INTRODUCTION
This digest presents our financial and compliance
audit for the Office of the Treasurer Fiscal Officer Responsibilities for the one-year
ended June 30, 2000.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
MUNICIPAL ECONOMIC DEVELOPMENT FUND
The Treasurer’s Office did not follow up with
facilities when it appeared that monies were not being paid into the Municipal Economic
Development Fund (Fund). As of June 30, 2000, only 13 of 22 active facilities on the
Treasurer’s list made any payment into the Fund during calendar year 2000, and
several facilities had not paid into the Fund to reflect sales made in 1999. Also, as of
June 30, 2000, the Treasurer had not collected any monthly payments from qualified solid
waste energy facilities for the months of April or May of 2000. Some of this money may not
have been collectable by June 30 because qualified facilities must pay into the Fund only
after receiving payment for the electricity sold to utilities; therefore, the receipt of
some revenues could have been delayed if the utilities did not pay the qualified
facilities in a prompt manner.
The Treasurer also did not make a required quarterly
distribution to the Village of Robbins in a timely manner. The Treasurer collected $15,830
in Municipal Economic Development Funds during the first quarter of calendar year 2000,
but did not distribute these funds to the Village of Robbins until 37 days after April 15,
2000.
There were several reasons why the Treasurer did not
collect all the funds due or disburse collected funds to the Village of Robbins in a
timely manner. The staff at the Treasurer’s Office stated they did not have the
information to determine amounts owed, a collection staff, or any enforcement authority.
In addition, the staff at the Treasurer’s Office stated the distribution to the
Village of Robbins for the first quarter of 2000 was delayed because the Treasurer’s
Office did not record receipts into the Fund in a timely manner. The incomplete and
untimely collection of funds by the Treasurer results in funds not being made available to
the Village of Robbins.
Section 40 of Public Act 91-0901, effective January 1,
2001, amended Section 8-403.1 of the Public Utilities Act to give the Department of
Revenue, instead of the Treasurer, the responsibility for collecting Municipal Economic
Development Fund payments from qualified solid waste energy facilities. (Finding 00-2,
pages 14-15)
We recommended the Treasurer work with the Department of
Revenue to ensure all qualified facilities are identified and that sufficient information
be provided to the Department of Revenue to collect overdue payments. Also, we recommended
the Treasurer make distributions to the Village of Robbins immediately after the end of
each quarter as specified in the Public Utilities Act.
The Treasurer's staff accepted our recommendation and
indicated they have worked with the Department of Revenue and have provided all relevant
information, which the Department did not already have. In addition, the Treasurer's staff
indicated they will make timely distributions in accordance with the Public Utilities Act.
OTHER FINDINGS
The remaining finding was less significant and is
being given attention by the Treasurer. We will review the Treasurer’s progress
toward the implementation of our recommendation in our next audit.
Ms. Barbara Ringler, Chief Internal Auditor provided the
Treasurer’s responses.
OTHER DISCLOSURES
ILLINOIS INSURED MORTGAGE PILOT PROGRAM TRUST
As of June 30, 2000 there were two properties in the
Illinois Insured Mortgage Pilot Program Trust (Trust). The Trust held the mortgage loans
on the properties as underlying collateral for the State’s investment in the program.
The two properties are hotels, the Renaissance in Springfield and the Holiday Inn in
Collinsville.
The recorded value on the financial statements for these
investments was $7,581,035 as of June 30, 2000 and the loan balance was $29,440,000. There
were no payments received during fiscal year 2000 from either hotel.
The mortgage loans on the two properties are considered
nonperforming assets. Accrued interest receivable at June 30, 2000 for the nonperforming
assets approximated $18,715,000. Interest on nonperforming assets is recognized when
collected, and therefore has not been recorded on the financial statements.
In 1995 the Treasurer authorized the Trustee to sell the
mortgage notes to the hotel owners for $10 million. The Illinois Attorney General opined
that his consent to the proposed sale in 1995 was required and he refused to give it. As a
consequence, the Treasurer and Trustee did not proceed with the transaction. Affiliates of
the owners of the hotels filed a lawsuit against the Trustee and the Treasurer seeking
specific performance of the buy-sell agreement on the terms agreed to.
On March 13, 2000 the Court in Madison County entered a
judgement order requiring the Trustee and the Treasurer to sell the mortgage loans on the
hotel properties to the plaintiffs. The Court found that the plaintiffs were ready,
willing and able to perform the buy-sell agreements at the time originally set for closing
in 1995. The Trustee and the Treasurer are appealing the order. Briefings on the appeal
were scheduled to be completed in February 2001 with oral arguments to follow.
AUDITORS' OPINION
Our auditors state the June 30, 2000 financial
statements present fairly, in all material respects, the assets, liabilities and
accountabilities and the results of investment activity of the Office of the Treasurer.
The auditors noted the financial statements have been prepared on a comprehensive basis of
accounting other than generally accepted accounting principles.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
The firm of Kerber, Eck & Braeckel LLP were
our special assistant auditors.
