REPORT DIGEST

DEPARTMENT OF FINANCIAL INSTITUTIONS

FINANCIAL AND COMPLIANCE AUDIT

For the Two Years Ended:

June 30, 2002

Summary of Findings:

Total this audit 4
Total last audit 2
Repeated from last audit 1

Release Date:
February 25, 2003

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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

 

 

  • The Internal Audit Division did not timely prepare a two-year audit plan and only conducted one internal audit during the audit period.
  • The Department did not examine ambulatory currency exchanges, out-of-state consumer installment loan, and sales finance licensees on an annual basis.

 

 

 

 

 

 

 

 

 

 

{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, 2002

EXPENDITURE AND CASH RECEIPT STATISTICS

FY 2002

FY 2001

FY 2000

  • Total Expenditures (All Funds)

$8,183,068

$8,310,487

$7,252,567

Personal Services
% of Total Expenditures
Average No. of Employees

$4,933,400
60.2%
99

$4,781,910
57.6%
100

$4,323,931
59.6%
95

Other Payroll Costs (FICA, Retirement)
% of Total Expenditures

$1,888,393
23.1%

$1,734,650
20.9%

$1,453,904
20.0%

Contractual Services
% of Total Expenditures

$495,418
6.1%

$601,500
7.2%

$562,176
7.8%

Electronic Data Processing
% of Total Expenditures

$356,751
4.4%

$393,813
4.7%

$325,562
4.5%

All Other Items
% of Total Expenditures

$509,106
6.2%

$798,614
9.6%

$586,994
8.1%

Cost of Property and Equipment

$837,609

$795,648

$799,342

Cash Receipts

$7,748,864

$9,001,084

$6,908,162

SELECTED ACTIVITY MEASURES (unaudited)

FY 2002

FY 2001

FY 2000

CONSUMER CREDIT DIVISION
Number of licensees
Number of exams performed

1,698
1,454

1,768
1,688

1,705
1,622

CURRENCY EXCHANGE DIVISION
Number of licensed exchanges
Number of exams performed

973
815

979
660

1,008
546

CREDIT UNION DIVISION
Number of state chartered credit unions
Number of exams performed

433
355

449
412

458
196

AGENCY DIRECTOR

During Audit Period: Sarah Vega
Currently: Daniel E. Cavanaugh, Acting Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department did not comply with the Fiscal Control and Internal Auditing Act

 

 

 

 

 

 

 

 

Ambulatory currency exchanges and out of state consumer installment loans and sales finance licensees not examined on an annual basis

 

 

 

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.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO PERFORM INTERNAL AUDITS ON MAJOR SYSTEMS

Internal audits were not conducted on any of the major systems of accounting and administrative controls at the Department during the audit period. The annual Internal Audit two-year plan was not prepared timely and only one internal audit was conducted during the audit period. From the one internal audit conducted, the workpapers indicated that there was a lack of documentation of planning, identification of preparer, supervision, and a review or referencing of the workpapers. In addition, the Department did not file the FCIAA Certification with the Auditor General for fiscal year 2001 in a timely manner.

The Fiscal Control and Internal Auditing Act (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. In addition, the Act requires an annual certification on the systems of internal fiscal and administrative control be filed with the Auditor General by May 1 of each year.

Department personnel attributed the lack of compliance to the lengthy vacancy in the position of chief internal auditor. In addition, the new Chief Internal Auditor was not free of operational duties. (Finding 1, pages 12 and 13)

Department management accepted our recommendation to comply with the law regarding internal audit planning, performance, and reporting.

EXAMS NOT PERFORMED ANNUALLY

The Department did not examine any of the 320 fiscal year 2001 or 340 fiscal year 2002 ambulatory currency exchanges that were active during the audit period. Further, the Department did not examine 180 of 189 (95%) consumer installment loan and sales finance licensees located out-of-state that were active during fiscal year 2002.

The Currency Exchange Act requires the Department to investigate the currency exchange business of any licensee at least once in each year. In addition, the Consumer Installment Loan Act and the Sales Finance Agency Act requires the Department to conduct an annual examination of each consumer installment loan and sales finance licensee located out of state.

Department personnel stated that the exams were not performed due to the Department noting few problems with these examinations during the past 10 years. As a result of few problems, the Department chose to utilize examiners on more critical examinations. (Finding 4, pages 17 and 18)

Department management accepted our recommendation to comply with the law regarding annual examinations of all ambulatory currency exchanges, out-of-state consumer installment loan, and sales finance licensees. According to their response, corrective action will be taken by hiring additional personnel.

OTHER FINDINGS

The remaining findings and recommendations were less significant and are reportedly being given attention by Department management. We will review progress toward implementation of our recommendations during our next audit.

Mr. George Preski, Chief Internal Auditor, provided the Department's responses.

AUDITORS’ OPINION

Our auditors state that the Department’s fiscal year 2002 financial statements for its nonshared and locally held funds are fairly presented in all material respects.

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

The accounting firm of Sikich Gardner & Co, LLP served as our special assistant auditors for the engagement.