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REPORT DIGEST GENERAL ASSEMBLY RETIREMENT SYSTEM, STATE OF FINANCIAL AUDIT For the Year Ended: Release Date: January 15, 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 http://www.auditor.illinois.gov
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SYNOPSIS¨
The unfunded liability of
the General Assembly Retirement System, State of ¨
The System did not have a
process to review financial journal entries independent of the person who
initiates and posts them to the financial records. ¨
Subsequent to the System’s
June 30, 2008 fiscal year end the overall investment portfolio managed by the
Illinois State Board of Investment, which includes the System’s investments,
experienced a significant decline due to unprecedented unfavorable market
conditions.
{Financial data is summarized on the reverse page} |
GENERAL ASSEMBLY RETIREMENT
SYSTEM, STATE OF
FINANCIAL
AUDIT
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OPERATING STATEMENT
ANALYSIS |
FY 2008 |
FY 2007 |
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REVENUES: Contributions - Participants....................................... Contributions
– Employer / Appropriations................... Total Contributions............................................... Increase
/ (Decrease) in Fair Value of Investments......
Investment Income – Net of Management Expenses...... Interest Earned on Cash
Balances............................... Total Revenues.................................................... EXPENSES: Benefits................................................................... Refunds....................................................................
Administrative Expenses............................................. Total Expenses.................................................... Revenue Over / (Under) Expenses............................. |
$ 1,772,860 6,809,800 $ 8,582,660 (6,734,639) 1,893,640 132,702 $ 3,874,363 $ 15,258,621 147,804 244,170 $ 15,650,595 $(11,776,232) |
$ 1,703,344 5,470,429 $ 7,173,773 10,914,976 1,933,225 142,784 $20,164,758 $14,719,292 297,790 220,333 $15,237,415 $ 4,927,343 |
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INVESTMENT SUMMARY – (All investments held in the |
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Foreign Obligations........................................................................... Corporate Obligations....................................................................... Common Stock & Equity Funds........................................................ Preferred Stock............................................................................... Foreign Equity Securities.................................................................. Hedge Funds................................................................................... Real Estate Investments................................................................... Private Equity.................................................................................. Money Market Instruments.............................................................. Infrastructure Funds......................................................................... Bank Loans..................................................................................... Forward Foreign Currency Contracts................................................ Total Investment Portfolio........................................................... Other ISBI Assets Less Liabilities.................................................... ISBI Net Assets........................................................................ Investments owned by other retirement systems, SERS & JRS........... General Assembly Retirement System Investments....................... |
$ 852,045,701 113,005,430 1,058,164,332 4,241,685,933 5,094,532 1,984,314,463 598,985,402 1,332,081,349 524,628,589 307,481,504 209,975,518 202,137,983 (72,622) $11,429,528,114 (114,474,953) $11,315,053,161 (11,243,129,218) $ 71,923,943 |
$ 1,184,275,884 72,189,687 1,228,970,012 6,059,409,027 1,865,020 1,365,647,941 496,404,578 1,189,614,911 563,366,021 535,699,912 108,436,449 0 (108,696) $12,805,770,746 (253,574,585) $12,552,196,161 (12,468,331,219) $ 83,864,942 |
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ADMINISTRATIVE
EXPENSES |
FY 2008 |
FY 2007 |
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Retirement, Insurance & Social Security............................................ Contractual Services........................................................................ Electronic Data Processing............................................................... Printing............................................................................................ Telecommunication.......................................................................... Travel............................................................................................. Commodities.................................................................................... Operation of Automotive Equipment..................................................
Provision for Depreciation................................................................ Total
Administrative Expenses................................................... |
$107,733 52,785 71,960 4,313 2,097 982 830 218 450 880 1,922 $244,170 |
$ 96,923 41,553 76,276 4,663 1,408 993 886 273 314 1,106
(4,062)
$220,333 |
FUNDING PROGRESS
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Actuarial Accrued Liability............................................ Actuarial Value of Assets............................................. Unfunded Actuarial Accrued Liability............................... Funded Ratio................................................................... |
$235,780,071 75,405,943 $160,374,128 32.0% |
$231,913,988 87,182,175
$144,731,813 37.6% |
EXECUTIVE
SECRETARY
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During Engagement Period: Tim Blair, Acting Currently:
Tim Blair, Acting |
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Unfunded liability at June 30, 2008 totals $160.4 million
Same individual prepares and posts the financial
journal entries
ISBI investment portfolio decreased approximately $2.1 billion subsequent to June 30, 2008 |
INTRODUCTION This digest covers our
financial audit of the General Assembly Retirement System, State of
UNDERFUNDING OF THE SYSTEM
The actuarial accrued
liability was valued at $235.8 million at June 30, 2008. The actuarial value of assets (at fair
value) totaled approximately $75.4 million at June 30, 2008. The difference between the liability and
the assets of $160.4 million reflects the unfunded liability of the System at
June 30, 2008. The System had a funded
ratio of 32.0% at June 30, 2008. FINDING,
RECOMMENDATION AND SYSTEM RESPONSE
During our testing, we noted the same individual
prepares and posts the financial journal entries. System personnel indicated the lack of appropriate personnel to perform a meaningful review contribute to the current procedures. A lack of an independent review of journal entries leaves the System open to risks of error and material misstatement of financial information. Because of the lack of an independent review of journal entries, we are considering this to be a significant deficiency in the System’s internal control.
We recommended someone other than the person
preparing and posting the journal entries review the journal entries and the
related supporting documentation for accuracy and that the review be
documented. (Finding 08-1, page 24)
System management concurred
with the recommendation and indicated they will institute a system to have
all financial journal entries and supporting documentation reviewed by a
person independent of the person that initiates them.
SUBSEQUENT
EVENT Subsequent to the System’s June 30, 2008
fiscal year end the overall investment portfolio managed by the Illinois
State Board of Investment (Board), which includes the System’s investments,
experienced a significant decline due to unprecedented unfavorable market
conditions. Based on unaudited
information the Board’s investment portfolio declined approximately $2.1
billion from the June 30, 2008 balances based on the readily determinable
market values provided by the Board. AUDITORS'
OPINION Our auditors state the June 30, 2008
financial statements of the System are fairly presented. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:RPU:pp SPECIAL
ASSISTANT AUDITORS BKD LLP
were our special assistant auditors for this audit. |