INTRODUCTION

These reports represent the results of our financial and compliance audit for the year ending December 31, 2001.

The Illinois State Toll Highway Authority did not deposit moneys received in accordance with the time frames set by the Toll Highway Act and the Trust Indenture Bond Agreement.

During testing, we noted 12 of 24 (50%) earned revenue receipts were not deposited into the Treasury within 5 days of collection. Receipts tested included concession and fiber optic fees. Receipts of $1,364,319 were deposited 6-7 days after collection, receipts of $1,847,459 were deposited 9-14 days after collection and receipts of $242,826 were deposited 20 days after collection. Not depositing money in the required time frame results in loss of interest earnings, could affect the future bond rating of the Authority, and could lead to other penalties, misuse or loss of Authority funds. (Finding 1, page 17) This finding has been repeated since 1999.

The Authority agreed with our recommendation to review procedures to ensure the deposit of receipts in the required time frame. (For previous Authority responses, see Digest Footnote 1.)

The Illinois State Toll Highway Authority did not properly classify the construction in progress, land, and infrastructure categories on the financial statements in accordance with generally accepted accounting principles (GAAP).

During our audit, we noted that fixed asset categories were not reclassified for projects that had been completed in prior periods. Thirty-four projects totaling $131,174,520 were reclassified from construction in progress to the appropriate categories in May of 2002 retroactive to the December 31, 2001 financial statements. These 34 projects were completed in the years between 1994 and 2000.

Due to the delay of not properly classifying projects, the construction in progress account was overstated by $131,000,000 for GAAP financial statement purposes, while land and infrastructure were understated by $5,600,000 and $122,900,000 respectively. Thus, the fixed asset accounts were misstated by category and the proper depreciation for completed projects was not recorded, resulting in a $14,700,000 understatement of expenses in accordance with GAAP. (Finding 2, pages 18-19)

The Authority agreed with our recommendation to monitor the status of all projects currently in progress and to reclassify completed projects to their appropriate accounts so that depreciation can be recorded.

The Toll Highway Authority did not have adequate support for sick leave accrual recorded in the general ledger which is the basis for the financial statements.

We noted the Authority’s general ledger balance for accrued sick leave had remained at $4,198,996 since 1997. The Authority generated a report detailing employees’ accrued sick leave at December 31, 2001. This report reflected a balance of $3,029,653 which was $1,169,343 less than the amount accrued in the general ledger. The financial statements were adjusted accordingly. (Finding 4, page 21)

The Authority agreed with our recommendation to reconcile to a report that accurately identifies accrued sick leave.

The Toll Highway Authority did not bill toll violators timely.

Toll violators were not being billed on a regular basis. No billings were sent for 2 of the 12 months (17%) and for 4 other months (34%) only limited billings were sent. In total, 3,905 invoices for $1,317,597 were sent to toll violators in calendar year 2001. We estimated additional 3,141 invoices in the amount of $1,070,000 should have been sent. A total of $439,000 was collected from toll violators.

The accounts receivable balance for toll violators as of December 31, 2001 was $1,658,792, representing amounts billed but uncollected as of that date. The allowance for bad debts for these receivables is $988,230 which equals the amounts over one year old. The net receivables balance was $670,562. Currently, the Authority does not review all videotape recordings to identify toll violators but plans to follow up on all tapes currently not reviewed when the process is outsourced. (Finding 7, page 26)

We recommended the Authority produce billings and send invoices on a monthly basis to all toll violators. The Authority responded that while it agrees that violators were not billed timely, billing information has been compiled for future notification and collection efforts and it has recently finalized negotiations to outsource the violator billing and collection process.

Other findings were less significant and were reportedly being addressed by Authority management. We will review progress toward implementation of all our recommendations during the next audit.

Our auditors stated the Illinois State Toll Highway Authority’s financial statements as of December 31, 2001 and 2000 are presented fairly in all material respects.

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WILLIAM G. HOLLAND, Auditor General

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Our special assistant auditors for this audit were FPT&W, Ltd.