Governors State University. Compliance Examination for the Year Ended June 30, 2011

              STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
COMPLIANCE EXAMINATION
(In Accordance with the Single Audit Act
and OMB Circular A-133)
For the Year Ended June 30, 2011
Performed as Special Assistant Auditors for
the Auditor General, State of Illinois
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
COMPLIANCE EXAMINATION
(IN ACCORDANCE WITH THE SINGLE AUDIT ACT AND OMB CIRCULAR A-133)
FOR THE YEAR ENDED JUNE 30, 2011
Table of Contents Page(s)
Agency Officials 1
Management Assertion Letter 2-3
Compliance Report
Summary 4-6
Accountants’ Reports
Independent Accountants’ Report on State Compliance, on Internal
Control Over Compliance, and on Supplementary Information for
State Compliance Purposes 7-9
Independent Auditors’ Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with Government
Auditing Standards 10-11
Independent Auditors’ Report on Compliance with Requirements that
could have a Direct and Material Effect on Each Major Program, on
Internal Control Over Compliance, and on the Schedule of
Expenditures of Federal Awards in Accordance with OMB Circular
A-133 12-14
Schedule of Findings and Questioned Costs
Summary of Auditors’ Results 15-16
Current Findings - Government Auditing Standards 17-20
Current Findings - Federal and Questioned Costs 21-35
Current Findings - State Compliance 36-46
Prior Findings Not Repeated 47-48
Financial Statement Report
The University’s financial statement report for the year ended June 30,
2011, which includes the report of independent auditors, management’s
discussion and analysis, basic financial statements and notes, supplementary
information, and the independent auditors’ report on internal control over
financial reporting and on compliance and other matters based on an audit
of basic financial statements performed in accordance with Government
Auditing Standards has been issued separately.
Supplementary Information for State Compliance Purposes
Summary 49-50
Fiscal Schedules and Analysis
Schedule of Expenditures of Federal Awards 51-55
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
COMPLIANCE EXAMINATION
(IN ACCORDANCE WITH THE SINGLE AUDIT ACT AND OMB CIRCULAR A-133)
FOR THE YEAR ENDED JUNE 30, 2011
Table of Contents, Continued Page(s)
Notes to the Schedule of Expenditures of Federal Awards 56
Schedule of Net Appropriations, Expenditures and Lapsed Balances 57
Comparative Schedule of Net Appropriations, Expenditures and
Lapsed Balances 58
Comparative Schedule of Income Fund Revenues and Expenditures 59
Schedule of Changes in State Property 60
Analysis of Significant Variations in Expenses 61
Analysis of Significant Variations in Revenues 62-63
Analysis of Significant Account Balances 64-66
Analysis of Accounts Receivable 67-68
Summary of Indirect Cost Reimbursement Funds 69
Analysis of Operations
University Functions and Planning Program 70-72
Average Number of Employees (Unaudited) 73
Student Statistics (Unaudited) 74
University Bookstore Information (Unaudited) 75
Selected Service Efforts and Accomplishments (Unaudited) 76
Schedules of Federal Expenditures, Nonfederal Expenses and New
Loans 77
Schedule of Degrees Awarded (Unaudited) 78
Schedule of Tuition and Fee Waivers (Unaudited) 79
Special Data Requirements for Audits of Universities
University Reporting in Accordance with University Guidelines 80-83
Schedule of Indirect Cost Funds to be Deposited into the University
Income Fund as Required by 1982 University Guidelines
(Amended 1997) 84
Schedule of Excess Funds Calculation by Entity as Required by 1982
University Guidelines (Amended 1997) 85
Balance Sheets - Auxiliary Enterprises and Activities Entities 86
Schedules of Revenues, Expenditures and Changes in Fund Balances 87-91
Summary of Foundation Cash Support to the University 92
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
Agency Officials
President Dr. Elaine Maimon
Executive Vice President, Chief of Staff, Treasurer Dr. Gebeyehu Ejigu
Vice President, Administration and Finance Ms. Karen Kissel
Internal Auditor Mr. David Dixon
Interim Comptroller Ms. Cathy Casson, CPA
Agency offices are located at:
1 University Parkway
University Park, IL 60484
1
Governors State
UNIVERSITY
February 8, 2012
E. C. Ortiz & Co., LLP
333 S. Des Plaines Street, Suite 2-N
Chicago, Illinois 60661
Ladies and Gentlemen:
Office of the President
University Park, IL 60484
708.534.4130
Fax: 708.534.4107
www.govst.edu
We are responsible for the identification of, and compliance with, all aspects of laws, regulations,
contracts, or grant agreements that could have a material effect on the operations of the Governors State
University (University). We are responsible for and we have established and maintained an effective
system of, internal controls over compliance requirements, except as disclosed to the auditors during
the engagement. We have performed an evaluation of the University's compliance with the following
assertions during the year ended June 30, 2011. Based on this evaluation, we assert that during the year
ended June 30, 2011, the University has materially complied with the assertions below.
A. The University has obligated, expended, received and used public funds of the State in
accordance with the purpose for which such funds have been appropriated or otherwise
authorized by law.
B. The University has obligated, expended, received and used public funds of the State in
accordance with any limitations, restrictions, conditions or mandatory directions imposed by
law upon such obligation, expenditure, receipt or use.
C. The University has complied, in all material respects, with applicable laws and regulations,
including the State uniform accounting system, in its financial and fiscal operations.
D. State revenues and receipts collected by the University are in accordance with applicable
laws and regulations and the accounting and recordkeeping of such revenues and receipts is
fair, accurate and in accordance with law.
2
E. Money or negotiable securities or similar assets handled by the University on behalf of the
State or held in trust by the University have been properly and legally administered, and the
accounting and recordkeeping relating thereto is proper, accurate and in accordance with law.
Yours very truly,
Governors State University
Dr. Elaine P. Maimon
President Vice Pres ent, Administration
and Finance
3
~ t ~f1 Alexis Kennedy
General Counsell
Vice President
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
COMPLIANCE REPORT
SUMMARY
The compliance testing performed during this examination was conducted in accordance with
Government Auditing Standards and in accordance with the Illinois State Auditing Act.
ACCOUNTANTS’ REPORTS
The Independent Accountants’ Report on State Compliance, on Internal Control Over Compliance,
and on Supplementary Information for State Compliance Purposes does not contain scope
limitations, disclaimers, or other significant non-standard language.
SUMMARY OF FINDINGS
Number of Current Report Prior Report
Findings 12 12
Repeated findings 7 2
Prior recommendations implemented or not repeated 5 3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Item
No.
Page Description Finding Type
FINDINGS (GOVERNMENT AUDITING STANDARDS)
11-1 17 Inaccurate Accounting for Intangible Assets Significant Deficiency
11-2 19 Inaccurate Accounting for Participation in Public
Entity Risk Pool
Significant Deficiency
FINDINGS AND QUESTIONED COSTS (FEDERAL COMPLIANCE)
11-3 21 Inadequate Procedures Over Verification of
Eligibility Requirements
Significant Deficiency/
Noncompliance
11-4 23 Inadequate Controls Over University Equipment
Acquired from Federal Funds
Significant Deficiency/
Noncompliance
11-5 26 Required Federal Reports Were Either Not
Submitted or Submitted Late
Significant Deficiency/
Noncompliance
4
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
SCHEDULE OF FINDINGS AND QUESTIONED COSTS, Continued
Item
No.
Page Description Finding Type
11-6 29 Student Financial Aid Disbursements Not
Reported Timely
Significant Deficiency/
Noncompliance
11-7 31 Inadequate Monitoring Procedures for
Subrecipients
Significant Deficiency/
Noncompliance
11-8 34 Noncompliance with Davis-Bacon Act Significant Deficiency/
Noncompliance
FINDINGS (STATE COMPLIANCE)
11-9 36 Noncompliance with the Required Contracting
Procedures
Significant Deficiency/
Noncompliance
11-10 39 Inadequate Controls Over University Property
and Equipment
Significant Deficiency/
Noncompliance
11-11 43 Time Sheets Not Maintained in Compliance with
the State Officials and Employees Ethics Act
Significant Deficiency/
Noncompliance
11-12 45 Noncompliance with the University’s Law on
Board Membership, Terms, Vacancies and
Meetings
Significant Deficiency/
Noncompliance
In addition, the following findings which are reported as current findings relating to Government
Auditing Standards also meet the reporting requirements for State Compliance.
11-1 17 Inaccurate Accounting for Intangible Assets Significant Deficiency/
Noncompliance
11-2 19 Inaccurate Accounting for Participation in Public
Entity Risk Pool
Significant Deficiency/
Noncompliance
PRIOR FINDINGS NOT REPEATED
A 47 Inadequate Controls Over Federal Matching
5
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
SCHEDULE OF FINDINGS AND QUESTIONED COSTS, Continued
Item
No.
Page Description Finding Type
B 47 Indirect Cost Recorded in Excess of the Federally
Approved Rate
C 47 Noncompliance with University Faculty Research
and Consulting Act
D 48 Noncompliance with the University’s Law on
Meningitis Vaccine Information
E 48 Computer Security Weaknesses
EXIT CONFERENCE
The findings and recommendations appearing in this report were discussed with University
personnel at an exit conference on January 26, 2012. Attending were:
Representing Governors State University
Executive Vice President, Chief of Staff,
Treasurer Dr. Gebeyehu Ejigu
Vice President, Administration and Finance Ms. Karen Kissel
Internal Auditor Mr. David Dixon
Interim Comptroller Ms. Cathy Casson, CPA
Representing E.C. Ortiz & Co., LLP
Partner Mr. Edilberto C. Ortiz, CPA
Partner Ms. Gilda Belmonte Priebe, CPA, CIA, CFE
Manager Ms. Villalyn S. Baluga, CPA
Representing the Office of the Auditor General
Audit Manager Mr. Thomas L. Kizziah, CPA
Responses to the recommendations were provided by Ms. Karen Kissel in a letter dated
February 7, 2012.
6
E.C. ORTIZ & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS' REPORT ON STATE COMPLIANCE, ON INTERNAL
CONTROL OVER COMPLIANCE, AND ON SUPPLEMENTARY INFORMATION FOR
STATE COMPLIANCE PURPOSES
Honorable William G. Holland
Auditor General
State of Illinois
and
The Board of Trustees
Governors State University
Compliance
As Special Assistant Auditors for the Auditor General, we have examined Governors State
University's (University) compliance with the requirements listed below, as more fully described in
the Audit Guide for Financial Audits and Compliance Attestation Engagements of Illinois State
Agencies (Audit Guide) as adopted by the Auditor General, during the year ended June 30, 2011.
The management of the University is responsible for compliance with these requirements. Our
responsibility is to express an opinion on the University's compliance based on our examination.
A. The University has obligated, expended, received, and used public funds of the State in
accordance with the purpose for which such funds have been appropriated or otherwise
authorized by law.
B. The University has obligated, expended, received, and used public funds of the State in
accordance with any limitations, restrictions, conditions or mandatory directions imposed by
law upon such obligation, expenditure, receipt or use.
C. The University has complied, in all material respects, with applicable laws and regulations,
including the State uniform accounting system, in its financial and fiscal operations.
D. State revenues and receipts collected by the University are in accordance with applicable
laws and regulations and the accounting and recordkeeping of such revenues and receipts is
fair, accurate and in accordance with law. ·
E. Money or negotiable securities or similar assets handled by the University on behalf of the
State or held in trust by the University have been properly and legally administered and the
accounting and recordkeeping relating thereto is proper, accurate, and in accordance with
law.
We conducted our examination in accordance with attestation standards established by the American
Institute of Certified Public Accountants; the standards applicable to attestation engagements contained
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO, IL 60661 tel: 312.876.1900 fax: 312.876 . 1911
7
in Government Auditing Standards issued by the Comptroller General of the United States; the Illinois
State Auditing Act (Act); and the Audit Guide as adopted by the Auditor General pursuant to the Act;
and, accordingly, included examining, on a test basis, evidence about the University's compliance with
those requirements listed in the first paragraph of this report and performing such other
procedures as we considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion. Our examination does not provide a legal determination on
the University's compliance with specified requirements.
In our opinion, the University complied, in all material respects, with the compliance requirements
listed in the first paragraph of this report during the year ended June 30, 2011. However, the results
of our procedures disclosed instances of noncompliance with the requirements, which are required to
be reported in accordance with criteria established by the Audit Guide, issued by the Illinois Office
of the Auditor General and which are described in the accompanying schedule of findings and
questioned costs as items 11-1, 11-2 and 11-9 through 11-12.
Internal Control
Management of the University is responsible for establishing and maintaining effective internal
control over compliance with the requirements listed in the first paragraph of this report. In planning
and performing our examination, we considered the University's internal control over compliance
with the requirements listed in the first paragraph of this report as a basis for designing our
examination procedures for the purpose of expressing our opinion on compliance and to test and
report on internal control over compliance in accordance with the Audit Guide, issued by the Illinois
Office of the Auditor General, but not for the purpose of expressing an opinion on the effectiveness
of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness
of the University's internal control over compliance.
A deficiency in an entity's internal control over compliance exists when the design or operation of a
control over compliance does not allow management or employees, in the normal course of
performing their assigned functions, to prevent, or detect and correct, noncompliance with the
requirements listed in the first paragraph of this report on a timely basis. A material weakness over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a requirement listed in the first
paragraph of this report will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control
over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did
not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, we identified certain deficiencies in internal control over
compliance that we considered to be significant deficiencies as described in the accompanying
schedule of findings and questioned costs as items 11-1, 11-2 and 11-9 through 11-12. A significant ·
deficiency in an entity's internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with
governance.
8
As required by the Audit Guide, immaterial findings excluded from this report have been reported in
a separate letter to your office.
The University's responses to the findings identified in our examination are described in the
accompanying schedule of findings and questioned costs. We did not examine the University's
responses and, accordingly, we express no opinion on the responses.
Supplementary Information for State Compliance Pumoses
As Special Assistant Auditors for the Auditor General, we have audited the financial statements of
the business-type activities of the University and its aggregate discretely presented component unit as
of and for the year ended June 30,2011, which collectively comprise the University's basic financial
statements, and have issued our report thereon dated February 8, 2012. Our report was modified to
include a reference to other auditors. Other auditors audited the financial statements of the
University's discretely presented component unit, as described in our report on the University's
financial statements. The accompanying supplementary information, as listed in the table of contents
as Supplementary Information for State Compliance Purposes, is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the University. The 2011
Supplementary Information for State Compliance Purposes, except for that portion marked
"unaudited" on which we express no opinion, has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended June 30, 2011 taken as a
whole.
We have also previously audited, in accordance with auditing standards generally accepted in the
United States, the University's basic financial statements for the year ended June 30, 2010. In our
report dated February 25, 2011 on basic financial statements, we expressed an unqualified opinion on
the respective financial statements of the business-type activities and the aggregate discretely presented
component units. Our report was modified to include a reference to other auditors. Other auditors
audited the financial statements of the University's discretely presented component units, as
described in our report on the University's financial statements. In our opinion, the 2010
Supplementary Information for State Compliance Purposes, except for the portion marked
"unaudited," is fairly stated in all material respects in relation to the basic financial statements for the
year ended June 30, 2010, taken as a whole.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, University management, Board of
Trustees and federal awarding agencies and pass-through entities and is not intended to be and should
not be used by anyone other than these specified parties.
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February 8, 2012
9
E.C. ORTIZ & CO., LLP
CERT IFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
and
The Board of Trustees
Governors State University
As Special Assistant Auditors for the Auditor General, we have audited the basic financial
statements of the business-type activities of the Governors State University (University) and its
aggregate discretely presented component unit, collectively a component unit of the State of Illinois,
as of and for the year ended June 30, 2011, which collectively comprise the University's basic
financial statements and have issued our report thereon dated February 8, 2012. Our report was
modified to include a reference to other auditors. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards issued by the Comptroller General of the United
States. Other auditors audited the financial statements of the University's discretely presented
component unit, as described in our report on the University's financial statements. This report does
not include the results of the other auditors' testing of internal control over financial reporting or
compliance and other matters that are reported on separately by those auditors.
Internal Control Over Financial Reporting
Management of the University is responsible for establishing and maintaining effective internal control
over financial reporting. In planning and performing our audit, we considered the University's internal
control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinion on the financial statements and not for the purpose of expressing an opinion on
the effectiveness of the University's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the University's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected on a
timely basis.
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO, IL 60661 tel: 312.876.1900 fax: 312.876.1911
10
Our consideration of internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and was not designed to identify all deficiencies in the internal
control over financial reporting that might be deficiencies, significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over financial reporting that we
consider to be material weaknesses, as defined above. However, we identified certain deficiencies in
internal control over financial reporting, described in findings 11-1 and 11-2 in the accompanying
schedule of findings that we consider to be significant deficiencies in internal control over financial
reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the University's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests disclosed no instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards.
The University's responses to the findings identified in our audit are described in the accompanying
schedule of findings. We did not audit the University's responses and, accordingly, we express no
opinion on them.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, University management, Board of
Trustees and federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other t~an these specified parties.
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February 8, 2012
11
E.C. ORTIZ & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR
PROGRAM, ON INTERNAL CONTROL OVER COMPLIANCE, AND ON THE SCHEDULE
OF EXPENDITURES OF FEDERAL AWARDS IN ACCORDANCE WITH OMB
CIRCULAR A-133
Honorable William G. Holland
Auditor General
State of Illinois
and
The Board of Trustees
Governors State University
Compliance
We have audited the Governors State University's (University) compliance with the types of
compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular
A -13 3 Compliance Supplement that could have a direct and material effect on each of the University's
major federal programs for the year ended June 30, 2011. The University's major federal programs are
identified in the summary of auditors' results section of the accompanying schedule of findings and
questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants
applicable to each of its major federal programs is the responsibility of the University's management.
Our responsibility is to express an opinion on the University's compliance based on our audit.
The schedule of expenditures of federal awards and our audit described below does not include
expenditures of federal awards for the agency determined to be a component unit of the University for
financial statement purposes.
We did not audit the University's compliance with the requirements governing the repayments special
test and provision compliance requirement in accordance with the requirements of the Student
Financial Assistance Cluster: Federal Perkins Loan program as described in the Compliance
Supplement. Those requirements govern functions performed by University Accounting Service, LLC
(UAS). Since we did not apply auditing procedures to satisfy ourselves as to compliance with those
requirements, the scope of work was not sufficient to enable us to express, and we do not express, an
opinion on compliance with those requirements. UAS' compliance with the requirements governing
the functions that it performs for the University for the year ended June 30, 2011 was examined by the
accountants for the servicer in accordance with the U.S. Department of Education's Audit Guide,
Audits of Federal Student Financial Assistance Programs at Participating Institutions and Institution
Servicers. Our report does not include the results of the accountants' for the servicer examination of
UAS' compliance with such requirements.
333 SOUTH DES PLAINES STREET, SUITE 2-N CHICAGO, IL 60661 tel: 312.876.1900 fax: 312.876.1911
12
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB
Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct
and material effect on a major federal program occurred. An audit includes examining, on a test basis,
evidence about the University's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination of the University's
compliance with those requirements.
In our opinion, the University complied, in all material respects, with the compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for
the year ended June 30,2011. However, the results of our auditing procedures disclosed instances of
noncompliance with those requirements, which are required to be reported in accordance with OMB
Circular A -13 3 and which are described in the accompanying schedule of findings and questioned costs
as items 11-3 through 11-8.
Internal Control Over Compliance
The management of the University is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to
federal programs. In planning and performing our audit, we considered the University's internal control
over compliance with the requirements that could have a direct and material effect on a major federal
program to determine our auditing procedures for the purpose of expressing our opinion on compliance
and to test and report on internal control over compliance in accordance with OMB Circular A-133, but
not for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the University's internal control over
compliance.
Requirements governing the repayments special test and provision compliance requirement in the
Student Financial Assistance Cluster: Federal Perkins Loan program as described in the Compliance
Supplement are performed by UAS. Internal control over compliance related to such functions for the
year ended June 30,2011 was reported on by accountants for the servicer in accordance with the U.S.
Department ofEducation's Audit Guide, Audits of Federal Student Financial Assistance Programs at
Participating Institutions and Institution Servicers. Our report does not include the results of the
accountants' for the servicer testing ofU AS' internal control over compliance related to such functions.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of control deficiencies, in internal control over compliance,
such that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
13
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, we identified certain deficiencies in internal control over
compliance that we consider to be significant deficiencies as described in the accompanying schedule
of findings and questioned costs as items 11-3 through 11-8. A significant deficiency in internal
control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a
material weakness in internal control over compliance, yet important enough to merit attention by those
charged with governance.
Schedule of Expenditures ofF ederal A wards
We have audited the financial statements of the business-type activities and the aggregate discretely
presented component unit of the University as of and for the year ended June 30, 2011, and have issued
our report thereon dated February 8, 2012. Our report was modified to include a reference to other
auditors. Other auditors audited the financial statements of the University's discretely presented
component unit, as described in our report on the University's financial statements. Our audit was
performed for the purpose of forming an opinion on the financial statements that collectively comprise
the University's basic financial statements. The accompanying schedule of expenditures of federal
awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a
required part of the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in
all material respects, in relation to the basic financial statements taken as a whole.
The University's responses to the findings identified in our audit are described in the accompanying
schedule of findings and questioned costs. We did not audit the University's responses and,
accordingly, we express no opinion on the responses.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, University management, Board of
Trustees and federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
~.C.~ 2. C.., LL~
February 8, 2012
14
SCHEDULE OF FINDINGS
AND
QUESTIONED COSTS
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unqualified
Internal control over financial reporting:
 Material weakness(es) identified? Yes X No
 Significant Deficiency(ies) identified that are not
considered to be material weakness(es)? X Yes None Reported
 Noncompliance material to financial statements
noted? Yes X No
Federal Awards
Internal control over major programs:
 Material weakness(es) identified? Yes X No
 Significant Deficiency(ies) identified? X Yes None reported
Type of auditors’ report issued on
compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A-133? X Yes No
15
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
Summary of Auditors’ Results, Continued
Identification of major programs:
CFDA Numbers Name of Federal Program or Cluster
84.268, 84.063,
84.038, 84.033,
84.007, 84.379,
84.376, 93.925,
93.407, 93.264,
Student Financial Assistance Cluster
93.307, 93.701,
93.226, 47.082,
Research and Development Cluster
84.405, 84.336 Teacher Quality Partnership Grants Cluster
84.047, 84.042 TRIO Cluster
17.275 ARRA - Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors
93.708 ARRA - Head Start
64.028 Post-9/11 Veterans Educational Assistance
Dollar threshold used to distinguish between type A and type B
Programs: $300,000
Auditee qualified as low-risk auditee? Yes X No
16
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - GOVERNMENT AUDITING STANDARDS
11-1 Inaccurate Accounting for Intangible Assets
Governors State University (University) did not properly account for the costs capitalized to
intangible assets in accordance with accounting principles generally accepted in the United
States of America (GAAP).
On June 11, 2010, the University executed a contract with a vendor for the implementation
of its new Enterprise Resource Planning (ERP) system. In accordance with the contract, the
vendor provided the University with the ERP software and hardware, and will provide
services for implementation, training, consulting, and software maintenance.
During our detailed testing of the related costs capitalized to intangible assets for the fiscal
year 2011, we noted that training and other post-implementation costs totaling $369,825
were capitalized instead of being recorded as an expense resulting in an overstatement of
assets. This also resulted in an overstatement of $52,832 in the related depreciation expense.
The University subsequently made the necessary adjustments in the financial statements.
Paragraph 13 of the Governmental Accounting Standards Board (GASB) Statement No. 51,
Accounting and Financial Reporting for Intangible Assets, states that outlays associated with
activities in the post-implementation/operation stage should be expensed as incurred. In
addition, paragraph 10(c) states that activities in the post-implementation/operation stage
include application training and software maintenance.
Further, the Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires the
University to establish and maintain a system of fiscal and administrative controls to ensure
resources are properly recorded and accounted for to permit the preparation of accounts,
reliable financial and statistical reports, and to maintain accountability over the State’s
resources.
University officials stated that the condition noted above was due to oversight.
Failure to properly account for intangible assets resulted in an overstatement of assets and
related depreciation expense on the University’s financial statements. (Finding Code No.
11-1)
17
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - GOVERNMENT AUDITING STANDARDS, Continued
Recommendation
We recommend the University review its current process for the preparation and review of
the annual financial statements to ensure that financial information is accurate and in
accordance with GAAP.
University Response
The University agrees and accepts this finding.
18
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - GOVERNMENT AUDITING STANDARDS, Continued
11-2 Inaccurate Accounting for Participation in Public Entity Risk Pool
Governors State University (University) did not properly account for its participation in the
State Universities Risk Management Association (SURMA) in accordance with accounting
principles generally accepted in the United States of America (GAAP).
The University has been a member of SURMA since its inception on February 1, 1996.
SURMA was created as a successor to the Board of Governors’ Self-Insurance Liability
Program. SURMA was initially funded by the surplus of the Board of Governors’ Self-
Insurance Liability Program upon its termination (treated as capital contributions of the
original participants), as well as additional contributions which were assessed to the
members. The SURMA members are Chicago State University, Eastern Illinois University,
Governors State University, Northeastern Illinois University, and Western Illinois
University. Each university has an employee appointed as a member to the SURMA Board,
which meets on a quarterly basis.
While all past payments made by the University to SURMA have been recorded to prepaid
insurance and amortized over the term of the current insurance policies, the capital
contributions to SURMA have not been recorded as an asset on the books of the University.
The University’s share of the excess capital contributions to SURMA was $149,497 and
$135,102 as of June 30, 2011 and June 30, 2010, respectively. SURMA’s bylaws state that
in the event of termination, if there are surplus funds available, such surplus shall be
distributed to the then-existing members in the same proportion that each existing member’s
contributions over the immediately previous five years were in proportion to the
contributions of all members. Similar provisions also apply to members who elect to
withdraw (if approved by the remaining participants) prior to the termination of SURMA.
The University subsequently made the necessary adjustment in the financial statements to
correct this error. During our review of the adjustment, the University recorded the entire
effect of the University’s share of the excess capital contributions to SURMA in the current
year. A proposed entry to correct the University’s adjustment was not recorded by the
University.
Further, we noted that the University did not adequately monitor SURMA to ensure SURMA
underwent an annual audit to provide assurance as to the accuracy of financial information
required to be reported by the University as is required by Article 8, Item J of the SURMA
Contract and By-Laws. An audit for fiscal year 2010 was not performed.
19
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - GOVERNMENT AUDITING STANDARDS, Continued
Governmental Accounting Standards Board (GASB) Interpretation No. 4 - Accounting and
Financial Reporting for Capitalization Contributions to Public Entity Risk Pools was issued
in February 1996 with an effective date of periods beginning after June 15, 1996. It states,
“A capitalization contribution to a public entity risk pool with transfer or pooling of risk
should be reported as a deposit if it is probable that the contribution will be returned to the
entity upon either the dissolution of or approved withdrawal from the pool. An entity’s
determination that a return of the contribution is probable should be based on the provisions
of the pooling agreement and an evaluation of the pool’s financial capacity to return the
contribution.”
Further, the Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires the
University to establish and maintain a system of fiscal and administrative controls to ensure
resources are properly recorded and accounted for to permit the preparation of accounts,
reliable financial and statistical reports, and to maintain accountability over the State’s
resources.
The SURMA By-Laws were adopted cooperatively by the five universities formerly under
the Board of Governors and SURMA. The member universities have been operating under
those By-Laws since 1995, prior to the issuance of GASB Interpretation No. 4. The
condition found is the result of SURMA’s failure to review and revise the By-Laws and the
member institutions’ interpretation that the return of the funds is not probable and hence the
failure to record the related accounting entries, as pointed out in the new audit finding this
year.
Failure to adequately monitor SURMA’s activities and properly account for the University’s
participation in SURMA may result in a material misstatement on the University’s financial
statements. (Finding Code No. 11-2)
Recommendation
We recommend the University implement controls to monitor the activities of SURMA and
properly account for its participation in SURMA in accordance with GAAP.
University Response
The University accepts this finding and concurs with the recommendation.
20
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE
Federal Agency: U.S. Department of Education
Program Name CFDA #
Program
Expenditures
TRIO Cluster - Upward Bound 84.047 ($559,769)
Questioned Costs: None - Procedural Finding Only
11-3 Inadequate Procedures Over Verification of Eligibility Requirements
The University did not have adequate procedures over verification of eligibility requirements
for TRIO Cluster - Upward Bound (Greater Success for U) program.
In our eligibility testing of 37 participants under the TRIO Cluster, we noted the following:
 The University’s eligibility determination for two participants was either not
supported or did not agree with the supporting documents on file.
 The University did not document its eligibility determination for three participants.
The related application review/eligibility determination forms were not prepared by
the program evaluator.
The Code of Federal Regulations (34 CFR 645.3) states that an individual is eligible to
participate in a Regular, Veterans, or a Math and Science Upward Bound project if the
individual meets all of the following requirements: (a) a citizen, national, or permanent
resident of the United States, or is in the United States for other than a temporary purpose;
(b) a potential first-generation college student, a low-income individual or an individual who
has a high risk for academic failure; (c) has a need for academic support, as determined by
the grantee, in order to pursue successfully a program of education beyond high school; and
(d) at the time of initial selection has completed the 8th grade but has not entered the 12th
grade and is at least 13 years old but not older than 19.
The Code of Federal Regulations (34 CFR 645.43(c)(1)) requires the grantee to maintain for
each participant a record of the basis for its determination that the participant is eligible to
participate in the project.
21
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
In addition, OMB Circular A-110, Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations requires nonfederal entities receiving federal awards establish and maintain
internal control designed to reasonably ensure compliance with federal laws, regulations and
program compliance requirements. Effective internal control procedures should include
proper documentation to support verification of eligibility requirements for grant applicants.
University officials stated that the conditions noted above were the result of oversight during
eligibility processing.
Failure to document and verify the required eligibility information may result in providing
benefits or scholarship awards to ineligible applicants thereby resulting to noncompliance
with Federal regulations, policies and procedures. (Finding Code Nos. 11-3, 10-1)
Recommendation
We recommend the University verify the eligibility requirements for grant applicants and
maintain supporting documentations to ensure compliance with Federal regulations.
University Response
The University agrees with this finding and accepts the recommendation. The University is
improving its processes and supervision to ensure compliance.
22
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Federal Agencies: U.S. Department of Education, and U.S. Department of Health and Human
Services
Program Name CFDA #
Program
Expenditures
TRIO Cluster - Student Support Services 84.042 ($31,955)
R&D Cluster - Minority Health and Health Disparities Research 93.307 (706,981)
ARRA - Head Start 93.708 (1,309,378)
Questioned Costs: $2,085
11-4 Inadequate Controls Over University Equipment Acquired from Federal Funds
Governors State University (University) did not have adequate controls over its equipment
acquired from federal funds.
An inventory of the University’s property and equipment is maintained in the Fixed Assets
module (property records) of the University’s Jenzabar information system (CARS).
University equipment acquired from federal funds are identified separately in the property
records under location 65.
During our detailed testing, we obtained a general ledger listing of equipment acquired from
federal funds during the fiscal year 2011 and noted that the following items were not
identified as equipment acquired from federal funds under location 65 in the property
records:
 Six items with a total value of $3,197 acquired and charged to R&D Cluster -
Minority Health and Health Disparities Research grant fund. These items consisted
of an iPad, two central processing units, and three monitors.
 A laptop, valued at $792, acquired and charged to ARRA - Head Start grant fund.
23
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
In our physical identification of nine items from the property records, we also noted the
following:
 Information in the property records for a laptop acquired and charged to ARRA -
Head Start grant fund, valued at $2,795, was not updated. The item was found in a
different location and no Property Change Request form was prepared to support the
change in location. The University subsequently updated the property records.
 A mobile workstation acquired and charged to TRIO Cluster - Student Support
Services grant fund, valued at $2,085, was not found. The University subsequently
reported this item as stolen and obtained the related police report after being noted
during the audit.
The Code of Federal Regulations (2 CFR 215.34 - Equipment) requires that the recipient’s
property management standards for equipment acquired with federal funds shall have a
control system in effect to insure adequate safeguards to prevent loss, damage, or theft of the
equipment. Any loss, damage, or theft of equipment shall be investigated and fully
documented. It further requires that equipment records shall be maintained accurately.
OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations
requires nonfederal entities receiving federal awards establish and maintain internal control
designed to reasonably ensure compliance with federal laws, regulations and program
compliance requirements. Effective internal control procedures should include adequate
record keeping and monitoring of equipment acquired from federal funds.
Department of Central Management Services (DCMS) Property Control Rules (44 Illinois
Administrative Code, Section 5010.400: Equipment Inventory Recording) require that
agencies shall adjust property records within 30 days of acquisition, change or deletion of
equipment items.
University procedures require the use of Property Change Request form when a department
wishes to have tagged equipment transferred out of their unit inventory.
University officials stated that the conditions noted above were due to oversight.
24
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Inadequate controls over University equipment acquired from federal funds results in
inaccurate and incomplete property records and noncompliance with federal regulations. It
could also result in incorrect accounting information and could cause unnecessary equipment
expenditures and inaccurate financial reporting. Loss of University property and equipment
may not be detected timely or remain undetected without an accurate property inventory
listing and/or strict compliance with University property control procedures. (Finding Code
Nos. 11-4, 10-2)
Recommendation
We recommend the University adhere to its procedures to ensure that equipment records are
accurately maintained and updated and to ensure compliance with federal regulations.
University Response
The University agrees with this finding and accepts the recommendation. Since this was
brought to the University’s attention, the University moved all identified federal equipment
into a separate property location in the inventory system. Further, with the implementation
of the new Enterprise Resource Planning (ERP) system, the University will have the ability
to track and identify federal equipment in the inventory system.
25
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Federal Agencies: U.S. Department of Health and Human Services
Program Name CFDA #
Program
Expenditures
R&D Cluster - Minority Health and Health Disparities Research 93.307 ($706,981)
R&D Cluster - Research on Healthcare Costs, Quality and Outcomes 93.226 (21,694)
Questioned Costs: None - Procedural Finding Only
11-5 Required Federal Reports Were Either Not Submitted or Submitted Late
Governors State University (University) is a recipient of grants from the National Institutes
of Health (NIH) and Agency for Healthcare Research and Quality (AHRQ) of the U.S.
Department of Health and Human Services (HHS). The required federal reports were either
not submitted or submitted late by the University.
In our detailed testing of Research and Development Cluster - Minority Health and Health
Disparities Research, we noted that the Annual Financial Status Report for the budget period
September 1, 2009 to August 31, 2010 was submitted by the University on November 30,
2010, which was a day late from the November 29, 2010 deadline.
In our detailed testing of Research and Development Cluster - Research on Healthcare Costs,
Quality and Outcomes, we also noted the following:
 The Final Progress Report for the budget period July 1, 2009 to April 30, 2011 due for
submission on July 29, 2011 was not yet submitted by the University. The grant’s
program director is still completing the report as of this time.
 The Final Invention Statement and Certification for the budget period July 1, 2009 to
April 30, 2011 was submitted by the University on November 7, 2011, which was 101
days late from the July 29, 2011 deadline.
 The Quarterly Federal Financial Reports were either not submitted or submitted late by
the University as follows:
26
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Quarterly
Reports Ended Due Date
Date
Submitted
Days
Delayed
September 30, 2010 October 30, 2010 Not submitted Not submitted
December 31, 2010 January 30, 2011 February 14, 2011 15
Part II (Terms and Conditions) of the NIH Grants Policy Statement states that Financial
Status Report is required on an annual basis and must be submitted for each budget period no
later than 90 days after the close of the budget period. Based on this, the deadline for
submission of the Annual Financial Status Report for the budget period September 1, 2009
to August 31, 2010 was on November 29, 2010.
Section IV (Special Terms and Conditions) of the Notice of Award issued by HHS states that
AHRQ policy requires submission of the Final Progress Report and Final Invention
Statement and Certification within 90 days after the grant’s final budget period expires. The
University’s final budget period for this grant expired on April 30, 2011; thus, the related
final reports were due for submission on July 29, 2011.
Federal Financial Report Instructions from the Office of Management and Budget (OMB)
require grantees to submit a quarterly Federal Financial Report no later than 30 days after the
end of each reporting period. Reporting period end dates that shall be used for the quarterly
reports are March 31, June 30, September 30 and December 31.
In addition, OMB Circular A-110, Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations requires nonfederal entities receiving federal awards establish and maintain
internal control designed to reasonably ensure compliance with federal laws, regulations and
program compliance requirements. Effective internal control procedures should include
monitoring of compliance with the reporting requirements of its grant programs and timely
submission of required federal reports.
University officials stated that the conditions noted above were the result of oversight in the
monitoring of the report submission requirements.
Failure to submit the required federal reports results in noncompliance with the federal
program requirements. Additionally, this may result in the withholding of funding for other
eligible projects or activities involving the University. (Finding Code Nos. 11-5, 10-3)
27
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Recommendation
We recommend the University comply with the reporting requirements of its grant programs
and ensure timely submission of all reports. We also recommend that the program directors
monitor their report submission requirements to ensure compliance.
University Response
The University agrees with this finding and accepts the recommendation. The University
has reorganized its grant organization and has invested in additional grant staff and
technology as well as improved processes and communications to ensure compliance.
28
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Federal Agency: U.S. Department of Education
Program Name CFDA #
Program
Expenditures
Student Financial Assistance Cluster - Federal Pell Grant Program 84.063 ($6,519,196)
Student Financial Assistance Cluster - National Science and Mathematics
Access to Retain Talent Grants
84.376 (52,500)
Questioned Costs: None - Procedural Finding Only
11-6 Student Financial Aid Disbursements Not Reported Timely
The disbursements made by the University to students awarded with Federal Pell Grant
Program (PELL) and National Science and Mathematics Access to Retain Talent Grants
(SMART) were not reported timely.
In our detailed testing of 60 students who received student financial aid during the academic
year 2010-2011, we noted that disbursements were not reported to the U.S. Department of
Education within 30 days from disbursement dates as follows:
 PELL disbursement in Fall 2010 for a student was reported four days late.
 SMART disbursements in Fall 2010 for two students were reported three and 57 days
late.
The Office of Management and Budget (OMB) A-133 Compliance Supplement, Section L-Reporting,
requires that institutions must report student payment data within 30 calendar
days after the school makes a payment; or becomes aware of the need to make an adjustment
to previously reported student payment data or expected student payment data.
In addition, OMB Circular A-110, Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations requires nonfederal entities receiving federal awards establish and maintain
internal control designed to reasonably ensure compliance with federal laws, regulations and
program compliance requirements. Effective internal control procedures should include
timely reporting of federal disbursements.
29
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
University officials stated that the condition noted above was due to administrative
oversight.
Failure to report PELL and SMART disbursements in a timely manner results in
noncompliance with federal program guidelines. (Finding Code Nos. 11-6, 10-6)
Recommendation
We recommend the University ensure that PELL and SMART disbursements are reported to
the U.S. Department of Education within 30 days of being disbursed as required.
University Response
The University agrees with this finding and accepts the recommendation. This finding was
brought to our attention at the end of the last audit cycle and the University immediately
made improvements to ensure compliance. The instances of noncompliance cited in this
finding are prior to the issue being brought to our attention.
30
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Federal Agency: U.S. Department of Labor
Program Name CFDA #
Program
Expenditures
ARRA - Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors
17.275 ($1,325,393)
Questioned Costs: None - Procedural Finding Only
11-7 Inadequate Monitoring Procedures for Subrecipients
Governors State University (University) is a recipient of a Recovery Act-funded grant from
the Employment Training Administration of the U.S. Department of Labor. The University
did not have adequate monitoring procedures for its subrecipients under the grant.
The University subawarded $3,190,000 to seven subrecipients under the ARRA-Program of
Competitive Grants for Worker Training and Placement in High Growth and Emerging Industry
Sectors program (program). Total expenditures incurred by the University for the
subrecipients amounted to $966,395 during the current fiscal year.
In our detailed testing of University’s compliance with the subrecipient monitoring
requirements, we noted the following:
 The University does not have procedures in place to monitor whether subrecipients
expending $500,000 or more in Federal awards during the subrecipients’ fiscal year
have met the audit requirements of OMB Circular A-133. The University
subsequently obtained the information as to the subrecipients’ fiscal year end,
Federal awards expended and related A-133 audits (as applicable) after being noted
during the audit.
 At the time of subaward, the University did not identify to all its subrecipients the
program’s Federal award information such as Catalog of Federal Domestic
Assistance (CFDA) title, CFDA number, award name and award number. In
addition, the University did not advise all its subrecipients of the requirement to
identify Recovery Act funds in the Schedule of Expenditures of Federal Awards
(SEFA) and the SF-SAC (A-133 Data Collection Form). The University
subsequently advised its subrecipients of these requirements after being noted during
the audit.
31
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
 One of the subrecipients is not registered in the Central Contractor Registration
(CCR) and has no Dun and Bradstreet Data Universal Numbering System (DUNS)
number as required.
 The University did not document at the time of disbursement of funds to
subrecipients the program’s CFDA and Federal award numbers for all five
expenditure vouchers reviewed totaling $163,015. The University subsequently
advised its subrecipients of this requirement after being noted during the audit.
Section M - Subrecipient Monitoring of the Office of Management and Budget (OMB) A-
133 Compliance Supplement requires a pass-through entity to ensure that subrecipient
expending $500,000 or more in Federal awards during the subrecipient’s fiscal year have met
the audit requirements of OMB Circular A-133. In addition, it requires a pass-through entity
at the time of the subaward to identify to the subrecipient the Federal award information
(e.g., CFDA title and number, award name and number, if the award is research and
development, and name of federal awarding agency) and applicable compliance
requirements. For Recovery Act subawards, a pass-through entity is responsible for
identifying to the subrecipient the amount of Recovery Act funds provided by the subaward
and advising the subrecipient of the requirement to identify Recovery Act funds in the SEFA
and the SF-SAC.
Section M - Subrecipient Monitoring of the OMB A-133 Compliance Supplement, Section
1512(h) of the American Recovery and Reinvestment Act of 2009, Training and Employment
Guidance Letter No. 29-08, and the Code of Federal Regulations (2 CFR 176.50(c)) state that
for Recovery Act subawards, a pass-through entity is responsible for identifying to first-tier
subrecipients the requirement to register in the CCR, including obtaining a DUNS number.
Section N - Special Tests and Provisions of the OMB A-133 Compliance Supplement, and
the Code of Federal Regulations (2 CFR 176.210(c) and 176.210(d)) require recipients of
Recovery Act funds to separately identify to each subrecipient, and document at the time of
subaward and disbursement of funds, the Federal award number, CFDA number, and amount
of Recovery Act funds. It further requires recipients to advise their subrecipients to include
in their SEFA information to specifically identify Recovery Act funding.
In addition, OMB Circular A-110, Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations requires nonfederal entities receiving federal awards establish and maintain
internal control designed to reasonably ensure compliance with federal laws, regulations and
program compliance requirements. Effective internal control procedures should include
adequate monitoring procedures for subrecipients.
32
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
University officials stated that the conditions noted above were due to oversight.
Inadequate monitoring procedures for subrecipients could result in Federal funds being
expended for unallowable purposes and subrecipients not properly administering Federal
programs in accordance with laws, regulations and grant agreements. In addition, failure to
inform subrecipients of the Federal award information could result in subrecipients
improperly omitting expenditures from their SEFA or not receiving a single audit in
accordance with OMB Circular A-133. (Finding Code No. 11-7)
Recommendation
We recommend the University establish and implement procedures to ensure adequate
monitoring of subrecipients in compliance with Federal regulations.
University Response
The University agrees with this finding and accepts the recommendation. The University
has reorganized its grant organization and has invested in additional grant staff and
technology as well as improved processes and communications to ensure compliance.
33
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Federal Agency: U.S. Department of Health and Human Services
Program Name CFDA #
Program
Expenditures
ARRA - Head Start 93.708 ($1,309,378)
Questioned Costs: None - Procedural Finding Only
11-8 Noncompliance with Davis-Bacon Act
Governors State University (University) is a recipient of a Recovery Act-funded grant from
the Administration for Children and Families of the U.S. Department of Health and Human
Services (HHS). The University did not obtain the required weekly certified payrolls from a
construction contractor paid from this federal fund.
During the current fiscal year, the University entered into construction contracts under the
ARRA-Head Start program (program) which are subject to the Davis-Bacon Act. In our
detailed testing of University’s compliance with the Davis-Bacon Act, we noted that the
University did not obtain the required weekly certified payrolls from one (33%) of the three
contractors reviewed. The construction cost incurred by the University for this contractor
amounted to $11,300 during the current fiscal year.
The Code of Federal Regulations on “Labor Standards Provisions Applicable to Contracts
Covering Federally Financed and Assisted Construction (29 CFR 5.5) requires contractors
submit to the non-Federal entity weekly, for each week in which any contract work is
performed, a copy of all payrolls. It further requires that each payroll submitted shall be
accompanied by a “Statement of Compliance” signed by the contractor (certified payrolls).
In addition, the Office of Management and Budget (OMB) Circular A-110, Uniform
Administrative Requirements for Grants and Agreements with Institutions of Higher
Education, Hospitals and Other Non-Profit Organizations requires nonfederal entities
receiving federal awards establish and maintain internal control designed to reasonably
ensure compliance with federal laws, regulations and program compliance requirements.
Effective internal control procedures should include ensuring that all required payroll
certifications are obtained from contractors in compliance with the Davis-Bacon Act.
University officials stated that the condition noted above was due to oversight.
34
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - FEDERAL COMPLIANCE, Continued
Failure to obtain the required weekly certified payrolls from the contractor resulted in
noncompliance with federal regulations. (Finding Code No. 11-8)
Recommendation
We recommend the University establish and implement procedures to ensure that all
required payroll certifications are obtained in compliance with Federal regulations.
University Response
The University agrees with this finding and accepts the recommendation. The University
has reorganized its grant organization and has invested in additional grant staff and
technology as well as improved processes and communications to ensure compliance.
35
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE
11-9 Noncompliance with the Required Contracting Procedures
The University did not comply with certain required contracting procedures.
During our tests of 25 contracts, we noted the following:
 Three contracts (12%) totaling $2,217,736 did not have the three signatures required
for contracts of $250,000 or more.
 Two contracts (8%) each valued at more than $10,000 were not filed with the Office
of the State Comptroller within 15 days after execution (three and four days late).
These contracts were incurred against locally held funds.
 Two contracts (8%) each valued at more than $10,000 were not filed with the Office
of the State Comptroller. These contracts were incurred against locally held funds.
 Three contracts (12%) totaling $397,736 were not approved and executed prior to
performance of services. These contracts were executed one to 83 days after the start
of related services.
 A contract (4%) amounting to $385,000 was not procured through competitive
selection and the disclosure of financial interest statement was also not obtained.
 Three contracts (12%) totaling $980,000 did not meet the contract content
requirements. The State Board of Elections Certification was not marked as
required.
The State Finance Act (30 ILCS 105/9.02) and Statewide Accounting Management System
(SAMS) Procedure 15.10.20 require three signatures for any new contract or contract
renewal in the amount of $250,000 or more in a fiscal year, or any order against a master
contract in the amount of $250,000 or more in a fiscal year, or any contract amendment or
change to an existing contract that increases the value of the contract to or by $250,000 or
more in a fiscal year, shall be signed or approved in writing by the chief executive officer of
the agency, and shall also be signed or approved in writing by the agency’s chief legal
counsel and chief fiscal officer. If the agency does not have a chief legal counsel or a chief
fiscal officer, the chief executive officer of the agency shall designate in writing a senior
executive as the individual responsible for signature or approval.
36
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
The Illinois Procurement Code (30 ILCS 500/20-80(b)) and SAMS Procedure 15.10.40
require all state agencies to file contracts, including any cancellation or modification,
exceeding $10,000 with the State Comptroller within 15 calendar days after execution. An
Affidavit for Late Filing must be completed for any contract liability not filed within 30 days
of execution. In addition, the Illinois Procurement Code (30 ILCS 500/20-80(d)) and SAMS
Procedure 15.10.40 require all contracts be reduced to writing and signed by all necessary
parties before services are rendered or goods are received.
SAMS Procedure 15.20.10 states that “File Only” contracts, including contracts paid entirely
from locally held funds, do not require obligation and are not entered into the SAMS system.
They must, however, be filed with the Illinois Office of the Comptroller (IOC) and must
meet all IOC documentation and certification requirements.
The Illinois Procurement Code (30 ILCS 500/20-5) requires all State contracts be awarded
by competitive sealed bidding unless otherwise authorized by law. In addition, the Illinois
Procurement Code (30 ILCS 500/20-20) establishes the small purchase maximum for
individual procurement of supplies or services other than professional or artistic services.
The Illinois Public Higher Education Procurement Bulletin Small Purchase Limits requires
competitive sealed bidding for procurement of supplies and services other than professional
or artistic services exceeding $51,300.
The Illinois Procurement Code (30 ILCS 500/50-35) requires all contracts with an annual
value of more than $25,000 be accompanied by disclosure of the financial interests of the
contractor, bidder, or proposer and each subcontractor to be used.
The Illinois Procurement Code (30 ILCS 500/20-160(b)) requires all contracts contain a
certification by the bidder or contractor that either (i) the bidder or contractor is not required
to register as a business entity with the State Board of Elections pursuant to this Code or
(ii) the bidder or contractor has registered as a business entity with the State Board of
Elections.
University officials stated that the conditions noted above were due to oversight.
Failure to comply with the required contracting procedures resulted in noncompliance with
State statutes and regulations. In addition, failure to adhere to a competitive bidding process
may result in the University not getting the lowest possible cost for the services provided.
(Finding Code Nos. 11-9, 10-7)
37
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
Recommendation
We recommend the University ensure all contracts over the threshold amounts be approved
and executed prior to performance of services and filed with the Office of the Comptroller in
accordance with State statutes and regulations. We further recommend that the required
disclosure of financial interest statement, contract certifications and signatures must be
obtained, and the required competitive solicitation procedures must be observed.
University Response
The University agrees with this finding and accepts the recommendation. Since this was
brought to the University’s attention, the University modified the contracting procedures to
ensure compliance.
38
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
11-10 Inadequate Controls Over University Property and Equipment
Governors State University (University) did not have adequate controls over its property and
equipment.
In our physical identification of 40 items in the property records, we noted the following:
 A television (3%), valued at $1,629, was not tagged with the University decal. The
University subsequently affixed the University decal on the item.
 Information in the property records for a video library (3%), valued at $610, was not
updated. The item was found in a different location and no Property Change Request
form was prepared to support the change in location. The University subsequently
updated the property records.
During our tracing to the property records of items physically identified, we noted the
following:
 Tag number affixed on a powercam, valued at $16,081, did not match the tag number
in the property records. The University subsequently affixed the correct tag number
on the item.
 A fax machine was not recorded in the property records.
During our review of 37 equipment deletions made during the fiscal year, we noted that a
tractor mower, valued at $10,683, traded-in and approved for deletion by the Department of
Central Management Services (DCMS) on January 5, 2011 was not yet deleted from the
property records. The University subsequently deleted the item after being noted during the
audit.
In our detailed testing of 40 equipment vouchers during the fiscal year, we noted the
following:
 Equipment items purchased from a voucher tested with a total value of $3,874 were
not included in the property records. These items consisted of six chairs, a coffee
table, three bars, five barstools, and a set of graphic.
 A studio pedestal tripod purchased from a voucher tested with a value of $2,880 was
not included in the property listing as of the fiscal year end submitted by the
University to DCMS.
39
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
During our review of the Quarterly Agency Report of State Property (C-15 Reports) for the
fiscal year, we also noted that the University’s capital lease equipment with a total cost of
$169,545 was included as part of the general equipment category instead of being reflected
separately in the quarterly C-15 Reports. The University subsequently revised the fourth
quarter C-15 Report to reflect the capital lease equipment as a separate line item.
The State Property Control Act (30 ILCS 605/4) requires responsible officers at each State
agency to be accountable for supervision, control and inventory of all property under their
jurisdiction.
DCMS Property Control Rules (44 Illinois Administrative Code, Section 5010.210: Marking
of State-Owned Equipment) require each piece of equipment be marked with a unique six-digit
identification number. The identification number may be applied by using the agency’s
inventory decal or by indelibly marking the number on the property. The identification
number shall be affixed to the property in a general area easily located by all and in no
danger of being damaged. It also requires that all equipment regardless of value shall be
clearly marked to indicate that it is the property of the State of Illinois.
DCMS Property Control Rules (44 Illinois Administrative Code, Section 5010.400:
Equipment Inventory Recording) require that agencies shall adjust property records within
30 days of acquisition, change, or deletion of equipment items.
Statewide Accounting Management System (SAMS) Procedure 29.10.10 requires agencies
to maintain detailed property records and update property records as necessary to reflect the
current balance of State property. Such detail records are to be organized by major asset
category and include the following information for each asset: (1) cost (or other value);
(2) function and activity; (3) reference to acquisition source document; (4) acquisition date
and date placed in service; (5) name and address of vendor; (6) short description of asset;
(7) organization unit charged with custody; (8) location; (9) fund and account from which
the item was purchased; (10) method of acquisition; (11) estimated useful life; (12) estimated
salvage value; (13) date, method and authorization of disposition; (14) tag number;
(15) accumulated depreciation; (16) depreciation method; (17) depreciation convention; and
(18) insured value (if applicable).
University procedures require the use of Property Change Request form when a department
wishes to have tagged equipment transferred out of their unit inventory.
40
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
DCMS Property Control Rules (44 Illinois Administrative Code, Section 5010.220:
Inventory of Equipment) requires that all items of equipment with an acquisition value of
$500 or more is subject to being reported to DCMS by the holding agency. It also states that
equipment with an acquisition value of less than $500 is not subject to reporting; however,
agencies will be responsible for establishing and maintaining internal control records over
these items.
DCMS Property Control Rules (44 Illinois Administrative Code, Section 5010.460: Annual
Inventory) requires all agencies to provide the Property Control Division on an annual basis
a listing of all equipment subject to being reported to DCMS as required under Section
5010.220. In relation to this, the University was required by the DCMS to submit a listing of
all equipment as of June 30, 2011 subject to being reported to DCMS no later than October
1, 2011.
SAMS Procedure 29.10.30 requires C-15 Reports to present the total cost of State property,
by category, reflected on the agency’s records as of the reporting date. It further requires
that capital lease assets be reflected on the C-15 Reports. In addition, SAMS Procedure
29.20.10 states that C-15 Report makes a distinction between capital lease assets and other
types of assets.
Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires State agencies to
establish and maintain a system, or systems, of internal fiscal and administrative controls,
which shall provide assurance that funds, property, and other assets and resources are
safeguarded against waste, loss, unauthorized use, and misappropriation; and revenues,
expenditures, and transfers of assets, resources, or funds applicable to operations are
properly recorded and accounted for to permit the preparation of accounts and reliable
financial and statistical reports and to maintain accountability over the State’s resources.
University officials stated that the conditions noted above were a result of human errors and
the ease of mobility of property from room to room.
41
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
Inadequate controls over University property and equipment results in inaccurate and
incomplete property records. It could also result in incorrect accounting information and
could cause unnecessary equipment expenditures and inaccurate financial reporting. Loss of
University property and equipment may not be detected timely or remain undetected without
an accurate property inventory listing and/or strict compliance with University property
control procedures. Failure to submit the complete inventory of equipment resulted in
noncompliance with DCMS Property Control Rules. Failure to properly complete the
quarterly C-15 Reports resulted in noncompliance with State’s property reporting
requirements. (Finding Code Nos. 11-10, 10-8)
Recommendation
We recommend the University adhere to its procedures to ensure that property and
equipment records are accurately maintained and updated. Periodic physical inventories
should be conducted to ensure existence of equipment, and property records should be
updated with the results of the inventory. We also recommend the University ensure
submission of a complete inventory of equipment with DCMS. In addition, the University
should ensure proper completion of the quarterly C-15 Reports.
University Response
The University agrees with this finding and accepts the recommendation. The University
will continue to improve its property control process and reporting procedures.
42
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
11-11 Time Sheets Not Maintained in Compliance with the State Officials and Employees Ethics
Act
Governors State University (University) is not maintaining time sheets for its faculty and
graduate assistants in compliance with the State Officials and Employees Ethics Act (Act).
The Act required the Illinois Board of Higher Education (IBHE), with respect to State
employees of public universities, to adopt and implement personnel policies. The Act (5
ILCS 430/5-5(c)) states, “The policies shall require State employees to periodically submit
timesheets documenting the time spent each day on official State business to the nearest
quarter hour; contractual State employees may satisfy the timesheets requirement by
complying with the terms of their contract, which shall provide for a means of compliance
with this requirement.” The IBHE adopted personnel policies for public universities on
February 3, 2004 in accordance with the Act. The University has not incorporated these
policies into the University’s policies.
During our review of timesheets for 25 employees during the fiscal year, we noted the
following:
 Four faculty members used the “negative” timekeeping system whereby the
employee is assumed to be working unless noted otherwise.
 Two adjunct faculty members not required by the University to submit timesheets
since they worked on a contract basis.
 A graduate assistant used positive timekeeping system wherein total contract hours
worked per week is reported instead of time worked each day to the nearest quarter
hour.
University officials stated that the University is reviewing along with other State
universities, time reporting for faculty, as it relates to existing collectively bargained
contractual obligations. The President’s council and the individual universities will continue
to discuss and explore time reporting.
By not requiring positive time reporting from all its employees, the University is not in
compliance with the Act. (Finding Code Nos. 11-11, 10-11, 09-3, 08-3, 07-3, 06-4, 05-7)
43
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
Recommendation
We recommend the University amend its policies and revise its procedures to ensure that all
employees submit timesheets documenting the time spent each day on official State business to
the nearest quarter hour.
University Response
Under study. The University acknowledges the requirements of the State Officials and
Employees Ethics Act for employees to periodically report time spent each day on official
State business to the nearest quarter hour. The University currently collects and monitors
reported time spent on official business from all nonacademic, civil service, and professional
and administrative staff. The University is reviewing existing time reporting requirements
for faculty employees established by federal granting agencies and others to determine
whether the requirements of the Ethics Act can be met by existing requirements rather than
requiring dual reporting. In addition, the University is reviewing, along with other State
universities, time reporting for faculty, as it relates to existing collectively bargained
contractual obligations.
44
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
11-12 Noncompliance with the University’s Law on Board Membership, Terms, Vacancies and
Meetings
Governors State University (University) did not comply with its law on Board membership,
terms, vacancies and meetings.
During our testing of statutory mandates, we noted that a quorum was not present during the
University’s regular Board of Trustees (Board) meeting on October 8, 2010. There were
only three Board members present during the meeting, which was less than the required
quorum of five. This raises a concern as to the legitimacy of actions taken by the Board
during that meeting.
In addition, we noted that the University’s Board is not composed of eight members as
required by its law. As of the current fiscal year’s audit, the University’s Board has only
four members appointed by the Governor and one student member elected by the student
body, leaving the University’s Board with three vacancies. Two of these vacancies have
existed for several years now and one has been recently vacant from a resignation during the
current fiscal year.
The Governors State University Law (Law) (110 ILCS 670/15-25) requires that at all regular
meetings of the Board, a majority of its members shall constitute a quorum. Unless the
student member is entitled to vote, he or she shall not be considered a member for the
purpose of determining whether a quorum is present. Further, University officials confirmed
that five Board members constitute a quorum for the University, which represents the
majority of its required members of eight.
In addition, the Law (110 ILCS 670/15-15) states that the Board shall consist of seven voting
members appointed by the Governor and one voting member who is a student at the
University as chosen by a campus-wide student election.
University officials stated that the Governor is responsible for making these appointments to
the Board and they have been in constant communication with the Governor’s Office to fill
the vacancies.
Failure to have sufficient number of Board members and to meet the required quorum at its
regular Board meeting resulted in noncompliance with the Law. In addition, there is a risk
that the Board will be unable to conduct meetings and perform functions as intended.
(Finding Code No. 11-12)
45
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS - STATE COMPLIANCE, Continued
Recommendation
We recommend the University continue to work with the Governor’s Office to ensure that
Board vacancies are filled. We further recommend the University ensure that it meets the
required quorum at all regular Board meetings to comply with the provisions of the Law.
University Response
The University agrees and accepts this finding. In October 2011, the Governor’s Office
appointed two additional Board of Trustee members.
46
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
PRIOR FINDINGS NOT REPEATED
A Inadequate Controls Over Federal Matching
Status: Implemented
It was recommended that the University improve its procedures to ensure compliance with
federal requirements.
During the current fiscal year, our testing disclosed that the match/cost share provided by the
University to its grants were adequate and properly supported in accordance with federal
requirements. (Finding Code No. 10-4)
B Indirect Cost Recorded in Excess of the Federally Approved Rate
Status: Implemented
It was recommended that the University implement procedures to ensure that indirect costs
recorded are in accordance with the federally approved rate.
During the current fiscal year, our testing disclosed that indirect costs recorded were in
accordance with the federally approved rates. (Finding Code No. 10-5)
C Noncompliance with University Faculty Research and Consulting Act
Status: Implemented
It was recommended that the University ensure that faculty members comply with the
University Faculty Research and Consulting Act as required by statute.
During the current fiscal year, our sample testing disclosed that the Requests for Advance
Approval of University Faculty Research and Consulting (Requests) were approved by the
University Provost prior to the start of the related services. It was also noted that the Annual
Statements of Time Spent on Outside Research and/or Consulting Services (Annual
Statements) for the related Requests are not yet due until February 2012. (Finding Code
Nos. 10-9, 09-2)
47
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
PRIOR FINDINGS NOT REPEATED, Continued
D Noncompliance with the University’s Law on Meningitis Vaccine Information
Status: Implemented
It was recommended that the University comply with the provisions of the Governors State
University Law on informing incoming students at the beginning of each academic year
about meningitis and its transmission.
On September 15, 2010, the University published in its student newspaper (The Phoenix)
information about meningitis and its transmission. It was also noted that posters showing the
same information were conspicuously displayed throughout the University at the beginning
of Academic Year 2010-2011. (Finding Code No. 10-10)
E Computer Security Weaknesses
Status: Repeated, reported as Finding Code No. IM11-8
It was recommended that the University restrict the use of accounts with powerful
capabilities; implement segregation of duties; develop formal procedures for user access and
logical security; enforce the University policy regarding password change interval and
length; restrict access to the data center; and improve physical security measures to store
documents that contain sensitive or personal information in locked cabinets.
During the current fiscal year, weaknesses noted in the University’s administration of
computer security have been substantially acted upon. What remains to be addressed are the
documentation of policies and procedures relating to the administration of user access and
the full enforcement of password expiration to all users. This issue has been included in the
immaterial finding letter. (Finding Code No. 10-12)
48
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
SUPPLEMENTARY INFORMATION FOR STATE COMPLIANCE PURPOSES
Summary
Supplementary Information for State Compliance Purposes presented in this section of the report
includes the following:
 Fiscal Schedules and Analysis
Schedule of Expenditures of Federal Awards
Notes to the Schedule of Expenditures of Federal Awards
Schedule of Net Appropriations, Expenditures and Lapsed Balances
Comparative Schedule of Net Appropriations, Expenditures and Lapsed
Balances
Comparative Schedule of Income Fund Revenues and Expenditures
Schedule of Changes in State Property
Analysis of Significant Variations in Expenses
Analysis of Significant Variations in Revenues
Analysis of Significant Account Balances
Analysis of Accounts Receivable
Summary of Indirect Cost Reimbursement Funds
 Analysis of Operations
University Functions and Planning Program
Average Number of Employees (Unaudited)
Student Statistics (Unaudited)
University Bookstore Information (Unaudited)
Selected Service Efforts and Accomplishments (Unaudited)
Schedules of Federal Expenditures, Nonfederal Expenses and New Loans
Schedule of Degrees Awarded (Unaudited)
Schedule of Tuition and Fee Waivers (Unaudited)
 Special Data Requirements for Audits of Universities
University Reporting in Accordance with University Guidelines
Schedule of Indirect Cost Funds to be Deposited into the University
Income Fund as Required by 1982 University Guidelines
(Amended 1997)
Schedule of Excess Funds Calculation by Entity as Required by 1982
University Guidelines (Amended 1997)
Balance Sheets - Auxiliary Enterprises and Activities Entities
Schedules of Revenues, Expenditures and Changes in Fund Balances
Summary of Foundation Cash Support to the University
49
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FOR THE YEAR ENDED JUNE 30, 2011
SUPPLEMENTARY INFORMATION FOR STATE COMPLIANCE PURPOSES,
Continued
Summary, Continued
The accountants’ report that covers the Supplementary Information for State Compliance Purposes
presented in the Compliance Report Section states that it has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in the auditors’ opinion, except
for the portion marked “unaudited”, on which they express no opinion, it is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
50
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS
Schedule of Expenditures of Federal Awards
Federal
Project or
CFDA Pass-Through FY 2011
Number Number Expenditures
MAJOR PROGRAMS
STUDENT FINANCIAL ASSISTANCE CLUSTER:
U.S. DEPARTMENT OF EDUCATION
Federal Direct Student Loans 84.268 $ 37,328,827
Federal Pell Grant Program 84.063 6,519,196
Federal Perkins Loans - Federal Capital Contributions 84.038 4,377,959
Federal Work - Study Program 84.033 271,308
Federal Supplemental Educational Opportunity Grants 84.007 119,109
Teacher Education Assistance for College and Higher Education Grants
(TEACH Grants) 84.379 65,500
National Science and Mathematics Access to Retain Talent (SMART) Grants 84.376 52,500
TOTAL U.S. DEPARTMENT OF EDUCATION 48,734,399
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Scholarships for Health Professions Students from Disadvantaged Backgrounds
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/Mental Health 93.925 184,193
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/CSW 93.925 82,887
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/OT 93.925 41,443
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/Speech 93.925 41,443
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/PT 93.925 41,443
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/Undergrad CDIS 93.925 36,839
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/Grad Health Admin 93.925 32,234
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/M&F Therapy 93.925 18,420
Scholarships for Health Professions Students from Disadvantaged
Backgrounds/Nursing 93.925 6,477
485,379
Federal Grantor/Pass-Through Grantor
For the Year Ended June 30, 2011
Program/Grant Title
51
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Expenditures of Federal Awards, Continued
Federal
Project or
CFDA Pass-Through FY 2011
Number Number Expenditures
ARRA - Scholarships for Disadvantaged Students
ARRA - Scholarships for Disadvantaged Students/Mental Health 93.407 121,664
ARRA - Scholarships for Disadvantaged Students/CSW 93.407 54,748
ARRA - Scholarships for Disadvantaged Students/OT G 93.407 28,375
ARRA - Scholarships for Disadvantaged Students/Speech 93.407 27,375
ARRA - Scholarships for Disadvantaged Students/PT G 93.407 27,375
ARRA - Scholarships for Disadvantaged Students/SP UG 93.407 24,333
ARRA - Scholarships for Disadvantaged Students/Hlth Admin G 93.407 21,292
ARRA - Scholarships for Disadvantaged Students/M&F 93.407 12,168
317,330
Nurse Faculty Loan Program (NFLP) 93.264 277,719
TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 1,080,428
TOTAL STUDENT FINANCIAL ASSISTANCE CLUSTER 49,814,827
RESEARCH AND DEVELOPMENT CLUSTER:
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Minority Health and Health Disparities Research
RIMI - Building Capacity for Health Disparities Research 93.307 706,981
ARRA - Trans-NIH Recovery Act Research Support
ARRA/Building Complex Language 93.701 64,016
Research on Healthcare Costs, Quality and Outcomes
Agency for Health Care Research and Quality 93.226 21,694
TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 792,691
NATIONAL SCIENCE FOUNDATION
ARRA - Trans-NSF Recovery Act Research Support
ARRA/Biology Research Lab 47.082 100,654
TOTAL NATIONAL SCIENCE FOUNDATION 100,654
TOTAL RESEARCH AND DEVELOPMENT CLUSTER 893,345
Federal Grantor/Pass-Through Grantor
Program/Grant Title
For the Year Ended June 30, 2011
52
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Expenditures of Federal Awards, Continued
Federal
Project or
CFDA Pass-Through FY 2011
Number Number Expenditures
TEACHER QUALITY PARTNERSHIP GRANTS CLUSTER:
U.S. DEPARTMENT OF EDUCATION
ARRA - Teacher Quality Partnerships, Recovery Act
ARRA/Chicago Southland Region Teacher Quality Partnership 84.405 771,730
Teacher Quality Partnership Grants
Teacher Quality Enhancement Grants 84.336 100,708
TOTAL U.S. DEPARTMENT OF EDUCATION 872,438
TOTAL TEACHER QUALITY PARTNERSHIP GRANTS CLUSTER 872,438
TRIO CLUSTER:
U.S. DEPARTMENT OF EDUCATION
TRIO - Upward Bound
TRIO - Upward Bound 84.047 559,769
TRIO - Student Support Services
TRIO - Student Support Services 84.042 31,955
TOTAL U.S. DEPARTMENT OF EDUCATION 591,724
TOTAL TRIO CLUSTER 591,724
OTHER MAJOR PROGRAMS:
U.S. DEPARTMENT OF LABOR
ARRA - Program of Competitive Grants for Worker Training and Placement
in High Growth and Emerging Industry Sectors
ARRA/Employment and Training Administration 17.275 1,325,393
TOTAL U.S. DEPARTMENT OF LABOR 1,325,393
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
ARRA - Head Start
ARRA/Early Head Start 93.708 1,309,378
TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 1,309,378
Program/Grant Title
Federal Grantor/Pass-Through Grantor
For the Year Ended June 30, 2011
53
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Expenditures of Federal Awards, Continued
Federal
Project or
CFDA Pass-Through FY 2011
Number Number Expenditures
U.S. DEPARTMENT OF VETERANS AFFAIRS
Post-9/11 Veterans Educational Assistance
VA Chapter 33 Award 64.028 442,669
TOTAL U.S. DEPARTMENT OF VETERANS AFFAIRS 442,669
TOTAL MAJOR PROGRAMS 55,249,774
OTHER PROGRAMS
U.S. DEPARTMENT OF EDUCATION
Higher Education - Institutional Aid
Passed through Morton College
Higher Education - Institutional Aid/Title V Cooperative Grant 84.031 N.A. 153,751
Fund for the Improvement of Education
Parent University 84.215 144,096
Child Care Access Means Parents in School
Child Care Access Means Parents in School 84.335 15,122
TOTAL U.S. DEPARTMENT OF EDUCATION 312,969
LIBRARY OF CONGRESS
Teaching With Primary Sources
Passed through the Education and Research Consortium of the Western Carolinas
Teaching With Primary Sources N.A. GA06C0076 177,093
TOTAL LIBRARY OF CONGRESS 177,093
SMALL BUSINESS ADMINISTRATION
Small Business Development Centers
Passed through the Illinois Department of Commerce and Economic Opportunity
Small Business Development Center 59.037 70006561122 90,695
Small Business Development Center 59.037 1603001Z001428 37,272
TOTAL SMALL BUSINESS ADMINISTRATION 127,967
Program/Grant Title
Federal Grantor/Pass-Through Grantor
For the Year Ended June 30, 2011
54
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Expenditures of Federal Awards, Continued
Federal
Project or
CFDA Pass-Through FY 2011
Number Number Expenditures
U.S. DEPARTMENT OF ENERGY
ARRA - State Energy Program
Passed through the Illinois Department of Commerce and Economic Opportunity
ARRA/State Energy Program 81.041 DE-EE0000119 84,154
TOTAL U.S. DEPARTMENT OF ENERGY 84,154
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Advanced Nursing Education Traineeships
Advanced Education Nursing Traineeships 93.358 37,431
Block Grants for Prevention and Treatment of Substance Abuse
Passed through the Illinois Department of Human Services
Block Grants for Prevention and Treatment of Substance Abuse 93.959 40C6001291 31,773
TOTAL U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 69,204
U.S. DEPARTMENT OF AGRICULTURE
Child and Adult Care Food Program
Passed through the Illinois Board of Education
Child and Adult Food Care Program 10.558 N.A. 23,294
TOTAL U.S. DEPARTMENT OF AGRICULTURE 23,294
U.S. DEPARTMENT OF DEFENSE
Procurement Technical Assistance for Business Firms
Passed through the Illinois Department of Commerce and Economic Opportunity
Procurement Technical Assistance Center 12.002 70006561122 8,557
TOTAL U.S. DEPARTMENT OF DEFENSE 8,557
U.S. DEPARTMENT OF JUSTICE
Edward Byrne Memorial Justice Assistance Grant Program
Passed through the Illinois Criminal Justice Grant Program
Edward Byrne Memorial Justice Assistance Grant Program 16.738 410058 4,807
TOTAL U.S. DEPARTMENT OF JUSTICE 4,807
TOTAL OTHER PROGRAMS 808,045
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 56,057,819
Federal Grantor/Pass-Through Grantor
Program/Grant Title
For the Year Ended June 30, 2011
55
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Notes to the Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2011
1. Significant Accounting Policy
Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant
activity of the State of Illinois, Governors State University and is presented on the accrual basis
of accounting. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of State, Local Governments, and Non-Profit
Organizations. Therefore, some amounts presented in this schedule may differ from amounts
presented in, or used in the preparation of the financial statements.
2. Subrecipients
During the fiscal year 2011, the University provided Federal awards to subrecipients under the
following grants:
Program/Grant Title
CFDA
Number
Amount
Provided to
Subrecipients
Minority Health and Health Disparities Research 93.307 $ 212,580
ARRA - Trans-NIH Recovery Act Research Support 93.701 22,570
ARRA - Trans-NSF Recovery Act Research Support 47.082 100,654
ARRA - Program of Competitive Grants for Worker
Training and Placement in High Growth and
Emerging Industry Sectors 17.275 966,395
Total $ 1,302,199
3. Non-cash Assistance
The University did not receive any federal non-cash assistance during the fiscal year ended June
30, 2011.
56
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Net Appropriations, Expenditures and Lapsed Balances*
Appropriations for Fiscal Year 2011
Fourteen Months Ended August 31, 2011
Approximate
Lapse Period
Appropriations Expenditures Expenditures Approximate Approximate
(Net After through July 1 to Total Balances
Transfers) June 30, 2011 August 31, 2011 Expenditures Lapsed
General Revenue Fund-001 (Public Act 96-0956): (a)
Operational expenses $ 26,558,000 $ 26,556,000 $ 2,000 $ 26,558,000 $ -
Total General Revenue Fund $ 26,558,000 $ 26,556,000 $ 2,000 $ 26,558,000 $ -
Total Appropriated Fund $ 26,558,000 $ 26,556,000 $ 2,000 $ 26,558,000 $ -
* The information contained in this schedule was taken directly from the University records which have been reconciled to those of the State Comptroller.
Expenditure amounts are vouchers approved and paid by the University and submitted to the State Comptroller for reimbursement of payments made
to vendors.
(a) For fiscal year 2011, the General Assembly changed the appropriation process for operating expenses that were paid from the General Revenue Fund.
The University received a lump sum appropriation for operational expenses, including personal services expenditures, rather than individual
appropriations designated for specific purposes.
57
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Comparative Schedule of Net Appropriations, Expenditures and Lapsed Balances*
For the Years Ended June 30, 2011, 2010, and 2009
2011 2010 2009
P.A. 96-0956 P.A. 96-0114 P.A. 95-0734
(a) (b)
General Revenue Fund - 001:
Appropriations (net after transfers) $ 26,558,000 $ 28,324,400 $ 27,018,400
Expenditures:
Operational expenses 26,558,000 25,986,100 -
Personal services - - 22,415,390
Personal services - ARRA - 2,338,300 -
Medicare - - 94,900
Contractual services - - 3,050,000
Commodities - - 150,000
Equipment - - 400,000
Telecommunications services - - 100,000
Awards and grants - - 100,000
Total Expenditures 26,558,000 28,324,400 26,310,290
Lapsed Balances $ - $ - $ 7 08,110
Special Lump Sum Appropriations:
Fiscal Years
Appropriations (net after transfers) $ - $ - $ 1,306,000
Expenditures:
International Trade Center - - 331,000
Institute of Urban Education - - 650,000
Center for Excellence in Health Education - - 325,000
Total Expenditures - - 1,306,000
Lapsed Balances $ - $ - $ -
Grand Total, All Funds:
Appropriations (Net after transfers) $ 26,558,000 $ 28,324,400 $ 28,324,400
Expenditures $ 26,558,000 $ 28,324,400 $ 27,616,290
Lapsed Balances $ - $ - $ 708,110
* The information contained in this schedule was taken directly from the University records which have been reconciled to
those of the State Comptroller. Expenditure amounts are vouchers approved and paid by the University and submitted
to the State Comptroller for reimbursement of payments made to vendors.
(a) For fiscal year 2011, the General Assembly changed the appropriation process for operating expenses that were paid from
the General Revenue Fund. The University received a lump sum appropriation for operational expenses, including
personal services expenditures, rather than individual appropriations designated for specific purposes.
(b) For fiscal year 2010, the General Assembly changed the appropriation process for operating expenses that were paid from
the General Revenue Fund. The University received a lump sum appropriation for operational expenses, not including
personal services expenditures, rather than individual appropriations designated for specific purposes.
58
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Comparative Schedule of Income Fund Revenues and Expenditures*
For the Years Ended June 30, 2011 and 2010
2011 2010
Fund balance, beginning of year $ 23,504,160 $ 13,710,114
Income fund revenues:
Student tuition and fees 2 8,837,713 2 8,096,232
Investment income 30,660 42,099
Miscellaneous 21,742 6,102
Total income fund revenues 2 8,890,115 2 8,144,433
Income fund expenditures:
Personal services (including change in accrued
compensated absences) 1 2,679,932 1 2,330,143
Medicare 901,912 873,229
Contractual services 3,048,291 2,537,426
Travel 205,468 177,902
Commodities 500,736 294,768
Equipment and permanent improvements 380,012 21,905
Telecommunications services 225,279 316,496
Operation of automotive equipment 38,128 26,659
Awards, grants and matching funds 127,622 142,285
Tuition and fee waivers 1,575,938 1,629,574
Total income fund expenditures 1 9,683,318 1 8,350,387
Fund balance, end of year $ 32,710,957 $ 23,504,160
* This schedule has been prepared on the accrual basis of accounting.
59
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Schedule of Changes in State Property*
For the Year Ended June 30, 2011
Balance Balance
June 30, 2010 Additions Deletions June 30, 2011
Land $ 1,389,086 $ - $ - $ 1,389,086
Equipment 18,408,979 1,366,416 480,875 19,294,520
Intangible assets - 1,077,097 - 1,077,097
Artwork/Sculptures 268,323 - - 268,323
Library collection 12,954,993 533,524 256,529 13,231,988
Buildings and site improvements 101,408,240 5,041,814 - 106,450,054
Total $ 134,429,621 $ 8,018,851 $ 737,404 $ 141,711,068
* This schedule has been prepared from the University's property control records. These records are maintained
on a basis prescribed by the Department of Central Management Services and differ from the information
presented in the basic financial statements due to higher capitalization thresholds which were adopted for
financial reporting purposes. These records have been reconciled to the property records submitted to the
Office of the State Comptroller.
60
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Variations in Expenses
For the Year Ended June 30, 2011
2011 2010 Amount Percentage Comments
Research $ 1,092,589 $ 1,344,335 $ (251,746) (19%) Decrease mostly due to the $0.3 million
decrease in research and development grants
received by the University during the fiscal year
2011 from U.S. Department of Health and
Human Services.
Public service 13,867,709 11,656,065 2,211,644 19% Increase mostly due to the $0.5 million increase
in the allocation of State payment fringe
benefits (payments on behalf) to public service,
and increase in grant expenditures primarily due
to the increase in the related grant revenues
from Recovery Act funding received by the
University from the Federal government.
Increase (Decrease)
The Statement of Revenues, Expenses, and Changes in Net Assets is presented on page 13 of the financial audit report. Following are explanations for
significant variances between expense accounts exceeding $94,000 and 10%:
61
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Variations in Revenues
For the Year Ended June 30, 2011
2011 2010 Amount Percentage Comments
Federal grants and contracts $ 7,687,585 $ 5,483,935 $ 2,203,650 40% Increase primarily due to the increase in
Recovery Act funding received by the
University from the Federal government.
State grants and contracts 982,355 492,229 490,126 100% Increase mostly due to the $0.5 million increase
in funding on grants received from the Illinois
State Board of Education (ISBE).
Other grants and contracts 876,290 999,798 (123,508) (12%) Decrease mostly due to the decrease in funding
on the following grants: (a) $0.1 million
decrease in CHHS/ASLH Build Sentence grant,
and (b) $0.1 million decrease in private loans
grant.
Auxiliary enterprises 1,671,660 2,080,224 (408,564) (20%) Decrease mostly due to the $0.4 million
decrease in Center for Performing Arts (CPA)
revenues, which was mostly attributable to the
$0.1 million decrease in rentals and concession
sales and $0.3 million decrease in the amount
transferred-in to the CPA fund during fiscal
year 2011.
Increase (Decrease)
The Statement of Revenues, Expenses, and Changes in Net Assets is presented on page 13 of the financial audit report. Following are explanations for
significant variances between revenue accounts exceeding $94,000 and 10%:
62
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Variations in Revenues, Continued
For the Year Ended June 30, 2011
2011 2010 Amount Percentage Comments
Other operating revenues $ 1,685,746 $ 1,150,338 $ 535,408 46% Increase mostly due to the $0.2 million increase
in indirect cost revenue resulting from increase
in the related Federal grants, and receipt of $0.3
million grant from the Illinois Clean Energy
Community Foundation for the University's
lighting system upgrade projects.
State appropriation -
Federal ARRA
- 2,338,400 (2,338,400) (100%) The University did not receive any State
appropriation - Federal ARRA during fiscal
year 2011.
Federal Pell grant 6,519,196 5,593,162 926,034 17% Increase mainly due to higher Pell grant awards
during fiscal year 2011.
Capital additions provided
by State of Illinois
282,600 - 282,600 100% The University received funding from the
Capital Development Board (CDB) during
fiscal year 2011 for various renovation projects.
The University did not receive any CDB
funding during fiscal year 2010.
Increase (Decrease)
63
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Account Balances
For the Year Ended June 30, 2011
Cash and Cash Equivalents
Cash and cash equivalents as presented on the Statement of Net Assets consisted of the following:
2011 2010
Deposit types:
Cash $ 4,211,329 $ 6,441,486
Illinois Funds 24,376,063 21,233,594
$ 28,587,392 $ 27,675,080
Depositories used:
First Midwest Bank $ 4,191,516 $ 6,419,297
Illinois Funds 24,376,063 21,233,594
Cash on Hand 19,813 22,189
$ 28,587,392 $ 27,675,080
Cash and cash equivalents increased by $0.9 million primarily due to increased tuition and fee
revenues.
Cash and Cash Equivalents, Restricted
Cash and cash equivalents, restricted as presented on the Statement of Net Assets consisted of the
following:
2011 2010
Deposit types:
Cash $ 654,550 $ 2,330,940
Money Market 622,528 660,986
Illinois Funds 3,429,458 6,226,570
$ 4,706,536 $ 9,218,496
64
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Account Balances, Continued
For the Year Ended June 30, 2011
Cash and Cash Equivalents, Restricted, Continued
2011 2010
Depositories used:
First Midwest Bank $ 649,857 $ 647,956
Old National Leasing Bank 4,693 1,682,984
Illinois Funds 3,429,458 6,226,570
Amalgamated Bank 622,528 660,986
$ 4,706,536 $ 9,218,496
Cash and cash equivalents, restricted decreased by $4.5 million primarily due to expending the
proceeds from debt financing on deferred maintenance projects.
Capital Assets
The University’s capital assets consisted of the following:
2011 2010
Land $ 1,389,086 $ 1,389,086
Artwork/Sculptures 268,323 268,323
Site improvements 5,986,726 5,650,832
Buildings 100,463,328 95,757,408
Intangible assets 1,077,097 -
Equipment 8,931,278 8,453,476
Library collection 13,231,988 12,954,993
Gross capital assets 131,347,826 124,474,118
Accumulated depreciation (52,363,347) (49,479,437)
Net capital assets $ 78,984,479 $ 74,994,681
Net capital assets increased by $4.0 million primarily due to the substantial completion of deferred
maintenance projects that have been underway for the past four years, and implementation of a new
Enterprise Resource Planning (ERP) system.
65
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Significant Account Balances, Continued
For the Year Ended June 30, 2011
Liabilities
The University’s liabilities as presented on the Statement of Net Assets consisted of the following:
2011 2010
Accounts payable $ 3,224,012 $ 4,462,786
Agency funds payable 149,101 373,379
Accrued compensated absences 4,855,661 5,047,765
Deferred revenue 3,806,802 4,611,732
Refundable grants 3,067,701 3,074,355
Revenue bonds payable 8,028,683 8,350,421
Notes payable and capital leases 4,019,410 4,416,271
Certificates of participation 17,578,587 18,541,259
Total liabilities $ 44,729,957 $ 48,877,968
Liabilities decreased by $4.1 million mostly due to the following: (a) $1.2 million decrease in
accounts payable due to timing differences on vendor payments, (b) $0.2 million decrease in agency
funds payable due to timing of the University’s receipt of funds from the various agencies doing
activities within the University as against the related expenditures by said agencies, (c) $0.8 million
decrease in deferred revenue mostly due to decrease in credit hours for the summer 2011 term,
(d) $1.7 million principal payments in notes payable and capital leases, revenue bonds payable, and
certificates of participation, and (e) $0.2 million decrease in accrued compensated absences due to
payouts made to employees who separated from service or who used vested sick time.
66
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Accounts Receivable
For the Year Ended June 30, 2011
The University’s receivables as presented on the Statement of Net Assets consisted of the following:
2011 2010
Accounts receivable, net of allowance for uncollectible
accounts of $3,594,700 in 2011 and $3,297,799
in 2010 $ 2,998,668 $ 3,114,174
Grants receivable 2,152,285 1,444,466
State appropriation receivable 11,534,898 6,440,425
Student loans, net of allowance for uncollectible loans
of $718,000 in 2011 and $717,000 in 2010 2,783,027 3,036,450
Total receivables $ 19,468,878 $ 14,035,515
Accounts receivable increased mostly due to the increase in grants receivable and State
appropriation receivable. Grants receivable consists of amounts due from the Federal government
and other granting sources at the end of the fiscal year. Increase in grants receivable was mostly due
to the timing of collections/drawdowns and increase in Recovery Act funding received by the
University from the Federal government. State appropriation receivable increased in fiscal year
2011 due to delayed payments from the State of Illinois. The $11.5 million in delayed
reimbursement was subsequently received by the University in fiscal year 2012.
The aging of accounts and grants receivable as of June 30, 2011 is as follows:
2011 2010
Current $ 4,551,955 $ 4,090,905
Up to 120 days past due 388,181 245,780
From 121 to 240 days past due 237,280 215,750
From 241 to 365 days past due 140,517 129,451
More than 365 days past due 3,427,720 3,174,553
Allowance for doubtful accounts (3,594,700) (3,297,799)
Net accounts and grants receivable $ 5,150,953 $ 4,558,640
Non-student receivables are not aged and have been presented as current above.
67
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Analysis of Accounts Receivable, Continued
For the Year Ended June 30, 2011
Aging of student loans receivable as of June 30, 2011 is as follows:
2011 2010
In school or in grace period - not in repayment $ 1,978,621 $ 2,199,811
In repayment:
On schedule 679,588 736,367
Past due - not in default 245,647 243,662
Past due - in default 597,171 573,610
Allowance for doubtful accounts (718,000) (717,000)
Net student loans receivable $ 2,783,027 $ 3,036,450
68
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
FISCAL SCHEDULES AND ANALYSIS, Continued
Summary of Indirect Cost Reimbursement Funds
For the Year Ended June 30, 2011
The University receives indirect and administrative cost reimbursements for administration of grants
and contracts, federally assisted financial aid programs, Veterans Affairs (VA) programs and other
related activities. These funds are recorded in Other Unrestricted Funds and are expended for
directly identifiable charges associated with such programs.
The administrative personal services expenditures are for selected University employees working in
the functions generating the related revenues. The contractual services expenditures include audit
charges to federally assisted programs. The remaining charges are for other expenditures related to
the respective programs.
Balances remaining at June 30, 2011 are used to meet budgeted operational costs in fiscal year 2012.
The following is an analysis of the sources and applications of indirect and administrative cost
reimbursements recorded in the current fund for the year ended June 30, 2011:
Indirect Administrative
Costs Overhead Total
Balance at June 30, 2010 $ 210,453 $ 120,431 $ 330,884
Add: Sources
Recovered from grants and contracts 1,500,405 - 1,500,405
Financial aid program reimbursements - 56,055 56,055
VA reporting fees - 1,498 1,498
Total sources 1,500,405 57,553 1,557,958
Less: Applications
Personal services 150,807 50,005 200,812
Contractual services 275,000 555 275,555
Commodities
Equipment
4,383
11,950
2,066
-
6,449
11,950
Others 176,638 - 176,638
Total applications 618,778 52,626 671,404
Balance at June 30, 2011 $ 1,092,080 $ 125,358 $ 1,217,438
69
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
ANALYSIS OF OPERATIONS
University Functions and Planning Program
For the Year Ended June 30, 2011
Functions
The University was chartered in 1969 to provide affordable and accessible undergraduate and
graduate education to its culturally and economically diverse life-long learners in the Chicago
metropolitan area. It is governed by the Board of Trustees of the University created in January 1996
as a result of legislation to reorganize governance of State higher education institutions and provides
liberal arts, science, and professional preparation at the upper-division, master, and doctorial levels.
Planning
Strategy 2015: Inspire Hope, Realize Dreams, Strengthen Community is the strategic plan of the
University. It was formally adopted by the University Board of Trustees in October 2009, and is
designed to provide general direction for all University initiatives through the 2014-2015 academic
year.
Strategy 2015 articulates the mission of the University as follows:
The University is committed to offering an exceptional and accessible education that imbues
students with the knowledge, skills, and confidence to succeed in a global society. The University is
dedicated to creating an intellectually stimulating public square, serving as an economic catalyst for
the region, and being a model of diversity and responsible citizenship.
The mission statement is informed by five core values, specified as follows:
(1) Provide Opportunity and Access: At the University, those traditionally underserved by higher
education and residents of surrounding communities have access to a first class public
education.
(2) Serve as an Economic Catalyst: The University is committed to the citizens of the State of
Illinois and the region to serve as an economic catalyst, so that communities grow and flourish.
(3) Prepare Stewards of our Future: The University is committed to preparing students to thrive in
the global economy and to contribute to the ongoing stewardship of the environment.
(4) Demonstrate Inclusiveness and Diversity: The University embraces diversity among students,
staff, and faculty as well as members of the broader community, and encourages acceptance of
wide-ranging perspectives.
70
STATE OF ILLINOIS
GOVERNORS STATE UNIVERSITY
ANALYSIS OF OPERATIONS, Continued
University Functions and Planning Program, Continued
For the Year Ended June 30, 2011
(5) Promote Quality of Life: The University values an atmosphere that fosters a capacity to enjoy
life through the fine arts and humanities, marketable skills and attitudes for employment,
supportive interpersonal relationships, and participative and informed citizenship.
Consistent with these values and informed by the larger institutional mission, the University actively
pursues six primary goals:
(1) Academic Excellence: Provide distinctive academic programs that effectively prepare students
to become leaders and productive citizens in the global community.
(2) High Quality Faculty and Staff: Provide students access to a highly qualified, motivated, and
diverse faculty and staff.
(3) Continuous Process Improvement: Develop and sustain a climate of continuous improvement
that is defined by evidence-based decision-making focused on enriching the student
experience.
(4) Visibility, Outreach, and Economic Catalyst: Pursue initiatives that make the University a
preferred destination in the region, that create a vibrant public dialogue, and that increase the
University’s effectiveness as an economic catalyst in the region.
(5) Social, Ethical, and Environmental Responsibility: Build an institution that is socially,
ethically, and environmentally responsible.
(6) Financial Growth and Sustainability: Diversify the University’s revenue streams to ensure
resources that are necessary for institutional growth and fiscal sustainability.
Within the larger context set by Strategy 2015, the annual budget process operates under the general
direction of the Planning and Budget Advisory Council (PBAC), a twenty-o