REPORT DIGEST

 

ILLINOIS HOUSING DEVELOPMENT AUTHORITY

 

FINANCIAL AND COMPLIANCE AUDIT

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

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                      3

Total last audit                      4

Repeated from last audit       3

 

Release Date:

June 8, 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 TDD (217) 524-4646

 

This Report Digest is also available on

the worldwide web at

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

 

 

 

SYNOPSIS
  • Illinois Housing Development Authority is not adequately monitoring subrecipients of the Section 8 and HOME Investment Partnership (HOME) programs.
  •  
  • Procedures were not fully implemented to periodically reconcile data from individual computer systems to amounts recorded in the general ledger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

                             ILLINOIS HOUSING DEVELOPMENT AUTHORITY

                                    FINANCIAL AND COMPLIANCE AUDIT

                                          For The Year Ended June 30, 2003

GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES

FY 2003

FY 2002

FY 2001

! Total Governmental Funds Revenue

     Real Estate Transfer Taxes

     % of Total Revenue

     Federal Home Funds

     % of Total Revenue

     Investment, Interest and Other Income

     % of Total Revenue

$57,400,905

$35,677,836

62.1%

$18,467,260

32.2%

$3,255,809

5.7%

$62,868,582

$32,599,376

51.9%

$26,459,592

42.1%

$3,809,614

6.0%

$45,483,813

$28,893,530

63.5%

$10,630,640

23.4%

$5,959,643

13.1%

! Total Governmental Funds Expenditures
     & Transfers

     Grants

     % of Total Expenditures

     General and Administrative

     % of Total Expenditures

     Provision for Est. Loss on Loans     
            Receivable.…… #9;

     % of Total Expenditures..……………

     Operating Transfers

     % of Total Expenditures……………. .

 

$20,335,942

$10,065,379

49.5%

$3,570,563

17.5%

 

$1,500,000

7.4%

$5,200,000

25.6%

 

$19,152,905

$8,837,951

46.2%

$3,464,954

18.1%

 

$1,500,000

7.8%

$5,350,000

27.9%

 

$19,494,711

$9,885,013

50.7%

$3,255,209

16.7%

 

$1,004,489

5.2%

$5,350,000

27.4%

PROPRIETARY FUND REVENUE AND EXPENSES (ADMINISTRATIVE)

! Total Administrative Fund Revenue

     Service Fees

     % of Total Revenue

     Interest and Investment Income

     % of Total Revenue

     Other Income

     % of Total Revenue

! Total Administrative Expenses

     Salaries and Benefits

     % of Total Expenses . .

     Average No. of Employees

     Professional Fees #9; .

     % of Total Expenses

     Other General and Administrative Expenses

     % of Total Expenses

     Transfers

     % of Total Expenses

     Financing Costs

     % of Total Expenses

! Net Value of Property and Equipment

$16,075,809

$8,211,732

51.1%

$3,602,576

22.4%

$4,261,501

26.5%

$15,888,921

$10,429,594

65.7%

195

$1,277,098

8.0%

$3,604,299

22.7%

$211,646

1.3%

$366,284

2.3%

$703,202

$18,384,006

$8,337,965

45.3%

$5,549,919

30.2%

$4,496,122

24.5%

$14,671,808

$7,525,312

51.2%

190

$1,607,244

11.0%

$4,552,978

31.0%

$1,638

.1%

$984,636

6.7%

$640,264

$17,724,527

$7,505,632

42.4%

$7,060,852

39.8%

$3,158,043

17.8%

$12,825,949

$6,589,404

51.4%

177

$2,073,658

16.2%

$3,764,435

29.4%

$61,315

.5%

$337,137

2.5

$931,283

SELECTED ACTIVITY MEASURES

  • Total Number of Bond Issues Outstanding

  • Total Bond Issue Liability (in millions)

  • Production of Housing Units

  • Production of Low Income Housing Units

  • % Low Income Housing Units to all Units

94

$1,783

150,055

134,371

89.5%

98

$1,888

144,620

127,198

88.0%

98

$2,010

136,102

121,037

88.9%

EXECUTIVE DIRECTORS

During Audit Period: Peter R. Dwars (to Feb. 26, 2003), Kelly King Dibble (as of Feb. 27, 2003)

Currently: Kelly King Dibble

Note: Statistics above do not include bond activity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Authority is not adequately monitoring subrecipients of the Section 8 and HOME programs

 

 

 

 

 

 

 

 

 

 

Section 8 subrecipients did not submit financial and HUD compliance reports as required

 

 

 

 

 

HOME subrecipients did not submit financial audit reports as required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Authority’s processing systems are not linked to the Authority’s general ledger

 

 

 

 

 

 

 

The Authority has not implemented procedures to reconcile all its processing information systems to the general ledger

 

 

 

 

 

 

 

 

The Authority has contracted with a vendor to re-engineer the financial processes

 

INTRODUCTION

The 2003 audit of the Illinois Housing Development Authority is presented in two parts. The compliance part is presented in one report and the financial part is presented in another report. Our audit was performed in accordance with the Single Audit Act and OMB Circular A-133.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE MONITORING OF SUBRECIPIENTS RECEIVING FEDERAL AWARDS

The Illinois Housing Development Authority (Authority) is not adequately monitoring subrecipients of the Section 8 and HOME programs. A portion of the Authority’s Section 8 program loans are passed through to subrecipients and are not included in the Authority’s loan portfolio. For those subrecipients, the Authority only provides contract administration. The Authority still has the responsibility to monitor the activities of the subrecipient as necessary to ensure the federal awards are used for the authorized purposes in compliance with laws, regulations and provisions of contracts or grant agreements and performance goals are achieved.

The auditors noted the following for the Section 8 subrecipients for which the Authority performed only contract administration:
  • Three of ten subrecipients, with expenditures of $1,038,498 had not submitted both financial and HUD compliance reports to the Authority for their most recent fiscal year.

During the auditors’ review of the Authority’s subrecipient monitoring process for the HOME program they noted the following:
  • Ten of the thirty subrecipients, with expenditures of $1,552,961, had not submitted both financial audits and audits in accordance with OMB Circular A-133 to the Authority for their most recent fiscal year.
  • The Catalog of Federal Domestic Assistance (CFDA) number and Federal agency name are not identified to the subrecipient.

Authority management indicated they were in the process of implementing procedures to ensure all subrecipients for the Section 8 and HOME program submit required audit reports and plan on having the procedures in place for the year ended June 30, 2004.

The failure to adequately monitor all subrecipients could result in federal funds being expended for unallowable purposes and/or subrecipients not properly administering the federal programs. (Finding 1, pages15-17)

We recommended the Authority obtain the appropriate reports for all Section 8 and HOME program subrecipients and perform their established procedures for uniform desk reviews for subrecipients for which they provide only contract administration. In addition, we also recommended the Authority follow-up with subrecipients who fail to submit the reports within the required timeframe.

Authority management agreed with our recommendation and indicated they have contacted subrecipients to obtain the required reports. In addition, they also noted they will review and revise, if necessary, their subrecipient monitoring procedures to ensure that subrecipients are notified of OMB Circular A-133 financial requirements and that the Authority’s monitoring activities are properly documented.

SYSTEM RECONCILIATION PROCEDURES

The Authority has not implemented periodic reconciliation procedures for data output produced by the Authority’s individual processing systems versus amounts recorded in the general ledger.

The Authority completed an implementation of four new computer application systems during fiscal year 2000: the upgraded general ledger system, the single family program system (AMOS), the investment system (CAMRA), and the multifamily, HOME and affordable trust fund loan programs billing and receivable system (Benedict). The systems are not integrated in the sense of simultaneously recording a single transaction within each of the individual systems and within the general ledger.

Authority management stated these systems do not interface with each other because the operational and reporting features inherent in the individual systems were not available to the Authority in an integrated system at the time of implementation. This results in the need to create interfaces between the three processing systems and the general ledger either electronically or manually in order to record transactions accurately, completely and consistently. The Authority has not yet implemented procedures to reconcile all data output produced by their individual processing systems versus amounts recorded in its general ledger.

Authority management acknowledged the importance of developing and implementing reconciling procedures. Various committees were established to oversee and assist in completing the reconciliation project for each individual operating system.

The Authority has made a number of enhancements to the computer applications noted above and has contracted with an external vendor to assist them in re-engineering the Authority’s financial processes.

Without periodic reconciliation procedures in place to ensure data output produced by the individual systems equate to amounts recorded in the general ledger, the risk exists the Authority’s general ledger may not include the most accurate and complete information. This finding has been repeated since 2000. (Finding 2, pages 18-19)

We recommended the Authority proceed with the re-engineering of its financial process.

Authority officials concurred with our recommendation and indicated the vendor to assist in the re-engineering has issued its final report. Authority management noted they have implemented a number of procedural improvements recommended in the vendor’s report, including being in the process of installing a new system that will have a full linkage to the general ledger. Authority management also noted other financial process re-engineering recommendations included in the vendor’s report are also being addressed. (For previous Authority responses, see Digest footnote #1.)

OTHER FINDING

The remaining finding was less significant and is reportedly being given attention by the Authority. We will review the Authority’s progress toward the implementation of our recommendations in our next audit.

Mr. James Kregor, Controller, provided the responses to our recommendations.

AUDITORS’ OPINION

Our auditors state the Authority’s financial statements as of and for the year ended June 30, 2003 are fairly presented in all material respects.

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

KPMG LLP were our special assistant auditors for this audit.

DIGEST FOOTNOTES

#1 - SYSTEM RECONCILIATION PROCEDURES

2002: The Authority concurs with the recommendation and is proceeding with the re-engineering of its financial processes and intends to soon award a contract for assistance on this project. The Authority also has been addressing systems’ linkage issues. The enhancements that would resolve the system reporting issues and allow for a full linkage of the CAMRA system with the general ledger are scheduled for a July installation. In addition, the Authority is in the process of contracting for the installation of new single-family software that will allow electronic transfers of loan data, with an interface to the General Ledger.

2001: The Authority concurs with the recommendation to assign a project leader (or committee), which would have planning and oversight responsibilities for the entire reconciliation project. As noted above, the Authority is in the process of preparing an RFP for outside consulting to assist the Authority with its planning and reporting responsibilities relating to the reconciliation and other projects. The Authority will assign a project leader, or committee, to coordinate the efforts related to this project, and provide timely status updates to the Authority’s Executive Director and other Authority personnel.

2000: The Authority concurs with the recommendation that the Authority assign a project leader (or committee) with planning and reporting responsibilities for implementing reconciliation procedures between the Authority’s operating systems and its general ledger. Such a committee to address the linkage and reporting issues of the CAMRA system to the general ledger has been established and is operational. The Authority will establish similar arrangements to address linkage issues with the Benedict and AMOS systems.