REPORT DIGEST CHICAGO STATE UNIVERSITY (In accordance with the Single Audit Act and OMB Circular A-133) For the Year Ended: Summary of Findings: Total this audit 8 Release Date: State of Illinois Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL To obtain a copy of the Report contact: (217)782-6046 or TDD (217) 524-4646 This Report Digest is also available on |
SYNOPSIS
{Financial Information is summarized on the reverse page.} |
CHICAGO STATE
UNIVERSITY
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2002
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS | FY 2002* |
OPERATING
REVENUES Student tuition and fees (net of scholarship allowances of $5,445,710) Total Operating Revenues OPERATING EXPENSES Instruction Total Operating Expenses Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) State appropriations INCREASE IN NET ASSETS Net assets, beginning of the year
(restated) |
$13,918,162 $41,330,142
$41,129,436 $98,253,316 $(56,923,174)
$43,528,600
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SELECTED ACCOUNT BALANCES | JUNE 30, 2002 |
Cash and
investments Capital assets, net of accumulated depreciation Revenue bonds payable Accrued compensated absences |
$7,446,531 |
SUPPLEMENTARY INFORMATION (Unaudited) | FY 2002 |
Employment
Statistics Faculty/administrative Total Employees Selected Activity Measures Students (Spring Term) |
986 1,379
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UNIVERSITY PRESIDENT | |
During
Audit Period: Dr. Elnora Daniel Currently: Dr. Elnora Daniel |
* Due to the change in accounting principles related to the implementation of GASB Statements No. 34,35,37,38,and 39 comparative information was not presented. Comparative information will be presented in future periods.
Need to improve controls over property
Need to improve cash management and reporting for federal grants
Need to monitor and comply with telecommunication policies and procedures
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FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS PROBLEMS WITH PROPERTY CONTROL PROCEDURES We noted instances of non-compliance with the State Property Control Act regarding the University's fixed asset records and reports. The State Property Control Act states "each responsible officer shall maintain a permanent record of all items of property under his jurisdictions and control." Several different types of exceptions were noted during our testing of property. The exceptions that occurred were in the functions of recording, tagging, and disposing of equipment. Additionally, there were several exceptions noted with regards to the location of the equipment when we performed a physical inventory inspection. Strong internal controls dictate that the University update and maintain a permanent and accurate record of property and equipment. Failure to maintain control over equipment could result in theft or misuse of equipment. (Finding 7, pages 33-34). This finding has been repeated since 1997. We recommended the University maintain accurate records of equipment in accordance with established internal control to ensure compliance with statutory requirements. University officials responded that they agree with the recommendation. The University plans to hold re-orientation sessions for staff responsible for property control. These sessions would include training on reporting, interim physical verification of property assignments, disposition and transfers. The property accountant will perform reconciliations of equipment purchases with property additions in the fixed asset system. The University will continue its efforts to maintain accurate records of equipment. See Digest Footnote #1 for previous agency responses. PROBLEMS IN MONITORING FEDERAL GRANTS The University's systems for compliance with the federal regulations for cash management and reporting need improvement. When a funding period is specified, the recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the Federal awarding agency. Also, an entity that receives government assistance is responsible for ensuring that the entity complies with the laws and regulations applicable to its activities. We noted the following exceptions:
Failure to adequately monitor federal awards may result in a future loss of funds due to noncompliance with federal requirements. (Finding 4, pages 26-28). We recommended the University establish policies and procedures that ensure compliance with federal rules and regulations and that expenditures are reported on the Schedule of Federal Awards in the period to which they are applicable in accordance with OMB Circular A-110. This practice will prevent the distortion of current year expenditures and does not preclude the reconciliation of the Schedule of Federal Awards to the general ledger. University officials responded that they agree with the recommendation. They stated that they would adopt proper policies and procedures to ensure compliance with the applicable federal rules and regulations. TELECOMMUNICATION POLICIES AND PROCEDURES NOT FOLLOWED The University did not ensure compliance with telecommunication policies and procedures regarding cellular phone usage and personal and long distance telephone calls. Telecommunication policies and procedures on cellular telephones, pagers and calling cards are not readily accessible to all employees and are not specific as to issuance, usage and revocation of these devices. There were two instances of unauthorized purchases of cellular telephones and four phones that were not registered with the Office of Telecommunications. Additionally, the University did not review the usage for unusual and/or personal phone calls for one month selected for testing. Per our discussions with University personnel, they cited these errors as due to a lack of adequate controls and insufficient staff allocated to this area. Adequate internal controls dictate that management establishes procedures to ensure that telecommunication policies are adhered to and followed. The failure to adhere to these policies and procedures could result in unauthorized expenditures and increases the risk that irregularities could exist without being detected. (Finding 6, Pages 31-32) We recommended to the University that they establish and comply with policies and procedures to ensure telecommunications expenditures are for authorized purposes. University officials stated that they agreed with the recommendation and that they have implemented certain controls that would address this finding. Documentation of the corrective action taken by the University will be available to us during next years audit. OTHER FINDINGS The remaining findings are reportedly being given attention by University officials. We will review progress toward implementation of our recommendations in our next audit. University responses to the findings were provided by the President, Dr. Elnora D. Daniel in a letter dated April 4, 2003. AUDITORS OPINION Our auditors state the financial statements of Chicago State University and its Revenue Bonds as of June 30, 2002 and for the year then ended are fairly presented in all material respects.
___________________________________ WILLIAM G. HOLLAND, Auditor General WGH:TLK:pp SPECIAL ASSISTANT AUDITORS Washington, Pittman & McKeever, LLC were our special assistant auditors for this audit. DIGEST FOOTNOTE #1 CONTROLS OVER FIXED ASSETS - Previous Agency Responses2001: 2000: The University concurs with the recommendation. The actual locations of the twenty-three equipment items were identified during the physical inventory and the equipment records were updated accordingly. The twenty-two items not initially located were all subsequently found by University personnel. The University has updated the property records for the correct location of all property items as identified in the reconciliation of the physical count conducted. The University will continue its efforts to maintain accurate records of equipment and will implement appropriation policies and/or procedures to comply with the statutory requirements and internal control procedures. This finding should not repeat in fiscal year 2001. 1999: We agree. We are in the process of performing a comprehensive physical inventory of equipment. We will also be able to reconcile physical inventory to the property control records and general ledger. Any differences will be investigated and resolved. The University has a policy on equipment transfers, which we will enforce. We have also required that tag numbers accompany the supporting documentation in order to process an item for payment. This will assure that all new purchases are inventoried and tagged. 1998: We agree. The University will comply with SAMS classification guidelines for capital leases. Also, additional inventory testing for property and control will be performed. 1997: We agree. |