REPORT DIGEST

GENERAL ASSEMBLY RETIREMENT SYSTEM OF THE STATE OF ILLINOIS

COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2008

Summary of Findings:

Total this report 1

Total last report 1

Repeated from last report 0

Release Date:

May 21, 2009

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

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Springfield, IL 62703

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are also available on

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INTRODUCTION

This digest covers our compliance attestation examination of the General Assembly Retirement System of the State of Illinois’ (System) for the year ending June 30, 2008. A financial audit covering the year ending June 30, 2008 was previously released on January 15, 2009. It should be noted that, pursuant to the Illinois Pension Code, investments of the System are managed by the Illinois State Board of Investment. The auditors identified one finding during their testing.

¨ The System did not have a process to review financial journal entries independent of the person who initiates and posts them to the financial records.

{Financial Data and Supplementary Information are summarized on the reverse page.}

GENERAL ASSEMBLY RETIREMENT SYSTEM OF ILLINOIS

COMPLIANCE EXAMINATION

YEAR ENDED JUNE 30, 2008

OPERATING STATEMENT ANALYSIS	FY 2008	FY 2007
REVENUES: Contributions – Participants........................................... Contributions – Appropriations & other........................... Total Contributions................................................... Net investment income................................................... Net appreciation (depreciation) in fair value of investments Interest earned on cash balances.................................... Total Revenue......................................................... EXPENSES: Benefits - Retirement annuities...................................... Benefits - Survivors' annuities......................................... Total Benefits........................................................ Refunds........................................................................ Administration............................................................... Total Expenses........................................................ Revenues over (under) expenses....................................	$ 1,772,860 6,809,800 $ 8,582,660 1,893,640 (6,734,639) 132,702 $ 3,874,363 $ 12,653,183 2,605,438 $ 15,258,621 147,804 224,170 $ 15,650,595 $(11,776,232)	$ 1,703,344 5,470,429 $ 7,173,773 1,933,225 10,914,976 142,784 $20,164,758 $12,180,739 2,538,553 $14,719,292 297,790 220,333 $15,237,415 $ 4,927,343
ANALYSIS OF PLAN INVESTMENTS	FY 2008	FY 2007
Balance at beginning of year, at fair value............................................ Net cash transferred from investments................................................ Net investments (1)..................................................................... Investment income – interest, dividends and other................................ Investment expenses.......................................................................... Net Investment income (2).......................................................... Net realized gain on sale of investments............................................... Net unrealized gain (loss) on investments ............................................ Net appreciation (depreciation) in fair value of investments (3)....... Total net investment gain (loss) (4), (2) + (3)................................. Balance at end of year, at fair value (1) + (4)................................	$ 83,864,942 (7,100,000) $ 76,764,942 2,164,234 (270,594) $ 1,893,640 3,911,240 (10,645,897) $ (6,734,639) $ (4,840,999) $ 71,923,943	$79,016,741 (8,000,000) $71,016,741 2,208,651 (275,426) $ 1,933,225 5,117,713 5,797,263 $10,914,976 $12,848,201 $83,864,942
iNVESTMENTS USED FOR Benefits and Expenses	FY 2008	FY 2007
CONTRIBUTIONS: Participants.................................................... Appropriations & other ................................. Total Contributions (5)................................. DEDUCTIONS: Benefits........................................................... Refunds............................................................ Administration................................................... Total Deductions (6)....................................... Investments used to Pay Benefits and Expenses) (5)-(6)......................	$ 1,772,860 6,809,800 $ 8,582,660 $15,258,621 147,804 244,170 $15,650,595 $(7,067,935)	$ 1,703,344 5,470,429 $ 7,173,773 $ 14,719,292 297,790 220,333 $ 15,237,415 $(8,063,642)
SUPPLEMENTARY INFORMATION (unaudited)	FY 2008	FY 2007
Retirees and beneficiaries currently receiving benefits.......................... Total members ................................................................................. Total active members......................................................................... Total return on investments.................................................................	395 257 182 (6.2)%	399 267 182 17.1%
EXECUTIVE SECRETARY
During Audit Period: Timothy B. Blair, Acting Currently: Timothy B. Blair, Acting

Same individual prepares and posts the financial journal entries

FINDING, CONCLUSION, AND

RECOMMENDATION

JOURNAL ENTRY REVIEW

During our testing, we noted the same individual prepares and posts the financial journal entries.

System personnel indicated the lack of appropriate personnel to perform a meaningful review contribute to the current procedures. A lack of an independent review of journal entries leaves the System open to risks of error and material misstatement of financial information. Because of the lack of an independent review of journal entries, we are considering this to be a significant deficiency in the System’s internal control.

We recommended someone other than the person preparing and posting the journal entries review the journal entries and the related supporting documentation for accuracy and that the review be documented. (Finding 08-1, page 7)

System management concurred with the recommendation and indicated they will institute a system to have all financial journal entries and supporting documentation reviewed by a person independent of the person that initiates them.

ACCOUNTANTS’ REPORT

We conducted a compliance attestation examination of the System for the year ended June 30, 2008 as required by the Illinois State Auditing Act. The accountants’ report does not contain any scope limitations, disclosures or other significant non-standard language.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

The public accounting firm of BKD LLP was our special assistant auditor for this engagement.

REPORT DIGEST

YEAR ENDED JUNE 30, 2008

FY 2008

FY 2007

FY 2008

FY 2007

iNVESTMENTS USED FOR Benefits and Expenses

FY 2008

FY 2007

EXECUTIVE SECRETARY

JOURNAL ENTRY REVIEW

SPECIAL ASSISTANT AUDITORS