Department of Financial Institutions 2000 Audit

REPORT DIGEST

DEPARTMENT OF FINANCIAL INSTITUTIONS

FINANCIAL AND COMPLIANCE AUDIT

For the Two Years Ended:
June 30, 2000

Summary of Findings:

Total this audit 2
Total last audit 2
Repeated from last audit 1

Release Date:
March 27, 2001

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
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

Internal audits were not conducted on all the Department’s major systems of accounting and administrative controls during the audit period. Of the eight major systems, the chief internal auditor had reviewed only one.

{Expenditures and Activity Measures are summarized on the next page.}

ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 2000

EXPENDITURE AND CASH RECEIPT STATISTICS	FY 2000		FY 1999		FY 1998
Total Expenditures (All Funds)	$7,252,567		$12,624,039		$12,262,482
OPERATIONS TOTAL % of TOTAL Expenditures	$7,252,567 100%		$12,624,039 100%		$12,262,482 100%
Personal Services % of Total Expenditures Average No. of Employees	$4,323,931 59.6% 95		$6,424,008 50.9% 153		$6,335,053 51.7% 157
Other Payroll Costs (FICA, Retirement) % of Total Expenditures	$1,453,904 20.0%		$2,124,632 16.8%		$1,872,849 15.3%
Contractual Services % of Total Expenditures	$562,176 7.8%		$2,355,893 18.7%		$2,309,768 18.8%
Electronic Data Processing % of Total Expenditures	$325,562 4.5%		$931,999 7.4%		$1,032,257 8.4%
All Other Items % of Total Expenditures	$586,994 8.1%		$787,507 6.2%		$712,555 5.8%
Cost of Property and Equipment (Rounded to nearest thousand)	$799,000		$1,438,000		$1,602,000
Cash Receipts	$6,908,162		$116,688,678		$128,796,772
SELECTED ACTIVITY MEASURES (unaudited)		FY 2000		FY 1999	FY 1998
CONSUMER CREDIT DIVISION Number of licenses Number of exams performed		9,392 1,622		7,206 1,441	5,625 1,112
CURRENCY EXCHANGE DIVISION Number of licenses Number of ambulatory licenses Number of exams performed		674 334 546		679 353 752	692 371 762
CREDIT UNION DIVISION Number of state chartered credit unions Number of exams performed		463 371		468 427	489 415
UNCLAIMED PROPERTY DIVISION* Number of inquiries processed Number of claims paid Number of exams performed * Note: The Unclaimed Property Division was transferred to IL State Treasurer’s Office, effective 7/1/99.		N/A N/A N/A		56,862 20,547 111	55,145 22,882 224
AGENCY DIRECTOR
During Audit Period: Frank C. Casillas (May 1994 to December 1999), Sarah Vega (January 2000 to present) Currently: Sarah Vega

Internal audits were not conducted on all major systems of accounting and administrative controls

INTRODUCTION

The Department of Financial Institutions is authorized by law to investigate, examine, license, and regulate financial institutions in the State of Illinois, including currency exchanges, credit unions, title insurance companies, foreign exchanges, and businesses making loans of $25,000 or less.

During fiscal year 1999, the Department also oversaw unclaimed property submitted by various financial institutions throughout the State. Effective July 1, 1999 the State’s unclaimed property and the related administrative responsibilities were transferred to the State Treasurer by action of the Illinois General Assembly.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INTERNAL AUDITS

Internal audits were not conducted on all major systems of accounting and administrative controls at the Department during the audit period. Of the eight major systems, the chief internal auditor had reviewed only one. The Department was unable to provide a copy of the written audit report, fixed assets, which had been filed with the previous director. In addition, the Department director did not receive and approve a two-year audit plan at the beginning of fiscal year 2000.

The Fiscal Control and Internal Auditing Act requires the Department to have (a) an approved, two-year audit plan; (b) audits of all major systems of internal accounting and administrative controls at least once every two years, and (c) written internal audit reports.

Department personnel attributed the lack of compliance to the lengthy vacancy in the position of chief internal auditor and the transfer of the Unclaimed Property Division to the State Treasurer. (Finding Code 00-1, pages 10 and 11)

Department management accepted our recommendation to comply with the law regarding internal audit planning, performance, and reporting. According to their response, corrective action was taken with the hiring of a new chief auditor in September 2000.

OTHER FINDING

The remaining finding and recommendation was less significant and is being given attention by Department management. We will review progress toward implementation of our recommendations during our next audit.

Mr. Ronald Handlin, chief fiscal officer, provided the Department's responses.

AUDITORS’ OPINION

Our auditors state that the Department’s fiscal year 2000 and 1999 financial statements for its nonshared and locally held funds are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JHL:pp

SPECIAL ASSISTANT AUDITORS

The accounting firm of Olive LLP served as our special assistant auditors for the engagement.