COLLEGE OF DuPAGE
Audit Committee Meeting
May 11, 2016
NOTICE AND AGENDA
BOARD OF TRUSTEES COMMITTEE MEETING
THE AUDIT COMMITTEE OF THE BOARD OF TRUSTEES OF COMMUNITY COLLEGE DISTRICT #502,
COUNTIES OF DuPAGE, COOK AND WILL, STATE OF ILLINOIS, WILL HOLD THE FOLLOWING COMMITTEE
MEETING IN THE STUDENT SERVICES CENTER (SSC), ROOM SSC-2200, MAIN CAMPUS,
425 FAWELL BLVD., GLEN ELLYN, ILLINOIS:
WEDNESDAY, MAY 11, 2016
7:00 P.M. ~ ROOM SSC-2200
MEETING: AUDIT COMMITTEE OF THE BOARD
AGENDA
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
CALL TO ORDER/PLEDGE OF ALLEGIANCE
ROLL CALL
PUBLIC COMMENT
COMMENTS BY COMMITTEE CHAIR
ACCREDITATION TASK FORCE RECOMMENDATIONS ON INTERNAL AUDIT
EXTERNAL AUDIT SERVICES - CLIFTON LARSON ALLEN LLP
DISCUSSION OF ETHICS POLICY
CONFIDENTIAL REPORTING OF WRONGDOING
APPROVE MINUTES OF APRIL 14, 2016 MEETING
REVIEW: REVISED BOARD POLICY 5-220, THE AUDIT COMMITTEE
REVIEW REVISED BOARD POLICY 10-55, INVESTMENT OF COLLEGE FUNDS
DISCUSSION: INTERNAL AUDIT REPORTS
CLOSED SESSION
RETURN TO OPEN SESSION
COMMITTEE DISCUSSION
NEXT MEETING DATE
ADJOURNMENT
FRANK NAPOLITANO, SECRETARY
BOARD OF TRUSTEES OF COMMUNITY COLLEGE
DISTRICT NO. 502, COUNTIES OF DuPAGE, COOK AND WILL, STATE OF ILLINOIS
Posted 5/9/16
ACCREDITATION TASK
FORCE REPORT
to the
SHARED GOVERNANCE
COUNCIL
April 29, 2016
Accreditation Task Force
College of DuPage
425 Fawell Blvd.
Glen Ellyn, IL 60137
The mission of College of DuPage is to be a center for excellence in teaching, learning and
cultural experiences by providing accessible, affordable and comprehensive education.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ACCREDITATION TASK FORCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ATF RECOMMENDATIONS
Ethics and Ethics Training Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board of Trustees Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Policies and Administrative Procedures Recommendations . . . . . . . . . . . .
Internal Audit Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curriculum Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrator/Faculty Training and Development Recommendations . . . . . . . . .
Other Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
6
6
7
8
8
9
9
1
2
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
INTRODUCTION
In a December 16, 2015 letter from the Higher
Learning Commission (HLC), College of DuPage
(COD) was formally notified of action by the
Higher Learning Commission Board of Trustees.
4.
5.
Previously, at a teleconference meeting on
December 9, 2015, the HLC Board of Trustees
placed COD on Probation because the College was
deemed to be out of compliance with the Criteria
for Accreditation and Core Components as follows.
6.
COD was found to be out of compliance with
Criterion Two, Core Component 2.A, “the
institution operates with integrity in its financial,
academic, personnel, and auxiliary functions; it
establishes and follows policies and processes
for fair and ethical behavior on the part of its
governing board, administration, faculty, and
staff,” for the following reasons:
1. As documented in the College’s internal audit
report, there have been regular breaches of
the College’s investment policies including
exceeding the limits of specific types of
investments that do not meet dollar, maturity,
or asset requirements required by the Board
Policy, and employees in the Financial Affairs
Office, although regularly notified about this
situation, failed to bring these matters to the
attention of appropriate individuals.
2. The College’s internal auditor brought 43
separate internal audits over the last three
years about alleged illegal or unethical
conduct or violations of College policy to
the attention of senior administration at the
College pursuant to the College’s audit plan,
but the College could not document College
actions taken in response to such information
or that such information was regularly shared
with the College’s Board.
3. Incidents at the College raise questions about
whether the institution follows its own ethics
policies and operates with integrity including:
charges for alcohol at the Waterleaf restaurant
that violated administrative procedures;
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
Monies paid to a former employee to his
own private bank account for equipment and
services not needed by the College; and
Awarding of non-competitive bid contracts to
vendors whose owners were on the College
of DuPage Foundation Board without a clear
determination of whether such awards raised
conflict of interest issues and in one case even
though the contract was entered into after the
stated contract deadline.
The College provides limited or no robust ethics
training programs for faculty, staff and students.
COD was found to be out of compliance with
Criterion Five, Core Component 5.B, “the
institution’s governance and administrative
structures promote effective leadership and support
collaborative processes that enable the institution
to fulfill its mission,” for the following reasons:
7. The Board of Trustees of the College did not
provide effective leadership in the following
circumstances: when it did not regularly
receive and review financial statements in
May-July of 2015; such statements had been
prepared by financial staff in their regular
course of work, but they were not presented to
the full Board pending a complete review of,
and changes made to, the reports;
8. When the Board or its members directly
involved itself in matters appropriately
delegated to the administration including
management of the Waterleaf restaurant and
hiring administrative staff; and
9. When it did not enforce Board policies
related to investments that had been placed in
assets contrary to Board policy but were not
apparent to the Board because of lack of detail
in financial reporting.
10. Faculty governance did not function effectively
at the College when neither the criminal
justice faculty at the College nor Suburban
Law Enforcement Academy instructors were
consulted about or approved the increase in
credit hours provided for non-credit courses
taken in the Law Enforcement Academy.
3
11. The administration of the College did not
perform effectively when the faculty took a
vote of no confidence, but the administration
took no actions to address the concerns that
led to the vote, and practices that led to faculty
concerns continue unchanged.
COD met with concerns Criterion One, Core
Component 1.D, “the institution’s mission
demonstrates commitment to the public good”
and Criterion Two, Core Component 2.C, “the
governing board is sufficiently autonomous
to make decisions in the best interest of the
institution and to assure its integrity,” for the
following reason:
12. The Board of the College has not worked
cooperatively with the administration of the
College or with fellow Board members. The
Board has not properly respected the role of
the administration in providing appropriate
operational oversight of the College, thus
impeding the College’s ability to serve the
public good and make decisions in the best
interest of the College.
COD met with concerns Criterion Three, Core
Component 3.A, “the institution’s degree programs
are appropriate to higher education,” for the
following reason:
13. The College has inappropriately awarded
college credits in criminal justice for the noncredit Suburban Law Enforcement Program
(“SLEA”) without clear alignment with the
College’s criminal justice program or a clear
protocol for reviewing it as prior learning if
it was intended as such and further increased
this award without any increase in instruction
or clock hours.
COD met with concerns Criterion Four, Core
Component 4.A, “the institution demonstrates
responsibility for the quality of its educational
programs,” for the following reason:
14. The College lacked appropriate oversight over
the SLEA curriculum and did not, therefore,
include the program in its regular academic
program review process, which ensures that
students in this program are meeting the
learning objectives of the College’s criminal
justice program, even though the College
simultaneously awarded credit in its criminal
4
justice program for the non-credit SLEA
program credits.
The period of Probation mandated by the HLC
Board of Trustees is two years at the end of which
the HLC will evaluate COD again.
HLC Board of Trustees requires that COD file
with the HLC an Assurance Filing no later
than February 2017, or eight weeks prior to a
comprehensive evaluation scheduled for no later
than April 2017. The Assurance Filing must
provide evidence that COD has ameliorated the
findings of non-compliance identified in this action
that resulted in the imposition of Probation and
that COD meets all the Criteria for Accreditation,
the Core Components, Federal Compliance
Requirements, and the Assumed Practices.
While the College must address all of the above
noted requirements in the Assurance Filing, its
particular focus will be on integrity, governance,
the role of the Suburban Law Enforcement
Academy in the College and its intersection with
the criminal justice program, and effectiveness of
governance and administration.
The April 2017 comprehensive evaluation will
consider COD’s compliance with all the Criteria
for Accreditation including those Criteria for
Accreditation cited as Not Met or Met with
Concerns by the HLC Board of Trustees, Core
Components, Federal Compliance Requirements,
and the Assumed Practices.
At its November 2017 meeting the HLC Board of
Trustees will review the evaluation team’s report and
related documents to determine whether COD has
demonstrated that it is now in compliance with all
Criteria for Accreditation and related requirements
and whether Probation can be removed, or if
COD has not demonstrated compliance, whether
accreditation should be withdrawn.
If the findings of noncompliance and other
concerns identified by the HLC Board of Trustees
have not been fully ameliorated or if COD is
unable to demonstrate that it fully meets the
Criteria for Accreditation and related requirements
such that Probation may be removed, the HLC
shall withdraw accreditation.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
ACCREDITATION TASK FORCE
At their February 2, 2016 meeting the Shared
Governance Council approved the chartering of the
Accreditation Task Force (ATF) with the following
charge: To meet regularly in order to ensure
that the College of DuPage is properly and fully
addressing all the concerns cited by the Higher
Learning Commission (HLC) in their December 16,
2015 letter to the College notifying us that we have
been given a two-year sanction of Probation.
ATF members represent all College constituency
groups and include:
Jim Benté
Cabinet, ATF Chairman and HLC Liaison
Ami Chambers,
Managerial Community Relations
Susan Dreghorn
Adjunct Faculty, English
David Goldberg
Full-Time Faculty, Political Science
Saraliz Jimenez
Managerial, Latino Outreach Center
Christopher Johnston
Adjunct Faculty, Student Success Counselor
Laurie Jorgensen
Administrator, Marketing and Creative Services
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
Miguel Marino
Classified, Registration Services
Min Pan
Classified, Learning Technologies
Ana Pliego
Student, Student Leadership Council
Gloria Roark
Student, Student Trustee
Donna Stewart
Administrator, Business and Technology
Tom Tipton
Full-Time Faculty, English
Between February 26 and April 29 the ATF met
eight times. During their meetings, the ATF
systematically addressed each of the 14 reasons
identified by the HLC Board of Trustees for
placing COD on Probation.
During their deliberations the ATF identified
46 recommendations. Since many of these
recommendations are related to or would
ameliorate multiple HLC concerns, the
recommendations have been grouped into seven
categories: Ethics and Ethics Training, Board
of Trustees, Board Policies and Administrative
Procedures, Internal Audit, Curriculum,
Administrator/Faculty Training and Development,
and Other.
5
ATF RECOMMENDATIONS
Ethics and Ethics Training Recommendations
In their December 16, 2015 letter the HLC Board
of Trustees Board noted that “the College provides
limited or no robust ethics training programs for
faculty, staff and students.” Although mandatory
ethics training for all staff was implement by
Human Resources in February 2016, the ATF
felt that the computer based Ethics and Code of
Conduct Training was: too broad and generic;
was not delivered in multiple languages; did not
evaluate the takers’ understanding of the principles
and practices discussed; and did not spell out
consequences for not taking the training in the
specified time frame.
Therefore, the ATF recommends the following:
a. New COD specific ethics training be
developed by the appropriate College entity
(e.g., Human Resources, Office of General
Council, etc.), and reviewed and approved by
a subcommittee of the Shared Governance
Council before being required training for the
entire staff.
b. Ethics training be provided in multiple
languages, minimally in Spanish and Polish.
c. Not only should all staff be required to
take the ethics training, but there should
also be an assessment at the end of the
training to determine if employees gained
a basic understanding of the principles and
practices conveyed in the training. And if
not, that those portions of the training not
“passed” may be retaken until a satisfactory
understanding is achieved.
d. An ongoing communication and awareness
plan concerning ethics and ethics training be
developed by the Cabinet and implemented by
April 2017.
e. Ethics training be a part of the new employee
and new faculty orientation processes.
f. All employees take the ethics training every
two years.
6
g.
h.
i.
j.
k.
Completion of the institutionally scheduled
periodical ethics training be a condition of
continuing employment.
In addition to the mandated state ethics
training, the COD Board of Trustees should
also take the same ethics training that is
required by all COD staff.
Board Policy and Administrative Procedure
should clearly state the requirements of the
ethics training and the consequences for not
completing it in the appropriate time frames.
All individuals who may be involved in the
College’s purchasing process complete yearly
a “Statement of Economic Interest” similar
to that which is issued by the DuPage County
Clerk’s office to Board members and others
having contract authority (Illinois Government
Ethics Act, 5 ILCS 420 / 4A-101).
The Foundation Board create a policy (if it
does not already exist) that would require
Foundation Board members to provide the
College’s purchasing department with a
Conflict of Interest statement when joining the
Board and every year thereafter.
Board of Trustees Recommendations
In their December 16, 2015 letter the HLC
Board of Trustees Board identified several
reasons for probations that related to governance,
including “when it did not regularly receive and
review financial statements,” “when it did not
enforce Board policies,” and “has not worked
cooperatively with the administration of the
College or with fellow Board members.”
Therefore, the ATF recommends the following:
a. Board agendas and packets should be
developed and made available to all Board
members at least five working days before
regular board meeting, and as soon as possible
before special board meetings.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
b.
c.
d.
e.
f.
g.
h.
Following election and prior to taking office,
Board members should have training and a
formal orientation on COD Board Policies
and Administrative Procedures; Open
Meetings Act; Ethics; an appropriate guide
to parliamentary procedure such as Roberts
Rules of Order; COD financial documents and
reports; and College operations.
Appoint a parliamentarian, who is not a member
of the Board, to be at all Board meetings.
Contract with a third-party, impartial
firm to create a “hotline” to receive
and provide the appropriate College
party with “whistleblower” information
concerning potential wrongdoing or ethic
violations. Amend Board Policy 15-27 and
Administrative Policy 15-27 to include details
(phone numbers, etc.) of the third-party firm
that staff, students and all stakeholders can
use to report potential wrongdoing or ethic
violations. Place third-party “whistleblower”
phone number on the Employee Portal and
public website.
Using an external expert facilitator, the Board
should conduct a retreat (with all members
attending) before the end of July 2016, to
focus on relational issues and team building.
Revise Board Policy 5-15 to include language
that requires the Board to provide a written
response, within 90 days, to a vote of no
confidence of the College President or if other
concerns have been formally submitted to the
Board by College constituency groups.
If not already done, reinstate membership
in the Illinois Community College Trustees
Association (ICCTA).
Identify an impartial third-party mediator for the
Board who can be utilized if impasses arise.
Board Policies and Administrative Procedures
Recommendations
In their December 16, 2015 letter the HLC Board
of Trustees Board identified several reasons for
probation that are related to policy and/or procedure.
It was felt by the ATF that some policies and/or
procedures could be enhanced in order to provide
clearer intent and direction to the Board and staff,
thereby addressing several HLC concerns.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
Therefore, the ATF recommends the following:
a. The Shared Governance Council should
review all current Board Policies and
Administrative Procedures to ensure they are
written in a clear and understandable fashion.
b. Revise Board Policy 5-15, item 3 to read:
“At least annually, all Board members should
be included in the President’s performance
evaluation and as part of the evaluation the
Board should seek input from the College’s
constituency groups. Once the annual
performance evaluation has been completed,
the Chairman of the Board should provide the
College community and other stakeholders
with an executive summary of the President’s
performance.”
c. Revise Board Policy 5-20 and add:
“Board members’ requests for operational
information, documents, reports, etc. should
be channeled through the College President,
and the President should provide the response/
information to all Board members.”
d. Rename Board Policy 5-85 to “Formulation
and Review of Board Policy.” Add the
following language: “At a minimum all Board
Policies will be reviewed and approved by the
Board once every three years.”
e. Board should engage in a process to ensure
that there is alignment between Board Policies
and Administrative Procedures.
f. Develop and implement an Administrative
Procedure that states all College constituency
groups (i.e., College of DuPage Faculty
Association, College of DuPage Adjuncts
Association, Classified Staff, Managerial
Staff, Administrators, Fraternal Order of
Police, Operating Engineers, and students)
will be invited to participate on College
committees, task forces and other teams
charged with setting institutional direction.
The procedure should also stipulate
that resources will be made available to
support and encourage participation by all
constituency groups.
g. Develop general training on Board Policies
and Administrative Procedures for staff
as a whole and offer specific sessions for
employees who are responsible to follow
7
certain policies and procedures (e.g.,
purchasing responsibilities, etc.).
Internal Audit Recommendations
In their December 16, 2015 letter the HLC
Board of Trustees Board noted that the College’s
internal auditor “brought 43 separate internal
audits over the last three years to the attention of
senior administration at the College, pursuant to
the College’s audit plan, but the College could
not document College actions taken in response
to such information or that such information was
regularly shared with the College’s Board.”
Therefore, the ATF recommends the following:
a. Develop a communication and awareness
campaign to educate College employees about
the purpose, function, and responsibilities of
the College’s Internal Audit Office.
b. Create an Internal Audit site on the Employee
Portal and post the annual internal audit plan
and those audit reports that are not privileged
(e.g., personnel, etc.).
c. Develop a standard audit report that includes
an “action taken” section and revise Board
Policy 5-220 to add language that all internal
audits must note if an action was or was not
taken, and what the action was.
d. Revise Board Policy 5-220 to include specific
thresholds or circumstances when an issue
would be assigned to an independent, thirdparty for audit or review.
e. Place all financial reports on the Employee
Portal under “Documents.”
f. As part of the internal auditor’s work plan,
have the external investment managers’
performance and adherence to Board Policy
evaluated on an annual basis.
Curriculum Recommendations
In their December 16, 2015 letter the HLC Board
of Trustees Board noted “the College lacked
appropriate oversight over the SLEA curriculum,”
and that “faculty governance did not function
effectively when neither the criminal justice
faculty nor Suburban Law Enforcement Academy
8
instructors were consulted about or approved the
increase in credit hours provided for non-credit
courses taken in the Law Enforcement Academy.”
It was felt by the ATF that a clear delineation
between credit and non-credit was needed and that
faculty oversight of the credit curriculum be well
established.
Therefore, the ATF recommends the following be
achieved by April 2017:
a. Develop a formal process whereby Continuing
Education will share all new initiatives with
the campus community.
b. Develop a Continuing Education Advisory
Committee that would report to the Vice
President of Academic Affairs and to the
Board Academic Committee. This committee
will include all constituency groups, including
administrators and faculty from programs
that have been recently affected by the
Continuing Education program development
activities such as Criminal Justice, Allied
Health, Office Technology and Culinary
Arts. This committee will be able to make
recommendations about Continuing Education
programs, credits, etc.
c. Develop a process that ensures curriculum
going to the Board has already been endorsed
by the College Curriculum Committee and
Departmental Curriculum Committees.
d. Develop and implement an Administrative/
Academic Procedure that requires any
agreement between the College and
an external agency, for the purpose of
awarding credit for prior learning, is vetted
and approved by the College Curriculum
Committee.
e. The Shared Governance Council will oversee
an effort that ensures Continuing Education
courses or programs titles and content are
not so similar to credit offerings that the
two could be confused by students or other
stakeholders.
f. Academic Affairs will develop and publish
within the College community a procedure
that prohibits “crosswalks,” without
appropriate faculty participation, between
Continuing Education and credit courses.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
g.
h.
Academic Affairs will publish within the
College community a policy that any future
credit programs will be developed with the
full cooperation and participation of the
appropriate faculty.
As per the Contractual Agreement between
the Board of Trustees and the College Faculty
Association, review and implement the
position of Departmental Chairs.
c.
d.
Administrator/Faculty Training and
Development Recommendations
e.
In their December 16, 2015 letter the HLC Board
of Trustees Board noted that the “administration
of the College did not perform effectively when
the faculty took a vote of no confidence.” It was
felt by the ATF that a better understanding of the
curricular issues, labor laws, and dealing with
long-standing issues would help to create a better
working relationship and trust among faculty and
administration.
Therefore, the ATF recommends the following be
achieved by April 2017:
a. Training will be developed by the
Administration and Faculty Association and
required for all Academic Administrators and
Faculty on curricular issues. (e.g., program/
course development, regulatory, etc.).
b. Training will be developed by the
Administration with the input of each
constituency group and required for all
Administrators and Union Officers on the
Illinois Educational Labor Relations Act and
other relevant collective bargaining issues.
ACCREDITATION TASK FORCE REPORT - APRIL 29, 2016
The Administration will be charged with
developing and implementing a formal
process to recruit and develop internal faculty
and staff for administrative roles.
Create task forces to examine issues with
parking, the hiring of retirees, the hiring
of program advisors, reinstating “faculty
advisors,” and a review of the Enhancing the
Student’s Experience Implementation Project
(ESEIP). (This recommendation was already
noted under current actions, however the ATF
wished for it to be reinforced.)
Broaden sample size, randomization, and
scope of Administrators’ evaluators for annual
evaluations.
Other Recommendations
In a January 21, 2016 Corrective Plan of Action
memo that Acting Interim President Dr. Collins
sent to College of DuPage Stakeholders, he stated
that actions to ameliorate some of the issues that
the HLC identified under Core Criteria Five, Core
Component 5.B included: “a series of meetings
with key faculty and administrators to discuss
the faculty concerns expressed on our employee
satisfaction (PACE) survey,” and “enacting all the
recommendations of that same PACE survey group.”
Therefore, the ATF recommends the following be
achieved by April 2017:
a. All PACE survey group recommendations
referenced in Dr. Collins’ January 21,
2016 Corrective Plan of Action memo be
implemented.
9
CliftonLarsonAllen LLP
1301 West 22nd Street, Suite 1100
Oak Brook, IL 60523
630-573-8600 | fax 630-573-0798
CLAconnect.com
May 6, 2016 Board of Trustees and Management of College of DuPage Community College District 502 425 Fawell Boulevard Glen Ellyn, Illinois Dear Ladies and Gentlemen: We are pleased to confirm our understanding of the terms and objectives of our engagement and the nature and limitations of the audit and nonaudit services CliftonLarsonAllen LLP (CLA) will provide for College of DuPage, Community College District 502 (“you”, “your”, or “the College”) for the year ended June 30, 2016. Jon Hoffmeister is responsible for the services provided to you. He will be assisted in the performance of the audit engagement by Michael Hillary, principal, and Lisa Kregor, director. Gregory Adams, principal, will be responsible for the performance of the tax services. Audit services We will audit the financial statements of the business‐type activities and the discretely presented component unit which collectively comprise the basic financial statements of the College, as of and for the year ended June 30, 2016, and the related notes to the financial statements. The Governmental Accounting Standards Board (GASB) provides for certain required supplementary information (RSI) to accompany the College’s basic financial statements. The following RSI will be subjected to certain limited procedures, but will not be audited: 1. Management’s discussion and analysis. 2. GASB‐required supplementary OPEB and pension information. We will also evaluate and report on the presentation of the following supplementary information other than RSI accompanying the financial statements in relation to the financial statements as a whole: 1. Schedule of expenditures of federal awards 2. Illinois Community College Board Uniform Financial Statements 3. Combining schedules of revenues, expenses and changes in subfund balances, all subfunds and account groups 4. Schedule of auxiliary subfunds An independent member of Nexia International
May 6, 2016 College of DuPage Community College District 502 Page 2 The following information other than RSI accompanying the financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements and our auditors’ report will not provide an opinion or any assurance on that information: 1. Contents of the Introductory Section of the College’s CAFR 2. Statistical data 3. Other Supplemental Financial information, except as denoted above Further, we have agreed that the document will include statistical information and a transmittal letter to facilitate the College’s application for the GFOA Certificate of Achievement for Excellence in Financial Reporting. Our engagement does not assure the College that the GFOA Certificate will be awarded. We will also audit the statement of program expenditures of the Illinois Cooperative Work Study Program Grant for the College, for the year ended June 30, 2016. In addition, we will also audit the basic financial statement of the WDCB‐FM Radio Station (the “Radio Station”) as of and for the year ended June 30, 2016, and the notes to the basic financial statements. The Governmental Accounting Standards Board (GASB) provides for certain required supplementary information (RSI) to accompany the Radio Station’s basic financial statements. The RSI will be subjected to certain limited procedures, but will not be audited. We will also evaluate and report on the presentation of the supplementary information other than RSI accompanying the Radio Station’s financial statements in relation to the financial statements as a whole. Tax services We will prepare the College’s federal Form 990‐T and applicable state filings for the year ended June 30, 2016 Audit engagement terms Audit objectives The objective of our audit is the expression of opinions about whether your basic financial statements are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Our audit will be conducted in accordance with auditing standards generally accepted in the United States of America (U.S. GAAS); the standards for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our audit will include tests of your accounting records, a determination of major program(s) in accordance with the Uniform Guidance, and other procedures we consider necessary to enable us to express opinions and render the required reports. We will apply certain limited procedures to the RSI in accordance with U.S. GAAS. However, we will not express an opinion or provide any assurance on the RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. We will also perform procedures to enable us to express an opinion on whether the supplementary information (as identified above) other than RSI May 6, 2016 College of DuPage Community College District 502 Page 3 accompanying the financial statements is fairly stated, in all material respects, in relation to the financial statements as a whole. The objectives of our audit also include: 
Reporting on internal control over financial reporting and compliance with the provisions of laws, regulations, contracts, and award agreements, noncompliance with which could have a material effect on the financial statements in accordance with Government Auditing Standards. 
Reporting on internal control over compliance related to major programs and expressing an opinion (or disclaimer of opinion) on compliance with federal statutes, regulations, and the terms and conditions of federal awards that could have a direct and material effect on each major program in accordance with the Uniform Guidance. The Government Auditing Standards report on internal control over financial reporting and on compliance and other matters will include a paragraph that states (1) that the purpose of the report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the College’s internal control or on compliance, and (2) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the College’s internal control and compliance. The Uniform Guidance report on internal control over compliance will include a paragraph that states that the purpose of the report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the result of that testing based on the requirements of the Uniform Guidance. Both reports will state that the report is not suitable for any other purpose. We will issue written reports upon completion of our audit of your financial statements and compliance with requirements applicable to major programs. We will make reference to the auditor of College of DuPage Foundation in our report on your financial statements. We cannot provide assurance that unmodified opinions will be expressed. Circumstances may arise in which it is necessary for us to modify our opinions, add an emphasis‐of‐matter or other‐matter paragraph(s), or withdraw from the engagement. If our opinions on the financial statements or the single audit compliance opinion are other than unmodified, we will discuss the reasons with you in advance. If circumstances occur related to the condition of your records, the availability of sufficient, appropriate audit evidence, or the existence of a significant risk of material misstatement of the financial statements or material noncompliance caused by error, fraudulent financial reporting, or misappropriation of assets, which in our professional judgment prevent us from completing the audit or forming opinions on the financial statements or an opinion on compliance, we retain the right to take any course of action permitted by professional standards, including declining to express opinions or issue reports, or withdrawing from the engagement. As part of our audit, we will also perform the procedures and provide reports required by the Illinois Community College Board. Auditor responsibilities, procedures, and limitations We will conduct our audit in accordance with U.S. GAAS and the standards for financial audits contained in Government Auditing Standards. Those standards require that we plan and perform the audit to obtain May 6, 2016 College of DuPage Community College District 502 Page 4 reasonable assurance about whether the basic financial statements as a whole are free from material misstatement, whether due to fraud or error. An audit involves performing procedures to obtain sufficient appropriate audit evidence about the amounts and disclosures in the basic financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the basic financial statements. We plan to use the work of the College’s internal audit function to assist us in obtaining audit evidence related to obtaining an understanding of the design and effectiveness of the College’s internal controls. Also, we plan to use personnel from the College’s internal audit department to provide direct assistance to us during the audit in obtaining audit evidence related to testing the effectiveness of the College’s internal controls. Our ultimate use of work and direct involvement of the College’s internal audit department will be based on our determination of the objectivity, competence and availability of personnel within the department. There is an unavoidable risk, because of the inherent limitations of an audit, together with the inherent limitations of internal control, that some material misstatements or noncompliance may not be detected, even though the audit is properly planned and performed in accordance with U.S. GAAS, Government Auditing Standards, and the Uniform Guidance. Because we will not perform a detailed examination of all transactions, material misstatements, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the College or to acts by management or employees acting on behalf of the College, may not be detected. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or on major programs. However, we will inform the appropriate level of management and those charged with governance of any material errors, fraudulent financial reporting, or misappropriation of assets that come to our attention. We will also inform the appropriate level of management and those charged with governance of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential, and of any material abuse that comes to our attention. We will include such matters in the reports required for a single audit. In making our risk assessments, we consider internal control relevant to the College’s preparation and fair presentation of the basic financial statements and compliance in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting fraud or errors that are material to the financial statements and to preventing and detecting misstatements resulting from noncompliance with provisions of laws, regulations, contracts, and grant agreements that have a material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. As required by the Uniform Guidance, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting May 6, 2016 College of DuPage Community College District 502 Page 5 material noncompliance with the direct and material compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to the Uniform Guidance. An audit is not designed to provide assurance on internal control or to identify deficiencies, significant deficiencies, or material weaknesses in internal control. However, we will communicate to you in writing significant deficiencies or material weaknesses in internal control relevant to the audit of the basic financial statements that we identify during the audit that are required to be communicated under AICPA professional standards, Government Auditing Standards, and the Uniform Guidance. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the College’s compliance with the provisions of laws, regulations, contracts, and grant agreements that have a material effect on the financial statements. However, the objective of our audit will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Government Auditing Standards. We will include in our report on internal control over financial reporting and on compliance relevant information about any fraud; noncompliance with provisions of laws, regulations, contracts, or grant agreements; or abuse that may have occurred that are required to be communicated under Government Auditing Standards. The Uniform Guidance requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards that may have a direct and material effect on each of the College’s major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the “OMB Compliance Supplement” for the types of compliance requirements that could have a direct and material effect on each of the College’s major programs. The purpose of these procedures will be to express an opinion on the College’s compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to the Uniform Guidance. We will evaluate the presentation of the schedule of expenditures of federal awards accompanying the financial statements in relation to the financial statements as a whole. We will make certain inquiries of management and evaluate the form, content, and methods of preparing the schedule to determine whether the information complies with U.S. GAAP and the Uniform Guidance, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We will compare and reconcile the schedule to the underlying accounting records and other records used to prepare the financial statements or to the financial statements themselves. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Management responsibilities Our audit will be conducted on the basis that you (management and, when appropriate, those charged with governance) acknowledge and understand that you have certain responsibilities that are fundamental to the conduct of an audit. May 6, 2016 College of DuPage Community College District 502 Page 6 You are responsible for the preparation and fair presentation of the financial statements, RSI, and the schedule of expenditures of federal awards in accordance with U.S. GAAP. Management is also responsible for identifying all federal awards received, understanding and complying with the compliance requirements, and for the preparation of the schedule of expenditures of federal awards (including notes and noncash assistance received) in accordance with the requirements of the Uniform Guidance. Management’s responsibilities include the selection and application of accounting principles; recording and reflecting all transactions in the financial statements; determining the reasonableness of significant accounting estimates included in the financial statements; adjusting the financial statements to correct material misstatements; and confirming to us in the management representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Management is responsible for compliance with applicable laws and regulations and the provisions of contracts and grant agreements, including compliance with federal statutes, regulations, and the terms and conditions of federal awards applicable to the College’s federal programs. Your responsibilities also include identifying significant contractor relationships in which the contractor has responsibility for program compliance and for the accuracy and completeness of that information. You are responsible for the design, implementation, and maintenance of effective internal control, including internal control over compliance, and for evaluating and monitoring ongoing activities to help ensure that appropriate goals and objectives are met relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and that there is reasonable assurance that government programs are administered in compliance with compliance requirements. You are responsible for the design, implementation, and maintenance of internal controls to prevent and detect fraud; assessing the risk that the financial statements may be materially misstated as a result of fraud; and for informing us about all known or suspected fraud affecting the College involving (1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the College received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for implementing systems designed to achieve compliance with applicable laws and regulations and the provisions of contracts and grant agreements, including compliance with federal statutes, regulations, and the terms and conditions of federal awards applicable to the College’s federal programs; identifying and ensuring that the College complies with applicable laws, regulations, contracts, and grant agreements, including compliance with federal statutes, regulations, and the terms and conditions of federal awards applicable to the College’s federal programs; and informing us of all instances of identified or suspected noncompliance whose effects on the financial statements should be considered. You are responsible for taking timely and appropriate steps to remedy any fraud; noncompliance with provisions of laws, regulations, contracts, or grant agreements; or abuse that we may report. Additionally, as required by the Uniform Guidance, it is management’s responsibility to evaluate and monitor noncompliance with federal statutes, regulations, and the terms and conditions of federal awards; take prompt action when instances of noncompliance are identified, including noncompliance identified in audit findings; and to follow up and take May 6, 2016 College of DuPage Community College District 502 Page 7 prompt corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. You are responsible for ensuring that management is reliable and for providing us with (1) access to all information of which you are aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters, and for the accuracy and completeness of that information, and for ensuring the information is reliable and properly reported; (2) access to personnel, accounts, books, records, supporting documentation, and other information as needed to perform an audit under the Uniform Guidance; (3) additional information that we may request for the purpose of the audit; and (4) unrestricted access to persons within the College from whom we determine it necessary to obtain audit evidence. You acknowledge that the College’s internal auditors providing direct assistance to us will be allowed to follow our instructions and that you will not intervene in the work the internal auditor performs for us. You agree to inform us of events occurring or facts discovered subsequent to the date of the financial statements that may affect the financial statements. You are also responsible for providing us access to component information, those charged with governance of components, component management, and component auditors (including relevant audit documentation and communications). Management is responsible for providing us with, or making arrangements to facilitate (1) unrestricted communication between us and the component auditor to the extent permitted by law or regulation; (2) communications between the component auditor, those charged with governance of the component(s), and component management, including communications of significant deficiencies and material weaknesses in internal control; (3) communications between regulatory authorities and the component related to financial reporting matters; (4) access to component information, those charged with governance of the component, component management, and the component auditor(s) (including relevant audit documentation requested by us); and (5) permission to perform work, or request a component auditor to perform work, on the financial information of the component. You agree to include our report on the schedule of expenditures of federal awards in any document that contains and indicates that we have reported on the schedule of expenditures of federal awards. You also agree to include the audited financial statements with any presentation of the schedule of expenditures of federal awards that includes our report thereon or make the audited financial statements readily available to intended users of the schedule of expenditures of federal awards no later than the date the schedule of expenditures of federal awards is issued with our report thereon. Your responsibilities include acknowledging to us in the representation letter that (1) you are responsible for presentation of the schedule of expenditures of federal awards in accordance with the Uniform Guidance; (2) you believe the schedule of expenditures of federal awards, including its form and content, is fairly presented in accordance with the Uniform Guidance; (3) the methods of measurement or presentation have not changed from those used in the prior period (or, if they have changed, the reasons for such changes); and (4) you have disclosed to us any significant assumptions or interpretations underlying the measurement or presentation of the schedule of expenditures of federal awards. Management is responsible for the preparation and fair presentation of other supplementary information in accordance with U.S. GAAP. You agree to include our report on the supplementary information in any document that contains, and indicates that we have reported on, the supplementary information. You also agree to include the audited financial statements with any presentation of the supplementary information that includes our report thereon or make the audited financial statements readily available to users of the supplementary May 6, 2016 College of DuPage Community College District 502 Page 8 information no later than the date the supplementary information is issued with our report thereon. You agree to provide us written representations related to the presentation of the supplementary information. Management is responsible for providing us with a written confirmation concerning representations made by you and your staff to us in connection with the audit and the presentation of the basic financial statements and RSI. During our engagement, we will request information and explanations from you regarding, among other matters, the College’s activities, internal control, future plans, specific transactions, and accounting systems and procedures. The procedures we will perform during our engagement and the conclusions we reach as a basis for our report will be heavily influenced by the representations that we receive in the representation letter and otherwise from you. Accordingly, inaccurate, incomplete, or false representations could cause us to expend unnecessary effort or could cause a material fraud or error to go undetected by our procedures. In view of the foregoing, you agree that we shall not be responsible for any misstatements in the College’s financial statements that we may fail to detect as a result of misrepresentations made to us by you. Management is responsible for authorizing the predecessor auditor to allow us to review the predecessor auditor’s workpapers and to respond fully to our inquiries, thereby providing us with information to assist us in planning and performing the engagement. You will be responsible for any fees billed by the predecessor auditor related to our review of their workpapers and our inquiries. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying and providing report copies to us of previous financial audits, attestation engagements, performance audits, or other studies related to the objectives discussed in the “Audit objectives” section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits, attestation engagements, performance audits, or other engagements or studies. You are also responsible for providing management’s views on our current findings, conclusions, and recommendations, as well as your planned corrective actions for the report, and for the timing and format for providing that information. Responsibilities and limitations related to nonaudit services For all nonaudit services we may provide to you, management agrees to assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, and/or experience to understand and oversee the services; evaluate the adequacy and results of the services; and accept responsibility for the results of the services. Use of financial statements Should you decide to include or incorporate by reference these financial statements and our auditors’ report(s) thereon in a future private placement or other offering of equity or debt securities, you agree that we are under no obligation to re‐issue our report or provide consent for the use of our report in such a registration or offering document. We will determine, at our sole discretion, whether we will re‐issue our report or provide consent for the use of our report only after we have performed the procedures we consider necessary in the circumstances. If we decide to re‐issue our report or consent to the use of our report, we will be required to perform certain procedures including, but not limited to, (a) reading other information incorporated by reference in the registration statement or other offering document and (b) subsequent event procedures. These procedures will be considered an engagement separate and distinct from our audit engagement, and we will bill you separately. If we decide to re‐issue our report or consent to the use of our report, you agree that we will be included on May 6, 2016 College of DuPage Community College District 502 Page 9 each distribution of draft offering materials and we will receive a complete set of final documents. If we decide not to re‐issue our report or decide to withhold our consent to the use of our report, you may be required to engage another firm to audit periods covered by our audit reports, and that firm will likely bill you for its services. While the successor auditor may request access to our workpapers for those periods, we are under no obligation to permit such access. If we agree that CLA will not be involved with your official statements related to municipal securities filings or other offering documents, we will require that any official statements or other offering documents issued by you with which we are not involved clearly indicate that CLA is not involved with the contents of such documents. Such disclosure should read as follows: CliftonLarsonAllen LLP, our independent auditor, has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. CliftonLarsonAllen LLP also has not performed any procedures relating to this offering document. With regard to the electronic dissemination of audited financial statements, including financial statements published electronically on your website or submitted on a regulator website, you understand that electronic sites are a means to distribute information and, therefore, we are not required to read the information contained in those sites or to consider the consistency of other information in the electronic site with the original document. We may issue preliminary draft financial statements to you for your review. Any preliminary draft financial statements should not be relied on or distributed. Engagement administration and other matters We expect to begin our audit on approximately May 23, 2016. We understand that your employees will prepare all confirmations, account analyses, and audit schedules we request and will locate any documents or invoices selected by us for testing. A list of information we expect to need for our audit and the dates required will be provided in a separate communication. At the conclusion of the engagement, we will complete the auditor sections of the electronic Data Collection Form SF‐SAC and perform the steps to certify the Form SF‐SAC and single audit reporting package. It is management’s responsibility to complete the auditee sections of the Data Collection Form. We will create the single audit reporting package PDF file for submission; however, it is management’s responsibility to review for completeness and accuracy and electronically submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors’ reports, and corrective action plan) along with the Data Collection Form to the federal audit clearinghouse and, if appropriate, to pass‐through entities. The Data Collection Form and the reporting package must be electronically submitted within the earlier of 30 calendar days after receipt of the auditors’ reports or nine months after the end of the audit period. May 6, 2016 College of DuPage Community College District 502 Page 10 We will provide copies of our reports to the College; however, management is responsible for distribution of the reports and the financial statements. Unless restricted by law or regulation, or containing privileged and confidential information, copies of our reports are to be made available for public inspection. We are available to perform additional procedures with regard to fraud detection and prevention, at your request, as a separate engagement, subject to completion of our normal engagement acceptance procedures. The terms and fees of such an engagement would be documented in a separate engagement letter. The audit documentation for this engagement is the sole and exclusive property of CLA and constitutes confidential and proprietary information. However, subject to applicable laws and regulations, audit documentation and appropriate individuals will be made available upon request and in a timely manner to Illinois Community College Board, or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of CLA personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of seven years after the report release date or for any additional period requested by the Illinois Community College Board. If we are aware that a federal awarding agency, pass‐through College, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. Except as permitted by the “Consent” section of this agreement, CLA will not disclose any confidential, proprietary, or privileged information of the College to any persons without the authorization of College management or unless required by law. This confidentiality provision does not prohibit us from disclosing your information to one or more of our affiliated companies in order to provide services that you have requested from us or from any such affiliated company. Any such affiliated company shall be subject to the same restrictions on the use and disclosure of your information as apply to us. Professional standards require us to be independent with respect to you in the performance of these services. Any discussion that you have with our personnel regarding potential employment with you could impair our independence with respect to this engagement. Therefore, we request that you inform us prior to any such discussions so that we can implement appropriate safeguards to maintain our independence and objectivity. Further, any employment offers to any staff members working on this engagement without our prior knowledge may require substantial additional procedures to ensure our independence. You will be responsible for any additional costs incurred to perform these procedures. Our relationship with you is limited to that described in this letter. As such, you understand and agree that we are acting solely as independent accountants. We are not acting in any way as a fiduciary or assuming any fiduciary responsibilities for you. We are not responsible for the preparation of any report to any governmental agency, or any other form, return, or report or for providing advice or any other service not specifically recited in this letter. May 6, 2016 College of DuPage Community College District 502 Page 11 Government Auditing Standards require that we make our most recent external peer review report publicly available. The report is posted on our website at www.CLAconnect.com/Aboutus/. Tax engagement terms Tax Engagement ‐Our responsibility to you We will prepare the College’s federal Form 990‐T and applicable state filings in accordance with the applicable tax laws. We will use our judgment in resolving questions where the law is unclear, and where there is reasonable authority, we will resolve questions in your favor whenever possible. We will not audit or independently verify the accuracy or completeness of the information we receive from you for the preparation of the returns and filings, and our engagement cannot be relied upon to uncover errors or irregularities in the underlying information. Tax Engagement‐Management responsibilities It is management’s responsibility to provide us with all of the information needed to prepare complete and accurate returns and filings. We will have no obligation to prepare the returns and filings until you have provided such information to us. We will prepare filings for the same states where the College filed last year unless College personnel notify us to the contrary or other information clearly indicates the need for an additional return or state filing. Please note that if the College had a taxable presence in more than one state, such as an employee or sales within the state or any tangible property owned or rented within the state, the College may be required to register in the state. The College also may be subject to state income, sales, use, or franchise tax in that state, depending upon the particular facts. It is the College’s responsibility, not CLA’s, to determine if assistance is needed in deciding whether the College must register or may be liable for state income, sales, use, or franchise tax or may have a filing requirement in various states. For all nonattest services we may provide to you, including the preparation of the federal Form 990‐T and applicable state filings, management agrees to assume all management responsibilities; oversee the services by designating an individual, preferably within senior management, who possesses suitable skill, knowledge, and/or experience to understand and oversee the services; evaluate the adequacy and results of the services performed; and accept responsibility for the results of the services. Management is responsible to carefully review the federal Form 990‐T and state filings that we prepare on your behalf before signing and submitting them to tax authorities. We will advise you with regard to tax positions taken in the preparation of the federal Form 990‐T and state filings, but the responsibility for the federal Form 990‐T and state filings remains with you. Tax examinations All returns and filings are subject to potential examination by the IRS and state authorities. In the event of an examination, we will be available, at your request, to assist or represent the College and its directors or officers. Services in connection with tax examinations are not included in our fee for preparation of the federal Form 990‐T and state filings. Our fee for such services will be billed to you separately, along with any direct costs. Record retention You are responsible for retaining all documents, records, canceled checks, receipts, or other evidence in support of information and amounts reported on the federal Form 990‐T and state filings. These items may be necessary May 6, 2016 College of DuPage Community College District 502 Page 12 in the event the taxing or other authority examines or challenges your federal Form 990‐T and state filings. These records should be kept for at least seven years. Your copy of the federal Form 990‐T and state filings should be retained indefinitely. If carryover item(s) exist (e.g., capital loss, net operating loss, tax credits, etc.), you should retain the supporting records related to the carryover item(s) until the item has either been utilized (and the statute of limitations associated with the year of utilization has expired) or the carryforward period has expired. In preparing the federal Form 990‐T and state filings, we rely on your representation that College personnel and its directors or officers understand and have complied with these documentation requirements. The management of the College is responsible for the proper recording of transactions in the books of accounts, for the safeguarding of assets, and for the substantial accuracy of the College’s financial records. All of the records that you provide to us to prepare your federal Form 990‐T and state filings will be returned to you after our use. Our working papers, including any copies of your records that we chose to make, are our property and will be retained by us in accordance with our established records retention policy. This policy states, in general, that we will retain our working papers for a period of seven years. After this period expires, our working papers and files will be destroyed. Furthermore, physical deterioration or catastrophic events may shorten the time our records are available. The working papers and files of our firm are not a substitute for the records of the College. Tax consulting services This engagement letter also covers tax consulting services that may arise for which the College seeks our consultation and advice, both written and oral, that are not the subject of a separate engagement letter. These additional services are not included in our fees for the preparation of the federal Form 990‐T and state filings. We will base our tax analysis and conclusions on the facts you provide to us, and will not independently verify those facts. We will review the applicable tax law, tax regulations, and other tax authorities, all of which are subject to change. At your request, we will provide a memorandum of our conclusions. Written advice provided by us is for the College’s information and use only and is not to be provided to any third party without our express written consent. Unless we are separately engaged to do so, we will not continuously monitor and update our advice for subsequent changes or modifications to the tax law and regulations, or to the related judicial and administrative interpretations. Tax Communications and confidentiality The Internal Revenue Code contains a limited privilege for confidentiality of tax advice between you and our firm. In addition, the laws of some states likewise recognize a confidentiality privilege for some accountant‐
client communications. You understand that CLA makes no representation, warranty or promise, and offers no opinion with respect to the applicability of any confidentiality privilege to any information supplied or communications you have with us, and, to the extent that we follow instructions from you to withhold such information or communications in the face of a request from a third party (including a subpoena, summons or discovery demand in litigation), you agree to hold CLA harmless should the privilege be determined not to apply to particular information or communications. May 6, 2016 College of DuPage Community College District 502 Page 13 Limitations and dispute resolution You agree that our liability, if any, arising out of the tax services portion of this engagement, any tax advice and tax planning, and for the federal Form 990‐T and state filings and schedules we prepare, will be limited to the tax fees paid to CLA for the tax services portion of this engagement. Mediation Any disagreement, controversy, or claim (“Dispute”) that may arise out of any aspect of our services or relationship with you, including this engagement, shall be submitted to non‐binding mediation by written notice (“Mediation Notice”) to the other party. In mediation, we will work with you to resolve any differences voluntarily with the aid of an impartial mediator. The mediation will be conducted as specified by the mediator and agreed upon by the parties. The parties agree to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the Dispute. Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties. Any Dispute will be governed by the laws of the state of Minnesota, without giving effect to choice of law principles. Time limitation The nature of our services makes it difficult, with the passage of time, to gather and present evidence that fully and fairly establishes the facts underlying any Dispute that may arise between us. The parties agree that, notwithstanding any statute or law of limitations that might otherwise apply to a Dispute, including one arising out of this agreement or the services performed under this agreement, for breach of contract or fiduciary duty, tort, fraud, misrepresentation or any other cause of action or remedy, any action or legal proceeding by you against us must be commenced as provided below or you shall be forever barred from commencing a lawsuit or obtaining any legal or equitable relief or recovery. An action to recover on a Dispute shall be commenced within the shorter of these periods (“Limitation Period”): •
For audit services, within twenty‐four (24) months after the date when we deliver our final audit report under this agreement to you, regardless of whether we provide other services for you relating to the audit report. •
For federal Form 990 and state filing preparation, separately within thirty‐six (36) months after the date when we deliver the tax returns and filings under this agreement to you on which the Dispute is based, regardless of whether we provide other services for you or relating to said returns and filings. •
For tax consulting engagements, separately within thirty‐six (36) months from the date of our last billing for services on each consultation on which the Dispute is based. The applicable Limitation Period applies and begins to run even if you have not suffered any damage or loss, or have not become aware of the existence or possible existence of a Dispute. May 6, 2016 College of DuPage Community College District 502 Page 14 Fees We our fees for these services will be as follows: •
Audit of Comprehensive Annual Financial Report including the audit of the financial statements, ICCB Requirements, and Uniform Guidance ‐ $98,000 •
Audit of the Illinois Board of Higher Education Cooperative Work Study Program ‐ $4,500 •
Audit of the basic financial statements of the WDCB‐FM Radio Station ‐ $7,000 •
Preparation of federal Form 990‐T and state filings ‐ $3,000 We agree that we will credit the College for direct assistance provided by the College’s internal audit personnel at a rate of $95 per hour against the audit fee quoted above. Furthermore, we agree that our billing rate for other audits which were not identified in this engagement letter will be $125 per hour. The fee estimate is based on anticipated cooperation from your personnel and their assistance with preparing confirmations and requested schedules. If the requested items are not available on the dates required or are not accurate, the estimated fee for services will likely be higher. If unexpected circumstances require significant additional time, we will advise you before undertaking work that would require a substantial increase in the fee estimate. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed even if we have not issued our reports. You will be obligated to compensate us for all time expended through the date of termination. Unanticipated services We do not anticipate encountering the need to perform additional services beyond those described in this letter. Below are listings of services considered to be outside the scope of our engagement. If any such service needs to be completed before the audit can proceed in an efficient manner, we will determine whether we can provide the service and maintain our independence. If appropriate, we will notify you and provide a fair and reasonable price for providing the service. We will bill you for the service at periodic dates after the additional service has been performed. Bookkeeping services Bookkeeping services are not audit services. Bookkeeping services include the following activities: 
Preparation of a trial balance 
Account reconciliations 
Bank statement reconciliations May 6, 2016 College of DuPage Community College District 502 Page 15 
Capital asset accounting (e.g., calculating depreciation, identify capital assets for additions and deletions) 
Calculating accruals 
Analyzing transactions for proper recording 
Converting cash basis accounting records to accrual basis 
Preparation of financial statements and the related notes to the financial statements 
Processing immaterial adjustments through the financial statements 
Adjusting the financial statements for new activities and new disclosures Additional work resulting from unanticipated changes in your organization or accounting records If your organization undergoes significant changes in key personnel, accounting systems, and/or internal control (other than those which we have been previously been made aware), we are required to update our audit documentation and audit plan. The following are examples of situations that will require additional audit work: 
Revising documentation of your internal control for changes resulting from your implementation of new information systems 
Deterioration in the quality of the College’s accounting records during the current‐year engagement in comparison to the prior‐year engagement 
Significant new accounting issues 
Significant changes in your volume of business 
Mergers, acquisitions, or other business combinations 
New or unusual transactions 
Changes in audit scope or requirements resulting from changes in your activities 
Erroneous or incomplete accounting records 
Evidence of material weaknesses or significant deficiencies in internal control 
Substantial increases in the number or significance of problem loans 
Regulatory examination matters May 6, 2016 College of DuPage Community College District 502 Page 16 
Implementation or adoption of new or existing accounting, reporting, regulatory, or tax requirements 
New financial statement disclosures Changes in engagement timing and assistance by your personnel The fee estimate is based on anticipated cooperation from your personnel and their assistance with timely preparation of confirmations and requested schedules. If the requested items are not available on the dates required or are not accurate, we will advise management. Additional time and costs may be necessary because of such unanticipated delays. Examples of situations that may cause our estimated fee to increase include: 
Significant delays in responding to our requests for information such as reconciling variances or providing requested supporting documentation (e.g., invoices, contracts, and other documents) 
Rescheduling our fieldwork 
Schedule disruption caused by litigation, financial challenges (going concern), loan covenants (waivers), etc. 
Identifying a significant number of proposed audit adjustments 
Schedules prepared by your personnel that do not reconcile to the general ledger 
Numerous revisions to information and schedules provided by your personnel 
Restating financial statements for accounting errors in the prior year 
Lack of availability of College personnel during audit fieldwork Changes in accounting and audit standards Standard setters and regulators continue to evaluate and modify standards. Such changes may result in new or revised financial reporting and disclosure requirements or expand the nature, timing, and scope of the activities we are required to perform. To the extent that the amount of time required to provide the services described in the letter increases due to such changes, our fee may need to be adjusted. We will discuss such circumstances with you prior to performing the additional work. Other fees You also agree to compensate us for any time and expenses, including time and expenses of legal counsel, we may incur in responding to discovery requests or participating as a witness or otherwise in any legal, regulatory, or other proceedings that we are asked to respond to on your behalf. You and your attorney will receive a copy of every subpoena or request we are asked to respond to. May 6, 2016 College of DuPage Community College District 502 Page 17 Finance charges and collection expenses You agree that if any statement is not paid within 30 days from its date, the unpaid balance shall accrue interest at the monthly rate of one and one‐quarter percent (1.25%), which is an annual percentage rate of 15%. In the event that any collection action is required to collect unpaid balances due us, reasonable attorney fees and expenses shall be recoverable. Consent Consent to use financial information Annually, we assemble a variety of benchmarking analyses using client data obtained through our audit and other engagements. Some of this benchmarking information is published and released publicly. However, the information that we obtain is confidential, as required by the AICPA Code of Professional Conduct. Your acceptance of this engagement letter will serve as your consent to use of the College’s information in these cost comparison, performance indicator, and/or benchmarking reports. Consent to send you publications and other materials For your convenience, CLA produces a variety of publications, hard copy and electronic, to keep you informed about pertinent business and personal financial issues. This includes published articles, invitations to upcoming seminars, webinars and webcasts, newsletters, surveys, and press releases. To determine whether these materials may be of interest to you, CLA will need to use your federal Form 990‐T and state filings information. Such information includes the entity name and address as well as the business and financial information you provided to us. By signing and dating this engagement letter, you authorize CLA to use the information that you provide to CLA during the preparation of your federal Form 990‐T and state filings to determine whether to offer you relevant materials. Your consent is valid until further notice. If you do not wish to authorize such use, please strike out this paragraph prior to signing the engagement letter. May 6, 2016 College of DuPage Community College District 502 Page 18 Agreement We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. This letter constitutes the entire agreement regarding these services and supersedes all prior agreements (whether oral or written), understandings, negotiations, and discussions between us. If you have any questions, please let us know. Please sign, date, and return the enclosed copy of this letter to us to indicate your acknowledgment and understanding of, and agreement with, the arrangements for our audit of your financial statements including the terms of our engagement and our respective responsibilities. Sincerely, CliftonLarsonAllen LLP Jon Hoffmeister, CPA Principal 630‐954‐8157 Jon.Hoffmeister@CLAconnect.com Enclosure Response: This letter correctly sets forth the understanding of College of DuPage Community College District 502. Authorized governance signature: Title: Date: Authorized management signature: Title: Date: Item __8
April 7, 2016
Confidential Reporting of Wrongdoing
College of DuPage is committed to the highest ethical standards and conducting its
operations in compliance with federal laws and regulations. To ensure that this standard
of performance is achieved and maintained, a mechanism for confidential anonymous
reporting of perceived wrongdoing, using an external, independent party, is provided
either via telephone or the internet.
This Policy encourages persons to disclose allegations of internal wrongdoing.
Wrongdoing may include, but is not limited to:
• Crimes, or violations of the law or governmental regulations
• Fraud or financial irregularity
• Improper use of College funds, property or assets
• Corruption, bribery or blackmail
• Endangering the health or safety of an individual
• Harming College property
• Abuse of students, staff, patrons, College guests, or visitors
• Engaging in activity in violation of Board policy;
• Other unethical conduct
The College will not tolerate any harassment or victimization of reporters and will take
appropriate action to protect reporters, including their anonymity (if name is known),
who raise concerns in good faith.
Alleged wrongdoer’s name may be disclosed only upon completion of the investigation
and if found guilty. If wrongdoer is found guilty, appropriate legal and/or personnel
action will be taken.
The President will designate a senior administrator who will have overall responsibility
for the maintenance and operation of this policy.
a. Where the complaint involves the senior administrator with this oversight
responsibility or his/her immediate staff, the reporter may instead submit a report
to the President.
b. Where the complaint involves the President, Treasurer, Controller, or other
senior administrator where the reporter is concerned the President may possess
a conflict of interest, the reporter may instead submit a report to the Chair of the
Board of Trustees, and/or to the College’s general Board’s outside counsel.
Item __8
April 7, 2016
Should a complaint involve the President, and be received by the senior
administrator, the senior administrator shall notify the Chair of the Board
immediately upon receipt of the same.
For all complaints except those set forth in (a) and (b) above, Tthe senior administrator
will maintain a record of raised concerns and related outcomes. At a minimum, the
Presidentsenior administrator will provide the Board with a quarterly update of all
suchny complaints received and actions taken, although the Board may ask for reports
at any time.
Should a complaint involve the President, and be received by the senior administrator,
the senior administrator will notify the Chair of the Board immediately upon receipt of
the same. For all complaints in this paragraph and as set forth in (a) and (b) above, the
President, Chair of the Board and/o general outside counsel (as applicable) shall
maintain a record of raised concerns and related outcomes.
Complaints involving a Board member will be brought to the Board’s attention by the
President and/or the Chair and to generaloutside counsel upon receipt of the same.
If any substantial changes are made to implementing procedures related to this policy,
the Board will be notified.
The President shall ensure the College web page under the Office of the President and
the Board of Trustees includes a link for members of the College, and members of the
public, to confidentially report wrongdoing to the senior administrator, President and to
the Board.
COLLEGE OF DUPAGE
Policy Manual of the Board of Trustees
The Board of Trustees - Miscellaneous
Policy No. 5-220
Audit Committee
(a) The Board of Trustees shall establish an audit committee. Committee members shall be
appointed by the chairperson of the Board and may be replaced from time to time. The
committee shall consist of at least 3 members of the Board of Trustees who are not
administrators or other employees of the College. The chairperson of the Board shall appoint
one of the members of the committee as chairperson of the committee.
The committee should operate in accordance with the Government Finance Officers
Association (GFOA) best practices, “an audit committee is a practical means for a governing
body to provide much needed independent review and oversight of the government’s financial
reporting processes, internal controls, and independent auditors. An audit committee also
provides a forum separate from management in which auditors and other interested parties can
candidly discuss concerns. By effectively carrying out its functions and responsibilities, an audit
committee helps to ensure that management properly develops and adheres to a sound system
of internal controls, that procedures are in place to objectively assess management’s practices,
and that the independent auditors, through their own review, objectively assess the
government’s financial reporting practices.”
If necessary, the audit committee will be allowed access to the services of at least one financial
expert, either a committee member or an outside party engaged by the committee.
(b) The committee shall have the authority to initiate, direct and authorize investigations or reviews,
College-wide, through the internal audit department. The internal auditor and his or her
department will report administratively to the President of the College, who will have the
authority to approve all human resources actions related to the director of the internal audit
department. All actions taken by the director of internal audit shall include input from the
committee, the Board Chairman, and the President. All human resources actions shall follow
the policies and procedures of the College.
To allow for independent analysis and investigation, the committee shall have unrestricted
access to members of management and relevant information, such as books, records, facilities,
property, and personnel, in any format, electronic or other, in which the information may exist.
(c) While the committee has the responsibilities and powers set forth in this Policy, it is not the
committee's duty to plan or conduct audits or to determine that the College's financial
statements are complete, accurate, and in accordance with generally accepted accounting
principles. The College’s administration is responsible for the preparation, presentation, and
integrity of the College's financial statements and for the appropriateness of the accounting
principles and reporting policies used. The College's independent auditors are responsible for
auditing the College's annual financial statements.
(d) In meeting its responsibilities, the committee shall meet at least 2 times per year or more
frequently as circumstances require.
(e) The committee shall have the following duties:
1) To report committee actions to the Board with recommendations as the committee may
deem appropriate.
2) To receive advance notice of all audits, reviews, and other investigations, whether internal
or external. This notice may occur via verbal or written report as accepted by the committee.
3) To review the results of all audits, reviews, and other investigations, whether internal or
external, for the College, regardless of the source of funding for the activity reviewed. This
review may occur via verbal or written report as accepted by the committee.
4) To approve procedures for and to review the receipt, retention, and treatment of complaints
received by the College, through any means, regarding accounting, internal accounting
controls, or auditing matters, including procedures for the confidential, anonymous
submission by College employees of concerns regarding questionable accounting or
auditing matters and matters related to misuse, abuse, or misappropriation of resources and
alleged financial fraud and supervisory misconduct.
5) To review and evaluate the effectiveness of the College's process for assessing significant
risks or exposures and the steps management has taken to monitor and control such risks.
6) To inquire of management, internal auditors, and external auditors about risks facing the
College.
7) To review the scope of the annual financial statement audit with the independent auditors.
a. The external auditor shall have direct access to the committee and shall meet
privately without members of management present at least once during the course of
an audit.
8) The audit committee shall review internal and external audit results and discuss significant
issues of internal control and compliance with the independent auditor, internal auditor, and
management. The audit committee shall monitor management’s progress in addressing any
audit recommendations.
9) To report regularly to the Board any issues that arise with respect to:
a. the quality or integrity of the College's financial statements, not to duplicate
communications and activities reported through the external audit;
b. the performance and independence of the College's external auditors;
c. the performance of the internal audit function; and
d. any other matters in the committee's performance of its duties that the committee
views important to present to the full board.
Adopted: 08/13/15
Reviewed:
Amended:
COLLEGE OF DUPAGE
Policy Manual of the Board of Trustees
College Operations - Fiscal
Policy No. 10-55
Investment of College Funds
Introduction
College of DuPage (“College”) has adopted this Investment Policy Statement (the “Policy”) to
provide a clear understanding for and amongst College Trustees, outside investment managers
and advisors and other interested parties concerning the investment of College funds. This Policy
will be used to evaluate the performance of the investment portfolio and investment providers.
The College shall invest public funds in a manner that:



Seeks to preserve capital while earning a market rate of return relative to the acceptable
level of risk undertaken as defined in this Policy,
Meets the cash flow needs of the College, and
Satisfies all applicable governing laws, including, but not limited to, the Illinois Compiled
Statutes, specifically 30 ILCS 235, the Public Funds Investment Act and 110 ILCS 805,
the Public Community College Act (together the “Acts”), and other state laws governing the
investment of public funds, as amended from time to time.
Scope
As required by the Public Funds Investment Act, this Policy shall apply to all operating funds,
special funds, interest and sinking funds, and other funds belonging to or in the custody of the
College. These funds are accounted for in the College’s Comprehensive Annual Financial Report
(“CAFR”) and generally include:
i.
Local property taxes received from the County Treasurers’ in DuPage, Cook and Will
Counties;
ii.
Monies received from the State of Illinois for Base Operating and other grants or other funds
received from any political or corporate subdivision;
iii.
All monies belonging to the College in its corporate capacity.
Upon approval and upon future amendment, if any, copies of this Policy will be delivered to:
i.
The Board of Trustees and Treasurer or other officer(s) of the College;
ii.
All depositories or fiduciaries of public funds of the College; and
iii.
Any investment advisers or managers used by the College.
The investment of bond funds or sinking funds shall comply with this Policy and the requirements
of any applicable bond resolution.
This Policy does not apply to the College’s 403(b) and 457 Deferred Compensation Plans, as well
as funds managed separately and subject to the Investment Policy Statement of the Foundation.
Page 1 of 11
Objectives of the Policy
The College’s investment objectives will include:

Safety: Safety and preservation of principal in the overall portfolio. For the types of
investment in this policy, safety can generally be considered both in terms of likelihood of
default (credit risk) and the degree to which prices change in response to market conditions
(market risk).

Liquidity: Portfolio must have sufficient liquidity to meet all projected cash flow needs of the
College.

Return: Maintain the purchasing power of the investable assets by producing positive real
rates of return in excess of inflation. Maximize returns within reasonable and prudent levels
of risk, as defined by this Policy and applicable law and Board policies.
The Treasurer or Chief Executive Officer (“Treasurer”) will work with Financial Affairs staff to
maintain a cash forecast and allocate the funds by duration and investment type. This forecast will
be used by the Treasurer to determine when funds may be required for expenditures, and funds will
be invested in four categories:




Operating Funds: Short-term, under 1 year
Contingency Funds/Working Cash (Medium/Long-term): 1-3 year, unless board approves
investments over 3 years
Capital Projects: Matched to certain capital projects: 1-5 year, unless board approves
investments over 5 years
Special Funds: For special uses other than above: maturity/duration can vary
The prioritization of safety, liquidity and return will be determined by the above categories of the
investment. While the categories of investments allowed by the Acts and this policy are of generally
high quality, assets of a longer maturity and duration may have higher variations in day to day
market value than those of shorter duration.
The College’s investment portfolio will be reviewed at least annually by the College’s Internal Audit
Department as to its effectiveness in meeting the College’s needs for safety, liquidity, return,
diversification, and its overall general performance. The results of the report will be provided to the
College’s President and the Board’s Audit Committee. In addition, the investment policy will be
reviewed at least annually by the Treasurer and the President with recommendations for any policy
amendments provided to the Board.
Delegation of Authority
The Board of Trustees has ultimate fiduciary responsibility for the investment of College funds. To
execute these responsibilities, the Board of Trustees approves the Policy and delegates
responsibility to the Treasurer. The Treasurer will have responsibility for policy implementation and
ongoing monitoring and oversight of the investment portfolio. The Treasurer may delegate the dayto-day responsibility for the investment of College funds to the Assistant Vice President, Finance
and Controller. The Treasurer may contract with a financial advisor(s) on behalf of the College.
This financial advisor will report to the Treasurer and manage a portfolio of investments subject to
the provisions of this Policy. Should the College hire one or more investment advisor, each advisor
Page 2 of 11
will be given a copy of this policy and will manage the portfolio within the percent constraints
elsewhere in this Policy. For example, if an advisor manages $10,000,000, that advisor will have
no more than 30% in commercial paper. For advisors existing prior to approval of this policy, there
will be a 90 day period to bring those accounts into compliance or move the securities to new
advisors.
Standard of Care
The standard of care to be used in the investment of College funds shall be the “prudent person”
standard and shall be applied in the context of managing the overall investment portfolio. The
prudent person standard states:
“Investments shall be made with judgment and care, under circumstances then
prevailing, which persons of prudence, discretion and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering
the probable safety of their capital as well as the probable income to be derived.”
Officers acting in accordance with this Policy and exercising due diligence shall be relieved of
personal responsibility for an individual investment’s credit or market risk, provided that deviations
from expectations are reported in a timely manner and appropriate action is taken to minimize
adverse developments.
The adoption of this standard of care by the Board of Trustees does not grant any authority to
invest College funds in any investments that are not specifically authorized by this Policy and the
Acts.
Ethics and Conflicts of Interest
Board members, officers and employees involved in the investment process will refrain from
personal business activity that could conflict with the proper execution and management of the
investment program, or that could impair their ability to make impartial decisions. Specifically, they
will be familiar with Section 2(d) of the Acts which notes the following:
“Except for pecuniary interests permitted under subsection (f) of Section 3-14-4 of the Illinois
Municipal Code or under Section 3.2 of the Public Officer Prohibited Practices Act, no person acting
as treasurer or who is employed in any similar capacity by or for a public agency may do any of the
following:
(1) Have any interest, directly or indirectly, in any investments in which the agency is authorized
to invest.
(2) Have any interest, directly or indirectly, in the sellers, sponsors, or managers of those
investments.
(3) Receive, in any manner, compensation of any kind from any investments in which the agency
is authorized to invest.”
Further, all College employees involved in the investment of College funds, shall adhere to the
standards prescribed in the Code of Professional Ethics for the Government Finance Officers
Page 3 of 11
Association of the United States and Canada (“GFOA”). This Code is attached to this Policy as
Exhibit A.
Authorized Financial Institutions and Intermediaries
The Treasurer, with the assistance of staff, will limit investments to financial institutions determined
by the Treasurer to be in compliance with this policy. These financial institutions may include
depositories, investment advisors, broker/dealers and local government investment pools, banks,
savings and loans and credit unions. The Treasurer will obtain information which will provide she or
he with assurance that the institution will agree to comply with this policy. This will include a written
certification that an authorized signer has read and understands the policy, although in certain
instances, the CFO and President together may elect to waive this requirement. Financial
institutions selected to engage in transactions with the College shall be at the sole discretion of the
College. Consideration for working with any financial institution will include financial condition, level
and breadth of service, competitive pricing and experience working with other higher education
and/or government institutions.
All depositories shall be insured by the Federal Deposit Insurance Corporation (“FDIC”) or the
National Credit Union Administration (“NCUA”) and may consist of banks, savings and loan
associations and credit unions that meet the following requirements:
 Minimum Capital, as defined by the FDIC, as Tier 1 Risk-Based Capital Ratio, at a
level to be considered to be “Well Capitalized.”
 Have been in operation for at least five years
 Have a Community Reinvestment Act rating of “Outstanding” or “Satisfactory”
For bank trust companies serving in a safekeeping role, the Treasurer will validate that proper
internal controls are being followed by the trust company. The Treasurer will also ensure that the
bank related to the trust company meets above requirements for capitalization, time in business and
community reinvestment act rating.
All financial institutions serving as a depository for College funds shall supply the following
information to the Treasurer:






Depository contract or account agreement
Collateral Agreement, if applicable
Audited financial statements
Statement of Condition (the “Call Report”)
Community Reinvestment Act report
Certification as to having read and agreeing to comply with this Policy
All investment managers shall be registered under the SEC Investment Advisors Act of 1940.
All security broker/dealers desiring to provide investment transactions for the College must meet
the following minimum requirements:
 Minimum Net Capital Requirements in compliance with SEC Rule 15c3-1
 Have been in operation for at least five years
 Maintains blanket SIPC insurance coverage
Page 4 of 11
All security broker/dealers must also supply the following, as appropriate:





Trading resolution, if applicable
Custodial Agreement, if applicable and not part of account opening document
Audited financial statements
Proof of Financial Industry Regulatory Authority (FINRA) status
Certification as to having read and agreeing to comply with this Policy
In making decisions regarding contracting with service providers, the Treasurer will consider any
relevant board policies related to doing business with firms controlled by women, minorities and
people with disabilities.
Authorized Investments
The Treasurer may invest restricted and unrestricted funds, including current operating funds,
special funds, interest and sinking funds, and other funds belonging to or in the custody of the
College, in the following types of securities, provided that such securities shall achieve the
objectives described in the Objectives of the Policy section of this policy and that such securities
shall mature or be redeemable on the date or dates prior to the time when in the judgment of the
Treasurer, the funds so invested will be required for expenditures by the Board. Securities shall
generally be purchased with the intention that they will be held to maturity so as to minimize interest
rate risk.
Funds shall be invested in such securities as authorized by the Acts, as amended from time to time.
The following investments will be permitted under this Policy, but may be further restricted at the
discretion of the Treasurer for portfolio management purposes. The Maximum Aggregate Limits
calculation will be defined as the maximum percentage of all cash equivalents and investments
allowed for the category. Further, certain categories have limits for individual funds. It is also
recognized that due to change in market condition, change in policy or change in liquidity position, a
portfolio which could temporarily be out of limits. In those situations, the Treasurer will act to bring
back into compliance as soon as possible, in no later than 30 days after situation is recognized
(unless extension is approved by the Board of Trustees). The variance to the limits below will be
brought to the Board of Trustees attention as soon as possible along with the cause and remedy.
1. Funds may be deposited in Certificates of Deposit, Money Market Accounts, Time Deposits,
or Savings Accounts, only with banks, savings banks, credit unions and savings and loan
associations which are insured by the FDIC (Bank Insurance Fund or Savings Association
Insurance Fund) or NCUSIF. The deposits must be collateralized or insured at levels
acceptable to the College in excess of the current maximum limit provided by the FDIC or
NCUSIF (See Section 9 - Collateralization). Maximum Aggregate Limit: No limit.
2. Investments may be made in bonds, notes, certificates of indebtedness, treasury bills or
other securities which are guaranteed by the full faith and credit of the United States of
America as to principal and interest. Investments may be made in short term discount
obligations such as the Federal National Mortgage Association, and other US Agency
obligations as described in paragraph 2(b) and 2(c) of the Act with a maturity date not to
exceed 5 years. All investment transactions by the College will be conducted on a deliveryversus-payment (DVP) basis. Maximum Aggregate Limit: No limit on non-callable securities
Page 5 of 11
of this type, however no more than 25% of the College’s total portfolio may be invested in
callable securities of this type.
3. The College may invest in Illinois Funds or Illinois School District Liquid Asset Fund provided
that they are rated AAAm or equivalent by Standard & Poor’s or Moody’s and are investing a
manner consistent with the Acts. Maximum Aggregate Limit for this Category is 15% of
holdings, with no more than 7.5% of holdings in each fund.
4. Collateralized repurchase agreements which conform to the requirements stated in
paragraph 2(g) or 2(h) of the Acts.
5. Commercial paper meeting the following requirements:
a. The corporation must be organized in the United States.
b. The investment must be rated at the time of purchase in the three highest
classifications established by at least two nationally recognized rating services.
c. The obligations cannot have a maturity longer than 270 days.
d. The total investment in any one corporation cannot exceed 5% of the corporation’s total
liabilities. Maximum Aggregate Limit is 30% of total portfolio with no more than 5% of
portfolio in a single issue.
6. Mutual funds which invest primarily in investment grade, short-term corporate bonds in a
manner consistent with paragraph 2.4 j of the Public Funds Investment Act. These are funds
which invest in investment grade, short-term bonds. These funds will be approved by the
board or listed separately in the policy. Maximum Aggregate Limit is 15% of total portfolio,
with no more than 5% in a single fund
7. The College may invest in money market mutual funds registered under the Investment Act
of 1940, from time to time amended, that invest obligations including bonds, notes,
certificates of indebtedness, treasury bills or other securities which are guaranteed by the
full faith and credit of the United States or in bonds, notes, debentures, or other obligations
the United States, its agencies and its instrumentalities. Funds must have the highest
possible rating from S&P or Moody’s. Maximum Aggregate Position: Unlimited for this
category, although no more than 20% of the total investment portfolio in any one fund.
8. The College may invest in tax-exempt and taxable municipal securities, including any issued
by the College. The bonds shall be rated within the four highest rating classifications
established by a nationally recognized rating service. Maximum Aggregate position is
30% of total portfolio with no more than 2.5% in a given issue.
Page 6 of 11
Prohibited Investments
The College strictly prohibits investing directly in the following financial instruments:
 Any derivatives such as forwards, swaps or futures contracts
 Private placements
 Unregistered stock
Collateralization
In recognition of the GFOA recommended practice on Collateralization of Public Deposits, it is the
policy of the College to require that time deposits in excess of FDIC and NCUSIF insurable limits
must be secured by collateral or AAA-rated private insurance at time of purchase to protect public
deposits in a single financial institution if it were to default.
1. Financial institutions must collateralize all deposits in excess of the maximum limit provided
by the FDIC and NCUA limits to 102% of market value. The ratio of market value of
collateral to the amount of funds on deposit shall be reviewed on a monthly basis.
Additional collateral will be required should the ratio fall below the minimum required level.
2. Acceptable collateral includes the following:
a. Bonds, notes, certificates of indebtedness, treasury bills, or other securities now or
hereafter issued which are guaranteed by the full faith and credit of the United States of
America as to principal and interest;
b. Bonds, notes or other securities constituting the direct and general obligations of any
agency or instrumentality of the United States, the interest and principal of which is
guaranteed by the United States;
c. Bonds issued by the College;
d. Obligations of United States Government Agencies; and
e. Certain surety bonds or letters of credit as approved by the Treasurer.
3. Safekeeping of Collateral. An executed collateral agreement must be on file with the
College. Third party safekeeping is required for all collateral. To accomplish this, the
securities must be held at one or more of the following locations:
a. At a Federal Reserve Bank or its branch office;
b. At another custodial facility in a trust or safekeeping department through book-entry
at the Federal Reserve;
c. By a custodial agent of the pledging institution; or
d. By the trust department of the issuing bank.
Page 7 of 11
Diversification
The College’s Treasurer will diversify the investment portfolio to mitigate the risk of loss resulting
in an over concentration in a specific maturity, issuer, financial institution, broker dealer, or class
of securities. Given the composition of investments allowed by the Acts, a number of investments
will be issued by, or guaranteed by the US government. Diversification can be by type of
investment, number of institutions invested in, and maturity. Diversification strategies shall be
periodically reviewed and adjusted by the Treasurer.
Internal Control
The Treasurer is responsible for establishing and maintaining an internal control structure
designed to insure that the assets of the entity are protected from loss, theft or misuse. The
internal control structure will be designed to provide reasonable assurance that these objectives
are met.
Performance Standards
This investment portfolio will be managed in accordance with the parameters specified within this
Policy. Benchmarks will be established at the beginning of the fiscal year (or as soon as possible
following issuance of this policy). Benchmarks should consider the average maturities of the
portfolios and can be weighted with various asset categories to more appropriately measure
impact of asset classes such as commercial paper and municipals in addition to treasuries. For
example, if the portfolio was composed of 10% money markets, and 90% 1-3 year treasury
bonds, a logical benchmark might be a weighting of a 10% short term money market return index
and 90% of a 1-3 year index. Currently the 180 day T-Bill Index is the benchmark standard being
utilized.
Reporting Requirements
The Treasurer will prepare a monthly and quarterly investment report and provide to both the
Board of Trustees and the President. In this report, the Treasurer will provide securities in the
portfolio by account, class and type and include information regarding book value, income
earned, market value, monthly and fiscal year-to-date return for account and in aggregate,
performance vs. benchmarks. The Treasurer will also describe the contents of accounts, and
how they meet compliance of the Investment Policy. On a monthly and quarterly basis, the
Treasurer will affirm compliance with the policy, or note areas where the policy is not in
compliance and plan to remedy.
On a quarterly basis, the Treasurer will provide the President and the Board of Trustees a report
similar to the monthly, and include a listing of all assets including cost basis, market value,
maturity and unrealized gain/loss. At the end of the fiscal year, the final quarterly report will
include an annual review of the portfolio vs. benchmarks.
Investment Policy Adoption
The Policy will be adopted by the Board. This Policy is available for public inspection at the Office
of the Board Secretary, 425 Fawell Blvd., Glen Ellyn, IL. The Policy will be reviewed periodically
by the Treasurer and any modifications made thereto must be approved by the Board.
Page 8 of 11
Glossary of Terms
% Held (MV) = Percent weight of the security in the portfolio based on market value.
Average Life = The weighted average time to receipt of principal payments (including scheduled paydowns and prepayments).
Coupon = The security coupon rate or the weighted average coupon of the bonds in a portfolio.
Eff Duration = Effective Duration - An option-adjusted measure of a bond's (or portfolio's) sensitivity to
changes in interest rates.
Maturity = The security maturity from the date of the report or the market value weighted average
maturity of the bonds in a portfolio.
Mkt Value ($) = Market Value.
Port Mkt Val (000) = Portfolio Market Value.
Quality = The Moody's security rating or the market value weighted average quality of the bonds in a
portfolio.
YTW = The lowest potential yield that can be received on a bond without the issuer actually
defaulting.
Adopted: 3/19/09
Reviewed:: 2/21/13
Amended: 031913:
Page 9 of 11
EXHIBIT A
GOVERNMENT FINANCE OFFICERS ASSOCIATION
Code of Professional Ethics
The Government Finance Officers Association of the United States and Canada is a professional
organization of public officials united to enhance and promote the professional management of
governmental financial resources by identifying, developing and advancing fiscal strategies,
policies, and practices for the public benefit.
To further these objectives, all government finance officers are enjoined to adhere to legal, moral,
and professional standards of conduct in the fulfillment of their professional responsibilities.
Standards of professional conduct as set forth in this code are promulgated in order to enhance the
performance of all persons engaged in public finance.
I. Personal Standards
Government finance officers shall demonstrate and be dedicated to the highest ideals of honor and
integrity in all public and personal relationships to merit the respect, trust, and confidence of
governing officials, other public officials, employees, and of the public.


They shall devote their time, skills, and energies to their office both independently and in
cooperation with other professionals.
They shall abide by approved professional practices and recommended standards.
II. Responsibility as Public Officials
Government finance officers shall recognize and be accountable for their responsibilities as
officials in the public sector.




They shall be sensitive and responsive to the rights of the public and its changing needs.
They shall strive to provide the highest quality of performance and counsel.
They shall exercise prudence and integrity in the management of funds in their custody and
in all financial transactions.
They shall uphold both the letter and the spirit of the constitution, legislation, and
regulations governing their actions and report violations of the law to the appropriate
authorities.
III. Professional Development
Government finance officers shall be responsible for maintaining their own competence, for
enhancing the competence of their colleagues, and for providing encouragement to those seeking
to enter the field of government finance. Finance officers shall promote excellence in the public
service.
Page 10 of 11
IV. Professional Integrity - Information
Government finance officers shall demonstrate professional integrity in the issuance and
management of information.




They shall not knowingly sign, subscribe to, or permit the issuance of any statement or
report which contains any misstatement or which omits any material fact.
They shall prepare and present statements and financial information pursuant to applicable
law and generally accepted practices and guidelines.
They shall respect and protect privileged information to which they have access by virtue of
their office.
They shall be sensitive and responsive to inquiries from the public and the media, within the
framework of state or local government policy.
V. Professional Integrity - Relationships
Government finance officers shall act with honor, integrity, and virtue in all professional
relationships.





They shall exhibit loyalty and trust in the affairs and interests of the government they serve,
within the confines of this Code of Ethics.
They shall not knowingly be a party to or condone any illegal or improper activity.
They shall respect the rights, responsibilities, and integrity of their colleagues and other
public officials with whom they work and associate.
They shall manage all matters of personnel within the scope of their authority so that
fairness and impartiality govern their decisions.
They shall promote equal employment opportunities, and in doing so, oppose any
discrimination, harassment, or other unfair practices.
VI. Conflict of Interest
Government finance officers shall actively avoid the appearance of or the fact of conflicting
interests.



They shall discharge their duties without favor and shall refrain from engaging in any
outside matters of financial or personal interest incompatible with the impartial and objective
performance of their duties.
They shall not, directly or indirectly, seek or accept personal gain which would influence, or
appear to influence, the conduct of their official duties.
They shall not use public property or resources for personal or political gain.
Page 11 of 11