FY11-CSU-Fin-Full

              STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2011
Performed as Special Assistant Auditors
for the Auditor General, State of Illinois
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
FINANCIAL AUDIT
For the Year Ended June 30, 2011
TABLE OF CONTENTS
Page No.
Agency Officials 1
Financial Statement Report
Summary 2
Independent Auditors’ Report 4
Management’s Discussion and Analysis 6
Basic Financial Statements
Statement of Net Assets 15
Statement of Revenues, Expenses, and Changes in Net Assets 16
Statement of Cash Flows 17
Notes to the Financial Statements 18
Supplementary Information
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
- Statement of Net Assets (Deficit) 37
- Statement of Revenues, Expenses and Changes in Net Assets (Deficit) 38
- Statement of Cash Flows 39
- Student Enrollment by Term (Unaudited) 40
- University Center Fee (Unaudited) 40
- Rental Disclosures (Unaudited) 41
- Schedule of Insurance in Force (Unaudited) 41
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 42
Schedule of Findings 44
Prior Findings Not Repeated 51
Other Reports Issued Under Separate Cover:
Compliance Reports (including Single Audit) for Chicago State
University for the Year Ended June 30, 2011
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STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
FINANCIAL AUDIT
For the Year Ended June 30, 2011
AGENCY OFFICIALS
President Dr. Wayne Watson
Provost and Senior V.P. of Academic and Student Affairs Dr. Sandra Westbrooks
Vice President of Administration and Finance Mr. Glenn Meeks
Associate V.P. of Administration and Finance Ms. Maricela Aranda
(8/8/11 to Present)
Associate V.P. of Administration and Finance Mr. Larry Pinkelton
(8/16/11 to Present)
Associate V.P. of Administration and Finance/Controller Mr. Edward Lannon
(to 3/31/11)
Director of Accounting/Controller Mr. Edward Lannon
(4/1/11 to Present)
Associate Director of Accounting Ms. Louise Williams
Chief Internal Auditor Mr. Ken Clow
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STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
FINANCIAL STATEMENT REPORT
SUMMARY
The audit of the accompanying basic financial statements of Chicago State University was
performed by Borschnack, Pelletier & Co.
Based on their audit and the reports of other auditors, the auditors expressed unqualified
opinions on the business-type activities and the discretely presented component unit of Chicago
State University.
SUMMARY OF FINDINGS
The auditors identified matters involving the University’s internal control over financial reporting
that they considered to be significant deficiencies. The significant deficiencies are described in
the accompanying Schedule of Findings listed in the table of contents as finding 11-1,
Suspended Academic Policy Resulted in Overstated Liability on the Financial Statements, 11-2,
Inaccurate Accounting for Participation in Public Entity Risk Pool, and 11-3, Inaccurate
Accounting for Accrued Compensated Absences.
EXIT CONFERENCE
The findings and recommendations appearing in this report were discussed with University
personnel at an exit conference on February 22, 2012. Attending were:
Representing Chicago State University
Chairman, Board of Trustees Mr. Gary L. Rozier
Vice-Chairman, Board of Trustees Ms. Zaldwaynaka Scott
President Dr. Wayne Watson
Vice President of Administration and Finance Mr. Glenn Meeks
Provost and Senior Vice President Academic &
Student Affairs Dr. Sandra Westbrooks
Interim Associate Vice President Sponsored Programs Dr. Yvonne Harris
Chief Internal Auditor Mr. Ken Clow
Director of Accounting / Controller Mr. Edward Lannon
Director of Compliance Ms. Carla Davis
Vice President of Enrollment Management Ms. Angela M. Henderson
Chief of Police and University Services Mr. Ronnie Watson
Associate Vice President of Administration & Finance Mr. Lawrence Pinkelton
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STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
FINANCIAL STATEMENT REPORT
SUMMARY
EXIT CONFERENCE (continued)
Representing Borschnack, Pelletier & Co.
Partner Mr. Paul A. Pelletier, CPA
Manager Mr. Robert Sikma, CPA
Representing the Office of the Auditor General
Audit Manager Mr. Thomas L. Kizziah, CPA
Responses to the recommendations were provided by Mr. Glenn Meeks in a correspondence
dated February 29, 2012.
hnack
Certified Public Accotmtan(.f & Cnns11ltants
200 East Court Street • Suite 6o8 • Kankakee, 11 60901
815.933.1771• fax: 815.933.1163
INDEPENDENT AUDITORS' REPORT
Honorable William G. Holland
Auditor General
State of Illinois
and
Board of Trustees
Chicago State University
As Special Assistant Auditors for the Auditor General, we have audited the accompanying financial
statements of the business-type activities of Chicago State University (University) and its 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 Chicago State University's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
the Chicago State University's management. Our responsibility is to express opinions on these
financial statements based on our audit. The prior year partial comparative information has been
derived from the University's June 30, 2010 financial statements and, in our reported dated
March 10, 2011, we expressed unqualified opinions on the respective financial statements of
the business-type activities of the University and its discretely presented component unit. We did
not audit the financial statements of the discretely presented component unit, as described in Note
1 of the financial statements. Those statements were audited by other auditors whose report
thereon has been provided to us, and our opinion on the financial statements, insofar as it relates
to the amounts included for the discretely presented component unit, is based on the report of the
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. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit and the report of other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the report of other auditors, the financial statements referred
to above present fairly, in all material respects, the respective financial position of the business­type
activities and the discretely presented component unit of Chicago State University, as of June
30, 2011, and the respective changes in financial position and, where applicable, cash flows
-4-
thereof for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated March 2,
2012 on our consideration of Chicago State University's internal control over financial reporting and
on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
The Management's Discussion and Analysis on pages 6 through 14 is not a required part of the
basic financial statements but is supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Chicago State University's basic financial statements. The accompanying
supplementary information is presented for purposes of additional analysis and is not a required
part of the basic financial statements. The University Auxiliary Facilities Revenue Bond Fund,
Series 1998 financial statements on pages 37 through 39 have been subjected to the auditing
procedures applied by us in the audit of the basic financial statements and, in our opinion, based
on our audit, are fairly stated in all material respects in relation to the basic financial statements
taken as a whole. The "Unaudited" supplementary information on pages 40 and 41 has not been
subjected to the auditing procedures applied by us and the other auditors in the audit of the basic
financial statements, and accordingly, we express no opinion on them.
March 2, 2012
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STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
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Introduction
This section of the Chicago State University (University) annual financial report presents
management’s discussion and analysis (“MD&A”) of the financial performance of the University
during the fiscal year ended June 30, 2011, with fiscal year 2010 prior year data presented for
comparative purposes. This discussion should be read in conjunction with the accompanying
financial statements and footnotes. The discussion and analysis is designed to focus on current
activities, resulting change and currently known facts.
This MD&A focuses on the University and excludes the discretely presented Chicago State
University Foundation, a component unit of the University. MD&A for the component unit is
included in its separately issued financial statements. Refer to footnote 1 for information on how
to obtain the financial statements of the component unit.
Background
Chicago State University, a public, comprehensive, urban institution of higher learning, strives
for excellence in teaching, research, creative expression and community service. The
University is located in a residential community on the south side of Chicago, approximately 12
miles south of downtown Chicago. The 161-acre campus has contemporary buildings
attractively placed in a carefully preserved woodland setting. The mission of the University is to:
1) provide access to higher education for residents of the region, the State and beyond, with an
emphasis on meeting the educational needs, undergraduate through doctoral levels, of
promising graduates from outstanding secondary schools as well as educating students where
academic and personal growth may have been inhibited by lack of economic, social, or
educational opportunity; and 2) produce graduates who are responsible, discerning, and
informed global citizens with a commitment to lifelong-learning and service.
The University enrolled approximately 7,200 doctorate, graduate and undergraduate students
during Spring 2011 and employs approximately 900 employees consisting of faculty, civil
service and administrators. The University offers a diverse range of degree programs from
baccalaureate through doctoral levels. The University has conferred approximately 994
graduate and undergraduate degrees per annum over the last five years.
Financial Highlights
The University’s financial position remained strong at June 30, 2011, with assets of $184.1
million and liabilities of $35.4 million. Net assets, which represent the residual interest in the
University’s assets after liabilities are deducted, increased by $14.0 million in fiscal 2011 to
$148.7 million at June 30, 2011. The increase in net assets is primarily attributable to tuition
and fee revenue and capital appropriations.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
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Financial Highlights (continued)
Changes in net assets represent all financial results (primarily operating activities) of the
University, which consist of revenues, expenses, gains and losses, and are summarized for the
years ended June 30, 2011 and 2010 as follows:
Fiscal year 2011 revenues increased $13.9 million or 9.9% to $155.4 million and total
expenditures increased $6.7 million or 5.0% to $141.4 million, compared to the prior year.
Overall, the University experienced an increase in net assets of $14.0 million for fiscal year
2011 primarily due to student tuition and fees, net, and capital appropriations.
Using the Financial Statements
The University prepares three basic financial statements: the Statement of Net Assets, the
Statement of Revenues, Expenses and Changes in Net Assets and the Statement of Cash
Flows as well as the Notes to the Financial Statements. These financial statements are
prepared in accordance with Governmental Accounting Standards Board (GASB) Statement No.
35. The financial statements encompass the University and it’s discretely presented component
unit.
Statement of Net Assets
The Statement of Net Assets presents the assets and liabilities of the University using the
accrual basis of accounting and reflects the financial position of the University at the end of the
fiscal year. The difference between total assets and total liabilities – net assets – is one
indicator of the current financial condition of the University, while the change in net assets that
occurs over time is an indicator of whether the overall financial condition has improved or
worsened during the year. Assets and liabilities are generally measured using current values.
One notable exception is capital assets, which are stated at historical cost, less an allowance for
depreciation. Net Assets has been further categorized as (i) Invested in capital assets, net of
related debt, (ii) Restricted nonexpendable – net assets that are permanently restricted by
externally imposed stipulations, (iii) Restricted expendable – net assets subject to externally
imposed restrictions that can be fulfilled by actions of the University pursuant to those
stipulations or that expire by the passage of time and (iv) Unrestricted – net assets that are not
subject to externally imposed stipulations and may be used at the discretion of the governing
board to meet current expenses for any purpose.
2011 2010
Total revenues $ 155,376,820 $ 141,435,168
Total expenses 141,355,967 134,610,114
Change in net assets $ 14,020,853 $ 6,825,054
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
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Statement of Net Assets (continued)
A summary of the University’s assets, liabilities and net assets for the year ended June 30, 2011
in comparison with June 30, 2010 is as follows:
2011 2010
Assets:
Current assets $ 36,204,444 $ 28,334,758
Noncurrent assets:
Capital assets, net 147,215,084 144,732,018
Other 694,754 757,219
Total Assets 184,114,282 173,823,995
Liabilities:
Current liabilities 13,355,808 14,992,120
Noncurrent liabilities 22,020,431 24,114,685
Total Liabilities 35,376,239 39,106,805
Net Assets:
Invested in capital assets, net of related debt 129,198,926 125,579,083
Restricted - expendable 2,134,906 2,943,852
Unrestricted 17,404,211 6,194,255
Total Net Assets $ 148,738,043 $ 134,717,190
A review of the University’s Statement of Net Assets at June 30, 2011 and 2010 shows that the
University maintains a strong financial foundation. This financial health reflects the prudent
utilization of its financial resources, including careful cost controls, and conservative use of debt.
Current assets increased by $7.9 million to $36.2 million. This primarily is the net result of the
$10.1 million increase in the balance of State appropriation and the $2.2 million decrease in
cash and cash equivalents. The balance in State appropriations increased $10.1 million to $17.8
million, due to the timing of processing and slow reimbursements from the State of Illinois.
Noncurrent assets are primarily capital assets which increased by $2.5 million because the
fiscal year 2011 purchases and State capital appropriations exceeded depreciation and
disposals.
The University’s total assets increased $10.3 million to $184.1 million at June 30, 2011.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
- 9 -
Statement of Net Assets (continued)
Total Current Liabilities decreased by $1.6 million (10.9%) due to a $3.2 million (34.3%)
decrease in accounts payable and accrued liabilities offset by a $1.6 million (192.0%) increase
in deferred revenue. The accounts payable and accrued liabilities decreases are mainly due to
a $1.2 million decrease in Local Income Fund liabilities, a $673 thousand decrease in the
liability for student health insurance, a $278 thousand liability decrease for the Douglas Hall
renovation, and a decrease of $305 thousand in liabilities for the Alliance for Minority
Participation grant. Deferred revenue increased $1.6 million due to a $213 thousand increase in
deferred tuition and a $1.4 million increase in various cash advances in grant programs.
Total Noncurrent Liabilities decreased by $2.1 million (8.7 %) due to scheduled payments on the
University’s debt and a $928 thousand reduction of accrued compensated absences. The
decrease in accrued compensated absences was primarily due to sick and vacation leave
payouts from employee turnover.
Total Liabilities overall decreased by $3.7 million (9.5%).
Total Net Assets increased by $14.0 million for fiscal year 2011 primarily due to student tuition
and fees, net, and capital appropriations.
Statement of Revenues, Expenses and Changes in Net Assets
The Statement of Revenues, Expenses and Changes in Net Assets presents the University’s
revenue and expense as operating or non-operating. Changes in total net assets as reflected in
the Statement of Net Assets are based on the activity presented in the Statement of Revenues,
Expenses, and Changes in Net Assets. The purpose of the statement is to present the
revenues and expenses incurred by the University, both operating and non-operating.
Operating revenues generally result from exchange transactions where each of the parties to
the transaction either give up or receive something of equal or similar value. The major sources
of the operating revenues of the University are student tuition and fees, grants, and auxiliary
revenues.
Non-operating revenues result from non-exchange transactions and are revenues received for
which goods and services are not provided in return. The significant source of non-operating
revenues that the University relies on to provide funding for operations is State appropriations
and on-behalf payments.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
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Statement of Revenues, Expenses and Changes in Net Assets (continued)
A summary of the University’s revenues, expenses and changes in net assets for the year
ended June 30, 2011 in comparison with the year ended June 30, 2010 is as follows:
2011 2010
Operating revenues $ 64,599,232 $ 55,973,538
Operating expenses 140,409,492 133,397,046
Operating loss (75,810,260) (77,423,508)
Net non-operating revenues 86,414,145 83,822,923
Income before other revenues, expenses, gains
or losses 10,603,885 6,399,415
Other revenues, expenses, gains or losses 3,416,968 425,639
Increase in net assets 14,020,853 6,825,054
Net assets, beginning of year 134,717,190 127,892,136
Net Assets, end of year $ 148,738,043 $ 134,717,190
The following is a graphic illustration of revenues by source, which were used to fund the
University’s operations for the year ended June 30, 2011. The most significant source of
revenue was the State of Illinois, totaling $70,013,370 which included State appropriations of
$40,014,775, State fringe benefits of $26,537,411, and capital grants and appropriations
expended by CDB of $3,461,184 or 45.1% percent of total revenue.
Student tuition and fees,
net, $37,774,246
24.31%
Federal grants and
contracts, $ 15,360,785
9.89%
State and local grants
and contracts,
$3,844,820
2.47%
Nongovernmental grants
and contracts, $21,211
0.01%
Auxiliary enterprise, net,
$4,505,372
2.90%
Other operating
revenues, $3,092,798
1.99%
Nonoperating revenues,
$87,316,404
56.20%
Capital appropriations,
$3,461,184
2.23%
Revenue by Source
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
- 11 -
Statement of Revenues, Expenses and Changes in Net Assets (continued)
A summary of the University’s operating expenses for the fiscal year ended June 30, 2011 in
comparison with the fiscal year ended June 30, 2010 is as follows:
2011 2010
Operating Expenses:
Educational and General
Instruction $ 41,762,045 $ 4 1,130,797
Research 3,539,508 4,219,192
Public Service 5,603,164 5,573,365
Academic Support 6,265,881 8,053,543
Student Services 14,718,362 8,122,443
Institutional Support 9,594,423 9,991,980
Operations and Maintenance of Plant 10,849,699 9,820,404
Depreciation 5,857,473 5,761,265
Scholarship and Fellowship 11,101,360 11,445,302
Auxiliary Enterprise Expenses 4,580,166 4,759,591
On-behalf State Fringe Benefits 26,537,411 24,519,164
Total Operating Expenses $ 140,409,492 $ 133,397,046
The following graphic illustration presents the operating expenses by function.
Instruction,
$41,762,045 , 29.74%
Research, $3,539,508 ,
2.52%
Public Service,
$5,603,164 , 3.99%
Academic Support,
$6,265,881 , 4.46%
Student Support,
$14,718,362 , 10.48%
Institutional Support,
$9,594,423 , 6.83%
Operation &
Maintenance of Plant,
$10,849,699 , 7.73%
Depreciation,
$5,857,473 , 4.17%
Scholarship &
Fellowship,
$11,101,360 , 7.91%
Auxiliary Enterprise
Expenses, $4,580,166 ,
3.26%
On-behalf State Fringe
Benefits, $26,537,411 ,
18.90%
Operating Expense by Function
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
- 12 -
Statement of Revenues, Expenses and Changes in Net Assets (continued)
The Statement of Revenues, Expenses, and Changes in Net Assets reflects a positive year with
an increase in the net assets of $14.0 million at the end of the year. Some highlights of the
information presented on the Statement of Revenues, Expenses, and Changes in Net Assets
are as follows:
Student tuition and fees revenues increased by $4.0 million to $37.8 million due to a 23.8%
increase in tuition revenue for non-resident second bachelor degree students and a modest
increase in enrollment. Federal grants and contract revenues increased by $4.9 million due to
an increase in the Textbook and Learning Materials Program of $5.4 million offset by other
decreases including $1.2 million for the Alliance for Minority Participation. State and local
grants and contracts decreased $948 thousand due to a decline in funding of several grants.
Other income increased by $349 thousand mainly due to increases of $440 thousand in
Athletics and $658 thousand in the Chicagoland Regional College Program (CRCP) revenue
offset by decreases of $598 thousand in the Local Income Fund and $132 thousand in Contract
Courses. There was an overall net increase of $8.6 million (15.4%) in total operating revenues
due to the changes explained above.
Total operating expenses increased by $7.0 million as result of offsetting increases and
decreases in the functional expense lines. Instruction increased by $631 thousand (1.5%)
primarily due to an increase in the CRCP costs. Research decreased $680 thousand (16.1%)
primarily due to a $923 thousand decrease in the Fuel Cell Mobile Robotic System program,
offset by a $246 thousand increase implementing the HIV / STD Prevention and Re-engineering
Transitional Research programs. Academic Support decreased $1.8 million (22.2%) primarily
due to lower compensated absence expenses and lower contractual services expense. Student
services increased by $6.6 million (81.2%) due to higher Textbooks and Learning Materials for
Ghana grant expenses of $5.4 million, mainly in printing. On-behalf State fringe benefit
expense increased 8.23% by $2.0 million following the trend of higher health insurance and
retirement costs.
Total operating loss decreased $1.6 million (2.1%).
Net non-operating revenue increased $2.6 million (3.1%) to $86 million. The increase was
primarily due to a $2 million increase in State Fringe benefits paid by the State; a $3.2 million
increase in Federal PELL grants; and a $2.7 million (6.3%) decrease in State appropriations.
Capital appropriations increased by $2.8 million due to increased spending on infrastructure,
roof repairs, and asbestos abatement projects.
The University chooses to report expenses by functional classification in the Statement of
Revenues, Expenses and Changes to Net Assets. The expenses are also reported by natural
classification in Note 7, on page 31.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
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Statement of Cash Flows
The final statement presented is the Statement of Cash Flows. The Statement of Cash Flows
presents detailed information about the cash activity of the University during the fiscal year.
This statement classifies sources and uses of cash into the categories defined in GASB No. 9.
The statement is divided into six parts. The first part reports operating cash flows and shows
the net cash used by operating activities of the University. The second section reflects cash
flows from noncapital financing activities. This section reflects the cash received to finance the
University’s activities for other than operating, investing or capital financing purposes. The third
section shows cash flows from capital and related financing activities. This section reports the
cash received and used for the acquisition and construction of capital projects and related
items. The fourth section reflects the cash flows from investing and shows the purchases,
proceeds, and interest received from investing activities. The fifth section reconciles the net
cash used in operations to the net operating loss on the Statement of Revenues, Expenses, and
Changes in Net Assets. The sixth section discloses the noncash investing, capital and
noncapital financing activities.
A summary of the statement of cash flows for the years ended June 30, 2011 and 2010 is as
follows:
2011 2010
Cash provided by (used in):
Operating activities $ (45,878,389) $ (45,221,137)
Noncapital financing activities 50,651,815 54,584,117
Capital and related financing activities (6,962,608) (4,960,455)
Investing activities 18,646 24,676
Net change in cash (2,170,536) 4,427,201
Cash, beginning of year 9,962,352 5,535,151
Cash, end of year $ 7,791,816 $ 9,962,352
Operating loss $ (75,810,260) $ (77,423,508)
Noncash expenses included in operating loss 32,394,884 30,280,429
Net change in assets and liabilities (2,463,013) 1,921,942
Net cash used in operating activites $ (45,878,389) $ (45,221,137)
Economic Factors that will affect the Future
Looking forward into the future, the management of the University believes it is well positioned
to continue its strong financial condition and level of excellence in service to its constituents. A
crucial element to the University’s future will continue to be its relationship with the State of
Illinois as the University relies on State appropriations to finance its higher education mission;
and maintaining enrollment by providing quality education at an affordable price.
Chicago State University has consistently advocated on its own behalf to maintain and enhance
state financial support that is critical to allow the University to continue its mission of providing
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED JUNE 30, 2011
- 14 -
Economic Factors that will affect the Future (continued)
access to higher education for students of diverse backgrounds and educational needs. The
University is committed to teaching, research, service and to community development that
includes social justice, leadership and entrepreneurship. The University has reason to be
encouraged by the positive response it has observed that shows the advocacy efforts are
having a favorable impact. While it is not appropriate to quantify renewed or enhanced state
support at this time, the University is pleased to note that additional appropriation support to the
University is already being earmarked in legislation related to State proceeds from the Illinois
gaming industry. The beginning of such legislation has already been enacted into law. The
University is closely monitoring the legislative process as part of its strategic planning process.
The University’s overall financial situation is strong and reflects prudent use of financial
resources, including careful cost control and management of appropriated operating and capital
resources. While it is not possible to predict the ultimate results, management believes that the
University’s financial condition is strong enough to weather known economic uncertainties.
(With Comparative Totals as of June 30, 2010)
ASSETS University
Component
Unit University
Component
Unit
Current Assets
Cash and cash equivalents (Note 2) $ 7 ,791,816 $ 343,373 $ 9,962,352 $ 613,727
Cash and cash equivalents-restricted (Note 2) - - - 372,714
Balance in State appropriation 1 7,800,065 - 7,691,533 -
Accounts receivable, net (Note 3) 1 0,035,804 - 10,230,824 150,000
Pledges receivable, net (Note 3) - 538,120 - 545,020
Inventories 4 0,094 - 5 3,606 -
Loans and notes receivable, net (Note 3) 2 2,625 - 2 0,979 -
Prepaid expenses and other assets 5 14,040 3,735 3 75,464 3,088
Total current Assets 3 6,204,444 8 85,228 28,334,758 1,684,549
Noncurrent Assets
Certificates of deposit-restricted (Note 2) - 1,415,373 - 1,305,546
Endowment investments (Note 2) - 2,890,193 - 1,697,203
Loans and notes receivable, net (Note 3) 6 94,754 - 7 57,219 -
Capital assets, net (Note 4) 147,215,084 - 144,732,018 -
Total noncurrent assets 147,909,838 4 ,305,566 145,489,237 3 ,002,749
Total Assets 184,114,282 5 ,190,794 173,823,995 4 ,687,298
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities 6 ,149,974 578,947 9,361,623 706,598
Accrued wages 2 ,637,234 - 2,654,309 -
Deferred revenue (Note 5) 2 ,480,061 - 8 49,303 -
Long-term liabilities-current portion (Note 6) 2 ,088,539 - 2,126,885 -
Total current liabilities 1 3,355,808 5 78,947 14,992,120 7 06,598
Noncurrent Liabilities
Accrued compensated absences (Note 6) 5 ,271,299 - 6,199,410 -
Bonds payable (Note 6) 1 6,390,000 - 17,365,000 -
Premium on bonds (Note 6) 2 58,249 - 2 80,706 -
Capital leases payable (Note 6) 1 00,883 - 2 69,569 -
Total noncurrent liabilities 2 2,020,431 - 24,114,685 -
Total Liabilities 3 5,376,239 5 78,947 39,106,805 7 06,598
NET ASSETS
Invested in capital assets, net of related debt 129,198,926 - 125,579,083 -
Restricted for:
Nonexpendable endowments (Note 14) - 3,063,348 - 1,881,234
Expendable
Direct programs and scholarships - 1,630,305 - 1,714,227
Loans 7 17,834 - 8 30,930 -
Capital projects 1 ,417,072 - 2,112,922 -
Unrestricted 1 7,404,211 ( 81,806) 6,194,255 385,239
Total Net assets $ 148,738,043 $ 4 ,611,847 $ 134,717,190 $ 3 ,980,700
2010
JUNE 30, 2011
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
STATEMENT OF NET ASSETS
2011
The accompanying notes are an integral part of these financial statements.
- 15 -
(With Comparative Totals for the Year Ended June 30, 2010)
University
Component Unit
University
Component Unit
OPERATING REVENUES:
Student tuition and fees (net of scholarship $ 37,774,246 $ - $ 33,786,262 $ -
allowances of $ 14,588,733)
Federal grants and contracts 15,360,785 - 1 0,507,573 -
State and local grants and contracts 3,844,820 - 4,792,609 -
Nongovernmental grants and contracts 21,211 - 59,704 -
Sales and services of auxiliary enterprises 4,505,372 - 4,083,970 -
(net of scholarship allowances of $ 35,341)
Other operating revenues 3,092,798 75,663 2,743,420 239,433
Total operating revenues 64,599,232 75,663 5 5,973,538 239,433
OPERATING EXPENSES:
Educational and General
Instruction 41,762,045 - 4 1,130,797 -
Research 3,539,508 - 4,219,192 -
Public service 5,603,164 - 5,573,365 -
Academic support 6,265,881 - 8,053,543 -
Student services 14,718,362 - 8,122,443 -
Institutional support 9,594,423 1,067,473 9,991,980 1,049,303
Operations and maintenance of plant 10,849,699 - 9,820,404 -
Depreciation 5,857,473 - 5,761,265 -
Scholarship and fellowship 11,101,360 231,987 1 1,445,302 275,674
Auxiliary enterprise expenses 4,580,166 - 4,759,591 -
On-behalf State fringe benefits (See Note 8) 26,537,411 - 2 4,519,164 -
Total operating expenses 140,409,492 1,299,460 133,397,046 1,324,977
Operating loss (75,810,260) (1,223,797) ( 77,423,508) (1,085,544)
NONOPERATING REVENUES (EXPENSES)
State appropriations 40,014,775 - 4 2,725,974 -
State fringe benefits (Note 8) 26,537,411 - 2 4,519,164 -
Federal nonoperating grants 20,745,572 - 1 7,508,026 -
Gifts and contributions - 304,154 - 639,617
Investment income (loss) 18,646 261,901 2 4,676 156,196
Interest on capital asset - related debt (902,259) - ( 954,917) -
Other nonoperating revenues (expenses) - 288,889 - (52)
Net nonoperating revenues 86,414,145 854,944 8 3,822,923 795,761
Income (loss) before other revenues,
expenses, gains, or losses 1 0,603,885 ( 368,853) 6,399,415 ( 289,783)
Capital appropriations 3,461,184 - 683,790 -
Endowment contributions - 1,000,000 - 100
Loss on disposal of capital assets (44,216) - ( 258,151) -
Total other revenues 3,416,968 1,000,000 425,639 100
Increase in net assets 1 4,020,853 631,147 6,825,054 ( 289,683)
NET ASSETS
Net assets-beginning of year (as previously reported) 134,717,190 3,980,700 126,033,731 4,270,383
Prior period adjustment - - 1,858,405 -
Net assets-beginning of year (as restated) 134,717,190 3,980,700 127,892,136 4,270,383
Net assets-end of year $ 148,738,043 $ 4,611,847 $ 134,717,190 $ 3,980,700
STATE OF ILLINOIS
2010
FOR THE YEAR ENDED JUNE 30, 2011
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
CHICAGO STATE UNIVERSITY
2011
The accompanying notes are an integral part of these financial statements.
- 16 -
(With Comparative Totals for the Year Ended June 30, 2010)
University Component
Unit
University Component
Unit
CASH FLOWS FROM OPERATING ACTIVITIES
Tuition and fees $ 36,524,934 $ - $ 31,897,396 $ -
Grants and contracts 21,509,159 - 18,800,181 -
Payment to suppliers for goods and services (29,004,578) ( 1,175,913) (24,788,732) ( 1,382,467)
Payments to employees for services (68,458,886) - (67,680,020) -
Payments for scholarships and fellowships (13,997,745) ( 231,987) (10,520,241) ( 275,674)
Loans issued to students ( 83,326) - ( 79,672) -
Loans collected from students 68,739 - 58,097 -
Sales and services of auxiliary enterprises 4,505,372 - 4,083,970 -
Other receipts (disbursements) 3,057,942 225,663 3,007,884 89,433
Net cash used by operating activities (45,878,389) ( 1,182,237) (45,221,137) ( 1,568,708)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
State appropriations 29,906,243 - 37,076,091 -
Gifts, contributions, and grants - 1,776,625 - 6,195,614
Federal nonoperating grants 20,745,572 - 17,508,026 -
Other noncapital financing activities - ( 195,893) - (4,673,686)
Net cash provided by noncapital financing activities 50,651,815 1,580,732 54,584,117 1,521,928
CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Purchases of capital assets ( 4,923,571) - (3,035,344) -
Principal paid on capital debt and leases (1,114,321) - ( 947,738) (2,623)
Interest paid on capital debt and leases (924,716) - ( 977,373) (52)
Net cash used by capital financing activities ( 6,962,608) - (4,960,455) (2,675)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and/or dividends on investments 18,646 68,167 24,676 74,013
Proceeds from sales and maturities of investments - 1,468,475 - 1,354,641
Net increase in certificates of deposit investments - ( 109,827) - ( 686,965)
Purchase of investments and other - (2,468,378) - (1,353,899)
Net cash provided (used) by investing activities 18,646 (1,041,563) 24,676 ( 612,210)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 2,170,536) ( 643,068) 4,427,201 ( 661,665)
Cash and cash equivalents-beginning of the year 9,962,352 986,441 5,535,151 1,648,106
Cash and cash equivalents-end of the year $ 7,791,816 $ 343,373 $ 9,962,352 $ 986,441
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED BY OPERATING ACTIVITIES:
Operating loss $ (75,810,260) $ (1,223,797) $ (77,423,508) $ (1,085,544)
Adjustments to reconcile net loss to net cash
used by operating activities
Depreciation expense 5,857,473 - 5,761,265 -
State fringe benefits 26,537,411 - 24,519,164 -
Other income transferred from fiscal agent account - - - ( 150,000)
Net changes in assets and liabilities:
Accounts receivables, net 195,020 - 3,825,275 -
Inventories 13,512 - 41,460 -
Prepaid expenses and other assets ( 138,576) - 153,385 -
Loans to students and employees 60,819 - 231,283 -
Accounts payable and accrued liabilities ( 3,211,649) 41,560 (2,124,537) ( 333,164)
Accrued wages ( 17,075) - 280,345 -
Deferred revenue 1,630,758 - ( 285,025) -
Compensated absences ( 995,822) - ( 200,244) -
Net cash used by operating activities $ (45,878,389) $ (1,182,237) $ (45,221,137) $ (1,568,708)
NONCASH INVESTING, CAPITAL AND NONCAPITAL FINANCING ACTIVITIES
Capital appropriations $ 3,461,184 $ - $ 683,790 $ -
Capital assets acquired by capital leases $ - $ - $ 403,532 $ -
Unrealized gains on investments $ - $ 98,058 $ - $ 8,988
State fringe benefits $ 26,537,411 $ - $ 24,519,164 $ -
FOR THE YEAR ENDED JUNE 30, 2011
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
STATEMENT OF CASH FLOWS
2011 2010
The accompanying notes are an integral part of these financial statements.
- 17 -
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 18 -
Note 1 – Summary of Significant Accounting Policies
Nature of Operations – Chicago State University (the “University”) is a public,
comprehensive, urban institution of higher learning located on the south side of
Chicago. The University serves the State, national and international communities by
providing its students with academic instruction, by conducting research and other
activities that advance fundamental knowledge, and by disseminating knowledge to
residents of the region, the State of Illinois and beyond.
Chicago State University was established in 1867 as an experimental teacher-training
school. The Chicago State University Board of Trustees, established in January 1996
by an act of the Illinois General Assembly, governs the University. The Board consists
of seven members appointed by the Governor and one student member elected by the
student population.
Reporting Entity – The financial reporting entity, as defined by Governmental
Accounting Standards Board (“GASB”) Statement No. 14, The Financial Reporting
Entity and amended by GASB Statement No. 39, Determining Whether Certain
Organizations are Component Units, consists of the primary government entity,
organizations for which the primary government is financially accountable and other
organizations for which the nature and significance of their relationship with the
primary government are such that exclusion could cause the financial statements to be
misleading or incomplete. Accordingly, the financial statements include the accounts
of all agencies of Chicago State University, as the primary government, the accounts
of the Chicago State University Foundation, Inc. (the “Foundation”), and the accounts
of the University Auxiliary Facilities System Revenue Bond Fund, Series 1998.
The Chicago State University Foundation was incorporated in December 1968, as an
independent, charitable, educational, and non-profit 501(c) 3 corporation with the sole
purpose of raising funds for the University to support programs and initiatives for which
State general operating funds are not available. In addition, University employees and
facilities are used for virtually all activities of the Foundation. Accordingly, the
Foundation is reported as a discretely presented component unit in the University’s
financial statements. Separate financial statements for the Foundation may be
obtained at the Foundation’s administrative office: Executive Director, Chicago State
University Foundation, Cook Administration Building, 9501 South Martin Luther King
Drive, Chicago, Illinois, 60628.
The University (including the Foundation) is a component unit of the State of Illinois for
financial reporting purposes. The financial balances and activities included in these
financial statements are, therefore, also included in the State’s comprehensive annual
financial report (CAFR).
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 19 -
Note 1 – Summary of Significant Accounting Policies (Continued)
Financial Statement Presentation – The University follows the financial statement
presentation requirements prescribed by GASB Statement No. 35, Basic Financial
Statements – and Management’s Discussion and Analysis – for Public Colleges and
Universities. This statement requires the University’s resources be classified into net
asset categories and reported in the Statement of Net Assets. These categories are
defined as (a) Invested in capital assets, net of related debt (b) Restricted
nonexpendable – net assets restricted by externally imposed stipulations (c) Restricted
expendable – net assets subject to externally imposed restrictions that can be fulfilled
by actions of the University pursuant to those stipulations or that expire by the passage
of time and (d) Unrestricted – net assets not subject to externally imposed stipulations
but may be designated for specific purposes by action of the Board of Trustees. The
University first applies restricted net assets when an expense or outlay is incurred for
purposes for which both restricted and unrestricted net assets are available.
The financial statements include certain prior period comparative information, which
has been derived from the University’s 2010 financial statements. Such information
does not include all of the information required to constitute a complete presentation in
conformity with U.S. generally accepted accounting principles. Accordingly, such
information should be read in conjunction with the University’s financial statements for
the year ended June 30, 2010.
Reclassifications - Certain items in the June 30, 2010 comparative information have
been reclassified to agree with the current year presentation.
Basis of Accounting – For financial reporting purposes, the University is considered
a special-purpose government engaged only in business-type activities. Accordingly,
the University’s financial statements have been presented using the economic
resources measurement focus and the accrual basis of accounting. Under the accrual
basis, revenues are recognized when earned and expenses are recorded when an
obligation has been incurred. All significant intra-agency transactions have been
eliminated.
In accordance with GASB Statement No. 20, the University is required to follow all
applicable GASB pronouncements. In addition the University applies all Financial
Accounting Standards Board (FASB) pronouncements issued on or before November
30, 1989, unless FASB conflicts with GASB. The University has elected not to apply
FASB pronouncements issued after November 30, 1989.
Use of Estimates – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 20 -
Note 1 – Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents – Cash equivalents are defined as short-term, highly
liquid investments that are both readily convertible to known amounts of cash and so
near to maturity that they present insignificant risk of changes in value because of
changes in interest rates. The University considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. Funds invested
through the Illinois Funds are considered cash equivalents.
Investments – The University accounts for its investments at fair value in accordance
with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools. Changes in unrealized gain (loss) on
the carrying value of investments are reported as a component of investment income
in the Statement of Revenues, Expenses, and Changes in Net Assets.
Accounts Receivable – Accounts receivable consists of tuition and fee charges to
students and auxiliary enterprise services provided to students, faculty, and staff, the
majority of which reside in the State of Illinois. Accounts receivable also include
amounts due from federal, state and local governments, or private sources, in
connection with the reimbursement of allowable expenditures made pursuant to the
University’s grants and contracts. Accounts receivable are presented net of estimated
uncollectible accounts.
Inventories – Inventories are determined on the first in, first out (FIFO) method and
stated at the lower of cost or market. The cost is recorded as an expense as the
inventory is consumed.
Prepaid Expenses and Other Assets – These assets consist of $514,040 which
includes deposits and prepaid expenses.
Capital Assets – Capital assets are recorded at cost at the date of acquisition, or fair
market value at the date of donation in the case of gifts. For equipment, the
University’s capitalization policy includes all items with a unit cost of $5,000 or more
and an estimated useful life greater than one year. Intangible assets greater than
$100,000 are capitalized. Renovations to buildings, infrastructure, and land
improvements that significantly increase the value or extend the useful life of the
structure are capitalized. Routine repairs and maintenance are charged to operating
expense in the year in which the expense is incurred.
Depreciation is computed using the straight-line method over the estimated useful lives
of the assets, generally 10 to 60 years for buildings, 5 to 50 years for infrastructure and
site improvements, 5 to 7 years for library books, and 3 to 15 years for equipment and
intangible assets.
Deferred Revenues – Deferred revenues include amounts received for tuition and
fees and certain auxiliary activities prior to the end of the fiscal year that are related to
the subsequent accounting period. Deferred revenues also include amounts received
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 21 -
Note 1 – Summary of Significant Accounting Policies (Continued)
Deferred Revenues (Continued) –
from grant and contract sponsors that have not yet been recognized because eligibility
requirements have not been met.
Compensated Absences – Employee sick and vacation pay is accrued at year-end
for financial statement purposes. The liability and expense incurred are recorded at
year-end as accrued compensated absences in the Statement of Net Assets and as a
component of compensation and benefit expense in the Statement of Revenues,
Expenses, and Changes in Net Assets.
Total accrued compensated absences changes in the current year are as follows:
Vacation Leave- (Decrease) $ (357,256)
Sick Leave (Decrease) (638,566)
Net decrease in Compensated Absences $ (995,822)
Non-current Liabilities – Noncurrent liabilities include (1) principal amounts of
revenue bonds payable, notes payable, and capital leases with contractual maturities
greater than one year; (2) estimated amounts for accrued compensated absences and
other liabilities that will not be paid within the next fiscal year; (3) the premium on the
revenue bonds payable (which are being amortized over the term of the bonds using
the straight line method); and (4) other liabilities that, although payable within one
year, are to be paid from funds that are classified as noncurrent assets.
Scholarship Allowances and Student Aid – Financial aid to students is reported in
the financial statements calculated by the alternative method as prescribed by the
National Association of College and University Business Officers (NACUBO). Certain
aid, such as loans and funds provided to students as awarded by third parties, and
Federal Direct Lending are accounted for as a third party payment (credited to the
student’s account as if the student made the payment). All other aid is reflected in the
financial statements as operating expenses or scholarship allowances, which reduce
revenues. The amount reported as operating expense represents the portion of the
aid provided to the student in the form of cash. Scholarship allowances represent the
portion of aid provided to the student in the form of reduced tuition. Under the
alternative method, these amounts are computed on a university basis by allocating
the cash payments to students, excluding payments for the services, calculated by a
ratio of total aid to the aid not considered to be third party aid.
Net Assets – GASB Statement No. 35 reports equity as “Net Assets” rather than “fund
balance.” The University’s net assets are classified as follows:
Invested in capital assets, net of related debt – This represents the
University’s total investment in capital assets, net of accumulated depreciation
and outstanding debt obligations related to those capital assets. To the extent
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 22 -
Note 1 – Summary of Significant Accounting Policies (Continued)
Net Assets (Continued) –
debt has been incurred, but not yet expended for capital assets, such amounts
are not included as a component of “invested in capital assets”.
Restricted net assets – nonexpendable – Nonexpendable restricted net assets
consist of endowment and similar type funds in which donors or other outside
sources have stipulated, as a condition of the gift instrument, that the principal is
to be maintained inviolate and in perpetuity, and invested for the purpose of
producing present and future income, which may either be expended or added to
the principal.
Restricted net assets – expendable – Restricted expendable net assets
include resources in which the University is legally or contractually obligated to
spend in accordance with restrictions imposed by external third parties.
Unrestricted net assets – Unrestricted net assets represent resources derived
from student tuition and fees, sales and service of educational departments and
auxiliary enterprises, and unrestricted gifts from donors. These resources are
used for transactions relating to the educational and general operations of the
University and Foundation and may be used at the discretion of the governing
board to meet current expenses for any purpose. These resources also include
auxiliary enterprises, which are substantially self-supporting activities that provide
services for students, faculty and staff.
Income Taxes – The University, as a political subdivision of the State of Illinois, is
excluded from Federal income taxes under Section 115(1) of the Internal Revenue
code, as amended. The Foundation is exempt from income taxes under Section
501(c) (3) of the Internal Revenue code.
Classification of Revenues – The University has classified its revenues as either
operating or nonoperating revenues according to the following criteria:
Operating revenues – Operating revenues include activities that have the
characteristics of exchange transactions, such as (1) student tuition and fees, net
of scholarship discounts and allowances, (2) sales and services of auxiliary
enterprises, net of scholarship discounts and allowances, (3) most federal, state
and local grants and contracts, and (4) interest on institutional student loans.
Nonoperating revenues – Nonoperating revenues include activities that have
the characteristics of nonexchange transactions, such as gifts and contributions,
and other revenue sources that are defined as nonoperating revenues by GASB
No. 9 and GASB No. 35, such as State appropriations and investment income.
New Accounting Pronouncements – The University adopted the provisions of GASB
Statement No. 59, Financial Instruments Omnibus as of July 1, 2010. This statement
had no impact on the University’s financial statements.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 23 -
Note 2 – Deposits and Investments
GASB Statement No. 40, Deposit and Investment Risk Disclosures requires general
disclosures by investment type with disclosures of the specific risks exposures of those
investments. Investments exposed to credit risk, custodial credit risk, concentrations
of credit risk, interest rate risk, and foreign currency risk must be disclosed, and the
deposit and investment policies (or the lack of a policy) that relate to these risks must
be described if the reporting entity is exposed to them.
The Public Funds Investment Act (30 ILCS 235) authorized the University and its
Board of Trustees to invest in bonds, notes, certificates of indebtedness, treasury bills,
or other securities guaranteed by the United States; interest-bearing savings accounts,
certificates of deposit, interest-bearing deposits, or any other investment that
constitutes direct obligations of any bank; short-term discount obligations of the
Federal National Mortgage Association; shares or other securities legally issued by
certain state or federal savings and loan associations; insured dividend-bearing share
accounts and certain other accounts of chartered credit unions; certain money market
mutual funds; the Illinois Funds Money Market Funds; and repurchase agreements
that meet certain instrument and transaction requirements. The Foundation is not
subject to such restrictions.
Deposits – At June 30, 2011, the carrying amount of the University and the
Foundation’s deposits with private financial institutions were $2,363,486 and
$1,758,746, respectively. This amount consisted of cash and certificates of deposit
deposited with the financial institutions. For financial reporting purposes, these
deposits have been classified as cash and cash equivalents or investments,
depending upon the original maturity of the financial instrument.
Carrying amounts at year-end of the above deposits, pooled investments and cash on
hand consisted of:
University Foundation
Carrying Bank Carrying Bank
Deposit Type Amount Balance Amount Balance
Cash in bank $ 2,363,486 $ 5,925,146 $ 2 87,793 $ 296,807
Money markets 55,580 55,580
Certificates of deposit 1 ,415,373 1,415,373
Total deposit accounts 2,363,486 $ 5,925,146 1 ,758,746 $ 1,767,760
Add: Investments classified as cash
equivalents (maturity < 90 days) -
Illinois Funds 5,428,330
Less: Certificates of deposit classified
as investments (maturity > 90 days) - (1,415,373)
Total Cash and Cash Equivalents $ 7,791,816 $ 3 43,373
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 24 -
Note 2 – Deposits and Investments (Continued)
Deposits (Continued) –
Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure,
deposits may not be returned. The University requires that balances on deposit with
financial institutions be either insured by the Federal Deposit Insurance Corporation
(FDIC), collateralized by securities held by the Federal Reserve Bank, or invested in
U.S. Government obligations, in the University’s name. The University maintains cash
deposits at certain Chicago-area financial institutions. The FDIC insured bank balances
totaling $6,643,561 of the University and the Foundation at June 30, 2011. The
remaining bank balances as of June 30, 2011 were fully collateralized.
The University and the Foundation had no custodial credit risk due to FDIC insurance
and collateral in the name of the University or the Foundation.
Interest Rate Risk – Interest rate risk exists when there is a possibility that changes in
interest rates could adversely affect an investment’s value. The Illinois Funds has a
weighted average maturity of less than one year.
Investments
The carrying value (and market value) of the investment portfolio of the Foundation and
University at June 30, 2011 consisted of the following:
University Foundation
Fair Value Fair Value
Money Funds and Other $ - 260,345
US Treasury and Agency Obligations 709,698
Common Stock 1,532,209
Corporate and International Bonds 387,941
Illinois Funds (Standard & Poors AAAm) 5,428,330 -
Total 5,428,330 2,890,193
Add: Certificates of Deposit (maturity >90 days) 1,415,373
Less: Investments classified as cash equivalents
(maturity < 90 days) (5,428,330)
Total Investments $ - $ 4,305,566
Custodial Credit Risk – Custodial credit risk is the risk that in the event of custodian
failure, investment principal may not be returned. At June 30, 2011, all investments held
by the Foundation are insured or registered and held by the Foundation or its agent in
the Foundation’s name.
Interest Rate Risk – Interest rate risk exists when there is a possibility that changes in
interest rates could adversely affect an investment’s value. The Foundation’s statement
of investment objectives and guidelines states that investments in non-convertible fixed-
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 25 -
Note 2 – Deposits and Investments (Continued)
Investments (Continued) –
income securities other than short-term securities will be restricted to issues within a
maximum fixed or expected average maturity of ten years and will be made primarily in
(1) securities issued or guaranteed by the U.S. government or its agencies, (2)
marketable issues of non-nuclear utility companies rated at the time of purchase within
the three highest grades assigned by Moody’s Investor Services, Inc. (Aaa, Aa or A) or
by Standard & Poors (AAA, AA or A) and (3) bond mutual funds which invest primarily in
bonds with rating of A and higher. The University’s funds expected to be used within
one year are invested in the Illinois Funds, which is fully collateralized and has a
Standard & Poors credit rating of AAAm.
The maturities of the debt securities investment portfolio (at market value) of the
Foundation at June 30, 2011 are as follows:
Maturity
Less than 1 - 5 6 - 10
Debt Security 1 year years years Total
US Treasury Obligations $ - $ 251,688 $ 147,334 $ 399,022
US Agency/Guaranteed Obligations 4,996 230,716 7 4,964 310,676
Total US Treasury/Agency 4,996 482,404 222,298 7 09,698
Corporate & Int'l Bonds 2 5,700 172,896 189,345 3 87,941
Total Debt Security Investments $ 30,696 $ 655,300 $ 411,643 $ 1,097,639
Credit Risk – Credit risk exists when there is a possibility that the issuer or other
counterparty to an investment may be unable to fulfill its obligation.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 26 -
Note 2 – Deposits and Investments (Continued)
Investments (Continued) –
The Moody’s Investor Service and Standard & Poor’s credit ratings of the debt securities
investment portfolio (at market value) of the Foundation at June 30, 2011 are as follows:
Total
Credit Rating Debt Securities
US Treasury Notes - no rating $ 399,022
Aaa/AAA 336,376
Aa1/AA 22,694
Aa2/AA 11,793
Aa2/AA- 23,009
Aa3/AA 24,973
Aa3/AA- 24,850
Aa3/A+ 77,871
Aa3/A- 13,645
A1/AA 12,810
A1/AA- 11,058
A1/A 10,883
A2/A+ 13,934
A2/A 26,750
A2/A- 25,482
A3/BBB+ 13,725
Baa1/BBB+ 10,767
Baa2/BBB 14,619
Baa2/BBB- 12,833
Baa3/BBB- 10,545
TOTAL $ 1,097,639
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 27 -
Note 2 – Deposits and Investments (Continued)
Foreign currency risk – Foreign currency risk exists when there is a possibility that the
exchange rate of foreign currencies against U.S. dollars may vary. The Foundation does
not have a policy limiting its exposure to foreign currency risk.
The Foundation’s exposure to foreign currency risk (valued in U.S. dollars) is as follows
at June 30, 2011:
Investment Currency Maturity Fair Value
Norvartis Secs Invest Ltd. Bermudian dollar 2/10/2019 $ 11,068
Shell Int'l Fin B V-USD European euro 3/22/2017 9,093
Total $ 20,161
Note 3 – Accounts, Pledges and Loans Receivable
Accounts receivable consisted of the following at June 30, 2011:
Student tuition and fees $ 9,915,415
Federal, state, and private grants and contracts 3,670,545
Third party and other receivables 1,675,109
Total Gross Receivable 15,261,069
Less allowance for doubtful accounts (5,225,265)
Net Accounts Receivable $ 10,035,804
The Foundation’s net pledges receivable at June 30, 2011 was $538,120 and consisted
of $538,620 of pledges expected to be collected within one year less an allowance for
estimated uncollectible amounts of $500.
Loans receivable consisted of the following at June 30, 2011:
Loans receivable $ 1,690,443
Less allowance for doubtful accounts (973,064)
Net Loans Receivable $ 717,379
Current portion $ 22,625
Noncurrent portion 694,754
Net Loans Receivable $ 717,379
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 28 -
Note 4 – Capital Assets
Following are the changes in capital assets for the year ended June 30, 2011:
Balance Balance
June 30, 2010 Additions Retirements Net Transfers June 30, 2011
Capital assets not being
depreciated
Land $ 9,611 $ - $ - $ - $ 9,611
Construction in-progress 2,521 4,305 - (210) 6,616
Total capital assets not
being depreciated 12,132 4,305 - (210) 16,227
Other capital assets:
Site improvements 12,113 - - - 12,113
Building and building
improvements 167,682 2,809 - 210 170,701
Equipment 29,525 996 (305) - 30,216
Intangible Assets 399 - 399
Library books 11,383 275 - - 11,658
Total other capital assets 221,102 4,080 (305) 210 225,087
Total 233,234 8,385 (305) - 241,314
Less: Accumulated depreciation (88,502) (5,858) 261 - (94,099)
Capital Assets, net $ 144,732 $ 2,527 $ (44) $ - $ 147,215
Amount in thousands
Note 5 – Deferred Revenue
Deferred revenue consists of the following at June 30, 2011:
Tuition and fees $ 1,028,470
Grants and contracts 1,451,591
Total Deferred Revenue $ 2,480,061
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 29 -
Note 6 – Long Term Liabilities
Long-term liabilities as of June 30, 2011 consist of the following:
June 30, 2011
Current
Portion
Non-current
Portion
Accrued compensated absences $ 6,092,813 $ 821,514 $ 5,271,299
Revenue bonds payable 17,365,000 975,000 16,390,000
Premium on bonds 280,705 2 2,456 258,249
Capital lease payable 370,452 269,569 100,883
Total Long Term Liabilities $ 2 4,108,970 $ 2,088,539 $ 22,020,431
The changes in long-term liabilities are as follows :
Beginning Ending
Balance Additions Payments Balance
Accrued compensated absences $ 7,088,635 $ 494,347 $ (1,490,169) * $ 6,092,813
Revenue bonds payable 18,295,000 - (930,000) 17,365,000
Premium on bonds 303,162 - (22,457) 280,705
Capital leases payable 554,773 - (184,321) 370,452
Total $ 26,241,570 $ 494,347 $ (2,626,947) $ 24,108,970
*Payments for accrued compensated absences include lump sum payouts for vacation
and sick time only. Additions include vacation earned in excess of days used.
Revenue Bonds Payable
On December 23, 1998, the University issued $25,650,000 of Auxiliary Facilities
Revenue Bonds with an average interest rate of 4.84% to advance refund $22,620,000
of outstanding 1994 Series Bonds.
Optional Redemption – The Series 1998 Bonds maturing on December 1, 2010,
through December 1, 2018, are subject to redemption at the option of the Board, on or
after December 1, 2008. The Series 1998 Bonds maturing after December 1, 2018,
are not subject to optional redemption prior to maturity.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 30 -
Note 6 – Long Term Liabilities (Continued)
Revenue Bonds Payable (Continued) –
Mandatory Redemption - The Series 1998 Term Bonds maturing on December 1,
2018, and December 1, 2023, are subject to mandatory redemption through the
application of sinking payments, at a redemption price equal to the principal amount
thereof, plus accrued interest to the date fixed for redemption, in the following principal
amounts on December 1, in each of the years as follows:
Bonds Maturing December 1, 2018 Bonds Maturing December 1, 2023
Year Principal Amount Year Principal Amount
2014 $ 1,120,000 2019 $ 1,445,000
2015 1,180,000 2020 1,525,000
2016 1,240,000 2021 1,610,000
2017 1,305,000 2022 1,705,000
2018 1,370,000 2023 1,800,000
Bond Insurance Rating – Both Moody’s Investor Service and Standard and Poor’s
Rating Services have indicated that they will apply the National rating to municipal
bonds subject to the reinsurance agreement with MBIA Corp.
The bonds are insured by MBIA Corp. and National Public Finance Guarantee. The
Rating of MBIA is B3 and the National Public Finance Guarantee is Baa1 as of
September 30, 2011.
Maturity Information
The scheduled maturities of the revenue bonds are as follows:
Fiscal Year Revenue Bonds Interest Total Payments
2012 $ 975,000 $ 874,816 $ 1,849,816
2013 1,020,000 829,175 1,849,175
2014 1,070,000 780,570 1,850,570
2015 1,120,000 727,425 1,847,425
2016 1,180,000 669,925 1,849,925
2017-2021 6,885,000 2,362,350 9 ,247,350
2022-2024 5,115,000 432,438 5,547,438
Totals $ 17,365,000 $ 6,676,699 $ 24,041,699
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 31 -
Note 6 – Long Term Liabilities (Continued)
Capital Leases Payable
The University leases various copiers and other equipment under capital lease
purchase contracts with interest rates of 9.22% for the copiers and 0.00% for the other
equipment. The capital leases payable are secured by the equipment being financed.
The scheduled maturities of the capital leases are as follows:
Fiscal Year Principal Interest Total Payments
2012 $ 269,569 $ 2,631 $ 2 72,200
2013 100,883 - 100,883
Totals $ 370,452 $ 2,631 $ 3 73,083
Note 7 – Natural Classifications
The University’s operating expenses by natural classification were as follows:
Compensation and benefits $ 93,983,401
Contractual services 14,799,554
Commodities 7,859,753
Awards and grants 13,997,745
Telecommunication 694,628
Other operating expenses 3,216,938
Depreciation 5,857,473
Total Operating Expenses $ 140,409,492
Note 8 - State Fringe Benefits
GASB Statement No. 24, Accounting and Financial Reporting for Certain Grants and
Other Financial Assistance requires the University to report “on behalf payments” for
fringe benefits and salaries by legally separate entities as revenue and expenditures of
the University. The University reported on behalf payments of $26,537,411 for year
ended June 30, 2011 consisting of group insurance in the amount of $15,333,395 and
pension contributions of $11,204,016.
State Universities Retirement System
Plan Description – The University contributes to the State Universities Retirement
System of Illinois (SURS), a cost-sharing multiple-employer defined benefit pension
plan, with a special funding situation whereby the State of Illinois makes substantially
all actuarially determined required contributions on behalf of the participating
employers. SURS was established July 21, 1941, to provide retirement annuities and
other benefits for staff members and employees of the State universities, certain
affiliated organizations, and certain other State educational and scientific agencies,
and for survivors, dependents, and other beneficiaries of such employees. SURS is
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 32 -
Note 8 - State Fringe Benefits (Continued)
considered a component unit of the State of Illinois’ financial reporting entity and is
included in the State’s financial reports as a pension trust fund. SURS is governed by
section 5/15, chapter 40, of the Illinois Compiled Statutes. SURS issues a publicly
available financial report that includes financial statements and required
supplementary information. That report may be obtained by accessing the website at
www.SURS.org, or calling 1-800-275-7877.
Funding Policy – Plan members are required to contribute 8.0% of their annual
covered salary and substantially all employer contributions are made by the State of
Illinois on behalf of the individual employers at an actuarially determined rate. The
current rate is 24.21% of annual covered payroll. The contribution requirements of
plan members and employers are established and may be amended by the Illinois
General Assembly. The employer contribution to SURS for the years ended June 30,
2011, 2010, and 2009 were $11,581,139, $10,635,583, and $6,944,063, respectively,
and is equal to the required contributions for each year.
Note 9 – Post employment Benefits
The State provides health, dental, vision, and life insurance benefits for retirees and
their dependents in a program administered by the Department of Healthcare and
Family Services along with the Department of Central Management Services.
Substantially all State employees become eligible for post-employment benefits if they
eventually become annuitants of one of the State sponsored pension plans. Health
and vision benefits include basic benefits for annuitants and dependents under the
State’s self-insurance plan and insurance contracts currently in force. Annuitants may
be required to contribute towards health and vision benefits with the amount based on
factors such as date of retirement, years of credited service with the State, whether the
annuitant is covered by Medicare, and whether the annuitant has chosen a managed
health care plan. Annuitants who retired prior to January 1, 1998, and who are vested
in one of the State’s sponsored pension systems, do not contribute towards health,
dental and vision benefits. For annuitants who retired on or after January 1, 1998, the
annuitant’s contribution amount is reduced 5% for each year of credited service with
the State allowing those annuitants with twenty or more years of credited service to not
have to contribute towards health and vision benefits. Annuitants also receive life
insurance coverage equal to the annual salary of the last day of employment until age
60, at which time the benefit becomes $5,000.
The State pays the University’s portion of employer costs for the benefits provided.
The total cost of the State’s portion of health, dental, vision, and life insurance benefits
of all members, including post-employment health, vision and life insurance benefits, is
recognized as an expenditure by the State in the Illinois Comprehensive Annual
Financial Report. The State finances the costs on a pay-as-you-go basis. The total
costs incurred for health, vision and life insurance benefits are not separated by
department or component unit for annuitants and their dependents nor active
employees and their dependents for those benefits including dental.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 33 -
Note 9 – Post employment Benefits (Continued)
A summary of postemployment benefit provisions, changes in benefit provisions,
employee eligibility requirements including eligibility for vesting, and the authority
under which benefit provisions are established are included as an integral part of the
financial statements of the Department of Healthcare and Family Services. A copy of
the financial statements of the Department of Healthcare and Family Services may be
obtained by writing to the Department of Healthcare and Family Services, 201 South
Grand Avenue, Springfield, Illinois, 62763-3838.
Note 10 – Liability Insurance
The University participates in a statutory cooperative known as the Illinois Public
Higher Education Cooperative (IPHEC). Through IPHEC the University has contracted
with commercial insurance carriers to provide liability insurance coverages, including
educators’ legal and other general liability insurance. The University purchases
commercial excess general liability coverage of $10.65 million. The University’s
liability coverages have a general $350,000 deductible per occurrence which is
administered through the State University Risk Management Association (SURMA), a
cooperative pool of certain State universities in which the University participates. In
most cases, participant contributions to SURMA are based upon actuarial valuations.
The University also has commercial general property insurance coverage for the
replacement value of the University’s property.
Note 11 – Related Party Transactions
A summary of related party transactions during the year ended June 30, 2011, is as
follows:
The Chicago State University Foundation
The University and Foundation agreed to a master contract, effective June 30, 1983,
and revised February 1, 1989, which specified the relationship between the two
organizations, as required by the University Guidelines adopted on November 30,
1982, and revised September 10, 1997, by the Legislative Audit Commission. Under
the terms of the contract, the Foundation is provided administrative support services
by the University, such as maintenance, telephone, personnel, and property control.
The Foundation does not directly pay the University for these services, which were
valued at $58,405 for the current fiscal year.
The Foundation reciprocates by providing fundraising and other services to the
University. These services were valued at $1,066,722 for the year ended June 30,
2011. Scholarships provided by the Foundation which benefited the University totaled
$231,987 for the year ended June 30, 2011. The Foundation’s liabilities include a
payable to the University of $570,861, which includes payroll reimbursements totaling
$565,175.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 34 -
Note 12 – Segment Information
A segment is an identifiable activity for which one or more revenue bonds or other
revenue-backed debt instruments are outstanding. A segment has a specific,
identifiable revenue stream pledged in support of the revenue bonds and has related
expenses, gains and losses, assets and liabilities that can be identified.
The Chicago State University, University Auxiliary Facilities System Revenue, Bond
Fund, Series 1998 (Revenue Bond Fund), an integral part of Chicago State University,
has replaced the Revenue Fund Series of 1971 and includes all operations of the
Cordell Reid Student Union Building. Its revenues are principally University Center
fees, rental and use fees, leased food services, bookstore commissions, and parking
fees.
Condensed financial statement information for the University Auxiliary Facilities
System Revenue Bond Series 1998 is as follows:
Condensed Statement of Net Assets
As of June 30,
2011
Assets:
Current assets $ 3,899,370
Capital assets, net 13,577,908
Total Assets 17,477,278
Liabilities
Current liabilities 1,300,609
Noncurrent liabilities 16,758,128
Total Liabilities 18,058,737
Net Assets (Deficit)
Invested in capital assets, net of related debt (4,067,797)
Unrestricted 3,486,338
Total Net Assets (Deficit) $ (581,459)
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 35 -
Note 12 – Segment Information - (Continued)
Year Ended
June 30, 2011
Operating revenues $ 6,879,506
Operating expenses 4,392,181
Operating income 2,487,325
Non-operating revenues and expenses, net (891,645)
Increase in net assets 1,595,680
Net assets (deficit), beginning of the year (2,177,139)
Net assets (deficit), end of the year $ (581,459)
Condensed Statement of Revenues, Expenses
and Changes in Net Assets (Deficit)
Condensed Statement of Cash Flows
Year Ended
June 30, 2011
Cash provided by (used in):
Operating activities $ 1,828,666
Capital financing activities (2,064,013)
Investing activities 140
Net increase in cash (235,207)
Cash, beginning of the year 3,966,335
Cash, end of the year $ 3,731,128
Note 13 – Commitments and Contingent Liabilities
The University is named as a defendant in approximately twenty-one (21) pending
lawsuits. The University believes that these matters will generally be settled in favor of
the University and will not result in any significant liabilities to the University.
The University receives monies from Federal and State government agencies under
grants and contracts. The costs charged to these grants are subject to audit and
disallowance by the granting agency. The University administration believes any
disallowance or adjustment would not have a material effect on the University’s
financial position.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2011
- 36 -
Note 14 – Endowments
The Foundation Board resolved that an annual amount be taken from dividend and
interest income on the endowment and that it be used for scholarships to the extent
permitted by donor stipulation. The portion of dividends and interest available for
scholarships in accordance with donor stipulations is transferred to the Expendable
Restricted Funds. For the year ended June 30, 2011, endowment interest and
dividends transferred to the Expendable Restricted Funds totaled $43,701.
Gains or losses on sales of investments are retained or absorbed by the endowment
fund principal.
Note 15 – Pledged Revenues and Debt Service Requirements
The University has pledged specific revenue, net of specific operating expenses, to
repay the principal and interest of revenue bonds. The following is a schedule of the
pledged revenues and related debt:
Bond Issue Purpose
Source of Revenue
Pledged
Future Net
Revenues
Pledged (1)
Term of
Commitment
Current Year
Pledged Net
Revenue to
Debt Service
(2)
Auxiliary
Facilities System
Revenue Bonds,
Series 1998
Advance refund the
Series 1994 Bonds
and various
improvements to the
University facilities.
Net revenues of the
University Center,
Housing, Bookstore,
Child Care, Facilities
Rental and Parking. $24,041,699 2024 12.43%
(1) Total future principal and interest payments on debt.
(2) Current year pledged net operating revenue (excluding depreciation) vs. total future debt service.
Pledged Revenues
SUPPLEMENTARY INFORMATION
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
Statement of Net Assets (Deficit)
As of June 30, 2011
(With Comparative Totals as of June 30, 2010)
2011 2010
ASSETS
Current Assets
Cash and cash equivalents $ 3 ,731,128 $ 3 ,966,335
Accounts receivable, net 5 2,436 3 5,311
Prepaid expenses 2 1,981 -
Other assets 9 3,825 9 3,825
Total Current Assets 3 ,899,370 4,095,471
Noncurrent Assets
Land improvements 2 53,555 2 28,055
Buildings and improvements 1 9,868,617 19,710,762
Furniture and equipment 4 68,701 4 47,882
Less: accumulated depreciation (7,012,965) (6,524,612)
Total Noncurrent Assets 1 3,577,908 13,862,087
Total Assets 1 7,477,278 17,957,558
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities 2 83,590 1,327,840
Deferred revenue 1 9,563 2 ,498
Long-term liabilities-current portion 9 97,456 9 99,563
Total Current Liabilities 1 ,300,609 2,329,901
Noncurrent Liabilities
Accrued compensated absences 1 09,879 1 59,090
Bonds payable 1 6,390,000 17,365,000
Premium on bonds 2 58,249 2 80,706
Total Noncurrent Liabilities 1 6,758,128 17,804,796
Total Liabilities 1 8,058,737 20,134,697
NET ASSETS (DEFICIT)
Invested in capital assets, net of related debt (4,067,797) (4,736,075)
Unrestricted 3 ,486,338 2,558,936
Total Net assets (Deficit) $ (581,459) $ (2,177,139)
Certain 2010 amounts were reclassified to agree with the 2011 presentation.
- 37-
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
Statement of Revenues, Expenses and Changes in Net Assets (Deficit)
For the year ended June 30, 2011
(With Comparative Totals for the Year Ended June 30, 2010)
2011 2010
OPERATING REVENUES
Room and board, (net of scholarship allowances of $35,341) $ 2,502,757 $ 2,538,213
Bookstore commissions 336,789 291,911
Vending and catering commissions 135,796 125,008
Child care center fees 1,279 45,529
Parking fees 1,101,771 1,005,602
University center fees 2,801,114 2,739,069
Total Operating Revenues 6,879,506 6,745,332
OPERATING EXPENSES
Personal services 1,566,809 2,214,938
Expended for plant 70,359 905,897
Commodities 97,742 132,552
Contractual services 1,856,734 2,045,690
Depreciation 500,501 491,825
Miscellaneous 300,036 232,198
Total Operating Expenses 4,392,181 6,023,100
Operating income 2,487,325 722,232
NONOPERATING REVENUES (EXPENSES)
Loss on disposal of capital assets - (7,080)
Investment income 140 36
Interest on capital asset - related debt (891,785) (932,057)
Net Nonoperating Revenues (Expenses) (891,645) (939,101)
Increase (decrease) in net assets 1,595,680 (216,869)
NET ASSETS
Net assets (deficit)-beginning of year (as previously reported) (2,177,139) 611,319
Prior period adjustment - (2,571,589)
Net assets (deficit)-beginning of year (as restated) (2,177,139) (1,960,270)
Net assets (deficit)-end of year $ (581,459) $ (2,177,139)
- 38 -
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
Statement of Cash Flows
For the year ended June 30, 2011
(With Comparative Totals for the Year Ended June 30, 2010)
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Room and board $ 2 ,502,697 $ 2 ,536,635
Bookstore commissions 3 36,789 2 91,911
Vending and catering commissions 1 35,796 1 25,008
Child care center fees 1 ,279 4 5,529
Parking fees 1 ,101,771 1,005,602
University center fees 2 ,801,114 2,739,069
Payment to suppliers for goods and services ( 3,387,653) (2,341,040)
Payments to employees for services ( 1,663,127) (2,203,105)
Net cash provided by operating activities 1 ,828,666 2,199,609
CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES
Purchases of capital assets ( 216,322) -
Principal paid on capital debt ( 930,000) (890,000)
Interest paid on capital debt ( 917,691) (957,738)
Net cash used by capital financing activities ( 2,064,013) (1,847,738)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 1 40 3 6
Net cash provided by investing activities 1 40 3 6
NET INCREASE (DECREASE) IN CASH (235,207) 3 51,907
Cash and cash equivalents - beginning of the year 3 ,966,335 3,614,428
Cash and cash equivalents - end of the year $ 3 ,731,128 $ 3 ,966,335
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income $ 2 ,487,325 $ 7 22,232
Adjustments to reconcile operating income to net cash
provided by operating activities
Depreciation expense 5 00,501 4 91,825
Changes in assets and liabilities:
(Increase) decrease in accounts receivables, net of deposits ( 17,125) 2 ,278
(Increase) in prepaid expenses ( 21,981) -
Decrease in other assets - 1 ,500
Increase (decrease) in accounts payable and accrued liabilities ( 1,040,801) 9 75,297
Increase (decrease) in deferred revenue 1 7,065 (5,356)
Increase (decrease) in accrued compensated absences ( 96,318) 1 1,833
Net cash provided by operating activities: $ 1 ,828,666 $ 2 ,199,609
Certain 2010 amounts were reclassified to agree with the 2011 presentation.
- 39 -
Student Enrollment by Term (Unaudited)
Unduplicated
Total Full-Time
Enrollment Equivalent
Fall session, 2010 7 ,362 5 ,227
Spring session, 2011 7 ,165 5 ,087
Summer session, 2011 2 ,793 1 ,486
University Center Fee (Unaudited)
For each term, the University Center Fee is assessed based upon enrollment status:
Full-Time Part-Time
Student Student
Fall session, 2010 $ 1 86.00 $ 1 20.00
Spring session, 2011 1 86.00 1 20.00
Summer session, 2011 1 43.00 9 6.00
For the Year Ended June 30, 2011
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
- 40 -
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
University Auxiliary Facilities System Revenue Bond Fund, Series 1998
For the Year Ended June 30, 2011
- 41 -
RENTAL DISCLOSURES (Unaudited)
On July 1, 1995, the Revenue Bond Fund renewed an annual rental agreement to provide the
University with office space and meeting rooms to conduct certain University activities in the
University Center for $272,000. This rental was funded by State appropriations.
SCHEDULE OF INSURANCE IN FORCE (Unaudited)
The Auxiliary System is insured under a master policy covering universities. The following
insurance coverage applicable to the System was effective during the current fiscal year:
Fire and extended coverage ($25,000 deductible) of:
Building $ 28,316,554
Contents $ 1,950,899
Business interruption $ 7,129,198
EDP $ 4,374,761
Boiler and machinery (Included in blanket
coverage limit) $ 100,000,000
Earthquake $ 100,000,000
Flood $ 100,000,000
Basic general liability (SURMA) $ 350,000
Excess general liability $ 10,650,000
Certified Public Accounlallts & Con:rulumts
200 East Court Street • Suite 6o8 • Kankakee, IL 60901
815·933.1771 • fax: 815.933.1163
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATIERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
and
Board of Trustees
Chicago State University
As Special Assistant Auditors for the Auditor General, we have audited the financial statements of
the business-type activities of Chicago State University and its 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 Chicago State University's basic financial statements and have
issued our report thereon dated March 2, 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 Chicago State University is responsible for establishing and maintaining
effective internal control over financial reporting. In planning and performing our audit, we
considered Chicago State University's internal control over financial reporting as a basis for
designing our auditing procedures for the purpose of expressing our opinions on the financial
statements and not for the purpose of expressing an opinion on the effectiveness of Chicago State
University's internal control over financial reporting. Accordingly, we do not express an opinion on
the effectiveness of the Chicago State 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.
-42-
Our consideration of internal control over financial reporting was for the limited purpose described
in the first paragraph 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, 11-2, and 11-3 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 Chicago State 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.
Chicago State University's responses to the findings identified in our audit are described in the
accompanying schedule of findings. We did not audit Chicago State 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, the Board of Trustees, University
management, 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.
March 2, 2012
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STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 44 -
11-1 FINDING: SUSPENDED ACADEMIC POLICY RESULTED IN OVERSTATED LIABILITY ON THE
FINANCIAL STATEMENTS
Federal Department: U.S. Department of Education
CFDA Numbers: 84.063, 84.268
Program Name: Student Financial Assistance Cluster
(Federal Pell Grant Program)
(Federal Direct Loan Program)
Questioned Cost: $21,668 (known)
Chicago State University (University) had multiple policies addressing the requirement for a student’s
Satisfactory Academic Progress. As a result of a misapplication of the academic policy that had
been suspended, the University determined that there were overawards made to students totaling
$740,030. The University recorded this as an adjustment to their financial statements. These
adjustments included a $134,836 reduction in receivables, a $605,194 increase in liabilities, and
revenue and expenses adjustments netting to $740,030.
In August 2011, the Department of Education (ED) requested the University to look into and report
back to ED, as to whether the University improperly awarded Federal aid to students during the past
four years.
The University’s enrollment management department was assigned responsibility to address possible
overawards made to students and report back on the issue. Based on an academic standing policy
in the University’s 2008 – 2010 Undergraduate Catalog (a similar policy was in place in the
University’s on-line 2010 – 2012 Undergraduate Catalog until it was amended in July, 2011) which
could lead to a student’s dismissal from the University for poor scholarship, the University calculated
Federal and Illinois MAP overawards to 126 unduplicated students from fiscal years 2008 through
2011 of $740,030. The University’s internal audit department was asked to verify the results
determined by enrollment management.
In October 2011, the University reported the results of this analysis back to ED and recorded various
entries on the University financial statements to record these results. In December of 2011, it was
determined that the policy used for this analysis had in fact been suspended by previous
administrations of the University since June 2008. We were provided various memos and
communications that support that this policy had been suspended and that students were no longer
being dismissed from the University for poor scholarship.
In order to satisfy ourselves with the University’s compliance relative to its Student Financial
Assistance Cluster and the accuracy of the entries recorded on the University’s financial statements,
we performed the following procedures:
 On December 22, 2011, we contacted ED to discuss the inquiry and the University’s response
noted above. ED confirmed that they had received the University’s initial submission noted
above but had not received any further communications from the University regarding the
matter. ED also verified that there are no Federal requirements that require the University to
dismiss students for poor scholarship, so if the University suspended their policy, it is
acceptable as long as the University was complying with the satisfactory academic progress
requirements governing the awarding of Federal student financial aid noted in Code of
Federal Regulations (34 CFR 668.34, 668.32(f), and 668.16(e)).
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 45 -
11-1 FINDING: SUSPENDED ACADEMIC POLICY RESULTED IN OVERSTATED LIABILITY ON THE
FINANCIAL STATEMENTS (Continued)
 We verified that the University’s policy governing satisfactory academic progress for the
awarding Federal student financial aid complied with the requirements of the Code of Federal
Regulations that were in place during fiscal year 2011.
 We selected a sample of 20 students from the 126 students identified by the University above
as students who improperly received aid. Based on the suspension of the policy requiring
dismissal for poor scholarship and application of the policy for awarding of Federal student
financial aid alone, we noted two students who received a total of $28,992 (of which $21,668
was aid awarded in fiscal year 2011) of Federal student financial aid and $4,160 of Illinois
MAP awards when they were not eligible. Extrapolation of the improper aid noted in our
sample to the population identified by the University resulted in an estimated total improper
aid awarded of $103,685. We proposed adjustments totaling $636,345 to correct the
adjustments that were made by the University on its financial statements.
 As part of our single audit testing and financial audit testing, we tested 65 students at random
that received Federal student financial aid during fiscal year 2011, noting no students who
would be ineligible for aid due to lack of satisfactory academic progress.
Generally accepted accounting principles requires the University to record assets, liabilities, revenue
and expenses when they occur.
The Fiscal Control and Internal Auditing Act (Act) (30 ILCS 10/3001) requires all State agencies to
establish and maintain a system of internal fiscal and administrative controls, which shall provide
assurance that 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.
Prudent business practices would require the University to establish, publish and enforce policies that
have a bearing on the students attending (or considering attending) the University.
University officials stated the new University administration discovered that students were not being
dismissed according to the academic standing policy. Upon review of what was thought to be the
current academic standing policy, the President gave a directive that effective spring 2011, the policy
was to be enforced and students dismissed accordingly. The University’s enrollment management
and internal audit departments reviewed student data from July, 2007 through June, 2011. The
result of the analysis was that $740,030 had been awarded to students who did not meet the
guidelines of the academic policy. That review was based on the perception that the academic
standing policy noted above had not been properly executed. The University administration later
discovered that the academic standing policy had actually been suspended years earlier. At this
point it was too late to revise the financial statements.
Failure to effectively communicate policies to employees hinders the ability of University employees
to properly perform their tasks, resulted in inaccurate financial reporting, and miscommunications
with Federal awarding agencies that could lead to a loss in Federal funding. (Finding Code No. 11-1)
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 46 -
11-1 FINDING: SUSPENDED ACADEMIC POLICY RESULTED IN OVERSTATED LIABILITY ON THE
FINANCIAL STATEMENTS (Continued)
RECOMMENDATION
We recommend the University improve its administrative controls to ensure that policies are clearly
stated, communicated and enforced. We further recommend the University report accurate amounts
on their financial statements and submit a revised analysis to ED.
UNIVERSITY RESPONSE
The University had two policies addressing satisfactory academic progress: academic standing and
financial assistance. The academic standing policy had been suspended by previous University
administrations since academic year 2007/2008 and it resulted in no students being dismissed for
poor scholarship. The current administration moved immediately (Spring 2011) to reinstate the
academic standing policy requiring the dismissal of students for poor scholarship. An estimation
regarding the number of students who may have been over-awarded in the four academic years was
reported on the financial statements. The University’s internal investigation led to the discovery of the
suspended academic standing policy and another review of student records was completed. As a
result, a revised analysis was submitted to the Department of Education in January 2012 showing
that twenty students had been over-awarded over the four academic years totaling $122,852 and
thirteen students had been over-awarded MAP awards from the Illinois Student Assistance
Commission totaling $20,151. The University accepts the recommendation.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 47 -
11-2 FINDING: INACCURATE ACCOUNTING FOR PARTICIPATION IN PUBLIC ENTITY RISK POOL
Chicago 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.
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 $268,783 and $265,475 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. An adjusting
entry was proposed to the University to correct this error, which the University did not record.
Further, we noted the University did not adequately monitor SURMA to ensure SURMA underwent a
timely annual audit of fiscal year 2010 to provide assurance as to the accuracy of financial
information required to be reported by the University.
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.
University officials stated 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
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 48 -
11-2 FINDING: INACCURATE ACCOUNTING FOR PARTICIPATION IN PUBLIC ENTITY RISK POOL
(Continued)
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 resulted in an understatement of assets 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 agrees with the finding and will implement controls to monitor the activities of SURMA
and properly account for its participation in SURMA in accordance with GAAP.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 49 -
11-3 FINDING: INACCURATE ACCOUNTING OF ACCRUED COMPENSATED ABSENCES
Chicago State University (University) did not properly account for vested sick time absences of
employees and did not properly calculate the accrued leave liability of the University.
We compared 100% of the employees’ accrued sick leave days/hours as of June 30, 2011 to June
30, 2010 in order to ensure that there were not any increases in accrued vested sick days/hours for
any employees. Since January 1, 1998, sick time no longer vests and should not be accrued as a
compensated absence by the University. We noted 17 employees in which the accrued sick leave
days/hours payable at June 30, 2010 was zero but a balance was present at June 30, 2011. The
University had inadvertently left the employees off of the 2010 listing. We also noted another
employee in which the number of days had been transposed in the schedule. The schedule included
the following:
Sick time payable Sick time payable
at June 30, 2010 at June 30, 2011
103.40 days (correct amount) 130.40 days (incorrect amount)
These understatements of vested sick time at June 30, 2010 understated the accrued leave liability
for the year ending June 30, 2010 and overstated the fiscal year 2011 expenses by approximately
$159,473. The overstatement of the June 30, 2011 accrual overstated the liability and expense by
$8,591. An adjusting entry was proposed to correct the misstatement.
We also tested a sample of 30 employees to determine if the University was properly accounting for
leave time earned and used. The University maintains manual records to track employee leave
days/hours. We noted one employee was shorted 8 hours of sick time. Once brought to the
University’s attention, the records were corrected.
The State Finance Act (30 ILCS 105/14a(f) states that sick leave accumulated on or after January 1,
1998 is not compensable at the time of the employee’s death, retirement, resignation, or other
termination of service.
Good business practices require the University to ensure controls are in place to properly record and
summarize data correctly. This data is used for calculating compensation due to employees and
determining compensated absence balances for financial reporting.
University officials stated that the current process utilizes a paper card system. The errors noted
were clerical errors inherent to this manual system.
Failure to properly accumulate accrued leave records and calculate liabilities related to accrued
compensated absences may cause errors in compensation to employees and results in inaccurate
financial statements. (Finding Code No. 11-3)
RECOMMENDATION
We recommend that the University improve its system for accumulating and calculating compensated
absences to ensure records and reporting are accurate.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
- 50 -
11-3 FINDING: INACCURATE ACCOUNTING OF ACCRUED COMPENSATED ABSENCES (Continued)
UNIVERSITY RESPONSE
The current process is manual and paper based. The corrective action will include employee re-training
and the acquisition of an automated platform that will calculate and track these balances
going forward. The manual process has been modified to include additional oversight and
review until the implementation of an automated process. The automated process is scheduled
to be in effect July 1, 2012.
Chicago State University’s new administrative leadership is committed to achieving operational
excellence through an enhanced commitment to process improvement, systems automation and
a strengthened infrastructure. The University accepts the recommendation as stated.
STATE OF ILLINOIS
CHICAGO STATE UNIVERSITY
SCHEDULE OF FINDINGS
FOR THE YEAR ENDED JUNE 30, 2011
PRIOR FINDINGS NOT REPEATED – GOVERNMENT AUDITING STANDARDS
- 51 -
A FINDING: Financial Statement Adjustments
Chicago State University (University) did not perform accounting reconciliations of certain
receivables, payables, prepaid expenses, and capital assets at the end of the accounting
period. We also noted errors reported in prior reporting periods that resulted in prior period
adjustments recorded by the University. (Finding Code No. 10-1)
Status – Not repeated
Our testing indicated that the University performed accounting reconciliations of all material
accounts. We did not note any errors related to prior reporting periods.
B FINDING: Noncompliance with the Unclaimed Property Act and Write-Off of Accounting Errors
Chicago State University did not fully comply with the Uniform Disposition of Unclaimed
Property Act and recorded a prior period adjustment for old accounting errors. (Finding Code
Nos. 10-2, 09-1, 08-4, and 07-12)
Status – Not repeated
Our sample testing did not identify any unclaimed property (held 7 years or more) that was
required to be transferred to the State. In addition, we did not identify any adjustments for prior
accounting errors made by the University.
C FINDING: Inaccurate Financial Reporting for the University Auxiliary Facilities System Revenue
Bond Fund
Chicago State University did not properly report financial information of the University Auxiliary
Facilities System Revenue Bond Fund. (Finding Code No. 10-3)
Status – Not repeated
Our testing did not identify errors in the University Auxiliary Facilities System Revenue Bond
Fund accounting.
D FINDING: Purchasing Card Procedures
Chicago State University did not process certain expenditures in compliance with its Purchasing
Card Policy and Procedures. (Finding Code Nos. 10-4, 09-3, and 08-8)
Status – Moved to Immaterial Findings Letter as Finding IM 11-1
Our sample testing did not identify exceptions as significant as the prior year.