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REPORT DIGEST SOUTHERN ILLINOIS RESEARCH PARK, INC. (CARBONDALE) COMPLIANCE EXAMINATION For the Two
Years Ended: June 30, 2007 AND FINANCIAL
AUDIT For the Year Ended: June 30, 2007 Summary of
Findings: Total this audit 2 Total last audit 0 Repeated from last audit 0 Release Date: March 6, 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 782-6046 or TTY (888) 261-2887 This Report Digest and the
Full Report are also available on the worldwide web at |
SYNOPSIS
· Southern Illinois Research Park (SIRP) did not have a fraud risk assessment program in place. · SIRP did not adhere to proper cutoff procedures when recording revenues and expenditures as year end. |
SOUTHERN ILLINOIS RESEARCH PARK, INC.
COMPLIANCE EXAMINATION AND FINANCIAL AUDIT
For The Period Ended June 30, 2007
|
FINANCIAL
OPERATIONS (All Funds) |
FY 2007 |
FY 2006 |
|
REVENUES |
|
|
|
Operating revenues.............................................. |
$256,866 |
$111,353 |
|
|
|
|
|
EXPENSES |
|
|
|
Operating expenses.............................................. |
$249,097 |
$123,239 |
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|
|
|
|
Operating income (loss).................................. |
$7,769 |
($11,886) |
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|
|
|
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NONOPERATING REVENUES (EXPENSES) |
|
|
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Interest Income.......................................................... |
$2,910 |
$1,169 |
|
Grant Income............................................................. |
$18,718 |
$212,326 |
|
Net non-operating revenues.................................. |
$21,628 |
$213,495 |
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|
|
|
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Increase in net assets.................................................. |
$29,397 |
$201,609 |
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NET ASSETS |
|
|
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Net Assets – beginning of year................................... |
$360,229 |
$158,620 |
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|
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Net Assets – end of year............................................ |
$389,626 |
$360,229 |
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|
|
|
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OTHER SIGNIFICANT
ACCOUNT BALANCES |
AT JUNE 30, 2007 |
AT JUNE 30, 2006 |
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Cash and Investments.................................................. Deposits with SIU....................................................... Capital Assets, net...................................................... Total Assets............................................................. Due to SIU................................................................. Accounts Payable....................................................... Deferred Revenue....................................................... Total Liabilities........................................................ Net Assets – Invested in capital assets......................... Net Assets – Unrestricted........................................... Total Net Assets...................................................... |
$55,262 $101,749 $266,481 $425,283 $0 $6,926 $28,731 $35,657 $266,481 $123,145 $389,626 |
$60,358 $30,042 $278,618 $401,406 $31,940 $9,237 $0 $41,177 $278,618 $81,611 $360,229 |
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INTERIM EXECUTIVE
DIRECTOR |
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During the audit: Mr. Kyle Harfst Currently: Mr. Kyle Harfst |
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No fraud risk
assessment program in place
SIRP relies on
external audits for identification of control weaknesses
Audits are not a
substitute for management controls SIRP used improper
cutoff when recording year end receipts and expenses, resulting in audit
adjustments |
INTRODUCTION This digest covers our compliance examination and financial audit of the Southern Illinois Research Park, Inc. for the period ended June 30, 2007.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS FRAUD PREVENTION AND DETECTION PROGRAM The Southern Illinois Research Park (SIRP)
does not have a fraud risk assessment program in place. According to SIRP
management, the SIRP has established internal controls in order to prevent
and detect fraud as well as errors that may occur; however, these controls
and associated risks are not monitored on an on-going basis. The SIRP relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, SIRP management has relied on the external audits for identification of control weaknesses. Accounting industry trends have increased organizations’ awareness of the prevalence of fraud. Many organizations rely in part on their auditors to uncover any internal fraud, but audits, even those of the highest quality, are not a substitute for management establishing good internal control. The SIRP is responsible for the development of internal controls and the monitoring of their operating effectiveness. Additionally, it is management’s responsibility to prevent and detect fraud. (Finding No. 1, Page 20)
We recommended that management establish
a continuous written fraud prevention, deterrence and detection program, and
that the Board of Directors evaluate management's identification of fraud
risks and its implementation of anti-fraud measures. SIRP officials agreed with our
recommendation. INTERNAL CONTROL OVER RECEIPTS AND EXPENSES CUT-OFF SIRP
did not adhere to proper cutoff procedures when recording revenues and
expenditures at year end. Our testing
noted three instances where receipts and expenses were being recorded in the
wrong period due to improper cutoff procedures. Audit adjustments were posted to correct these errors; however,
these errors resulting from the use of improper cutoff procedures were
immaterial to the financial statements when considered in the aggregate. SIRP
hired a contract accounting firm in the middle of the year to assist in the
journal entry and financial statement preparation. It appears that June 30, 2006 accruals were cleared out through
entries posted directly to net assets during fiscal year 2007, instead of
properly reversing these accruals.
Posting these entries directly to net assets can lead to the
misstatement of the SIRP’s financial statements and the misrepresentation of
financial position to financial statement readers. Generally
accepted accounting principles require the use of the accrual basis of
accounting. The instances described
above are not in compliance with these standards. (Finding No. 2, Pages
21-22). We
recommended, that SIRP management work with the contract accounting firm on a
closer basis to consistently apply appropriate cutoff procedures on a monthly
basis, in order to correctly reflect year end accruals. SIRP officials agreed with our
recommendation. AUDITORS’ OPINION Our auditors stated the June 30, 2007 financial statements of the Research Park, Inc. are fairly presented in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:KAL :pp SPECIAL ASSISTANT AUDITORS Crowe Chizek & Co., LLC were our special assistant auditors for this audit. |