REPORT DIGEST

 

ILLINOIS DEVELOPMENT FINANCE AUTHORITY

 

FINANCIAL AND COMPLIANCE AUDIT

(In accordance with the Single Audit Act and
OMB Circular A-133)

For the Six Months Ended:

December 31, 2003

Final Audit

 

Summary of Findings:

Total this audit                          3

Total last audit                          0

Repeated from last audit           0

 

Release Date:

August 24, 2004

 

 

 

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 1-888-261-2887

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

·        The Authority had deficiencies in the financial reporting process that resulted in several material audit adjustments to the financial statements.

 

·        The Authority failed to file certain reports with the appropriate State agencies in a timely manner.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

                                  ILLINOIS DEVELOPMENT FINANCE AUTHORITY

                                           FINANCIAL AND COMPLIANCE AUDIT

 

REVENUES AND EXPENSES (ENTERPRISE FUNDS)

For The Six Months Ended December 31, 2003

For The Year Ended June 30, 2003

! Total Revenues.............................................

$2,021,263

$3,034,775

      Administrative Service Fees............................

        % of Revenues.............................................

$1,477,426

73.1%

$1,754,860

57.8%

      Interest Income..............................................

        % of Revenues...........................................  

$223,750

11.1%

$458,352

15.1%

      Interest on Loans............................................

        % of Revenues.............................................

$185,055

9.1%

$413,874

13.6%

      Other Income.................................................

        % of Revenues.............................................

$135,032

6.7%

$407,689

13.4%

! Total Expenses..............................................

$2,120,766

$3,965,424

      Salaries and Benefits.......................................

        % of Expenses.............................................

$1,110,644

52.4%

$1,910,213

48.2%

      Average No. of Employees.............................

24

24

      Contractual Services.......................................

        % of Expenses.............................................

      Net loss on investments...................................

        % of Expenses.............................................

$589,129

27.8%

$337,927

15.9%

$919,748

23.2%

$985,025

24.8%

      Other Items....................................................

        % of Expenses.............................................

$83,066

3.9%

$150,438

3.8%

! Change in Net Assets....................................

($99,503)

($930,649)

! Cost of Property and Equipment...................

$225,466

$225,466

SELECTED ACTIVITY MEASURES

For The Six Months Ended December 31, 2003

For The Year Ended June 30, 2003

! Total Number of Bond Issues and Loans Outstanding at June 30,.....................................

 

597

 

590

! Total Number of New Bond Issues and Loans....

49

50

! Total Bond Value Outstanding (in millions)..........

$7,154

$7,001

! Jobs Created or Retained during Year................

260

245

AGENCY DIRECTOR

   During Audit Period: Patrick E. Rea (through 11/23/03); Sara Siegel (11/24/03 – 12/31/03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Several correcting journal entries were proposed and ultimately posted by management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Reports were filed late or were not filed at all

 

 

INTRODUCTION

 

      On May 31, 2003, the 93rd General Assembly passed Senate Bill 1075 which became Public Act 93-0205 on July 17, 2003.  This act repeals the enabling legislation of the Authority and several other bonding authorities effective January 1, 2004 and creates the Illinois Finance Authority.  The activities of each of the bonding authorities were transferred to the Illinois Finance Authority on January 1, 2004.  This is the final audit of the Illinois Development Finance Authority.

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

INACCURATE FINANCIAL REPORTING

 

      The Illinois Development Finance Authority (Authority) had deficiencies in the financial reporting process that resulted in several material audit adjustments to the financial statements.

 

      During our audit we noted several different types of accounting and reporting errors.  The errors related primarily to accruals that should have been recorded in the books and other adjustments that should have been made to properly record the activity that occurred during the period.  Several correcting journal entries were proposed by the auditors and untimely posted by management. 

 

      Further, we noted that the Authority had inaccurate loan terms in its subsidiary ledger.  During our loan testing we found 13 of 38 (34%) loans had incorrect information regarding the loan date, original loan amount, the due date, and the interest rate.  (Finding 1, pages 12-14)

 

      We recommended the Authority implement procedures to ensure that their basic financial statements are prepared in accordance with generally accepted accounting principles (GAAP). We also recommended the Authority update its loan subsidiary ledger.

 

      Authority officials stated that the financial statements for the consolidated Illinois Finance Authority are now prepared under a centralized general ledger accounting system.  This system will allow the new Authority to manage the general ledger, payables, receivables, loan tables and the preparation of the financial statements in an accurate and timely manner.

 

 

DELINQUENT REPORTING

 

            The Authority failed to file certain reports with the appropriate State agencies in a timely manner.

 

            During our audit we noted accounts receivable reports and the Agency Workforce Report were either filed late or were not filed at all. 

 

            The Statewide Accounting Management System (SAMS) requires State Comptroller reports to be filed no later than the last day of the month following the end of the quarter.  The State Employment Records Act requires State agencies to file an Agency Workforce Report with the Office of the Secretary of State by January 1st of each year.  (Finding 3, pages 17-18)

 

            We recommended the Authority implement procedures to ensure that all required reports are filed with the appropriate State agencies in a timely manner.

 

            Authority officials stated that the new Illinois Finance Authority policies and procedures include a compliance calendar listing the names of the required reports and the deadlines for their submittal.

 

OTHER FINDING

 

      The remaining finding is less significant and is reportedly being giving attention by the Authority.  We will review progress toward implementing our recommendations in our audit of the Illinois Finance Authority.

 

      Mr. Michael Pisarcik, Chief Administrative Officer and Treasurer of the Illinois Finance Authority, provided the Authority’s responses.

 

 

 

 

AUDITORS’ OPINION

 

      Our auditors state the financial statements of the Authority as of and for the six months ended December 31, 2003 are fairly presented in all material respects.

 

 

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:TLK:pp

 

SPECIAL ASSISTANT AUDITORS

 

      KPMG, LLP were our special assistant auditors on this audit.