Illinois Rural Bond Bank 2002 Audit

REPORT DIGEST

ILLINOIS RURAL BOND BANK

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 2002

Summary of Findings:

Total this audit: 2
Total last audit: 1
Repeated from last audit: 0

Release Date:
March 20, 2003

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 Illinois Rural Bond Bank entered into certain contractual agreements which did not include all the required elements for State contracts.
The Illinois Rural Bond Bank did not submit certain accounting information to the Illinois Office of the Comptroller in a timely manner.

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

ILLINOIS RURAL BOND BANK
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 2002

REVENUE AND EXPENSE STATISTICS	FY 2002*
Operating Revenues	$4,645,146
Operating Expenses	$6,044,097
Interest expense and amortized issuance cost net of amortized premium % of Operating Expenses	$5,485,783 90.8%
Salary and Benefits % of Operations Expenditures Average No. of Employees	$198,202 3.3% 4.00
Professional Services % of Operations Expenditures	$157,814 2.6%
Financing Costs % of Operations Expenditures	$ 115,462 1.9%
Equipment and Office Leases % of Operations Expenditures	$44,086 0.7%
Other General and Administrative Expenses % of Operations Expenditures	$42,750 0.7%
Operating Income (Loss)	$(1,398,951)
Nonoperating Revenues (Expenses)	$1,384,227
Change in Net Assets	$(14,724)
Total Net Assets at June 30, 2002	$3,926,091

* Due to the change in accounting principles related to the implementation of GASB Statement No. 34, comparative information was not presented. Comparative information will be presented in future audit periods.

SELECTED ACTIVITY MEASURES	FY 2002	FY 2001
Revenue Bonds Outstanding	$89,900,000	$87,065,000
Loans Made During Year	$24,307,855	$6,476,833

AGENCY OFFICIAL(S)

Executive Director: Ms. Katherine A. Parker (until 7/31/01); Mr. Eric Watson (current)

Agency contracts did not include required elements

GAAP Interim Forms A and B were filed 118 days late

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTRACTS DID NOT INCLUDE MINIMUM REQUIRED ELEMENTS

We examined the written Agency contracts related to each of the contractual service expenditures selected for expenditure testing. Four of those expenditures met the $5,000 threshold for requiring a "written" contract. Each of these contracts entered into by the Agency did not include some or all of the following elements:

Bribery clause

Default on repayment of educational loan certification
Advance payment certification
Discriminatory club dues certification
International boycott certification

The Statewide Accounting Management System (SAMS) procedure 15.50.10 lists contents that are required to be included in all written contracts entered into by State agencies.

The Agency stated that it believed the contracts did include all of the minimum requirements for written contracts. (Finding 1, page 10)

We recommended the Agency develop procedures to ensure that all written contracts contain the required elements.

Agency officials responded that it had updated the contractual agreements to include the required disclosures and certifications.

LATE FILING OF ACCOUNTING REPORTS WITH THE OFFICE OF THE STATE COMPTROLLER

The Agency did not submit certain accounting information to the Illinois Office of the Comptroller (Comptroller) in a timely manner.

The Comptroller required State Agencies to file accounting reports on capital assets and depreciation (GAAP Interim Forms A and B) by September 21, 2001. These reports, however, were filed 118 days late.

Agency management stated the GAAP forms were filed late because of confusion related to the preparation of the forms with the Agency’s outside accountant.

We recommended the Agency implement procedures to ensure accurate and timely filing of all required reports. Agency officials stated that as of January 1, 2003 the Bank’s own staff assumed the duties of its contractual accountant and would comply with the filing requirements specified by the Comptroller.

AUDITORS’ OPINION

Our auditors state the Bank’s financial statements as of June 30, 2002 and for the year then ended are fairly presented in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were Nykiel-Carlin & Co., LTD.