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REPORT DIGEST JUDGES’ RETIREMENT SYSTEM OF ILLINOIS FINANCIAL AUDIT For the Year Ended: June 30, 2007 Release Date: March 4, 2008
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.state.il.us/auditor |
SYNOPSIS
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The unfunded liability of the Judges’ Retirement System of the State
of Illinois (System) was $715.2 million at June 30, 2007. The System’s funded ratio at that date was
48.4%.
¨
The System did not have an adequate segregation of duties for the approval
and payment of contracts. ¨ Public Act 94-0004 (Act) became law on June 1, 2005 and established specific dollar amounts to be contributed to the System by the State for fiscal years 2006 and 2007. {Financial data is summarized on the reverse page} |
JUDGES’ RETIREMENT SYSTEM OF ILLINOIS
FINANCIAL
AUDIT
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OPERATING
STATEMENT ANALYSIS |
FY
2007 |
FY
2006 |
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REVENUES:
Contributions - Participants................................. Contributions – Employer /
Appropriations......... Total Contributions.......................................... Investment Income - Appreciation in Fair
Value.. Investment Income – Net Investments
Income....... Interest Earned on Cash Balances......................... Total Revenues................................................ EXPENSES: Benefits............................................................. Refunds.............................................................
Administrative Expenses....................................... Total Expenses.................................................
Revenue Over Expenses...................................... |
$ 14,152,973 35,236,800 $ 49,389,773 82,846,751 14,742,583 568,347 $147,547,454 $ 75,615,866 620,577 454,210 $
76,690,653 $ 70,856,801 |
$ 13,833,096 29,337,911 $
43,171,007 46,320,241 14,434,078 575,354 $104,500,680 $
68,997,103 821,637 447,238 $ 70,265,978 $ 34,234,702 |
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INVESTMENT
SUMMARY – (All investments held in the
Illinois State Board of Investment commingled fund at fair value) |
JUNE
30, 2007 |
JUNE
30, 2006 |
|
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................................................................... Forward Foreign Currency Contracts.......................................
Total Investment Portfolio..................................................... Other ISBI Assets Less Liabilities..............................................
ISBI Net Assets.................................................................. ISBI assets owned by other retirement systems, SERS & GARS
Judges’ Retirement System Investments................................ |
$ 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 (108,696) $12,805,770,746 (253,574,585) $12,552,196,161 (11,894,002,437) $ 658,193,724 |
$ 1,110,919,988 104,455,671 1,382,574,163 5,369,124,032 1,057,334 1,113,268,102 416,462,183 1,134,025,154 482,264,036 320,641,552 0 26,145 $11,434,818,360 (118,333,506) $11,316,484,854 (10,733,880,464) $ 582,604,390 |
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ADMINISTRATIVE EXPENSES |
FY
2007 |
FY
2006 |
|
Retirement, Insurance & Social Security..................................... Contractual Services.................................................................. Electronic Data Processing........................................................ Printing...................................................................................... Telecommunication.................................................................... Travel....................................................................................... Commodities............................................................................. Operation of Automotive Equipment.......................................... Provision for Depreciation......................................................... Total Administrative Expenses............................................ |
$226,155 96,956 99,158 9,700 3,310 2,317 6,576 624 775 1,700 6,939 $454,210 |
$258,869 91,636 80,852 7,354 3,463 2,165 9,628 606 0 1,292 (8,627) $447,238 |
FUNDING PROGRESS
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JUNE 30, 2007
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JUNE 30, 2006
|
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Actuarial Accrued Liability........................................................... Actuarial Value of Assets............................................................. Unfunded Actuarial Accrued Liability........................................... Funded Ratio.............................................................................. |
$1,385,339,573 670,090,950 $ 715,248,623 48.4% |
$1,291,394,861 599,234,149 $ 692,160,712 46.4% |
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, 2007 totals $ 715.2 million Lack of segregation of duties identified in
approving and paying of contracts State
contributions for fiscal year 2007 were based on a statutorily set amount |
INTRODUCTION
This digest covers our financial audit
of the Judges’ Retirement System of Illinois (System) for the year ended June
30, 2007. A report on the results of
our compliance attestation examination for the year ending June 30, 2007 is
being issued separately. UNDERFUNDING OF THE SYSTEM FINDING,
RECOMMENDATION AND SYSTEM RESPONSE
The System did not have an adequate
segregation of duties for the approval and payment of contracts. During our testing of contractual
expenditures, we identified 2 out of 4 contracts (50%), totaling $23,000,
where the Administrative Services Manager signed off for both his position
and also for the Executive Secretary indicating approval of the
contract. In
addition, we found the Administrative Services Manager approved the invoice
vouchers for payment on both of the contracts noted as exceptions. System management indicated they were not aware of the lack of
segregation of duties when the Administrative Services Manager approves /
signs for himself and the Executive Secretary on contracts and payments. Because
of the significance of the lack of segregation of duties noted, we are
considering this to be a significant deficiency in the design of the System’s
internal control.
We recommended someone
other than the Administrative Services Manager review and sign for the
Executive Secretary in those instances when the Executive Secretary is
unavailable to approve contracts and payments when both the Administrative
Services Manager and Executive Secretary signatures are required. (Finding
07-1, page 22) System management concurred
with the recommendation. LEGISLATION
AFFECTING THE SYSTEM
Public Act 94-0004 (Act)
became law June 1, 2005 and established specific dollar amounts to be
contributed to the System by the State for fiscal years 2006 and 2007 as
opposed to the State contribution being calculated based on the existing
funding formula. The System
calculated that the State contribution was reduced approximately $9.3 million
for fiscal year 2007 as compared to what would have been required under the
funding formula. State required
contributions will be higher in future years to make up for the two-year
funding reduction, as the overall goal of 90% funding in fiscal year 2045 was
unchanged by the Act.
AUDITORS' OPINION Our
auditors state the June 30, 2007 financial statements of the System are
fairly presented. ____________________________________ WILLIAM G.
HOLLAND, Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS McGladrey & Pullen LLP were our
special assistant auditors for this audit. |