FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE SEGREGATION OF DUTIES
The Authority did not have adequate segregation of duties in the areas of equipment
and cash receipts. One employee was responsible for recording equipment expenditures and
maintaining property records. During seventeen months of the audit period, the employee
was also responsible for recording cash receipts and performing monthly reconciliations.
This increases the risk that errors or irregularities could occur and not be found in the
normal course of operations.
We recommended the Authority properly segregate duties in order to maintain an
effective internal control over the record keeping and accounting duties concerned with
asset custody and physical control over assets. (Finding 1, page 12)
The Authority agreed with our recommendation and states it has implemented procedures
which will segregate responsibilities to enhance internal controls.
NONCOMPLIANCE WITH THE PUBLIC FUNDS INVESTMENT ACT
The Authority did not comply with the Public Funds Investment Act by not investing
excess funds in order to achieve a higher rate of return or by having a written investment
policy. The Authority's Corporate Savings Account at June 30, 2000 had a $1,030,073
balance of which approximately $500,000 could have been invested in acceptable securities
at a higher rate of return during the last three months of FY 00.
We recommended the Authority comply with statute and establish a written investment
policy and ensure excess funds are invested in acceptable securities to achieve the
highest rate of return. (Finding 3, page 14)
The Authority agreed with the recommendation and transferred $700,000 from the Savings
Account to the Investment Account and established a written investment policy effective
August 26, 2000.
OTHER FINDINGS
The other findings noted in our report were less significant and the Authority has
responded that corrective action is in process. We will review the Authority’s
progress towards the implementation of our recommendations in our next audit.
Mr. W. Kenneth Gearhart, Director, provided responses to our findings and
recommendations.
AUDITORS’ OPINION
Our auditors state the financial statements of the East St. Louis Financial
Advisory Authority as of and for the years ended June 30, 2000 and June 30, 1999 are
fairly presented in all material respects.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:GR:pp
AUDITORS ASSIGNED
Martin & Shadid were our special assistant auditors for this audit.
