REPORT
DIGEST ILLINOIS GRAIN INSURANCE CORPORATION FINANCIAL AND COMPLIANCE AUDIT Summary of Findings:
WILLIAM G. HOLLAND Iles Park Plaza |
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ILLINOIS GRAIN INSURANCE CORPORATION
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 1997
FINANCIAL ACTIVITY | FY 1997 |
FY 1996 |
Total Revenues Assessments Penalties Interest Expenditures, transfers, other (uses) and sources of funds - (net) Fund Balance - June 30
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$1,156,958 |
$277,385 115,789 4,750 156,846 $(1,640,125) $1,817,106 |
SCHEDULE OF GRAIN DEALERS | FY 1997 |
FY 1996 |
Active dealers - beginning
of year Add: New dealers Less: Closed or insolvent dealers Active dealers - end of year
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544 18 (30) 532 |
564 11 (31) 544 |
CORPORATION PRESIDENT | |
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During Fiscal Year 1997, the Corporation lost
approximately $14,675 of investment income The Department incurs significant costs in some grain company failures |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS FUNDS NOT INVESTED IN INTEREST BEARING ACCOUNTS The Illinois Grain Insurance Corporation did not promptly transfer funds between its clearing account (non-interest bearing) and its interest-bearing account in Fiscal Year 1997. This resulted in the loss of approximately $14,675 of investment income during Fiscal Year 1997. During the past three fiscal years, we estimate the Corporation has lost an estimated $33,425 in investment income. In addition, the clearing account balance was in excess of FDIC coverage, in violation of the State Officers and Employees Money Disposition Act. (Finding 1, page 10) We recommended the Corporation's board monitor cash and properly collateralize cash balances. We also recommended the board establish written investment procedures. The Corporation's response states this function is performed by the Illinois State Treasurer's Office and plans have been formulated to have funds placed in an Illinois Public Treasurer's Investment Pool Account which will provide for collateralizing the funds and for interest to be paid on the account. THE CORPORATION DID NOT REIMBURSE THE DEPARTMENT FOR ADMINISTRATIVE COSTS The Grain Insurance Corporation did not reimburse the Department of Agriculture for administrative costs incurred on behalf of the Corporation. During a normal operating year, the Department incurs about $22,000 of direct salary cost on behalf of the Corporation. An analysis of the last three major grain elevator bankruptcies showed the Department incurred direct labor and travel costs of $94,073, $97,762, and $23,044 in connection with these failures. This analysis indicates that the Department incurs significant additional costs in some grain company failures. Officials indicated it has always been their policy to use grain dealer assessments solely to reimburse grain producers and other claimants for losses incurred by the failure of a grain dealer or warehouseman and not for administrative costs. (Finding 2, page 12) We recommended the Department of Agriculture negotiate an agreement with the Corporation for reimbursing , at a minimum, the extraordinary costs incurred as part of major bankruptcies. If the Department believes it lacks statutory authority, it should seek a formal, written opinion from the Attorney General on this matter of statutory interpretation. Department officials stated they were seeking a legal opinion from the Attorney General's Office to resolve this issue. OTHER FINDING The remaining finding was less significant. It dealt with inadequate segregation of duties over receipts and it is being given attention by the Department of Agriculture. We will review progress toward implementing our recommendations in our next audit.
AUDITORS' OPINION Our auditors state that the Illinois Grain Insurance Corporation's financial statements for the year ending June 30, 1997 are fairly presented. ____________________________________ WGH:KMC:pp SPECIAL ASSISTANT AUDITORS Our special assistant auditors for this audit were Sikich Gardner & Co, LLP. |