REPORT DIGEST

UNIVERSITY OF ILLINOIS

FINANCIAL AUDIT
For the Year Ended: June 30, 2013


Release Date:   January 16, 2014

Summary of Findings:
Total this audit: 2
Total last audit:  2
Repeated from last audit: 2

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 University’s financial audit report consists
of three sets of financial statements as follows
– The financial statements of the University,
and the revenue bond financial statements of the
Auxiliary Facilities System and the Health
Services Facilities System.

This report contains only findings pertaining to
the Financial Statement Audit.

The State Compliance Examination and Federal
Single Audit Reports will be issued at a later
date.

SYNOPSIS

• The University has not established adequate
internal controls over accurately identifying
and recording period end accounts payable and
deferred expense and revenue transactions for
financial reporting purposes.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE YEAR-END EXPENSE ACCRUALS, AND
REVENUE AND EXPENSE DEFERRAL PROCESS

The University has not established adequate
internal controls over accurately identifying
and recording period end accounts payable and
deferred expense and revenue transactions for
financial reporting purposes.

In relation to our testwork over Educational
Activities and Auxiliary Enterprises revenue
transactions, we reviewed 164 revenue
transactions recorded during the fiscal year
totaling $5,737,468. Additionally, we separately
reviewed 31 internal journal voucher revenue
transactions recorded during the fiscal year
(totaling $70,704,670 debits and $38,727,786
credits). In relation to our testwork over
expense transactions, we reviewed 189 cash
disbursement transactions recorded during the
fiscal year (totaling $158,100,167) and 70 cash
disbursements subsequent to year-end (totaling
$86,780,967). Additionally, we separately
reviewed 72 internal journal voucher expense
transactions recorded during the fiscal year
(totaling $129,667,697 debits and $293,900,157
credits).

During our review of these transactions, some of
the items that were not recorded in the proper
accounting periods are as follows:

• Two supplies and services expense transactions
totaling $393,695 that included $387,544 that
were recognized as expense in fiscal year 2013,
which should have been recognized as expense and
accrued for in fiscal year 2012.

• Two supplies and services expense transactions
totaling $3,747,837 that were recognized as
expense in fiscal year 2013, which included
$1,768,266 that should have been deferred as
fiscal year 2013 and recognized as expense in
fiscal year 2014.

• One supplies and services expense transaction
totaling $103,101 that was appropriately
recognized as expense for fiscal year 2013,
which should have been recognized as an accounts
payable and a capitalized advertising cost for
fiscal year 2012. (Finding 1, Pages 5-6) This
finding was first reported in 2009.

We recommended the University review its current
process to assess the completeness and existence
of its revenue and expense transactions at year-
end and consider changes necessary to ensure all
period-end accounts payable, and deferred
revenues and expenses are accurately identified
and recorded.

University officials accepted the recommendation
and stated that they will work to develop and
implement corrective actions to further improve
the year-end process. (For the previous
University response, see Digest Footnote #1.)

OTHER FINDING

The remaining finding relates to inadequate
controls over University procurement card
transactions and is reportedly being given
attention by the University.  We will review the
University’s progress towards the implementation
of our recommendations in our next engagement.

AUDITORS’ OPINION

Our auditors state the June 30, 2013 financial
statements are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:TLK

SPECIAL ASSISTANT AUDITORS

KPMG were our special assistant auditors.

DIGEST FOOTNOTES

 #1 –Inadequate Year-End Accruals Process –
 Previous University Response

Accepted.  The University has already
implemented significant process enhancements in
this area.  Through analysis of the exceptions
identified in the audit, the University will
work to develop and implement corrective actions
to further improve the year-end processes in
this area.