INTRODUCTION
The Illinois Student Assistance Commission (ISAC) was created to establish and
administer a system of financial assistance, through loan guarantees, scholarships and
grant awards for residents of the State of Illinois to enable them to attend qualified
public or private institutions of their choice within Illinois. FY 2001 was the third year
ISAC issued contracts in its new mandate of offering a prepaid tuition program –
College Illinois!. Footnote 15 discloses that College Illinois! had an actuarial (deficit)
of $18.5 million as of June 30, 2001.
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
NEED TO FILE CONTRACTS WITH THE STATE COMPTROLLER
ISAC has not filed copies of contracts with the State Comptroller’s Office for
the Illinois Designated Account Purchase Program (IDAPP). The Program’s expenditures
are paid from locally-held funds.
The State Comptroller’s procedures require all contracts exceeding $5,000 be filed
and made available within the Statewide Accounting Management System (SAMS). The
requirement applies to all contracts regardless if paid from either a State Treasurer-held
fund or from an agency-held fund.
The agency indicated it was not aware the SAMS filing requirements applied to the
Illinois Designated Account Purchase Program. (Finding 1, page 15)
We recommended ISAC establish policies and procedures that ensure that locally-held
fund contracts be filed in accordance with State regulations.
ISAC management agreed with the finding and recommendation and stated they have
established procedures whereby all contracts exceeding $5,000, including those paid from
locally held funds, will be filed with the State Comptroller’s Office.
INADEQUATE COLLATERALIZATION TO SECURE CASH ON DEPOSIT
The amount of collateral pledged to secure cash on deposit with various banks was
not adequate as required by the State Officers and Employees Money Disposition Act. The
Illinois Designated Account Purchase Program (IDAPP) bank balances exceeded FDIC Insurance
and collateral. This finding has been repeated since 1995.
A review of the IDAPP records revealed cash and cash equivalents on deposit with
banking institutions totaling $5,824,956 and $13,109,164 in FY 2001 and FY 2000,
respectively. Of this total, $45,686 and $54,156 in FY 2001 and FY 2000 respectively were
not covered by FDIC Insurance or adequately collateralized.
The State Officers and Employees Money Disposition Act requires that public deposits by
protected against risk of loss with FDIC insurance or with collateral. (Finding 5, page
21)
We recommended IDAPP require financial institutions to pledge an adequate amount of
collateral to secure their deposits where the amount on deposit exceeded FDIC insurance
coverage.
ISAC officials agreed with the recommendation and stated they are committed to being
compliant with the State Officers and Employees Money Disposition Act (30 ILCS 230). ISAC
officials also stated the lack of collateralization related to one account which will be
transferred, thus eliminating the non-compliance in the future. (For previous ISAC
responses, see Digest footnote.)
OTHER FINDINGS
Other findings involved issues dealing with reporting requirements applicable to
bond indentures and letters of credit. They were less significant and are reportedly being
given attention by ISAC management. We will review progress toward implementation of our
recommendations in our next audit.
ISAC responses were provided by Mr. Tomy Nella, Controller.
AUDITORS’ OPINION
The auditors stated the financial statements for the Illinois Student
Assistance Commission as of and for the year ended June 30, 2001 are fairly presented in
all material respects.
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WILLIAM G. HOLLAND, Auditor General
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AUDITORS ASSIGNED
Miller Cooper & Co., Ltd. were our special assistant auditors for this
audit.
