FINANCIAL AND COMPLIANCE AUDIT

For the Two Years Ended:
June 30, 1998

Summary of Findings:

Total this audit 3
Total last audit 5
Repeated from last audit 1

Release Date:
September 2, 1999

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

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Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
782-6046 or TDD (217) 524-4646
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SYNOPSIS

• The Commission did not have adequate controls over expenditures for its locally held funds.
• The Commission lacked proper controls to insure accountability over its fixed assets. Our auditors’ opinion on the District’s financial statements was qualified due to the lack of a current detailed accounting record of general fixed assets.
• The Commission did not properly reconcile its accounts receivable ledgers to its general ledger accounts, and accounts receivable were overstated

 

The Master Plan Fund owed other funds $127,603 but had only $79,088 in assets

The Commission’s fixed asset listing was understated by $1.29 million dollars as costs for construction in progress were not recorded

Account receivable ledgers could not be reconciled to the general ledger

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS FOR EXPENDITURES MADE FROM LOCALLY HELD FUNDS

The Commission did not have adequate controls to ensure that expenditures and transfers from the locally held funds were accurate and proper. We identified the following conditions:

• four of 6 locally held funds operated at a deficit in fiscal year 1998. In addition, at June 30, 1998 the Master Plan Fund owed $127,603 to other locally held funds but had assets of only $79,088.
• the Commission did not record payments made by a not-for-profit entity for the Chicago Technology Park Research Center. Payments of $62,792 in fiscal year 1998 should have been recorded as expenditures within the Chicago Technology Park Research Center locally held fund.
• Credit card expenditures were not supported with receipts or other documentation for 41 of 72 (57%) charges judgmentally selected for review.

We recommended the Commission improve its internal controls over expenditures made from locally held funds. In its response the Commission noted that it recognized the need to better allocate costs and to revise its accounting manual. The Commission also responded that the two Visa credit cards had been canceled. (Finding 98-2, pages 13-16)

INADEQUATE CONTROLS OVER FIXED ASSET LISTINGS

The Commission did not maintain proper accountability over fixed assets. We noted the following conditions during the audit.

• The Commission’s fixed asset listing did not include costs of construction in progress for its Enterprise Center. The absence of this cost resulted in an understatement of $1.29 million in Fiscal Year 1998 assets.
• The Commission’s fixed asset listing included costs of title searches and legal fees for property not yet acquired by the Commission; including these costs overstates the cost of property actually held by the Commission.
• The Commission had not established a General Fixed Asset Account Group for its financial statement reporting of fixed assets as required by generally accepted accounting principles and the Statewide Accounting Management System.

As a result of these conditions, the auditors expressed a qualified opinion in their audit of the Commission’s financial statements.

We recommended the Commission establish policies and procedures in order to comply with generally accepted accounting principles and the Statewide Accounting Management System. The Commission responded that procedures have been revised or added to ensure the reliable reporting of fixed assets. (Finding 98-1, pages 11-12)

IMPROPER CONTROLS OVER GENERAL LEDGER ACTIVITY

The Commission did not properly reconcile general ledger accounts to subsidiary records, and accounts receivable balances were overstated. Specific conditions included:

• Accounts receivable ledgers could not be reconciled to the general ledger. Differences between the two ledgers should be investigated and explained in order to maintain proper control over accounting information.
• The Commission recorded a receivable of $75,000 in fiscal year 1997 but had no documentation to support this entry.
• The Commission had not created an allowance for doubtful accounts for the Chicago Technology Park Research Center Income Fund. For both fiscal years under audit, estimated uncollectible receivables amounted to over $95,000.

We recommended the Commission establish procedures to ensure the accuracy of amounts within the general ledger and follow generally accepted accounting principles in recording receivables and estimated uncollectible accounts. The Commission responded that differences between ledgers were due generally to the accounting software and that the Fiscal Officer was able to reconcile the ledgers at the request of the auditors. (Finding 98-3, pages 16-18)

Mr. Tom Livingston, the Commission’s current Executive Director, provided the Commission’s responses.

 

AUDITORS’ OPINION

Our auditors stated the Commission’s financial statements as of June 30, 1997 and June 30, 1998 were fairly presented except for: 1) the lack of detailed fixed asset records, and 2) the effects of such adjustments, if any, as might have been determined to be necessary had they been able to examine evidence regarding year 2000 disclosures.

 

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WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

Pandolfi, Topolski, Weiss & Co., LTD. were our special assistant auditors.