REPORT DIGEST

WESTERN ILLINOIS UNIVERSITY

FINANCIAL AUDIT

For the One Year Ended: June 30, 2011

Release Date: February 21, 2012

Summary of Findings:

Total this audit: 2

Total last audit: 2

Repeated from last audit: 0

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

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INTRODUCTION

This report contains only findings pertaining to the Financial Statement Audit.

The State Compliance Examination and Federal Single Audit Report will be issued at a later date.

SYNOPSIS

• The University had not established adequate internal controls over property records to ensure proper calculation and recording of depreciation expense.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER UNIVERSITY PROPERTY AND EQUIPMENT

The University had not established adequate internal controls over property records to ensure proper calculation and recording of depreciation expense and accountability for property.

The auditors noted 4 of 29 (14%) assets examined were not accurately depreciated during Fiscal Year 2011. Further, examination of all capital assets identified a net overstatement of depreciation expense and accumulated depreciation by approximately $71,858 for the fiscal year.

The auditors also noted the management controls created to account for missing property and review the missing property report was not operating as intended. One University Department reported 184 equipment items totaling $456,703 missing. These items represented 62% of the Department’s total inventory accountability and 56% of the 459 total items reported missing by the University. Upon auditor’s notification, the Department further investigated and found 99 (54%) of the 184 items. The auditors subsequently found 2 of 25 (5%) items tested from the University’s revised list of missing property.

Governmental Accounting Standards Board Statement No. 34 and University policy provide accounting requirements for depreciation expense. University policy requires upper management review of missing property lists to determine whether a continued search, theft investigation, or removal from records should occur. (Finding 1, pages 44-46)

We recommended that the University make the necessary adjustments to correct its capital asset and depreciation records. In addition, the University should update values in the fixed assets inventory system to prevent future miscalculations. Further, the University should ensure oversight review is performed on physical inventory results to assure accuracy and prompt resolution of inventory discrepancies.

University officials agreed with the finding and stated corrective action will be taken.

OTHER FINDING

The remaining finding is reportedly being given attention by the University. We will review the University’s progress toward implementation of our recommendations in our next audit.

AUDITORS' OPINION

Our auditors stated the financial statements of Western Illinois University as of June 30, 2011, and for the year then ended, are fairly stated in all material respects.

WILLIAM G. HOLLAND

Auditor General

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AUDITORS ASSIGNED: Our special assistant auditors for this examination were E. C. Ortiz & Co. LLP.