REPORT DIGEST

TEACHERS’ RETIREMENT SYSTEM

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2021

Release Date:  March 29, 2022

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 our Compliance
Examination of the Teachers’
Retirement System of the State of
Illinois for the year ended June 30,
2021.  A separate Financial Audit as
of and for the year ending June 30,
2021, was previously released on
December 22, 2021.  This report
contains two findings.  The Financial
Audit report contained no findings.

SYNOPSIS

•  (21-1) The Teachers’ Retirement
System did not always obtain fully
completed disclosures from investment
managers as required by the Illinois
Pension Code.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS


NONCOMPLIANCE WITH CERTAIN DISCLOSURES
REQUIRED BY THE ILLINOIS PENSION CODE

The Teachers’ Retirement System of the
State of Illinois (System) did not
always obtain fully completed
disclosures from investment managers
as required by the Illinois Pension
Code.

Before the System hires a new
investment manager, they require the
entity to complete the Firm Employment
and Use of Professional Service
Providers form.  The form includes all
of the disclosures required by the
Pension Code for its investment and
senior staff (Form A) and its
contractors (Form B).  In addition,
the form requests additional comments
and certifications from the
prospective investment manager related
to their diversity initiatives that
the System takes into consideration
when hiring new investment managers.

Illinois Pension Code 40 ILCS
5/1-113.21
During testing, the auditors noted 5
of 16 (31%) investment manager
disclosures returned to the System
where the investment manager did not
properly disclose the number of
contracts with businesses owned by
minorities, women or persons with a
disability and the number of contracts
with other than those businesses owned
by minority, women or persons with a
disability.  We noted that all five
investment managers did not track the
number of contracts for investment
services, consulting services and
professional services with minority-
owned businesses, women-owned
businesses or businesses owned by
persons with a disability. (Finding 1,
pages 8-9)

We recommended the System work with
its investment managers to comply with
the disclosure requirements of the
Illinois Pension Code or seek
legislative remedy from the statutory
requirement.

System management stated that as with
prior years, they disagreed with this
finding and believe the System is
following statute compliance.

OTHER FINDING

The remaining finding pertains to
weaknesses in cybersecurity programs
and practices.  We will review the
System’s progress towards the
implementation of our recommendations
in our next State compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Teachers’
Retirement System (System) for the
year ended June 30, 2021, as required
by the Illinois State Auditing Act.
The accountants stated the System
complied, in all material respects,
with the requirements described in the
report.

This compliance examination was
conducted by BKD 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:dmg