REPORT DIGEST

CAPITAL DEVELOPMENT BOARD

FINANCIAL AUDIT

For the Year Ended:

June 30, 2005

Summary of Findings-

Government Auditing Standards:

Total this audit                            1

Total last audit                            1

Repeated from last audit           0

Release Date:

February 9, 2006 

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 is also available on

the worldwide web at

http://www.state.il.us/auditor

SYNOPSIS

·        Adequate controls were not maintained over the collateralization and financial reporting of construction retention trust accounts.

{Selected financial information is summarized on the reverse page.}

FINANCIAL INFORMATION – (In thousands)

FY 2005

FY 2004

REVENUES

      Federal capital grants...........................................................

      Licenses and fees.................................................................

      Other charges for services....................................................

      Other...................................................................................

            Total revenues................................................................

EXPENDITURES

      Education.............................................................................

      General government.............................................................

      Debt service - principal........................................................

      Debt service – interest..........................................................

      Capital outlays.....................................................................

            Total expenditures..........................................................

OTHER SOURCES (USES)

      Appropriations from State resources.....................................

      Reappropriations to future year(s).........................................

      Lapsed appropriations..........................................................

      Receipts collected and transmitted to State Treasury.............

      Net change in liabilities for reappropriated accounts..............

      Operating transfers out.........................................................

            Total other sources (uses)...............................................

FUND BALANCE

      Change in fund balance.........................................................

      Fund balance, July 1.............................................................

      Fund balance, June 30.........................................................

$27,177

5,127

23,197

           2

$55,503

$(497,341)

(30,941)

             (94)

(10)

  (113,914)

$(642,300)

$1,999,797

(1,416,368)

(71,236)

(128)

73,369

    (1,277)

$584,157

$(2,640)

  6,018

 $3,378

$18,906

6,859

18,230

         27

$44,022

$(546,365)

(29,247)

(109)

(23)

  (138,573)

$(714,317)

$2,747,930

(1,963,989)

(19,612)

(102)

(91,963)

       (740)

$671,524

$1,229

  4,789

$6,018   

SELECTED ACCOUNT BALANCES – (In thousands)

FY 2005

FY 2004

Cash equity with State Treasurer.................................................

Cash and cash equivalents..........................................................

Intergovernmental receivables.....................................................

Due from other State funds.........................................................

Accounts payable and accrued liabilities......................................

Intergovernmental payables.........................................................

Deferred revenue.......................................................................

$12,979

$9,846

$2,254

$6,396

$68,755

$63,586

$9,835

$17,879

$12,552

$3,714

$1,128

$56,408

$1,148

$12,955

EXECUTIVE DIRECTORS

During Audit Period: Anthony Rossi (through 1-2-05), Janet Grimes (effective 1-3-05)

Currently: Janet Grimes

Local funds of $6.06 million were uninsured and uncollateralized

Deposits of $951,000 were misreported to the Office of the Comptroller as having

no custodial credit risk

INTRODUCTION

The Capital Development Board serves as the non-road, construction management arm of the Illinois government.

FINDING, CONCLUSION AND RECOMMENDATION

INADEQUATE INTERNAL CONTROL AND FINANCIAL REPORTING FOR UNINSURED AND UNCOLLATERALIZED DEPOSITS

      The Board did not maintain adequate controls over the collateralization and financial reporting of locally held construction retention trust accounts.

      At June 30, 2005, the Board had a total bank balance of $9.846 million held in local funds as retainage on open construction projects, including $6.06 million which was uninsured and uncollateralized.  We noted:

·        Uninsured and uncollateralized deposits totaling $951,000 were misreported to the Comptroller’s Office as having no custodial credit risk.

·        Personnel did not adequately monitor, identify, and require collateral for uninsured deposits.

·        The Board did not have a deposit policy for custodial credit risk as required by the Public Funds Investment Act. (Finding 1, pages 7-8)

      We recommended the Board monitor bank balances and obtain appropriate documentation of collateral pledged for uninsured locally held deposits.  We further recommended that the Board require banks to pledge securities for deposits in excess of the $100,000 FDIC limit.  We also recommended that Board adopt a deposit policy.

      The Board responded that information regarding possible collateralization of deposits would be requested and analyzed to determine the actual risk to the State.  The Board further stated that after completing their analyses, the Board would decide on whether to continue using retention trust accounts, modify the wording, or discontinue the process.

      Gevan Behnke, Administrator of the Office of Fiscal Management, provided the response to our recommendation.

AUDITORS’ OPINION

We performed a financial audit of the Capital Development Board for the year ended June 30, 2005.  A two-year compliance examination and a one-year financial audit will be performed for the period ended June 30, 2006.

Our auditors stated the financial statements of the Capital Development Board for the year ended June 30, 2005 are fairly presented in all material respects.

           ____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:LKW:pp

SPECIAL ASSISTANT AUDITORS

Clifton Gunderson LLP were our special assistant auditors for this engagement.