Illinois Rural Bond Bank

REPORT DIGEST

ILLINOIS RURAL BOND BANK

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 1999

Summary of Findings:

Total this audit: 4

Total last audit: 3

Repeated from last audit: 2

Release Date:
March 21,2000

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’s Treasurer's level of bonding was inadequate for fiscal year 1999.

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

ILLINOIS RURAL BOND BANK
FINANCIAL AND COMPLIANCE AUDIT
For The Year Ended June 30, 1999

EXPENSE AND REVENUE STATISTICS	FY 1999	FY 1998
Total Expenditures (All Funds)	$7,568,275	$6,001,873
OPERATIONS TOTAL (All Funds) % of Total Expenditures	$1,477,416 19.5%	$1,006,862 16.8%
Personal Services % of Operations Expenditures Average No. of Employees	$245,170 16.6% 7	$245,443 24.4% 7
Other Payroll Costs (FICA, Retirement) % of Operations Expenditures	$79,139 5.4%	$75,903 7.5%
Professional Services % of Operations Expenditures	$47,200 3.2%	$45,254 4.5%
Financing Costs % of Operations Expenditures	$972,180 65.8%	$533,889 53.0%
Equipment and Office Leases % of Operations Expenditures	$40,126 2.7%	$44,049 4.4%
General and Administrative Expenditures % of Operations Expenditures	$85,301 5.8%	$54,695 5.4%
Depreciation % of Operations Expenditures	$8,300 .5%	$7,629 .8%
INTEREST EXPENSE (Bond Funds and Public Project Construction Notes Fund) % of Total Expenditures	$6,090,859 80.5%	$4,995,011 83.2%
Total Revenue (All Funds)	$7,310,111	$5,918,970

SELECTED ACTIVITY MEASURES	FY 1999	FY 1998
Revenue Bonds Outstanding	$88,585,000	$74,590,000
Loans Made During Year	$31,493,000	$19,697,000

AGENCY OFFICIAL(S)

Chairman: Corinne Wood, Lieutenant Governor (Inaugurated on January 11, 1999)
Executive Director: Tim G. Bobinsky (7/1/98-6/28/99) Katherine A. Parker (6/28/99- present)

Bonding was inadequate

The largest liquid assets during FY99 were $3,300,000

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUACY OF TREASURER’S BOND

The Rural Bond Bank’s Treasurer’s bonding was inadequate for fiscal year 1999.

The Bank does maintain bonding in excess of the amount required by its enabling statute. However, prudent business practice would dictate the Bank maintain bonds adequate to protect all liquid assets against theft or misappropriation. The largest liquid assets during fiscal year 1999 were $3,300,000, whereas the Treasurer's bonding was in the amount of $100,000.

We recommended the Bank maintain bonding adequate to cover the largest liquid asset balance during the fiscal year and start procedures to amend its statute to require bonds sufficient to protect all liquid assets against theft or misappropriation. (Finding 1, page 12) This finding has been repeated since 1997.

Although the Bank noted the Attorney General assured it its bond coverage met the letter of the law, Bank officials stated they would seek price quotes for additional coverage and look to their Board of Commissioners for further direction. (For previous Agency responses, see Digest Footnote #1.)

OTHER FINDINGS

The remaining findings are less significant and are being given attention by the Bank. We will review progress toward implementing our recommendations during our next audit.

Ms. Katherine A. Parker, Executive Director, provided responses to our recommendations.

AUDITORS’ OPINION

Our auditors state the Bank’s financial statements as of June 30, 1999, and for the year then ended are fairly presented in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:TEE:pp

SPECIAL ASSISTANT AUDITORS

Kyle E. McGinnis, CPA was our special assistant auditor for this audit.

DIGEST FOOTNOTES

#1 INADEQUACY OF TREASURER'S BOND - Previous Response

1998: We accept the auditor's recommendation. The staff have received an application and quotes on obtaining a public official bond in the amount of $3.2 million. The staff will recommend to the board to purchase coverage independently on the market.

1997: We accept the auditor's recommendation. The staff will recommend to the board either to amend the statute increasing the requirement so that coverage can be obtained through the State of Illinois or to purchase coverage independently on the open market.