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REPORT DIGEST FINANCIAL
AUDIT For the Year Ended: June 30, 2008 ANDCOMPLIANCE
EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this audit 7 Total last audit 7 Repeated from last audit 3 Release Date: April 2, 2009
State of
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
To obtain a copy of the
Report contact: Office of the Auditor
General
(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.state.il.us/auditor
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SYNOPSIS ¨ The Authority did not appropriately reconcile its investment statements to the general ledger. ¨
The
Authority lacks adequate segregation of duties in its accounting and
financial procedures. ¨ A locally held fund of the Authority was in excess of the federally insured limit. {Expenditures and Activity Measures are summarized on the reverse page.} |
FINANCIAL
AUDIT AND COMPLIANCE EXAMINATION
For
the Two Years Ended June 30, 2008
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EXPENDITURE
STATISTICS |
FY 2008 |
FY 2007 |
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........... Total
Expenditures........................................... Locally Held Funds Total..................................... %
of Total Expenditures.......................... Appropriated Funds Total.................................... % of Total Expenditures.......................... Expenditures
from the Lump Sum Appropriations: Personal
Services............................................... Contractual
Services........................................... Travel................................................................. Commodities...................................................... Printing............................................................... Equipment.......................................................... Electronic
Data Processing.................................. Telecommunications............................................
Total.............................................................. |
$228,236 $11,878 5% $216,358 95% $158,873 44,510 4,962 5,694 193 0 0 2,126 $216,358 |
$249,865 $12,414 5% $237,451 95% $200,074 27,208 2,628 3,204 90 324 67 3,856 $237,451 |
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SUMMARY
OF SIGNIFICANT ACCOUNTS |
FY 2008 |
FY 2007 |
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Cash and Cash Equivalents.............................................. Investments..................................................................... Property and Equipment.................................................. |
$6,515,886 $0 $59,580 |
$351,073 $5,953,273 $58,027 |
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Ending Balance – Locally Held Fund (Accrual
Basis)........ |
$6,518,305 |
$6,304,346 |
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SUPPLEMENTARY
INFORMATION |
FY 2008 |
FY 2007 |
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Average Number of Authority Employees..................... |
3 |
4 |
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EXECUTIVE
DIRECTOR |
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During Audit Period: Mr. W. Kenneth Gearhart (Retired October
31, 2006) Ms. Melinda Carlton (November 1,
2006 to October 3, 2007) Ms. Patrice R. Rencher, Interim
(October 4, 2007 to March 31, 2008) Currently:
Ms. Patrice R. Rencher (April 1, 2008 through present) |
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Accounting records not updated monthly
Internal control
weakness
$5,984,690 in
excess of the FDIC insured amount |
INTRODUCTION This
report presents our Financial Statement audit for the year ended June 30,
2008 and a State Compliance Examination of the East St. Louis Financial
Advisory Authority’s (Authority) operations for the two years ended June 30,
2008. FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS INADEQUATE RECONCILIATION OF INVESTMENT STATEMENTS TO GENERAL LEDGER The Authority prepares investment
analyses on a quarterly basis for reporting purposes and enters the
investment data into the general ledger.
However, the Authority does not update its accounting records to
reflect the monthly change in fair market value amounts. The investment balance at June 30, 2007 was
$5,890,652. During fiscal year 2008,
the Authority’s Treasury bill investments matured and were not
reinvested. At June 30, 2008 all money
received from the matured U.S. Treasury Bill investments was held in a money
market account. Authority personnel stated that they rely on their trustee to prepare the quarterly reconciliations. The Authority then records increases or decreases in the general ledger. We recommended the investment account be
reviewed and reconciled monthly to the general ledger so that the ending
balance of the investment statement agrees to the ending balance per the
general ledger. In addition, we recommend the Authority review the
reconciliations prepared by their trustee.
(Finding 1, page 10) This
finding was first reported in 2004. The Authority agreed with our recommendation, and stated that they will review and reconcile monthly statements to the general ledger. (For previous Authority responses, see Digest Footnote) INADEQUATE SEGREGATION OF DUTIES The Authority lacks segregation of duties in its accounting and financial procedures. The Authority currently has three employees. In addition, the Authority has had significant turnover in the past two years, occasionally resulting in only one staff member in the office. Because of the limited number of personnel, the Authority’s cash and investment receipts and disbursements procedures often require that one individual be responsible for duties that should be performed by at least two people. Total assets for the Authority were $6,520,800 at June 30, 2008. We recommended that the Authority segregate the duties of receipts and disbursements to enhance internal controls over the process. In addition, as a compensating control the Board of Directors should be involved in reviewing transactions and monthly financial reports. (Finding 2, page 11) Authority officials agreed with our recommendation and stated that when accounting and financial procedures are performed, all three employees are involved with the process. BANK FUNDS IN EXCESS OF FEDERALLY INSURED
LIMIT The Authority had a locally held fund that was in excess of the Federally insured limit during the two years ended June 30, 2008. In September 2007, approximately $3,000,000 of the Authority’s U.S. Treasury Note investments matured, and in March 2008, the remaining balance of U.S. Treasury Notes was redeemed. None of these funds were reinvested into U.S. Treasury Notes. All money received from the U.S. Treasury Notes at redemption was placed into a money market account. At June 30, 2008, the Authority held $6,384,690 in a money market account that was $5,984,690 in excess of the Federally insured limit of $400,000. We recommended the Authority reduce its risk by obtaining collateral for the amounts in excess of the federal insurance or invest in government backed obligations. (Finding 7, page 16) Authority officials agreed with our recommendation and stated that they will obtain collateral for the amounts in excess of federal insurance or invest in government backed obligations. OTHER FINDINGS With regard to the other findings noted in our report, Authority officials responded that corrective action has been or will be taken. We will review the Authority’s progress towards the implementation of all our recommendations in our next audit. AUDITORS’ OPINION
Our auditors state the financial
statements of the East St. Louis Financial Advisory Authority as of and for
the year ended June 30, 2008 are fairly presented in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:HJY:pp AUDITORS ASSIGNED Schorb & Schmersahl, LLC were our special assistant auditors for this audit. DIGEST
FOOTNOTE INFREQUENT PERFORMANCE OF INVESTMENT RECONCILIATIONS – Previous Authority Response 2006:
Authority officials agreed with our recommendation, and stated that monthly
reconciliations of the investment account are now being performed. |
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