REPORT DIGEST

 

ILLINOIS FARM DEVELOPMENT AUTHORITY

 

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                         2

Total last audit                         0

Repeated from last audit          0

 

Release Date:

March 9, 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 TDD (217) 524-4646

 

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.

 

 

SUBSEQUENT EVENT

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. Effective with its transfer into the new Illinois Finance Authority, the Illinois Farm Development Authority ceased to exist as a separate legal entity.

 

 

 

 

 

 

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

 

                   ILLINOIS FARM DEVELOPMENT AUTHORITY

                         FINANCIAL AND COMPLIANCE AUDIT

                                 For The Year Ended June 30, 2003

 

ENTERPRISE FUNDS

FINANCIAL INFORMATION

FY 2003

FY 2002

! Total Operating Expenses

$1,225,578

$941,209

Personal Services

% of Total Expenses

Average No. of Employees

$368,459

30.1%

7

$353,985

37.6%

7

Other Payroll Costs (FICA, Retirement)

% of Total Expenses

$113,834

9.3%

$102,206

10.9%

Other Professional Fees and Services

% of Total Expenses

$359,009

29.3%

$393,632

41.8%

Rental of Office, Utilities and Equipment

% of Total Expenses

$41,181

3.4%

$41,846

4.5%

Travel

% of Total Expenses

$22,672

1.8%

$22,456

2.4%

Advertising

% of Total Expenses

$15,522

1.3%

$13,222

1.4%

Depreciation

% of Total Expenses

$7,662

0.6%

$11,396

1.2%

Bad Debts (Recoveries)

% of Total Expenses

$273,216

22.3%

$(17,659)

(1.9)%

                   Other Expenses

                   % of Total Expenses

$24,023

1.9%

$20,125

2.1%

! Total Operating Revenues

$514,975

$642,369

! Nonoperating Revenues (Expenses)

$549,921

$793,251

! Capital Contributions to Guarantee Funds

$0

$970,000

! Cash and Investments

$24,637,114

$24,881,972

! Guarantee Claims Receivable, Net

$267,196

$160,411

! Cost of Property and Equipment

$73,889

$84,492

SELECTED ACTIVITY MEASURES

FY 2003

FY 2002

Revenue Bonds Issued Since Inception

Number

Amount

Bond Principal Outstanding at June 30,

Bonds Issued During Year

Number

Amount

2,980

$250,106,620

$ 90,656,504

83

$12,428,828

2,897

$237,677,792

$ 89,473,383

63

$8,639,030

AGENCY DIRECTOR

During Audit Period: Mr. David Wirth, Executive Director

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

 

 

 

 

 

 

Related transactions were noted

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

CONFLICT OF INTEREST POLICY

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

During the course of the audit we noted the Authority’s board of directors approved an application and authorized the sale of a $135,000 Agricultural Development Bond. The loan was a related transaction with the bank that purchased the bond from the Authority and in turn loaned the bond proceeds to a client. The bank services the loan and makes periodic reports to the Authority on repayments made by the borrower. The related transaction arose since an Authority's board member also serves on the bank’s board of directors and is a part owner of the bank making the loan from the proceeds.

In the second instance, the Authority’s board of directors approved an application and authorized the sale of a $158,500 Agricultural Development Bond. The loan was a related transaction because the application and sale of the bond was authorized for the ultimate benefit of a relative of a board member.

In both instances board members recused themselves from the vote on the loan application and the authorization to sell the bonds to avoid a perception or appearance of impropriety.

Authority personnel stated that they believed the Board members recusing themselves from participating in the vote pertaining to the particular bonds was sufficient to ensure independence. (Finding 1, page 12)

We recommended the Authority establish a documented conflict of interest policy and procedure. The Authority responded that they had sought advice from legal counsel before taking the actions cited above, and the Authority defends its actions. However they agreed with the recommendation to establish conflict of interest policies.

 

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. David Wirth, Executive Director, 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 year ended June 30, 2003 are fairly presented in all material respects.

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

 

SPECIAL ASSISTANT AUDITORS

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