Weak controls over cemetery funds
- NEED TO STRENGTHEN CONTROLS OVER CEMETERY CARE
AND BURIAL TRUST FUNDS
Prior to 1995,
inadequate controls were in place to monitor the
disposition of Cemetery Care and Burial Trust
Funds. At that time, the Comptroller's Office
Cemetery Care and Burial Trust Department's focus
was to ensure licensees filed reports as required
The Office of the Comptroller's Cemetery Care
and Burial Trust Department is responsible for
administering the Cemetery Care Act. This duty
involves registering and licensing all cemeteries
in Illinois that have care funds and monitoring
their compliance with the Act through submission
of annual financial reports. Care funds are
trusts established pursuant to a contract for the
maintenance of cemetery plots, graves, crypts or
mausoleums belonging to the persons establishing
the trusts. To obtain a license under the Act,
applications must be accompanied by a fidelity
bond equal to 10% of care funds. Details from
annual reports submitted are used to determine
licensees requiring a bond increase. Field
auditors from the Comptroller's Office are
required to notify cemeteries of the bond
increase and audit compliance with the Act.
Audits are performed annually on cemeteries with
care funds greater than $250,000. According to
the Comptroller's office, approximately 630
cemeteries are audited per year.
Prior to 1995, the Office's Cemetery Care and
Burial Trust Department placed little emphasis on
the quality or accuracy of information provided
by licensees. In 1995, the Office developed and
implemented new audit checklists and a notice of
findings for Department employees to utilize in
performing their review and notifying licensees
of deficiencies. In addition, the Office has
developed and received approval for legislation
directly authorizing enforcement actions and
civil recoveries; legislation creating a two tier
audit structure, with the "second tier"
audit to be performed at the licensees' expense
where specified indicators of financial
instability are found; and legislation requiring
that an independent trustee be appointed for
trust funds exceeding $500,000.
The Office states it is also proposing a fee
to generate monies to be used to allow the Office
to maintain cemeteries whose trust funds have
been depleted and to seek recovery of misspent
trust funds; developing a new administration
database to identify risk factors to indicate
potential problems before trusts funds are
dissipated; and, pursuing civil recovery actions
in Circuit Court to recover over $8 million in
misspent trust funds for three cemetery
licensees. (Finding 1, page 8)
We recommended the Office continue efforts to
strengthen controls over the operations of the
Cemetery Care and Burial Trust Department.
Comptroller's officials stated they agree and
that they have taken significant steps to correct
the weakness by:
- creating an enforcement protocol to deal with
past delinquencies in an equitable manner,
- performing a file by file review and update of
all licensees to validate their legal compliance,
- continuing to improve the reliability of stress
indicators used to help determine financial
instability of licensees, and
- increasing discipline in licensee revocation.
- Comptroller officials stated they believe these
measures, along with the steps taken previously,
will help ensure that adequate controls are in
place to monitor the disposition of Cemetery Care
and Burial Trust funds.
The remaining finding was less significant and
has been given appropriate attention by
management. We will review progress toward the
implementation of our recommendation in our next
audit. Office responses were provided by Mr.
Michael Moody, Director of Internal Audits.
- Our auditors stated the Office's financial
statements are fairly presented.
WILLIAM G. HOLLAND, Auditor General
SPECIAL ASSISTANT AUDITORS
- Pandolfi, Topolski, Weiss & Co., Ltd. were
our special assistant auditors.