REPORT DIGEST

REPORT DIGEST

ILLINOIS FARM DEVELOPMENT AUTHORITY

(Close-out Audit)

FINANCIAL AND COMPLIANCE AUDIT

For the Six Months Ended:

December 31, 2003

Summary of Findings:

Total this audit 2

Total last audit 2

Repeated from last audit 1

Release Date:

September 23, 2004

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

· The Authority does not have a written conflict of interest policy for Board members and employees.

{Expenditures and Activity Measures are summarized on the next page.}

ILLINOIS FARM DEVELOPMENT AUTHORITY

FINANCIAL AND COMPLIANCE AUDIT

For The Six Months Ended December 31, 2003

ENTERPRISE FUNDS

FINANCIAL INFORMATION

For the Six Months Ended December 31, 2003

For the Year Ended June 30, 2003

! Total Operating Expenses...................................

$486,436

$1,225,578

Personal Services........................................

% of Total Expenses..............................

Average No. of Employees....................

$193,070

39.7%

7

$368,459

30.1%

7

Other Payroll Costs (FICA, Retirement)........

% of Total Expenses..............................

$65,934

13.6%

$113,834

9.3%

Other Professional Fees and Services...........

% of Total Expenses...................................

$175,841

36.2%

$359,009

29.3%

Rental of Office, Utilities and Equipment.......

% of Total Expenses...................................

$19,621

4.0%

$41,181

3.4%

Travel.........................................................

% of Total Expenses...................................

$10,335

2.1%

$22,672

1.8%

Advertising..................................................

% of Total Expenses...................................

$19,184

3.9%

$15,522

1.3%

Bad Debts (Recoveries)...............................

% of Total Expenses...................................

$(10,000)

(2.1)%

$273,216

22.3%

Other Expenses...........................................

% of Total Expenses..........................................

$12,451

2.6%

$31,685

2.5%

! Total Operating Revenues....................................

$190,647

$514,975

! Nonoperating Revenues (Expenses).....................

$138,309

$549,921

! Transfers to the State General Revenue Fund.....

$(4,000,000)

$0

! Cash and Investments...........................................

$20,511,967

$24,637,114

! Guarantee Claims Receivable, Net.......................

$118,495

$267,196

! Cost of Property and Equipment.......................

$73,889

$73,889

SELECTED ACTIVITY MEASURES

For the Six Months Ended December 31, 2003

For the Year Ended June 30, 2003

Revenue Bonds Issued Since Inception

Number................................................................

Amount................................................................

Bond Principal Outstanding.............................................

Bonds Issued During the Period

Number................................................................

Amount................................................................

3,029

$256,671,621

$ 95,514,339

49

$6,565,001

2,980

$250,106,620

$ 90,656,504

83

$12,428,828

AGENCY DIRECTOR

During Audit Period: Mr. David Wirth, Executive Director

Currently: Mr. Ali Ata, Executive Director (Illinois Finance Authority)

Related transactions were noted in the prior audit

The Authority stated they were unable to implement the prior year’s recommendation due to other priorities

INTRODUCTION

The Illinois Farm Development Authority was established on September 16, 1981, by Public Act 82-518. It operated under the provisions of that Act, known as the Illinois Farm Development Act (20 ILCS 3605, et seq.). Public Act 93-0205 created a new agency, the Illinois Finance Authority, effective January 1, 2004. The Illinois Farm Development Authority along with other bonding agencies in the State were consolidated into this new agency. This is the final audit of the Illinois Farm Development Authority.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

CONFLICT OF INTEREST POLICY

The Authority does not have a written conflict of interest policy for Board members or employees.

In the prior audit we noted that the Authority authorized and sold Agricultural Development Bonds to a bank in a related transaction and for the benefit of a relative in a related transaction. In both instances board members recused themselves from the vote on the loan application and the authorization to sell the bonds to avoid the perception or appearance of any impropriety.

Authority personnel stated they were unable to implement the prior year's recommendation because of other priorities. (Finding 1, page 12)

We continued to recommend the Authority establish a documented conflict of interest policy and procedure. The new Illinois Finance Authority agreed with the finding and indicated that they are implementing a conflict of interest policy into their new set of Policies and Procedures.

OTHER FINDING

The remaining finding is less significant and the Authority’s response indicates that it is addressing the conditions noted. We will address the progress toward implementation of the finding in our initial audit of the Illinois Finance Authority.

Mr. Mike Pisarcik, Chief Administrative Officer of the Illinois Finance Authority, provided the Authority’s responses to our findings and recommendations.

AUDITORS’ OPINION

Our auditors state the financial statements of the Illinois Farm Development Authority as of and for the six months ended December 31, 2003 are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

Cameron, Smith & Company were our special assistant auditors for this audit.