REPORT DIGEST

SOUTHERN ILLINOIS UNIVERSITY

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

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

For the Year Ended:

June 30, 2004

Summary of Findings:

Total this audit                          3

Total last audit                          3

Repeated from last audit           0

Release Date:

March 16, 2005 

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 TTY (888) 261-2887

This Report Digest is also available on

the worldwide web at

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

SYNOPSIS

¨      The University did not file all required contracts and leases with the Office of the Comptroller.

¨      Vouchers from both University campuses were coded with the wrong SAMS object code.

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

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

FY2004

FY2003

(Restated)

OPERATING REVENUES

      Student tuition and fees.....................................
Auxiliary enterprises...........................................

      Grants and contracts.................................................

      Sales and services of educational activities..............

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

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

OPERATING EXPENSES

      Instruction......................................................................

      Research................................................................

      Public services..............................................................................

      Academic support.....................................................................

      Student services............................................................................

      Institutional support...................................................................

      Operation and maintenance of plant......................................

      Scholarships and fellowships.....................................................

      Auxiliary enterprises................................................................

      Depreciation............................................................................

      Additional on-behalf SURS allocation for unfunded liability.........
Other.....................................................................................
Total Operating Expenses.................................................

Operating Loss.......................................................................

NONOPERATING REVENUES (EXPENSES)

      State appropriations.................................................................

      Payments on behalf of the University......................................

      Additional on-behalf SURS allocation for unfunded liability....

      Other nonoperating revenues (expenses), net........................

        Net Nonoperating Revenues (Expenses)...........................

Income (Loss) Before Capital Contributions.......................

      Capital appropriations, additions to endowments and capital grants and gifts.

INCREASE IN NET ASSETS..............................

Net assets, beginning of the year (restated)..................................

Net assets, end of the year.............................................

$128,651,935

70,679,014

88,010,306

72,907,124

468,086

$360,716,465

$225,548,481

48,493,944

52,498,428

92,270,967

47,787,416

58,298,105

59,610,827

18,501,136

70,637,616

29,140,624

141,111,746

90,328

$843,989,618

($483,273,153)

$213,458,064

92,928,477

141,111,746

24,202,508

$471,700,795

($11,572,358)

$20,719,758

$9,147,400

$346,283,162

$355,430,562

        $114,958,280

            64,914,964

            81,993,496

            69,202,526

                 364,298

    $331,433,564

        $215,399,317

            45,042,557

            53,751,664

            80,617,219

            42,418,011

            57,209,271

            59,180,579

            18,032,631

            61,046,594

            28,585,677

                            0

                (65,467)

    $661,218,053

  ($329,784,489)

        $227,406,113

            75,905,748

                            0

            38,322,584

    $341,634,445

       $11,849,956

          $45,519,549

$57,369,505

        $288,913,657

       $346,283,162

SELECTED ACCOUNT BALANCES

JUNE 30, 2004

JUNE 30, 2003

Cash and investments......................................................

Capital assets, net of accumulated depreciation............

Revenue bonds, notes payable and capital lease obligations.

Accrued compensated absences...........................................

Net assets.............................................................................

$197,004,741

$449,902,411

$151,881,739

$44,430,126

$355,430,562

$170,668,713

$432,434,427

$157,524,290

$46,709,694

$346,283,162

SUPPLEMENTAL INFORMATION (Unaudited)

Fall Term 2003

Fall Term 2002

Employment Statistics

                Carbondale............................................

                Edwardsville.............................................

                Total.........................................................................

6,437

2,730

9,167

6,589

2,772

9,361

Enrollment Statistics

                Carbondale........................................

                Edwardsville...................................

                Total.....................................................................

17,600

10,604

28,204

17,910

10,124

28,034

UNIVERSITY PRESIDENT

During Audit Period: Dr. James E. Walker

Currently: Dr. James E. Walker

Contracts and leases sampled and not filed with the Comptroller’s Office totaled almost $21 million

A computer system error caused certain vouchers to be incorrectly posted as commodities vouchers

INTRODUCTION

      Our 2004 audit of Southern Illinois University is presented in three volumes: Compliance Examination; Financial Audit; and Supplementary Financial Information.  The findings and recommendations are contained in the Compliance Examination volume.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO FILE CONTRACTS AND LEASES WITH THE OFFICE OF THE STATE COMPTROLLER

      Contracts and leases from all campuses (Carbondale, Edwardsville and School of Medicine) were not filed with the Office of the Comptroller, as required by the Statewide Accounting Management System (SAMS procedure 15.20.10).  This procedure requires contracts and leases paid from locally held funds to be filed with the Comptroller’s Office.

      Out of a sample of 25 contracts and 15 leases, 24 (96%) contracts and 12 (80%) leases were not filed with the State Comptroller’s Office.  The contracts and leases not filed totaled $20,954,430.  For Carbondale, the ten contracts we tested totaled $14,051,853, with one contract being a book-publishing contract with an open-ended amount.  For Edwardsville, the ten contracts we tested totaled $4,394,833.  For the School of Medicine, the four contracts not properly filed totaled $673,015.  The leases required to be filed totaled $156,668, $287,691, and $1,390,370 for Carbondale, Edwardsville, and the School of Medicine, respectively.

      University personnel believed that contracts and leases paid from locally held funds did not have to be filed with the Office of the State Comptroller.  (Finding 1, pages 19-20)

      We recommended the University file contracts and leases with the Office of the Comptroller as required.

      University officials stated they have implemented our recommendation.

NEED TO IMPROVE EXPENDITURE CLASSIFICATIONS

      Vouchers from the Carbondale and Edwardsville campuses were not coded with the correct SAMS object code.

      Out of a sample of 25 commodities vouchers tested, 4 vouchers (16%) were incorrectly classified.  Three of these vouchers were coded as commodities expenditures and should have been coded as equipment expenditures, while one was coded as commodities expenditures and should have been coded as landscaping expenditures.

      Per University officials, the three equipment vouchers that were miscoded as commodities were due to an automatic computer system change.  The unit price was erroneously entered as $1, and consequently, the system switched the coding and posted the transactions to commodities.  The remaining coding error was the result of a manual data entry error.

      University officials indicated that new codes have been established which should eliminate the automatic change process.  (Finding 2, pages 21-22)

      We recommended the University continue to use the newly established codes, and monitor the processing of transactions to ensure additional system deficiencies do not cause future errors.

      University officials stated they have implemented our recommendation.

OTHER FINDINGS

      The remaining finding is less significant and is reportedly being given attention by the University.  We will follow-up on all findings in our next audit of the University.

      Mr. Ron Cremeens, Internal Audit Director, provided the University's responses.

AUDITORS’ OPINION

      Our auditors stated the financial statements of the University as of June 30, 2004 and for the year then ended are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KAL:pp

SPECIAL ASSISTANT AUDITORS

      Kerber, Eck & Braeckel LLP were our special assistant auditors for this audit.