Western Illinois University. Financial Audit for the Year Ended June 30, 2011

              Office of the Auditor General, Iles Park Plaza, 740 E. Ash St., Springfield, IL 62703 • Tel: 217-782-6046 or TTY 888-261-2887
This Report Digest and a Full Report are also available on the internet at www.auditor.illinois.gov
WESTERN ILLINOIS UNIVERSITY
FINANCIAL AUDIT
For the One Year Ended: June 30, 2011
Summary of Findings:
Total this audit:
Total last audit:
Repeated from last audit:
2
2
0
Release Date: February 21, 2012
INTRODUCTION
This report contains only findings pertaining to the Financial Statement Audit.
The State Compliance Examination and Federal Single Audit Report will be issued at a later date.
SYNOPSIS
• The University had not established adequate internal controls over property records to ensure proper calculation and recording of depreciation expense.
{Expenditures and Activity Measures are summarized on the reverse page.}ii
STATEMENT OF NET ASSETS
Assets
Cash and cash equivalents....................................
54,902$
43,889$
Investments..........................................................
28,005
10,000
Accounts and student loans receivable, net..........
10,052
9,141
Due from primary government.............................
25,360
17,926
Capital assets, net.................................................
173,565
153,934
Other....................................................................
4,275
3,663
Total................................................................
296,159$
238,553$
Liabilities
Accounts payable, accrued payroll, liabilities......
21,302$
18,660$
Compensated absences.........................................
13,954
15,664
Revenue bonds, certificates of participation.........
88,940
56,563
Other....................................................................
7,038
6,873
Total................................................................
131,234$
97,760$
Net Assets
Invested in capital assets, net of related debt........
122,136$
106,815$
Restricted.............................................................
2,047
2,028
Unrestricted.........................................................
40,742
31,950
Total................................................................
164,925$
140,793$
REVENUES, EXPENSES AND CHANGES IN NET ASSETS
2011
2010
Revenues
State appropriations.............................................
121,976$
113,352$
Tuition and fees, net.............................................
75,988
73,193
Auxiliary enterprises............................................
50,574
49,639
Grants and other contracts....................................
29,816
26,494
Sales and services of educational activities..........
5,106
5,152
Other....................................................................
4,742
7,942
Total................................................................
288,202$
275,772$
Expenses
Instruction............................................................
61,151$
61,812$
Staff benefits........................................................
6,596
7,800
Auxilliary enterprises...........................................
40,884
40,066
Institutional support.............................................
12,815
12,485
Student services...................................................
20,013
19,747
Academic support................................................
17,269
17,687
Operation and maintenance of plant.....................
15,463
16,909
Student aid...........................................................
9,533
8,135
On-behalf payments.............................................
54,314
50,456
Other....................................................................
26,032
25,487
Total................................................................
264,070$
260,584$
Change in net assets..................................................
24,132$
15,188$
During Examination Period: Dr. Alvin Goldfarb
Currently: Dr. Jack Thomas
WESTERN ILLINOIS UNIVERSITY
FINANCIAL AUDIT
For The Year Ended June 30, 2011 (in thousands)
AGENCY DIRECTOR
2010
2011iii
Capital asset depreciation was overstated by nearly $72,000
Management controls did not operate properly
Missing equipment
University agrees with auditors
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE CONTROLS OVER UNIVERSITY PROPERTY AND EQUIPMENT
The University had not established adequate internal controls over property records to ensure proper calculation and recording of depreciation expense and accountability for property.
The auditors noted 4 of 29 (14%) assets examined were not accurately depreciated during Fiscal Year 2011. Further, examination of all capital assets identified a net overstatement of depreciation expense and accumulated depreciation by approximately $71,858 for the fiscal year.
The auditors also noted the management controls created to account for missing property and review the missing property report was not operating as intended. One University Department reported 184 equipment items totaling $456,703 missing. These items represented 62% of the Department’s total inventory accountability and 56% of the 459 total items reported missing by the University. Upon auditor’s notification, the Department further investigated and found 99 (54%) of the 184 items. The auditors subsequently found 2 of 25 (5%) items tested from the University’s revised list of missing property.
Governmental Accounting Standards Board Statement No. 34 and University policy provide accounting requirements for depreciation expense. University policy requires upper management review of missing property lists to determine whether a continued search, theft investigation, or removal from records should occur. (Finding 1, pages 44-46)
We recommended that the University make the necessary adjustments to correct its capital asset and depreciation records. In addition, the University should update values in the fixed assets inventory system to prevent future miscalculations. Further, the University should ensure oversight review is performed on physical inventory results to assure accuracy and prompt resolution of inventory discrepancies.
University officials agreed with the finding and stated corrective action will be taken.
OTHER FINDING
The remaining finding is reportedly being given attention by the University. We will review the University’s progress toward implementation of our recommendations in our next audit.iv
AUDITORS' OPINION
Our auditors stated the financial statements of Western Illinois University as of June 30, 2011, and for the year then ended, are fairly stated in all material respects.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:rt
AUDITORS ASSIGNED: Our special assistant auditors for this examination were E. C. Ortiz & Co. LLP.