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REPORT DIGEST
ILLINOIS STUDENT ASSISTANCE COMMISSION -
ILLINOIS
PREPAID TUITION PROGRAM
FINANCIAL AUDIT For the Year Ended: June 30, 2008 Release Date: April 14, 2009
State of
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
To obtain a copy of the
Report contact: Office of the Auditor
General
(217) 782-6046 or TTY (888)
261-2887 This Report Digest and the
Full Report are also available on the worldwide web at www.auditor.illinois.gov |
INTRODUCTIONThis report covers our financial audit of the Illinois Student Assistance Commission (Commission) – Illinois Prepaid Tuition Program (Program) as of June 30, 2008 and for the year then ended. SYNOPSIS¨ The Commission did not have adequate internal controls over financial reporting for its securities lending transactions. {Expenditures and Activity Measures are summarized on the reverse page.} |
PREPAID TUITION PROGRAM
FINANCIAL AUDIT
For The Year Ended June 30, 2008 (In Thousands)
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FINANCIAL
OPERATIONS |
2008 |
2007 |
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OPERATING REVENUES Income (loss) from investment securities..................... Application and other fees.......................................... Interest income (other)............................................... Net operating revenue.......................................... OPERATING EXPENSES Accreted tuition expenses.......................................... Management and professional services....................... Investment management fees...................................... Salaries and employee benefits................................... Total operating expenses...................................... Operating Income (Loss).............................................. Transfer out..................................................................... Change in Net Assets................................................... Net Assets (Deficit), July 1.............................................. Net Assets (Deficit), June 30....................................... |
$(78,491) 2,396 355 (75,740) 65,873 3,872 2,972 842 73,559 (149,299) - (149,299) 36,322 $(112,977) |
$124,331 2,259 533 127,123 54,684 3,179 3,042 736 61,641 65,482 (25) 65,457 (29,135) $36,322 |
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SELECTED BALANCE
SHEET ACCOUNTS |
June 30, 2008 |
June 30, 2007 |
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Cash and cash equivalents................................................ Securities lending collateral............................................... Investments and marketable securities.............................. Current Liabilities: Securities
lending collateral obligations........................ Tuition payable.......................................................... Accreted tuition payable............................................ Other current liabilities............................................... Total current liabilities.......................................... Tuition & accretion payable, long-term............................. Net Assets, (deficit)......................................................... |
$ 5,998 167,529 987,590 170,776 45,625 4,375 872 $221,648 $1,052,405 $(112,977) |
$ 7,268 - 986,333 - 28,832 2,170 1,071 $32,073 $925,199 $36,322 |
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ACTUARIAL (DEFICIT) as of June 30 - Per Actuarial Reports |
2008 |
2007 |
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Net assets, before tuition/accretion payable...................... Add - Actuarial present value of future payments expected to be made by contract purchasers... Deduct - Actuarial present value of future payments expected to be paid by the program................. Actuarial (deficit) as of June 30........................................ Contracts purchased and outstanding............................... |
$992,676 193,922 (1,459,764) $(273,166) 53 |
$992,522 187,396 (1,264,132) $(84,214) 50 |
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AGENCY DIRECTOR |
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During Audit Period:
Mr. Andrew Davis Currently:
Mr. Andrew Davis |
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Controls over financial reporting were
not adequate
Collateral investments, obligations, and
losses were not recorded
Disclosures were not made
Management stated that information was
not received timely
Controls over reporting investment
transactions need improvement
The Commission accepted our
recommendation |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONSSECURITIES
LENDING PROGRAM NOT ACCOUNTED FOR PROPERLY The Illinois Prepaid
Tuition Program (Program) of the Illinois Student Assistance Commission
(Commission) did not have adequate internal controls over financial reporting
for its securities lending transactions. The Commission implemented
a securities lending program in fiscal year 2008. The Commission did not record its $168
million in securities lending collateral investments or $171 million in
liabilities related to securities lending as of June 30, 2008, or the
associated $3 million unrealized loss incurred for the fiscal year. In addition, the draft financial statements
provided to the auditors did not have the required securities lending
disclosures. According
to Commission management, the Commission receives information on a monthly
basis from the custodial bank. The final information regarding impairment of
the value of the securities lending collateral was received by the Commission
only after year-end in August 2008. (Finding 1, page 31) We recommended the
Commission improve its controls so that it timely obtains all relevant
investment information necessary to properly record and disclose of all
material investment transactions in the Program’s annual financial
statements. The
Commission accepted our recommendation and indicated it had implemented
additional controls to ensure that all material transactions and disclosures
are properly recorded on the financial statements on a timely basis. AUDITORS’ OPINIONOur auditors stated the financial statements of the Program are fairly presented in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JAF:pp SPECIAL ASSISTANT AUDITORS
Our special assistant auditors for this audit were McGladrey & Pullen, LLP. |