REPORT DIGEST NORTHEASTERN ILLINOIS UNIVERSITY FINANCIAL AUDIT For the Year Ended: June 30, 2013 Release Date: December 19, 2013 Summary of Findings: Total this audit: 1 Total last audit: 1 Repeated from last audit: 1 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 SYNOPSIS The University did not properly identify all students who withdrew from the University and did not determine or return the unearned portion of Title IV aid provided to all students who withdrew from the University. This resulted in inaccuracies in the amounts reported in the financial statements and noncompliance with federal regulations. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS FAILURE TO IDENTIFY AND REFUND TITLE IV AID IN A TIMELY MANNER The University did not properly identify all students who withdrew from the University. The University also did not determine or return the unearned portion of Title IV aid provided to all students who withdrew from the University. This resulted in inaccuracies in the amounts reported in the financial statements and noncompliance with Federal Regulations. In our testing of unofficial withdrawal determinations over students receiving Title IV aid and who failed to receive a passing grade in any of their classes (703 students), we noted one student that should have been considered to have unofficially withdrawn from the University, but for which the University had not made this determination. Furthermore, in our testing of the withdrawal date determination for students receiving Title IV aid and who withdrew from the University after completing 60% or more of the payment period, we noted that the University relied on the date that the student last logged into the University’s online learning portal for 161 students who received $576,919 of Title IV aid during the payment period. Since the University had not documented the students actively participated in an academic activity at their last login, the login date cannot be used to determine the withdrawal date. Therefore, the mid-point of the semester should have been used as the students’ withdrawal date for the unearned Title IV refund calculation. Consequently, the University should have calculated and returned the unearned Title IV aid disbursed to these students based on the student having earned 50% of their Title IV aid rather than considering the aid to have been 100% earned. In response to our testing and inquiries, the University is in the process of calculating the unearned Title IV aid which should have been refunded to the Department of Education (ED) and for which the University has recourse against the students for payment. Since the liability to ED had not been identified timely, the University’s financial statements understated current liabilities for refundable grant revenues and also understated student receivables, net of an allowance for doubtful accounts. Since the maximum understatement totals $289,154, the University’s financial statements were not considered to be materially misstated as a result of these errors. (Finding 1, Pages 54-56) This finding was first reported in 2010. We recommended the University implement procedures to ensure that refunds are processed timely and accurately in order to facilitate accurate financial reporting and to be in compliance with federal regulations. University officials agreed with the finding and recommendation. (For the previous University response, see Digest footnote #1) AUDITORS’ OPINION Our auditors state the University financial statements as of June 30, 2013 and for the year then ended, are fairly presented in all material respects. WILLIAM G. HOLLAND Auditor General WGH:TLK:rt SPECIAL ASSISTANT AUDITORS CliftonLarsonAllen were our special assistant auditors. DIGEST FOOTNOTE #1 FAILURE TO IDENTIFY AND REFUND TITLE IV AID IN A TIMELY MANNER – Previous University Response 2012: The University concurs with the finding and recommendation.