REPORT DIGEST DUQUOIN STATE FAIR COMPLIANCE EXAMINATION For the Two Years Ended: September 30, 2011 Release Date: May 17, 2012 Summary of Findings: Total this audit: 5 Total last audit: 2 Repeated from last audit: 0 State of Illinois, Office of the Auditor General WILLIAM G. HOLLAND, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION The DuQuoin State Fair is an operating entity of the Department of Agriculture. The Fair is held to promote agriculture and the agriculture industry, and to provide for exhibits and activities in the fields of industry, education, arts and crafts, labor, entertainment and other areas of interest to the people of Southern Illinois. SYNOPSIS • The DuQuoin State Fair issued grandstand complimentary tickets for the 2011 Fair in excess of the amount allotted by the applicable performer’s contract. • The DuQuoin State Fair does not perform a reconciliation of total grandstand ticket sales reported by Ticketmaster to the Fair ticket office receipts or to the total grandstand deposits recorded by the State Comptroller. • The DuQuoin State Fair did not hold the required number of horse racing events in 2010 and 2011 and collected nominating, sustaining and starting fees in excess of amounts allowed under the Illinois Horse Racing Act of 1975. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS ISSUANCE OF COMPLIMENTARY GRANDSTAND TICKETS IN EXCESS OF CONTRACTS The DuQuoin State Fair (DSF) issued grandstand complimentary tickets for the 2011 Fair in excess of the amount allotted by the applicable performer’s contract. The DSF reserves the right to receive and distribute no more than 250 grandstand complimentary tickets per performance as part of each performer’s contract at no cost to the DSF. The grandstand complimentary tickets are used by the Fair for advertising, barter or exchange, incentives, VIPs and special requests. The DSF distributed 132 additional grandstand complimentary tickets, with an approximate value of $4,520, in excess of the 750 ticket limit allotted for three performances. The DSF also issued 72 complimentary grandstand tickets, with an approximate value of $1,960 to a corporate sponsor in return for promotional activities; however this exchange transaction was not specifically addressed in the corporate sponsor’s contract with the DSF. We also noted the DSF has not developed formalized written policies and procedures regarding the issuance of complimentary tickets. (Finding 1, pages 9-10) We recommended the DSF develop and implement rules for the sale, barter or exchange of grandstand complimentary tickets. Further, the DSF should comply with the terms of the entrainment contracts and modify contract terms to address the exchange of grandstand tickets for promotional activities when necessary. DSF officials agreed with the finding and recommendation. FAILURE TO RECONCILE GRANDSTAND TICKET SALES The DuQuoin State Fair (DSF) does not perform a reconciliation of total grandstand ticket sales reported by Ticketmaster to the DSF ticket office receipts or to the total grandstand deposits recorded by the State Comptroller. The Department of Agriculture contracts with Ticketmaster to provide the ticket selling equipment and the ticket sales reporting system for all grandstand shows. We noted the DSF failed to reconcile total grandstand ticket sales reported by Ticketmaster to the total ticket sales recorded by the DSF ticket office. The unreconciled difference indicated that sales reported by the DSF ticket office exceeded sales reported by Ticketmaster by $2,710. Additionally, we noted the DSF failed to reconcile grandstand ticket sales reported by the DSF ticket office to total grandstand deposits recorded by the State Comptroller. The unreconciled difference indicated that sales reported by the DSF ticket office exceeded receipts deposited by $2,830. (Finding 2, page 11) We recommended the DSF perform a monthly reconciliation of total grandstand ticket sales reported by Ticketmaster to the DSF’s ticket office receipts and to the total grandstand deposits recorded by the State Comptroller. DSF officials agreed with the finding and recommendation. NONCOMPLIANCE WITH THE ILLINOIS HORSE RACING ACT OF 1975 The DuQuoin State Fair (DSF) was not in compliance with the Illinois Horse Racing Act of 1975 concerning the number of days of its racing program and the nominating, sustaining and starting fees exceeding 2% of the purse for certain races. The DSF held only three days of horse racing events in 2010 and 2011. The DSF is required by the Act to provide at least a five day racing program each year. Additionally, the nominating, sustaining, and starting fees of $52,050 paid by the entrants for the DSF’s racing events in 2011 amounted to 15% of the purses and exceeded the 2% limited outlined by the Act by approximately $45,010. (Finding 3, page 12) We recommended the DSF comply with the provisions of the Illinois Horse Racing Act. DSF officials agreed with the finding and stated it will comply with the provisions of the Illinois Horse Racing Act. OTHER FINDINGS The remaining findings are reportedly being given attention by the DuQuoin State Fair. We will follow up on our findings during the next examination of the DSF. AUDITORS’ OPINION We conducted a compliance examination of the DuQuoin State Fair as required by the Illinois State Auditing Act. The DSF has no funds that require an audit leading to an opinion of financial statements. WILLIAM G. HOLLAND Auditor General WGH:EVB:rt SPECIAL ASSISTANT AUDITORS Sikich, LLP were our Special Assistant Auditors for this engagement.