REPORT DIGEST WESTERN ILLINOIS UNIVERSITY SINGLE AUDIT, AND COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2016 Release Date: March 29, 2017 FINDINGS THIS AUDIT: 7 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 1 -- 0 -- 1 Category 2: 3 -- 3 -- 6 Category 3: 0 -- 0 -- 0 TOTAL: 4 -- 3 -- 7 FINDINGS LAST AUDIT: 8 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General FRANK J. MAUTINO, 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 This digest covers our federal Single Audit and Compliance Examination of Western Illinois University (University) for the year ended June 30, 2016. A separate Financial Audit as of and for the year ending June 30, 2016, was previously released on February 2, 2017. In total, this report contains 7 findings, one of which was reported in the Financial Audit. SYNOPSIS • (16-4) The University did not remit excess funds from indirect costs, auxiliary enterprises, and accounting entities due to the Income Fund as required. • (16-6) The University subsidized operations of University activities between accounting entities during Fiscal Year 2016. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NONCOMPLIANCE WITH UNIVERSITY GUIDELINES ON EXCESS FUNDS The University did not comply with the University Guidelines on remittance of excess funds. Although the University calculated excess funds on indirect cost, auxiliary enterprises and accounting entities, they failed to remit amounts due to the Income Fund for the following funds (Finding 4, page 27): Indirect Cost Fund: $435,308 Public Service Fund: $172,042 University Publication Fund: $1,307 Unique Charge Fund: $4,269 Total: $612,926 We recommended the University continue to monitor the activities of each accounting entity and ensure compliance with all the requirements of the University Guidelines. University officials accepted our recommendation and stated they will continue to monitor the activities of each accounting entity and make a decision on remitting excess funds based on the University current resources affected by the State budget impasse. SUBSIDIES BETWEEN ACCOUNTING ENTITIES The University subsidized operations of University activities between accounting entities during Fiscal Year 2016. Activities are functions which are self- supporting in whole or in part, which are directly related to instructional, research or service units. The University Stores and Service Centers accounting entities had negative cash balances at the beginning and the end of the fiscal year totaling $1.8 million and $1.1 million, respectively A negative cash balance is, in effect, an unrecorded interfund payable/receivable, thereby causing a subsidy between funds to occur. The University Stores and Service Centers operate stores and maintenance service centers for all units of the University. As of June 30, 2016, this accounting entity had accounts receivable and inventories totaling $1.0 million. (Finding 6, pages 30-31) This finding was first reported in 2012. We recommended the University continue to annually review the activities of each accounting entity, ensure that fees charged for services are sufficient to cover expenditures, and take appropriate corrective actions to ensure subsidies between accounting entities do not continue. University officials agreed with our finding and stated they will continue to monitor all accounting entities for negative trends and take corrective actions as necessary. (For previous University response, see Digest Footnote #1.) OTHER FINDINGS The remaining findings are reportedly being given attention by the University. We will review the Agency’s progress towards the implementation of our recommendations in our next engagement. AUDITOR’S OPINION The financial audit report was previously released. The auditors stated the financial statements of Western Illinois University as of June 30, 2016, and for the year ended, are fairly stated in all material respects. The auditors also conducted a Single Audit of the University as required by the Uniform Guidance. The auditors stated the University complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on the Agency’s major federal programs for the year ended June 30, 2016. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of Western Illinois University for the year ended June 30, 2016, as required by the Illinois State Auditing Act. The accountants stated the University complied, in all material respects, with the requirements described in the report. This Single Audit and State compliance examination were conducted by the firm of Adelfia LLC. BRUCE L. BULLARD Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:lkw DIGEST FOOTNOTES #1 – Subsidies between Accounting Entities 2015: The University agrees with the finding. The University effective September 1, 2015 restructured a service center to offload expenses and maintain a cash positive operation. The University will continue to monitor all accounting entities for negative trends and make adjustments as necessary.