REPORT DIGEST

UNIVERSITY PARK SOUTHERN ILLINOIS UNIVERSITY AT EDWARDSVILLE, INC

COMPLIANCE EXAMINATION AND FINANCIAL AUDIT

For The Period Ended June 30, 2007

FINANCIAL OPERATIONS (ALL FUNDS)	FY2007	FY2006
OPERATING REVENUES
Payments from SIUE for University Park facility.................	$37,268	$37,268
Management fees...............................................................	29,628	32,071
Budget allocation from SIUE..............................................	291,646	282,572
Ground rents and common area maintenance......................	58,148	82,784
Total operating revenues........................................	$416,690	$434,695
OPERATING EXPENSES
Budget expended at SIUE.................................................	$291,646	$282,572
Contractual services...........................................................	100,120	70,180
All other expenses.............................................................	30,750	46,069
Total operating expenses........................................	$422,516	$398,821
Operating revenue in excess of expenses............................	($5,826)	$35,874
NONOPERATING REVENUES (EXPENSES)
Gain on sale of asset.......................................................... Grant funds returned.......................................................... Interest income..................................................................	$0 (23,070) 12,563	$77,573 0 30,389
Interest expense.................................................................	0	(17,569)
Other revenue....................................................................	1,261	1,451
Total nonoperating revenues (expenses).................	($9,246)	$91,844
Increase in net assets.............................................	($15,072)	$127,718
NET ASSETS
Net assets – beginning of the year......................................	$1,936,630	$1,808,912
Net assets – end of the year...............................................	$1,921,558	$1,936,630

OTHER SIGNIFICANT ACCOUNT BALANCES	JUNE 30, 2007	JUNE 30, 2006
Cash.................................................................................	$496,500	$655,756
Capital assets....................................................................	$1,599,529	$1,503,199
Total assets.....................................................................	$2,121,686	$2,230,476
Accounts payable..............................................................	$86,747	$178,842
Deferred revenue...............................................................	$113,381	$115,004
Total liabilities................................................................	$200,128	$293,846
Net assets invested in capital assets, net of related debt......	$1,599,529	$14,249
Net Assets – restricted......................................................	$0	$1,488,950
Net Assets – unrestricted...................................................	$322,029	$433,431
Total net assets...............................................................	$1,921,558	$1,936,630
EXECUTIVE DIRECTOR
During Audit Period: Mr. James R. Pennekamp Currently: Mr. James R. Pennekamp

No fraud risk assessment program in place

University Park relies on external audits for identification of control weaknesses

Audits are not a substitute for management controls

The same individual opens the mail, prepares deposits, records deposits, receives the bank statements, and reconciles the bank account

INTRODUCTION

This digest covers our compliance examination and financial audit of the University Park for the period ended June 30, 2007.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FRAUD PREVENTION AND DETECTION PROGRAM

The University Park does not have a fraud risk assessment program in place. According to University Park management, the University Park has established internal controls in order to prevent and detect fraud as well as errors that may occur; however, these controls and associated risks are not monitored on an on-going basis.

The University Park relies on current internal controls that have been put in place to prevent and detect fraud. Additionally, University Park management has relied on the external audits for identification of control weaknesses.

Accounting industry trends have increased organizations’ awareness of the prevalence of fraud. Many organizations rely in part on their auditors to uncover any internal fraud, but audits, even those of the highest quality, are not a substitute for management establishing good internal control.

The University Park is responsible for the development of internal controls and the monitoring of their operating effectiveness. Additionally, it is management’s responsibility to prevent and detect fraud. (Finding No. 1, Page 24)

We recommended that management establish a continuous written fraud prevention, deterrence and detection program, and that the Board of Directors evaluate management's identification of fraud risks and its implementation of anti-fraud measures.

University Park officials agreed with our recommendation.

INADEQUATE SEGREGATION OF DUTIES

University Park does not have adequate segregation of duties over cash and cash receipts. Specifically, we noted that the same individual is responsible for opening the mail, preparing deposit slips, recording deposits in QuickBooks, receiving unopened bank statements and reconciling the bank account. Furthermore, there is only a one-signature requirement for wire transfers, and all signatories on the bank accounts are authorized to make wire transfers and they are also authorized to open bank accounts in the name of the University Park. Therefore, it is possible that a signatory could open a fraudulent account and wire transfer funds into the account.

According to University Park management, due to the small size of the University Park’s staff, a complete segregation of duties is simply not feasible. (Finding No. 2, page 25)

We recommend that the University Park assign the receipt of the unopened bank statement to an individual other than the employee responsible for preparing cash receipts and preparing the bank reconciliation. We also recommended that cancelled checks and all other transactions be reviewed for reasonableness before the statement is handed over for reconciliation. Furthermore, we recommended that the University Park notify the bank of a two-signature requirement for all wire transfers.

University Park officials agreed with our recommendations.

AUDITORS’ OPINION

Our auditors stated the June 30, 2007 financial statements of the University Park are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KAL :pp

SPECIAL ASSISTANT AUDITORS

Crowe Chizek & Co., LLC were our special assistant auditors for this audit.

SYNOPSIS