REPORT DIGEST

 

ILLINOIS FINANCE AUTHORITY

 

FINANCIAL AUDIT

AND

COMPLIANCE EXAMINATION

(In Accordance with the

Single Audit Act and

OMB Circular A-133)

 

For the Year Ended:

June 30, 2008

 

Summary of Findings:

Total this year                           7

Total last year                           8

Repeated from last year            4

 

Release Date:

June 11, 2009

 

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 and the Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

¨      The Authority did not have a complete listing of statutory mandates that are applicable to the Authority. 

¨      The Authority did not have a policy to comply with the Farmers Home Administration program requirements for nondiscrimination. 

¨      The Authority did not report required revenue bond information to the Illinois Office of the Comptroller.

¨      The Authority has not adopted rules for the fire sprinkler dormitory revolving loan program. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


ILLINOIS FINANCE AUTHORITY

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

(In Accordance with the Single Audit Act and OMB Circular A-133)

YEAR ENDED JUNE 30, 2008

FINANCIAL INFORMATION

FY2008

FY2007

·        Total Revenues.........................................

$42,638,022

$14,739,091

      Transfers from other state funds...................

        % of Revenues..........................................

$13,000,000

30.5%

-

0.0%

      Interest on Loans.........................................

        % of Revenues..........................................  

$10,121,129

23.7%

$3,666,594

24.9%

      Interest and investment income.....................

        % of Revenues..........................................

$8,942,648

21.0%

$2,793,615

19.0%

      Administrative Service Fees..........................

        % of Revenues..........................................

$7,140,725

16.7%

$6,632,365

45.0%

      Grants.........................................................

        % of Revenues..........................................

$2,000,000

4.7%

-

0.0%

      Other Revenues...........................................

        % of Revenues..........................................

$1,433,520

3.4%

$1,646,517

11.1%

·        Total Expenses..........................................

$21,859,760

$10,749,742

      Interest Expense..........................................

      % of Expense..............................................

$15,401,759

    70.5%

$2,767,195

    25.7%

      Employee Related Expenses.........................

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

$3,444,591

15.7%

$3,638,102

33.9%

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

      Average Cost per Employee.........................

        31

$111,116

        28

$129,932

      Professional Services...................................

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

$1,837,280

 8.4%

$2,642,074

24.6%

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

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

$1,176,130

5.4%

$1,702,371

15.8%

·        Excess of Revenues over Expenses.........

$20,778,262

$3,989,349

·        Cash...........................................................

·        Investments...............................................

·        Conduit debt outstanding..........................

$75,675,753

$136,170,456

$22,613,213,811

$41,125,776

$18,997,064

$21,638,350,000

SELECTED ACTIVITY MEASURES

FY2008

FY2007

·        Federal Program Loans Outstanding..............

$820,816

$546,455

·        Total Number of Bond Issues and Loans Outstanding at June 30, (Unaudited)..............

 

1,023

 

1,058

·        Total Number of New Bond Issues and Loans (Unaudited).................................................

 

 88

 

120

·        Total Jobs Created or Retained (Unaudited)...

16,389

9,232

AGENCY EXECUTIVE DIRECTOR

During Audit Period: Ms. Kym Hubbard

Currently: Mr. John Filan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Authority did not maintain list of mandates

 

 

 

 

 


Authority should develop a process to identify and monitor laws

 

 

 

 

 

 

 

 

 


Authority agrees with auditors

 

 

 

 

 

 

 


Loans totaled $516,250 for this program

 

 

 

 

 

 

 

 

 


Authority agrees with auditors

 

 

 


Outstanding conduit debt was $22 billion

 

 

 

 


Notices not filed timely

 

 

 

 

 

 

 

 


Dates did not match

 

 

 


Forms were missing

 

 

 


The Authority cited a discrepancy in records

 

 

 

 

 

 

 

 


Authority agrees with auditors

 

 

 

 

 

 

 

 

 

 

 


The Fire Sprinkler Dormitory Act was effective January 1, 2005

 

 

 

 


Rules have not been adopted

 

 

 

 

 

 

 

 

 

 


Authority agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

      The mission of the Authority is to foster economic development to the public and private institutions that create and retain jobs, and improve the quality of life in Illinois by providing access to capital. 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

FAILURE TO PROVIDE A LISTING OF LAWS AND REGULATIONS APPLICABLE TO THE AUTHORITY

 

      The Authority did not have a complete listing of statutory mandates that are applicable to the Authority.

 

      During our audit, we requested the Authority to provide us with a list of laws and regulations applicable to the Authority.  The Authority was unable to provide us with the requested list.   

 

      Adequate controls over compliance with laws and regulations would require the Authority to develop a process identify and monitor federal, state and local laws and regulations that apply to the Authority in order to ensure that the Authority is complying with those laws and regulations.

 

      Authority management stated it only maintains a comprehensive list of substantive statutes most directly applicable to its regular operations.  (Finding 2, page 14)

 

      We recommended that the Authority establish procedures to monitor laws and regulations applicable to the Authority.

 

      Authority officials accepted our recommendation and indicated that they are working to create a more complete system to track and monitor the applicable statutory mandates. 

 

 

NEED TO DEVELOP POLICY ON NONDISCRIMINATION

 

      The Authority did not have a policy to comply with the Farmers Home Administration program requirements for nondiscrimination. 

 

      During our testing of compliance with the Farmers Home Administration program, we noted the Authority did not have a formal policy to notify applicants of the requirements for nondiscrimination.  During fiscal year 2008 the Authority made three loans totaling $516,250 under this program.  (Finding 3, page 15)

 

      We recommended that the Authority implement a formal policy against discrimination that will inform applicants that the Authority does not discriminate based on the requirements of the program.

 

      Authority officials accepted the recommendation and stated that posting of the policy was implemented after the audit period. 

 

 

BOND INFORMATION NOT REPORTED TO THE ILLINOIS OFFICE OF THE STATE COMPTROLLER

 

      The Authority did not report required revenue bond information to the Illinois Office of the Comptroller.

 

      During the fiscal year ended June 30, 2008 the total outstanding balance of conduit debt that was in the care of the Authority was $22 billion.

 

      During our detailed testing, we selected a sample of 23 delinquent records from the Comptroller’s listing.  We noted that according to the Authority’s records 8 (35%) of the “Notice of Payment of Bond Interest and/or Principal” C-08 notice forms were not submitted to the Comptroller timely. 

 

      We also selected 30 newly issued bonds for detailed testing.  We noted the following:

 

·        For 2 of the 30 (7%) bonds tested the bond issue dates did not match the “Bond Interest and Redemption Schedule” C-05 form.

·        For 2 of the 30 (7%) bonds tested 2 of 11 required C-08’s forms were missing.

·        2 of the 30 (7%) bonds tested were missing the bond interest and redemption schedule required to be filed with the Comptroller on form C-05.

 

      Authority management stated that this repeat finding is due to discrepancies among records and receipt dates maintained by the Illinois Office of the Comptroller, the individual bond trustees and the Authority.  (Finding 4, pages 16-17)  This finding was first reported in 2005. 

      We recommended the Authority review its procedures to ensure that the C-05 and C-08 forms are submitted timely to the Comptroller’s Office and that the information is complete and accurate.

 

      Authority officials stated that they continue to work with the Illinois Office of the Comptroller on at least a monthly basis to provide the timely, accurate and complete information required under Statewide Accounting Management Systems procedures.  (For the previous Authority response, see Digest footnote #1.) 

  

    

NEED TO ESTABLISH RULES TO ADMINISTER LOAN PROGRAM

 

      The Authority has not adopted rules for the fire sprinkler dormitory revolving loan program.

 

      The Fire Sprinkler Dormitory Act (110 ILCS 47/15) effective January 1, 2005 states that the Authority and the State Fire Marshal shall jointly administer a fire sprinkler dormitory revolving loan program to provide low-interest loans for the installation of fire sprinkler systems in college dormitories to post-secondary educational institutions.  The Fire Sprinkler Dormitory Act (110 ILCS 47/25) further states that the Authority and the State Fire Marshal shall adopt rules to administer the revolving loan program. 

 

      As of June 30, 2008, the Authority had not adopted rules to administer the fire sprinkler dormitory loan program.  No appropriation was requested by the Authority for the program in fiscal year 2008 and the program was not appropriated funds in fiscal year 2008.  During fiscal year 2008 the Authority adopted rules for the ambulance revolving loan program that was part of the prior year’s finding.   

 

      Authority management stated that no rules have been adopted because the program has never received any state appropriation.  (Finding 5, page 18)

 

      Authority official’s accepted our recommendation to prepare rules to administer the fire sprinkler dormitory revolving loan program.

 

 

OTHER FINDINGS

 

      The remaining findings are reportedly being giving attention by the Authority.  We will review progress toward implementing our recommendations in our next audit and examination.

 

AUDITORS’ OPINION

 

      The auditors stated the financial statements for the Illinois Finance Authority for the year ended June 30, 2008 were fairly stated in all material respects.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

 

 

 

SPECIAL ASSISTANT AUDITORS

 

      McGladrey & Pullen, LLP were our special assistant auditors for this engagement.

 

 

 

 

DIGEST FOOTNOTE

 

#1– BOND INFORMATION NOT REPORTED TO THE ILLINOIS OFFICE OF THE COMPTROLLER – Previous Commission Response

 

2007:  The Authority accepts the recommendation.  In order to file the maturity schedule with the Office of the Comptroller within the 30 days subsequent to the closing date, which is required, the Authority has to rely on the bond information provided by outside parties.  The bond transcript is usually not available to the Authority until 60 to 90 days after a bond closing.  The Authority is currently reviewing ways to strengthen its policies to ensure that repayment schedules reported to the Comptroller match the bond transcripts.  In addition the Authority will increase the frequency of correspondence with the Comptroller’s Office and its bond trustees from annually to quarterly to improve the accuracy and timeliness of the required revenue bond reporting.