REPORT DIGEST

REPORT DIGEST

ENVIRONMENTAL PROTECTION AGENCY

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

Release Date:

February 26, 2008

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

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

This Report Digest and the Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

SYNOPSIS

The Agency did not identify errors in the Generally Accepted Accounting Principles (GAAP) Reporting Package or the draft financial statements provided to auditors.

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

ENVIRONMENTAL PROTECTION AGENCY

FINANCIAL AUDIT – WATER REVOLVING FUND

For The Year Ended June 30, 2007

STATEMENT OF NET ASSETS (Amounts in thousands)		FY 2007
Assets Current Assets Cash and Cash Equivalents......................................................................................... Other receivables, net................................................................................................... Loans and notes receivable, net................................................................................. Due from federal government....................................................................................... Restricted assets – cash and cash equivalents........................................................ Restricted assets - investments................................................................................... Restricted assets – accrued interest receivable........................................................ Restricted assets – pledged loans receivables.......................................................... Total current assets Noncurrent Assets Loans and notes receivable, net long-term................................................................ Capital assets being depreciated, net........................................................................... Other noncurrent assets................................................................................................. Restricted assets - investments................................................................................... Restricted assets – pledged loans receivable............................................................ Total noncurrent assets................................................................................... TOTAL ASSETS Liabilities Current liabilities Accounts payable and accrued liabilities.................................................................... Due to other funds......................................................................................................... Due to component units................................................................................................. Current portion of long-term obligations..................................................................... Compensated absences, current.................................................................................. Total current liabilities....................................................................................... Noncurrent liabilities Noncurrent portion of long-term obligations.............................................................. Compensated absences, long-term............................................................................... Total noncurrent liabilities................................................................................ TOTAL LIABILITIES....................................................................................... Net Assets Invested in capital assets................................................................................................. Restricted for Debt Service................................................................................................................... Other purposes.............................................................................................................. Unrestricted........................................................................................................................ TOTAL NET ASSETS...................................................................................... Operating Revenues.......................................................................................................... Operating Expenses........................................................................................................... Operating Income.............................................................................................................. Total Non-operating Revenues (Expenses)................................................................... Income before transfers...................................................................................................... Transfers from other funds.............................................................................................. Changes in net assets....................................................................................................... Total net assets, July 1...................................................................................................... Total net assets, June 30..................................................................................................		$436,217 43,289 95,224 420 12,579 62,968 7,834 32,626 $691,157 $1,080,615 185 922 48,285 370,241 1,500,248 $2,191,405 $4,092 49 1 19,358 497 $23,997 $210,391 727 211,118 $235,115 $185 534,533 1,584,323 (162,751) $1,956,290 $62,818 12,410 $50,408 76,244 $126,652 8,237 134,889 1,821,401 $1,956,290
	AGENCY DIRECTOR
	During Audit Period and Currently: Douglas P. Scott

Errors totaling $1.948 million and $5.580 million were not identified by the Agency

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

OVERSIGHT OF FINANCIAL REPORTING

The Agency did not identify errors in the Generally Accepted Accounting Principles (GAAP) Reporting Package or the draft financial statements provided to the auditor. We noted the following errors in the Water Revolving Fund, Fund 270, GAAP Reporting Package accounting reports submitted to the Office of the State Comptroller and respective financial statements:

· A $1.948 million error in the calculation of Restricted Net Assets for Debt Service, requiring an adjusting entry.

· A $5.580 million error in the calculation of Interest Receivable, Restricted, requiring an adjusting entry.

· Accounts payable related to $148 thousand in equipment purchases were not reported, resulting in the underreporting of expenses when General and Administrative expenses were reduced by the Total GAAP Capital Outlay Expenditures on the Capital Asset Summary (Form SCO-538), which included the $148 thousand in current year payables. No correcting entry was posted.

Failure to maintain adequate controls over the financial reporting process led to a material misstatement in the financial statements. (Finding 1, pages 24-25)

We recommended the Agency establish and maintain effective controls over the financial reporting process to ensure accurate submission of financial data, including a timely and adequate review of the GAAP Reporting Package, the financial statements and notes to the financial statements.

Agency officials accepted our recommendation.

AUDITORS’ OPINION

We conducted a financial audit of the Agency’s Water Revolving Fund for the year ended June 30, 2007. Our special assistant auditors stated that the Agency’s Water Revolving Fund financial statements of the Illinois Environmental Protection Agency as of and for the year ended June 30, 2007 are fairly stated in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JSC:pp

AUDITORS ASSIGNED

Our special assistant auditors for this engagement were Crowe Chizek and Company LLC.

Assets

Liabilities