REPORT DIGEST

ILLINOIS STUDENT ASSISTANCE COMMISSION

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  June 16, 2021

FINDINGS THIS AUDIT:  2

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  1 -- 0 -- 1
Category 3:  0 -- 1 -- 1
TOTAL: 1 -- 1 -- 2

FINDINGS LAST AUDIT: 1

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 (888) 261-2887

This Report Digest and Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

This digest covers the Illinois Student
Assistance Commission’s (Commission)
financial audit for the year ended June
30, 2020.  Included in the financial
statements of the Commission are the
Illinois Prepaid Tuition Program
(Program), a major fund of the Commission
and the State of Illinois and the
Illinois Designated Account Purchase
Program (IDAPP), a major fund of the
Commission.   A separate digest covering
the Commission’s Compliance Examination
for the year ended June 30, 2020 will be
released under a separate cover.

SYNOPSIS

• (20-01) The Commission - IDAPP was not
in compliance with one of the covenants
relating to the Commission’s revolving
line of credit agreement.
• (20-02) The Commission did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment benefits
plans was complete and accurate.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

DEBT COVENANT VIOLATION

The Commission - IDAPP was not in
compliance with a covenant relating to
the agency’s revolving line of credit
agreement.

During our audit of the fiscal year 2020
financial statements, we noted that IDAPP
was in violation of a debt covenant
related to the agency’s revolving credit
(loan) agreement.  In addition, the
Facility matured on July 27, 2010 and has
not been repaid.  Per the agreement, the
default ratio is set at a maximum three-
month rolling average of 5.0% or a
maximum of 6.25% for any settlement
period.  We reviewed monthly reports and
noted 3 months fell above these ratios,
ranging from 5.36% to 5.78% for the
three-month average and 6.34% to 10.24%
for the settlement period.

As a result of the debt covenant
violation and the maturity of the
facility, the bank has certain remedies
available to it under the terms of the
loan agreement, principal of which would
be rights to call the loan and take
possession of the collateral (the
underlying student loan portfolio).  The
bank has been made aware of the event of
default and the maturity of the loan and
has not communicated to IDAPP any intent
to exercise the remedies available to it
under the terms of the loan agreement.
The balance of the line of credit with
the bank was $78,156,827 at June 30,
2020.  (Finding 1, page 150)  This
finding was first reported in 2009.

We recommended the IDAPP continue to
monitor the loan covenant violations and
continue seeking remedies from the lender
involved.

Commission officials accepted our
recommendation and stated the loan
covenants are reviewed monthly and the
Commission continues to talk to the bank
about the portfolio.

LACK OF CENSUS DATA RECONCILIATIONS

The Commission did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment benefits
(OPEB) plans that was complete and
accurate.

During testing, we noted the Commission
had not performed an initial complete
reconciliation of its census data
recorded by the State Employees’
Retirement System of Illinois (SERS) and
the State of Illinois, Department of
Central Management Services (CMS) to its
internal records to establish a base year
of complete and accurate census data.
(Finding 2, page 151-152)

We recommended the Commission work with
SERS and CMS to develop an annual
reconciliation process of its active
members’ census data from its underlying
records to a report from each plan of
census data submitted to the plan’s
actuary. After completing an initial full
reconciliation, the Commission may limit
the annual reconciliation to focus on the
incremental changes to the census data
file from the prior actuarial valuation,
provided no risks are identified that
incomplete or inaccurate reporting of
census data may have occurred during
prior periods.

Commission officials accepted our
recommendation and stated the Commission
will work with SERS and CMS to develop a
reconciliation process.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Commission as of and
for the year ended June 30, 2020, are
fairly stated in all material respects.

This financial audit was conducted by
Crowe LLP.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JGR