REPORT DIGEST

REPORT DIGEST

WESTERN 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 0

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

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

· Federal Perkins Loan borrowers did not receive a final demand letter in a timely manner.

· Federal Perkins Loan borrowers were not contacted 3 times at structured intervals during the initial 9 month grace period.

{Financial Information is summarized on the reverse page.}

WESTERN ILLINOIS UNIVERSITY

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For the Year Ended June 30, 2004

FINANCIAL OPERATIONS	FY 2004		FY 2003
OPERATING REVENUES Tuition and fees, net.......................................................... Auxiliary enterprises, net................................................... Grants and contracts.......................................................... Other..................................................................................... Total Operating Revenues........................................ OPERATING EXPENSES Instruction........................................................................... Research............................................................................... Public service...................................................................... Academic support.............................................................. Student services................................................................. Institutional support.......................................................... Operation and maintenance of plant................................ Student aid........................................................................... Auxiliary enterprises.......................................................... Depreciation........................................................................ On-behalf payments........................................................... Other..................................................................................... Total Operating Expenses......................................... Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) State appropriations........................................................... Capital appropriations........................................................ Gifts....................................................................................... Interest on capital assets - related debt.......................... Investment income............................................................. Other net.............................................................................. INCREASE IN NET ASSETS................................................... Net assets, beginning of year................................................... Net assets, end of year..............................................................	$44,126,804 42,392,818 21,467,731 9,022,362 $117,009,715 $49,082,909 5,148,557 10,721,040 12,065,576 15,625,275 9,420,983 12,483,110 5,498,580 37,122,186 9,606,897 67,284,696 4,364,681 $238,424,490 $(121,414,775) $122,302,896 783,810 3,578,599 (2,556,496) 648,835 362,934 $3,705,803 $87,986,163 $91,691,966		$39,722,720 41,771,909 22,457,224 7,352,841 $111,304,694 $48,942,184 7,473,664 9,537,462 11,812,515 14,062,918 9,311,451 11,892,020 5,144,641 35,103,676 9,429,371 22,210,918 3,846,648 $188,767,468 $(77,462,774) $81,669,728 3,200,708 611,257 (2,718,469) 343,215 (39,329) $5,604,336 $82,381,827 $87,986,163
SELECTED ACCOUNT BALANCES	June 30, 2004		June 30, 2003
Cash and Investments............................................................... Capital Assets, net of accumulated depreciation.................. Accrued Compensated Absences........................................... Revenue Bonds Payable............................................................	$50,062,395 $129,703,354 $18,321,095 $53,440,822		$55,971,585 $120,797,201 $19,262,214 $55,595,402
SUPPLEMENTAL INFORMATION	FY 2004		FY 2003
Employment Statistics
Faculty and Administrative...............................................	1,065		1,050
Civil Service.........................................................................	795		849
Student Employees.............................................................	317		334
Total Employees.........................................................	2,177		2,233
Enrollment Statistics
Fall term enrollment - undergraduate...............................	10,462	10,440
Fall term enrollment -graduate..........................................	1,844	1,972
Fall term enrollment - extension........................................	1,163	1,049
Full-time equivalent cost per student..............................	$8,454	$8,349
UNIVERSITY PRESIDENT
During Audit Period: Dr. Alvin Goldfarb Currently: Dr. Alvin Goldfarb

Perkins Loan borrowers not notified timely

Perkins Loan borrowers not contacted 3 times

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

UNTIMELY FINAL DEMAND LETTERS TO BORROWERS IN DEFAULT

The University did not send a final demand letter to Federal Perkins Loan borrowers in a timely manner, and the date in which the borrowers were required to provide a response was less than the allowed period of time. During our testing of 30 borrowers in default during fiscal year 2004, we noted that 10 out of 30 borrowers were not sent a final demand letter in a timely manner and were not given 30 days from the demand letter's date to respond. The untimely letters ranged from 28 days to 358 days late.

Federal regulations require that a final demand letter be sent 60 days after initial payment was due, informing the borrower that he/she has 30 days to bring the account current; request forbearance, deferment, or cancellation; or make other payment arrangements. (Finding 1, page 14)

University officials responded that the condition described in the finding was also found during an internal audit in 2004 and programming changes were immediately implemented to correct the problems.

INADEQUATE CONTACT WITH PERKINS LOAN BORROWERS

The University did not contact Federal Perkins Loan borrowers 3 times during the initial 9 month grace period, and/or did not contact the borrower at 90 days, 150 days and 240 days as required. During our testing of 30 students in default, we noted that 16 out of 30 borrowers were not contacted three times during the initial grace period. Also, 13 of the 30 borrowers were contacted three times during the initial grace period, but were not contacted at 90 days, 150 days and 240 days.

Federal regulations require contact with a Perkins Loan borrower at structured intervals. The University cited possible programming errors in the system which generates the letters and a change in personnel as the cause of the lack of adequate borrower contact. (Finding 2, pages 15-16)

We recommended the University investigate and resolve the possible programming error and adequately train personnel to ensure the University complies with federal regulations.

University officials concurred with our finding and stated that all recommendations have been implemented.

OTHER FINDING

The remaining finding is less significant and has been addressed by University management. We will review progress toward the implementation of our recommendations in our next examination. University responses were provided by Carole Carter, Internal Audit Director.

AUDITORS' OPINION

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

___________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

BKD, LLP were our special assistant auditors.