For the Two Years Ended:
June 30, 1999

Total this audit 4
Total last audit 6
Repeated from last audit 2

Release Date:
February 24, 2000

State of Illinois
Office of the Auditor General

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

• The Council did not perform any compliance audits of grantees during Fiscal Years 1998 or 1999.
• The Council did not file its Fiscal Year 1998 Federal Financial Status Report in a timely manner, and its Fiscal Year 1997 report was inaccurate.
• The Council did not reconcile its accounting records to Comptroller records.

FY 1999

FY 1998

FY 1997

$17,370,950

$14,096,637

$7,995,329

$1,461,522
8.4%
$933,940
63.9%
21
$44,473

$1,426,372
10.1%
$983,955
68.9%
21
$46,855

$1,403,319
17.5%
$969,181
69.0%
22
$44,054

$193,891
13.3%

$171,524
12.0%

$176,926
12.6%

$116,777
8.0%

$116,772
8.3%

$104,693
7.5%

$216,914
14.8%

$154,121
10.8%

$152,519
10.9%

$15,909,428
91.6%

$12,670,265
89.9%

$6,592,010
82.5%

• Cost of Property and Equipment

$251,891

$249,262

$232,381

FY 1999

FY 1998

FY 1997

$650,357

$584,143

$474,200

$27,945

$115,080

$55,259

2,723

1,795

1,861

The Council overstated administrative expenses and understated program expenses in its 1997 federal financial report

The Council did not reconcile accounting records to State Comptroller records to ensure its records were accurate

The Council did not perform grant compliance audits during the audit period. Total grants awarded to art organizations were $15.9 million in Fiscal Year 1999 and $12.6 million in Fiscal Year 1998. The Council's internal policy requires that each month the fiscal and grant departments audit a sample of final grant reports. The agency had selected certain grants for review but had not performed the actual reviews as of the end of our audit fieldwork. Agency management cited a lack of adequate procedures as the primary reason for not performing grant compliance audits. (Finding 3, page 23)

Management for the Illinois Arts Council agreed with our recommendation to complete audits of grants on a timely basis and change its policy to ensure adequate audit procedures.

The Council did not file the Fiscal Year 1998 Federal Financial Status Report (Status Report) to the National Endowment for the Arts (NEA) on a timely basis. In addition the Fiscal Year 1997 Federal Financial Status Report, filed on December 30, 1997 had inaccurate amounts for expenses.

The 1998 Status Report was not submitted to the NEA until February 2, 1999. However, the Council was required to submit the Status Report by the extended due date of December 29, 1998. Council management stated that the Status Report was filed late due to the time constraints on Council staff.

The Fiscal Year 1997 Status Report included incorrect amounts for program and administrative expenses. Specifically, the Council reported program expenses of $273,609 for the period of July 1, 1996 through September 30, 1997 although actual program expenses were $296,330; the Council reported $194,091 while actual administrative expenses were $171,370 for administrative expenses. Council management agreed with our recommendation to improve the timeliness and accuracy of the Federal Financial Status Reports. (Finding 1, pages 18-19)

The Council did not reconcile federal cash balances and monthly expenditures to State Comptroller records. In addition the Council did not reconcile its general ledger cash balance to its bank statement. Failure to reconcile and correct possible errors increases the risk that management would be making decisions based on inaccurate accounting information.

Federal advances are received directly from the National Endowment for the Arts and are deposited into the Federal Grant Fund. The Council did not perform monthly reconciliations of its accounting records to State Comptroller records after November 1997. The Statewide Accounting Management System (SAMS) Procedure 25.40.20 requires, on a monthly basis, timely reconciliations between agency cash receipt records and Comptroller records.

Similarly, the Council did not perform monthly reconciliations of appropriations, expenditures and unexpended balances with State Comptroller records after November 1997. The Council also did not reconcile its year end balances for Fiscal Year 1998 and 1999. SAMS procedure 11.40.20 requires agencies to reconcile its monthly appropriation balances on a timely basis.

Further, the Council did not reconcile its general ledger cash to its bank statement for the Illinois Arts Council Foundation. The auditors found the general ledger cash had been overstated by $500 since December 1998. Council management stated that lack of attention to fiscal and accounting duties caused these conditions. (Finding 2, pages 20-22)

Council management agreed with our recommendation to perform the necessary reconciliations and noted that corrective action was implemented in November 1999.

The remaining finding is of lesser significance and the Council indicated it had already implemented our recommendation.

Responses to the recommendations were provided by Mr. Richard Carlson, Deputy Director of the Illinois Arts Council.

Our auditors stated the Council’s financial statements as of and for the years ended June 30, 1999 and June 30, 1998 were fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

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Our special assistant audits were McGreal, Johnson & McGrane.