Repository: UIHistories Project: Board of Trustees Minutes - 1956 [PAGE 197]

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194

BOARD OF TRUSTEES

[December 20

Responsibilities to Audit The responsibilities of the Auditor of Public Accounts to conduct an audit of all expenditures from State appropriations are set forth in the State constitution and various Supreme Court decisions. Those responsibilities are further set forth in Section 142D, Illinois revised statutes as amended June 8, 1953, which designates certain funds to be paid into the State treasury and certain funds to be retained by the University in its own treasury and further provides that "The Auditor of Public Accounts shall audit or cause to be audited the above items of income and all other income and expenditures of such institution." We wish to call your attention to the existence of those responsibilities and to point out a difficulty of correctly discharging them when certain payments of obligations of the University are made by the Auditor's office. F o r example, the University submits numerous vouchers to the Auditor's office for payment for purchases of material which will be placed in inventory in revolving funds. T h e vouchers indicate only an appropriation fund and account to be charged. In reality the material purchased for revolving funds is "sold" by revolving funds to using departments and activities in the University. These may include educational departments or activities financed with monies retained at the University such as auxiliary enterprises, bond revenue fund enterprises, trust fund accounts and other activities allied to the University. In conformity with sound accounting principles the using departments and activities are charged for their purchases, on the records at the University. Such charges reflecting distribution from revolving funds are not now accounted for in the State Auditor's office, nor are the transactions examined there. W e question the assumption that an audit of vouchers for purchases destined to be placed in revolving funds and afterward distributed has been performed with examination of documents relating to the original purchase. In our opinion an audit of such transactions should extend to an examination of documents and records relating to the end result of the transactions. W e have submitted a separate report containing recommendations for accounting procedures which we believe would contribute to the removal of deficiencies now existing in the manner audit responsibilities are discharged. It is our recommendation that a joint committee, composed of representatives of the University's accounting staff and representatives of the Auditor's office be appointed to study the recommended plan with the view of its adoption or the development of a plan which would better serve the purpose. We believe that such a cooperative effort of a committee would be productive of highly beneficial results. In this report we have discussed some of the problems existing as consequences of the physical size of the University of Illinois, the breadth of its activities, the separation by literal distance of the administrative and accounting offices of the University and of the State and the absence of joint efforts to establish common methods in areas of mutual interest. W e believe the problems can best be solved by free exchanges of ideas and frequent discussions of points of view. In that belief, we repeat a suggestion that a committee of personnel from the University and from the State Auditor's office should be formed to make a common effort to solve common problems. W e wish to thank sincerely all personnel of the University who assisted us during our survey and examination. Their time and aid were freely given. We particularly wish to thank President Morey and Messrs. Farber, Pratt, Dahlenburg, and Green.

F. M. MERSINGER & Co.

December 15, 1954

SPRINGFIELD, ILLINOIS

Comments on Specific Points in Report of Examination by F. M. Mersinger and Company of University of Illinois Accounts for 1952-53 Working Cash Fund of $300,000 The working cash fund was established by an Act of the General Assembly in 1933 and is essential in a large operation such as the University. Much has