John G. Peters

 

 



 

 

 

 


             

Cash and investments understated by $31 million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

University disagrees

 

 

 

 

Auditors’ comment 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outside research and consulting not approved timely

 

 

 

Approvals were late

 

 

 

 

Prior written approval required

 

 

 

 

 

 

 

 

 

 


The University agreed with the recommendation but not the facts as presented

 

 

 

 

 

 

Auditors’ comment

 

 

 

 

 

 

 

 

 

 

 

 


Documentation did not support compliance

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

NEED TO IMPROVE LOCALLY HELD FUNDS REPORTING

 

      The University understated its cash and investment balances reported to the Illinois Office of the Comptroller on its locally held funds report for June 30, 2007 by $31 million. 

 

      During our compliance examination we noted the cash and investment balance reported to the Comptroller’s Office on its quarterly “Report of Receipts and Disbursements of Locally Held Funds” (Form C17) for the quarter ended June 30, 2007 was $31 million less than the cash and investment amounts reported in its June 30, 2007 financial statements.   

 

      University personnel stated that the understatement of the cash and investment balances was the result of timing differences and the basis of accounting used to prepare the different reports.  (Finding 5, page 20)

 

      We recommended the University improve its procedures for preparing the locally held funds report so that year-end cash and investment balances agree to those reported in its financial statements. 

 

      University officials disagreed with the finding.  The University management stated it prepares and files the required form by the mandated due date of July 31 and all cash and investment activity for the fiscal year is properly disclosed by the GAAP package deadline of September 30. 

 

      In an auditors’ comment auditors noted the University disagreed with the finding but did not dispute the facts as stated in the finding that cash and investments reported to the Illinois Office of the Comptroller were understated by $31 million for the quarter ended June 30, 2007.  We continued to urge the University to comply with Statewide Accounting Management System Procedures and file an accurate locally held fund report by the reporting deadline.

 

 

 

 

 

COMPLIANCE WITH UNIVERSITY FACULTY RESEARCH AND CONSULTING ACT

 

      University faculty did not obtain timely approval for outside research or consulting activities.

 

      During our testing of 25 faculty requests for approval of outside consulting or research, we noted that 9 of the requests (36%) were not approved until after the estimated start dates for the outside consulting or research.  The approvals ranged from 2 to 163 days late. 

 

      The University Faculty Research and Consulting Act (110 ILCS 100/) requires “prior written approval of the President of that institution, or a designee of such President, to perform the outside research or consulting services...”  University procedures require such requests be submitted to the Office of the Provost for approval prior to the start of any work.  (Finding 6, pages 21-22)

 

      We recommended the University comply with the Act and communicate its procedures and the requirements of the University Faculty Research and Consulting Act to the faculty.

 

      The University agreed with the recommendation, but did not agree with the facts as presented.  The form requires the faculty to give an estimated date for when their services will be used outside of the University.  The external auditors have interpreted the estimated date to be the date that work is actually performed.  The auditors have used the estimated date in their testing criteria as opposed to the date that the faculty signed the form.  Further, University officials stated they would do a thorough review of the form to eliminate potentially confusing data elements while maintaining compliance with the Act.

 

      In an auditors’ comment auditors noted the University’s request for approval forms for outside consulting and research included only the estimated start date for outside consulting and research.  The University asked auditors to correlate the faculty’s signature date with the start date of the outside consulting and research absent any documentary evidence that any such correlation exist.  If the estimated date used by the auditors is not valid as the University is stating in its response, then no valid start date exists on the form.  In either scenario, the University’s documentation did not support compliance with the University Faculty Research and Consulting Act.  We continued to recommend the University comply with the Act.

                 

 

OTHER FINDINGS

 

      The remaining findings are reportedly being given attention by the University.  We will review the University’s progress toward the implementation of our recommendations in our next compliance examination. 

 

 

AUDITORS' OPINION

 

      We conducted a compliance examination of the University for the year ended June 30, 2007 as required by the Illinois State Auditing Act, the Single Audit Act and OMB Circular A-133.  A financial audit and report required under Government Auditing Standards covering the year ending June 30, 2007 were issued separately. 

 

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

 

SPECIAL ASSISTANT AUDITORS

 

Our special assistant auditors were Clifton Gunderson LLP.