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Thursday, May 20, 2010 11:26 pm

UI audit shows holes in the hull of state’s flagship school

Poor spending control and documentation revealed

A day after the University of Illinois announced its new president would make a $620,000 base salary, an audit revealed numerous issues with the way the state’s flagship school system is run.

Released May 13 by Illinois Auditor General William Holland, the 392-page routine audit found 47 issues among UI schools at Chicago, Urbana-Champaign and Springfield. They include inadequate control of procurement cards, undocumented payroll and fringe benefits for school employees and inaccurate accounting procedures. On Wednesday, university officials announced that newly-hired president Michael Hogan, former president of the University of Connecticut, would be offered a base salary of $620,000, with a $225,000 raise if he stays five years. The university currently has $376 million in unpaid bills owed to it by the State of Illinois.

The university has 5,700 credit cards, issued to certain employees for procurement purposes, according to the audit. Expenditures must be reconciled by the cardholder and approved by a supervisor, but the accounting system tracking procurement is set to automatically approve expenditures if no action is taken for seven days.  Of the 40 procurement transactions totaling $42,586 examined in the audit, seven lacked proper authorization, two lacked any documentation at all, and one raises questions of misuse by showing a tax charge even though the university is tax-exempt. One of the improperly authorized purchases, totaling $1,356, was made by someone other than the cardholder, and four transactions totaling $659 were made and approved by the same person. Forms authorizing eight cardholders to use procurement cards could not be located, auditors note. The university’s procurement card transactions totaled $108.1 million in Fiscal Year 2008, the audit shows.

“In discussing these conditions with university personnel, they stated that the errors were the result of oversight and employees and their supervisors being unfamiliar with university policy,” Holland wrote in the audit. “Failure to properly review and approve procurement card transactions could result in erroneous or fraudulent transactions being recorded in the general ledger system.”

University officials acknowledged that “erroneous charges can and do occur” under current procedure, but added “… the university employs careful oversight and review to ensure these errors are minimal, and it takes immediate action when errors are discovered.”

The audit also noted that payroll and fringe benefits for employees at the Chicago and Urbana-Champaign campuses were improperly documented, meaning the federal government was charged for work that may or may not have been done. Any university projects sponsored by federal funds require “effort certification” – which essentially proves the salary charged for a project is reasonable for the effort required. The two campuses charged a combined total of $45.9 million to the federal government for payroll and fringe benefits without the required documentation.

Many employees at all three campuses did not fill out required time sheets, the audit notes. Of the 125 employee files examined in the audit, 99 did not file time sheets.

“Based upon inquiry of university management, employees classified as board members, faculty and academic professionals generally track their time using a ‘negative’ timekeeping system whereby the employee is assumed to be working unless noted otherwise,” the audit notes. “…Failure to follow the time reporting requirements of the Act results in noncompliance with state statute.”

To read this and other audits, visit http://www.auditor.illinois.gov.

Contact Patrick Yeagle at pyeagle@illinoistimes.com.
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