REPORT DIGEST
ILLINOIS STATE BOARD OF INVESTMENT
Compliance Examination
For the Year Ended June 30, 2010
Summary of Findings:
Total this audit: 1
Total last audit: 2
Repeated from last audit: 0
Release Date: March 24, 2011
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 Full Report are also available on the worldwide web at www.auditor.illinois.gov
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SYNOPSIS
• ISBI did not comply with certain statutory mandate
requirements.
INTRODUCTION
This digest covers our compliance attestation examination of
the Illinois State Board of Investment for the year ended June 30, 2010. A financial audit covering the year ended
June 30, 2010 was previously released on January 27, 2011.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
NONCOMPLIANCE WITH STATUTORY MANDATES
The Illinois State Board of Investment (ISBI) did not comply
with mandate requirements related to the management of the Power Agency Trust
Fund, quarterly and annual financial reporting, and publishing information on
their website.
We noted that ISBI was not in compliance with the State
Finance Act that requires ISBI to manage the investments in the Power Agency
Trust Fund once the fund has reached a balance of $25 million. We noted that the Power Agency Trust Fund
amounted to a balance of $25 million in FY08, but ISBI has not been managing
the investments in the Power Agency Trust Fund in the current fiscal year or
any prior years.
We also noted that ISBI was not in compliance with the
Illinois Pension Code that requires a quarterly report to each pension fund
under its jurisdiction and an annual report to each pension fund. The mandate requires that the quarterly
reports include a full description of the investments acquired showing average
costs and a full description of securities sold or exchanged; however, we noted
this information was not provided.
During our testing of revenues and receipts, we noted that
ISBI did not update its monthly financial information to their website by the
15th of the following month as required by the Accountability for the
Investment of Public Funds Act.
Furthermore, ISBI does not have a published list of approved depository
institutions, commercial paper issuers, or broker dealers.
According to ISBI management, ISBI was unaware of the
specific requirements of these mandates.
We recommended ISBI perform a periodic review of general
mandates and those specific to ISBI to ensure compliance with State statutes
and regulations. (Finding 1, pages 7-8)
Management agreed with the recommendation and indicated they
will incorporate the Power Agency Trust Fund and the Accountability of the
Investment of Public Funds Act into its function. The Power Agency Trust Fund is currently
under $25 million but the Board will work with the Illinois State Treasurer so
as to monitor when the fund has a balance of $25 million or more in order to
manage the fund investment. Procedures
are also being implemented to ensure that investment summary information is
updated by the 15th of the month. Also
the Board will incorporate sufficient information concerning the investment of
public funds held by the Board into the Board website to comply with all of the
requirements of the Accountability of the Investment of Public Funds Act.
ACCOUNTANTS’ REPORT
We conducted a compliance attestation examination of the
Board for the year ended June 30, 2010 as required by the Illinois State
Auditing Act. The accountants’ report
does not contain any scope limitations, disclosures or other significant
non-standard language.
WILLIAM G. HOLLAND
Auditor General
WGH:AKS
SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen LLP were our Special Assistant
Auditors for this engagement.