The Agency has not fully complied with several of its mandated duties and
Nine instances of non-compliance with State mandated duties and responsibilities were
Late fees assessed but never collected from 2 of 10 mortgage licensees
Past due accounts receivable of $73,357 were on the Agency's books at June 30, 1998
which included $27,696 which was past due at June 30, 1997
$964,447 of real estate licensing fees were not allocated to the appropriate funds
Quarterly supervisory fees were consistently billed from 1 ½ to 4 ½ months late
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
- NONCOMPLIANCE WITH STATE MANDATES
- The Agency did not fully comply with the provisions of certain State mandates. We
selected a sample of the State mandated duties and responsibilities applicable to the
Agency to test for compliance. Deficiencies were noted in the following mandates.
- Illinois Bank Examiners' Education Foundation Act
- 20 ILCS 3210/1-8 requires the Foundation Board of Trustees to hold at least one
meeting each calendar quarter. The Board did not meet during one out of eight quarters
during the audit period.
- - 20 ILCS 3210/1-8 requires the Illinois Bank Examiners' Education Foundation to submit
an annual report to the Governor, the General Assembly, and all State chartered banks. The
reports for years 1996 and 1997 were not submitted until February 1, 1998.
- - 20 ILCS 5/9 requires applications for permits to organize a State bank be acknowledged
before an officer authorized by law to acknowledge deeds. Our testing of five applications
identified four had not been acknoweldged as required.
- Residential Mortgage License Act of 1987
- 205 ILCS 635/1-5 requires Board members to file an annual statement of their business
transactions or affiliations with licensees. Of 10 statements tested, 7 were filed past
the annual deadlines.
- - 205 ILCS 635/3-2(d)-(i) requires each residential mortgage licensee to submit an
annual audit report or acceptable substitute within 90 days of fiscal year end. During
testing of 10 mortgage banking license files, we determined 2 did not submit an annual
audit report or acceptable substitute within the required time frame. Late fees were
assessed in both instances, but never collected.
- Real Estate License Act of 1983
- 225 ILCS 455/17 requires the Agency to employ one real estate auditor and one
investigator for every 15,000 licenses. We noted the Agency employed 7 investigators but
no auditors during the audit period. Based on data received from the Agency, there were
approximately 67,960 brokers and salespersons with active licenses as of June 30, 1997.
This would require 4 investigators and 4 auditors for compliance with the statute. Agency
personnel indicated investigators perform essentially the same job as auditors, and
legislation is pending that would eliminate this requirement.
- - 225 ILCS 455/21 requires a summary report of final disciplinary actions against real
estate licensees to be prepared at least once every other month. According to Agency
personnel, reports are currently prepared quarterly.
- - 225 ILCS 455/13 requires the Agency to mail a listing of all licensees sponsored by
each licensed broker to the broker within 60 days after the renewal period. According to
Agency officials, reports are currently being prepared quarterly.
- - 225 ILCS 455/9 states members of the Real Estate Administration and Disciplinary Board
may not serve more than eight years, must be appointed to four year terms, and no two
members' terms shall expire in the same year. Based on our testing, we noted one member of
nine examined served more than eight years; four members terms expired on October 1, 1997,
and five members' terms are set to expire October 1, 2001.
- We recommended the Agency allocate staff and resources necessary to ensure the Agency is
in compliance with its mandates. (Finding 98-2, pages 12-13, Finding 98-5, pages 17-18,
and Finding 98-7, pages 20-22)
- The Agency concurred with the findings and recommendations
- PAST DUE ACCOUNTS RECEIVABLE
- The Agency did not place past due accounts receivable in the Comptroller's Offset
System. During audit testing, it was noted at June 30, 1997, the Agency had 13 accounts
receivable balances totaling $42,521 which were over one year old and had not been placed
in the Offset System. Among these accounts was a receivable for $6,925 which was over five
years old. At June 30, 1998, the Agency had 23 accounts receivable balances totaling
$73,357 which were over one year old and had not been placed in the Offset System. Among
these accounts were 10 receivables totaling $27,696 which were also over one year old at
June 30, 1997.
- We recommended the Agency routinely review outstanding accounts receivable to determine
that collection attempts have been made and that those receivables over $1,000 and one
year old are promptly placed in the Comptroller's Offset System. (Finding 98-4, page 16)
- Agency officials responded that they anticipated this finding would be corrected by
January 31, 1999.
- IMPROPER ALLOCATION OF REAL ESTATE FEES
- The Agency did not allocate real estate licensing receipts to the appropriate funds.
During audit testing, it was noted that $964,447 of receipts for the Real Estate Division
were not allocated to the appropriate funds and remained in a clearing account at the
Treasurer's Office from July 1997 through November 1997.
- We recommended the Agency allocate real estate licensing fee receipts to the appropriate
funds in a timely manner. (Finding 98-9, page 24)
- Agency officials stated they concurred with the recommendation and that all receipts are
now allocated to their respective funds in a timely manner.
- INADEQUATE CONTROLS OVER RECEIPT PROCESSING
- The Agency did not have adequate controls in place to ensure supervisory fees were
billed timely. Quarterly supervisory fees were consistently billed from six weeks to four
months late. For example, during audit testing of receipts, we noted the following:
¨ Fourth quarter 1996 supervisory fees of $215,480, which should have been billed
December 31, 1996 were not billed until March 28, 1997.
¨ Second and third quarter 1997 supervisory fees totaling $227,200 and $225,765, which
should have been billed June 30, 1997 and September 30, 1997, respectively, were not
billed until November 20, 1997.
¨ First quarter 1998 supervisory fees totaling $250,092 which should have been billed
March 31, 1998, were not billed until July 10, 1998.
- We recommended the Agency establish controls to ensure supervisory fees are billed on
each calendar quarter. (Finding 98-13, page 28) This finding has been repeated since
- Agency officials stated they concur with the finding and that rules regarding
supervisory fees have been changed. This change and a re-allocation of staff resources to
calculate and collect the supervisory fees should bring the Agency into compliance. (For
previous Agency responses, see digest footnote #1.)
- OTHER FINDINGS
- The remaining findings are less significant and are being given appropriate attention by
Agency management. We will review progress toward implementation of our recommendations
during our next audit.
- Ms. Sandra Maxwell, Chief Internal Auditor, provided responses to our recommendations.
- Our auditors state the financial statements as of and for the years ended June 30, 1998
and 1997 are fairly presented except for: 1) the effects of such adjustments, if any, as
might have been determined to be necessary had they been able to examine evidence
regarding Year 2000 disclosures, and 2) the Agency omission of a Budget to Actual
Statement for the Real Estate Recovery Fund.
WILLIAM G. HOLLAND, Auditor General
SPECIAL ASSISTANT AUDITORS
- Clifton Gunderson L.L.C. were our special assistant auditors for this audit.
- #1 INADEQUATE CONTROLS OVER RECEIPT PROCESSING
- 1996: "The Agency concurs with this finding. All funds are now being
billed, collected, and allocated to the appropriate fund in a timely fashion."
- 1994: "This Office concurs with this recommendation. The addition of
an Account Technician I to the fiscal area will allow this Office to re-write our cash
processing procedures. Already we are having all receipts processed in Springfield rather
than in both Springfield and Chicago. This consolidation, together with the additional
staff will permit the full implementation of this recommendation."
- 1992: "This Office concurs with this recommendation. Cash receipts
received in Chicago are now being restrictively endorsed as the checks received in
Springfield have been. Reconciliation procedures are being developed to reconcile receipts
directly to the log book. This should be completed and implemented by October 31, 1993.