REPORT DIGEST

GOVERNORS STATE UNIVERSITY

FINANCIAL AND COMPLIANCE AUDIT
(In accordance with the Single Audit Act of 1984, and OMB Circular A-133)
For the Year Ended:
June 30, 1996

Summary of Findings:

Release Date:
May 15, 1997

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

SYNOPSIS

• The University did not properly account for equipment and maintain adequate property control records. Many equipment items tested could not be located, were not recorded on property control records, or were not in the specified location. This finding has existed since 1995.

• The University did not enforce its telecommunications policy which resulted in inadequate controls over telephone usage and reimbursement. This finding has existed since 1994.

• The University did not obtain time estimates or give prior written approval to full-time faculty who performed outside consulting or research activities.

• Federal Direct Loan Program costs of $4.3 million were questioned due to lack of required monthly reconciliations of records.

• Our auditors' opinion on the University's financial statements was qualified due to inadequate detailed records to support the balance for equipment in the Plant Funds.

{Financial Information is summarized on the reverse page.}

FY 1996

FY 1995

$ 19,345,312
11,494,094
8,301,495
609,214
3,724,165
5,336,363
$ 48,810,643

$ 17,098,952
28,686
1,056,515
1,704,332
6,559,731
13,241,040
3,862,459
4,379,734
348,098
993,831
66,102
$ 49,339,480

$ 19,392,900
10,645,109
3,915,461
295,217
3,421,359
5,120,885
$ 42,790,931

$ 16,505,257
24,851
936,905
1,705,336
2,042,305
11,633,941
3,671,203
4,866,338
339,367
290,901
65,785
$ 42,082,189

JUNE 30,
1996

JUNE 30,
1995

$ 1,817,914
7,994,441
64,070,666
7,502,435

(5,435,381)
30,656
2,846,655
71,160,887

$ 3,210,871
7,534,680
61,900,495
7,186,929

(4,906,544)
29,983
2,577,560
68,219,131

FY 1996

FY 1995

312.9
261.8
32.5

56.2
35.1
59.2
757.7

1,970
1,738
$10,643

293.1
281.2
34.6

35.8
38.6
53.3
736.6

1,887
1,738
$8,444

Inaccurate equipment and property control records

Internal controls over telecommunications not enforced

No prior approval or time estimates obtained from faculty

No monthly reconciliations of Federal Direct Loan Program

FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS

INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT

 

The University did not properly account for equipment and maintain accurate property control records. Equipment items totaling $11,365 could not be located, and other items were not in the locations indicated on records, and several items could not be traced to property control records.

 

Also, equipment transferred in was not recorded and the fixed asset reports submitted to the Comptroller were both inaccurate and filed late. (Finding 4, page 10) This finding has been repeated since 1995.

 

We recommended the University take a complete, properly supervised physical inventory of equipment and adjust their property control records accordingly. University officials agreed with our recommendation and stated that procedures are in place to implement our recommendations. (For the previous agency responses, see Digest Footnote 1.)

 

INEFFECTIVE TELECOMMUNICATIONS CONTROLS

 

The University has a formal telecommunications policy governing usage and review of phone bills; however, this policy has not been enforced. University department heads have the responsibility to review the propriety of calls charged to their departments and take appropriate action. We found that calls in excess of five dollars, both out-of-state and international, did not have explanations. Also, we found that some personal calls were not reimbursed to the University as required by the Dept. of Central Management Services policy. (Finding 5, page 12) This finding has been repeated since 1994.

 

We recommended the University improve internal controls over telecommunication expenditures by enforcing its policy requirements and procure reimbursement for personal calls.

 

University officials agreed with our recommendation and stated they will strictly enforce its policy regarding department review. (For previous agency responses, see Digest Footnote 2.)

 

NONCOMPLIANCE WITH UNIVERSITY FACULTY RESEARCH AND CONSULTING ACT

 

The University did not obtain time estimates from, or give prior written approval to, full-time faculty who perform outside consulting or research activities. Seven faculty members of the University performed such outside services. The forms utilized by the University did not require prior approval and estimated time as required by the University Faculty Research and Consulting Act (110 ILCS 100/1). (Finding 3, page 9)

 

We recommended the University revise its procedures to obtain time estimates and approval in advance. University officials agreed with and will implement our recommendation.

 

FEDERAL DIRECT LOAN PROGRAM QUESTIONED COSTS

 

The University's procedures for the Federal Direct Loan Program needed improvement. There were 5 promissory notes not signed by the students and 15 disbursements to students that were not in agreement with the promissory notes. Also, no monthly reconciliations of the entire Federal Direct Loan Program records were performed. Due to these deficiencies, program costs of $4,351,215 were classified as questioned costs. (Finding 14, page 16)

 

University officials agreed with this finding and reported that they have implemented corrective action.

 

OTHER FINDINGS

 

The remaining findings and recommendations were less significant and have been given appropriate attention by University management. We will review progress toward implementation of our recommendations during our next audit. University responses were provided by Mr. James Alexander, Vice President of Administration and Planning.

AUDITORS' OPINION

Our auditors' opinion on the financial statements of Governors State University for the year ended June 30, 1996 was qualified because of inadequate equipment records to support the amounts recorded for equipment in the plant funds. (See Finding 1 above.)

_____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:ROQ:ak

 

SPECIAL ASSISTANT AUDITORS

Nykiel, Carlin, Lemna & Co. were our Special Assistant Auditors for this audit.

DIGEST FOOTNOTES

#1 INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT

1995: "The University is aware of the problem and will take appropriate corrective action during this fiscal year."

#2 INEFFECTIVE TELECOMMUNICATION CONTROLS

1995: "The University agrees with the finding and will take action to improve and enforce internal controls over telecommunication expenses."

1994: "The University accepts the finding and will take action to assure that department heads effectively comply with the telecommunications policy."