REPORT DIGEST

TEACHERS’ RETIREMENT SYSTEM

COMPLIANCE AUDIT

For the Year Ended:
June 30, 1999

Summary of Findings:

Total this audit 1
Total last audit 5
Repeated from last audit 0

Release Date:

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State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

SYNOPSIS

 

  • The System’s internal audit program did not meet the requirements of the Fiscal Control and Internal Auditing Act. The internal audit function audited twelve of fourteen major systems of internal control identified in the System’s two-year audit plan.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Financial Data and Activity Measures are summarized on the reverse page.}

TEACHERS' RETIREMENT SYSTEM OF ILLINOIS

INFORMATION FROM FINANCIAL AND COMPLIANCE AUDITS

YEAR ENDED JUNE 30, 1999

OPERATING STATEMENT ANALYSIS

FY 1999

FY 1998

Revenues: Contributions - Members

Contributions - State of Illinois

Contributions - School Districts

Total Contributions

Investment Income - Appreciation in Fair Value

Investment Income - Income From Investments

Total Investment Income

Investment Expense

Total Revenues

Expenses: Total Benefits

Other Expenses

Total Expenses

Revenues in Excess of Expenses

$ 866,375,866

572,950,673

63,645,260

$1,502,971,799

1,249,234,042

1,019,382,731

2,268,616,773

178,955,804

$3,592,632,768

$1,284,126,616

36,684,558

$1,320,811,174

$2,271,821,594

$ 441,016,391

466,948,418

35,985,379

$ 943,950,188

2,054,735,011

996,269,001

3,051,004,012

(177,902,545)

$3,817,051,655

$1,209,957,247

34,314,918

$1,244,272,165

$2,572,779,490

INVESTMENT PORTFOLIO ANALYSIS - Fair Value

JUNE 30, 1999

JUNE 30, 1998

Total Government Obligations

Total Corporate Obligations

International Notes

Preferred Stock (U.S. & International Combined)

Common Stock - U.S.

Common Stock - International

Short Term Investments

Real Estate Investments

Alternative Investments

Currency Investment

Total Investment Portfolio

$3,721,789,582

3,811,831,816

1,518,930,968

106,705,409

7,484,313,905

2,664,930,858

831,540,481

2,500,511,322

596,456,656

39,166,266

$23,276,177,263

$3,763,739,965

3,009,332,951

1,412,854,121

106,840,757

6,336,877,264

2,104,340,857

1,315,152,039

2,465,432,457

458,118,826

9,969,850

$20,982,659,087

ADMINISTRATIVE EXPENSES

FY 1999

FY 1998

Personal Services

Professional Services

Postage

Machine Repair and Rental

Other Contractual Services

Commodities

Occupancy Expense

Provision for Depreciation

Gain on Disposal of Equipment

Total Administrative Expenses

$ 7,534,038

849,600

296,888

409,878

673,592

271,846

194,542

448,680

1,030

$10,680,094

$ 6,754,240

807,808

374,988

306,077

569,345

233,925

235,241

481,297

(1,611)

$9,761,310

SELECTED ACCOUNT BALANCES

JUNE 30, 1999

JUNE 30, 1998

Cash

Receivables

Accrued Investment Income Receivable

Investments

Collateral from Securities Lending

Prepaid Expenses

Property and Equipment

Total Assets

Total Liabilities

Net Assets Held in Trust for Pension Benefits

Actuarial Accrued Liability

Unfunded Actuarial Accrued Liability

$ 2,756,183

313,908,201

222,342,888

23,053,834,375

1,418,345,349

449,650

3,339,675

$25,014,976,321

2,777,267,322

$22,237,708,999 33,205,513,000

$(10,967,804,001)

$ 1,129,919

129,755,536

234,214,755

20,748,444,332

1,841,099,038

637,835

3,184,221 $22,958,465,636

2,992,578,231

$19,965,887,405 29,908,241,000

$(9,942,353,595)

SUPPLEMENTARY INFORMATION

FY 1999

FY 1998

Total investment manager fees

Total time weighted return on investments

Average Number of System Employees

Number of Retirement Annuitants

Total Brokerage Commissions Paid

$75,463,334

10.8%

161

52,430

$14,031,243

$70,424,067

16.6%

155

51,472

$14,282,151

EXECUTIVE DIRECTOR
During Audit Period: Mr. Keith Bozarth

Currently: Mr. Keith Bozarth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Two major internal control systems were not tested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

This digest covers our State compliance audit of the System for the year ended June 30, 1999. A financial audit covering the year ended June 30, 1999 is issued under a separate cover.

FINDING, CONCLUSION, AND RECOMMENDATION

INTERNAL AUDIT PROGRAM

The internal audit function audited twelve of fourteen major systems of internal control identified in the System’s two-year audit plan. Major systems of internal control that did not have audits completed included:

  • Budgeting, accounting and reporting
  • Member services

According to the Fiscal Control and Internal Auditing Act, major systems of internal control should be audited on a periodic basis such that all major systems are reviewed at least once every two years.

System management noted the transition from the predecessor Internal Audit Manager to the present manager is the cause for the incomplete schedule. In addition, management indicated adequate time was needed to hire and orient the new manager.

We recommended the internal audit function devote sufficient resources to completing audits of major internal control systems within the two-year period covered by its audit plan.

System management stated a two-year audit plan has been developed and an additional internal auditor has been hired to ensure all required audits will be completed during the next two-year cycle.

 

 

 

Mr. John Bauman, Chief Operating Officer, provided the response to our recommendation on November 30, 1999.

 

 

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

Friedman Eisenstein Raemer and Schwartz, LLP were our special assistant auditors for this audit.