January 27, 2012

Illinois Auditor General Examines University

THE UNIVERSITY of Illinois in January received the findings of a self-requested, 20-month long audit of University financial management by the Illinois Auditor General. While the audit disclosed no material weaknesses in internal controls of the University or improper use of public funds appropriated by the Illinois General Assembly, the Auditor General provided 20 University recommendations for improvement in certain areas, all of which the University accepted and has already begun to implement.

U OF I Board of Trustees Chairman Christopher G. Kennedy said the audit findings confirmed high expectations for transparency and adherence to best practices in the conduct of University business.

“ON BEHALF of the University and the Board of Trustees, I want to express our thanks to the State Legislative Audit Commission and the Auditor General for this audit,” Kennedy said. “University internal controls are intact and University management will continue to be held to high standards of professionalism and the adherence to business operating processes prescribed by the University and the State.”

THE UNIVERSITY, which has an annual operating budget of $5 billion, routinely undergoes auditing scrutiny by a wide array of authorities. These include annual financial and compliance audits of University finances by an external auditing firm under the auspices of the State Auditor General, as well as audits by federal agencies in connection with millions of dollars in research grants and contracts the U of I receives. In addition, the Executive Director of University Audits annually conducts internal audits on a wide variety of matters.

NEVERTHELESS, UNIVERSITY trustees in January 2010 approved a resolution to authorize a “transition” audit of certain University transactions because of the significant change in the composition of the board in September 2009, when seven of nine trustees appointed by the Governor were replaced. The reconstituted board requested that the transition audit “focus on purchasing, finance and investment, and construction transactions that required board approval during the period 2007 through 2009 to determine whether the approval process followed all applicable laws, rules, practices and procedures.” As requested by the board, the management audit was authorized by the Legislative Audit Commission (Resolution #139) in March 2010.

THE MAJORITY of the University recommendations made by the Auditor General related to the retention of transaction documentation or the adequacy of the transactions documentation. Click here for a link to the executive summary of each of the audit recommendations and the Board/University’s responses.

THE RECOMMENDATIONS concern submission of transactions to the Board of Trustees for approval; use of the Board of Trustees Executive Committee; sole source justification forms; copyright and patent support; use of contracts vs. purchase orders; contract approval routing forms; purchasing documentation; contractor performance reviews; conflict of interest; procurement of financial advisors; use of construction managers; alternate bids; procurement documentation; change orders; minority and female business enterprise (MAFBE) subcontractors; qualifications based selection; evaluation; and oversight of subcontractors.

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