Illinois Office of the State Treasurer - Fiscal Officer Responsibilities 2002 Audit

REPORT DIGEST

OFFICE OF THE TREASURER
FISCAL OFFICER RESPONSIBILITIES

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 2002

Summary of Findings:

Total this audit 0
Total last audit 0
Repeated from last audit 0

Release Date:
March 27, 2003

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

INTRODUCTION

This digest presents our financial and compliance audit for the Office of the Treasurer Fiscal Officer Responsibilities for the year ended June 30, 2002.

AUDITORS’ OPINION

The auditors stated the Office of the Treasurer, Fiscal Officer Responsibilities, as of and for the year ended June 30, 2002 present fairly, in all material respects the Statement of Assets, Liabilities and Accountabilities and the results of investment activity of the Treasurer, Fiscal Officer Responsibilities. The auditors noted the financial statements have been prepared on a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JSC:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors on this audit were Kerber, Eck & Braeckel LLP.

{Expenditures and Activity Measures are summarized on the reverse page.}

OFFICE OF THE TREASURER - STATE OF ILLINOIS
FISCAL OFFICER RESPONSIBILITIES
FINANCIAL AND COMPLIANCE AUDIT
FOR THE YEAR ENDED JUNE 30, 2002

ASSETS, LIABILITIES AND ACCOUNTABILITIES	JUNE 30, 2002	JUNE 30, 2001
Assets
Cash - (Demand Deposits, Clearing Accounts)	$ 78,228,210	$ 66,589,630
Revenue Producing Deposits and Investments, At Cost (which approximates market)	7,140,201,462	8,021,363,317
Other Assets	115,947,715	88,788,928
Amount of Future General Revenues Obligated for Debt Service	12,223,908,277	10,671,394,655
TOTAL ASSETS	$19,558,285,664	$18,848,136,530
Liabilities and Accountabilities
Liabilities for Balances on Deposit	$ 6,841,895,347	$ 7,724,111,780
General Obligation Indebtedness	12,700,063,894	11,088,652,182
Accountabilities	16,326,423	35,372,568
TOTAL LIABILITIES AND ACCOUNTABILITIES	$19,558,285,664	$18,848,136,530
FINANCIAL HIGHLIGHTS	YEAR ENDED JUNE 30, 2002	YEAR ENDED JUNE 30, 2001
Investment Income Earned	$220,715,064	$439,312,742
Average Yield on Time Deposits (unaudited)	3.83%	5.90%
Investment Base Increase From Prior Year (unaudited)	$331,651,883	$239,297,000
STATE TREASURER
During Audit Period: Honorable Judy Baar Topinka Currently: Honorable Judy Baar Topinka

At June 30, 2002 two properties remain in the Illinois Insured Mortgage Pilot Program Trust

Accrued interest receivable for nonperforming assets approximated $22,247,000 at June 30, 2002

Ongoing litigation

OTHER DISCLOSURES

ILLINOIS INSURED MORTGAGE PILOT PROGRAM TRUST

As of June 30, 2002 there were two properties in the Illinois Insured Mortgage Pilot Program Trust (Trust). The Trust held the mortgage loans on the properties as underlying collateral for the State’s investment in the program. The two properties are hotels, the Renaissance in Springfield and the Holiday Inn in Collinsville.

The recorded value on the financial statements for these investments was $7,581,000 as of June 30, 2002 and the loan balance was $29,440,000. There were no payments received during fiscal year 2002 from either hotel.

The mortgage loans on the two properties are considered nonperforming assets. Accrued interest receivable at June 30, 2002 for the nonperforming assets approximated $22,247,000. Interest on nonperforming assets is recognized when collected, and therefore has not been recorded on the financial statements.

In 1995 the Treasurer authorized the Trustee to sell the mortgage notes to the hotel owners for $10 million. The Illinois Attorney General opined that his consent to the proposed sale in 1995 was required and he refused to give it. As a consequence, the Treasurer and Trustee did not proceed with the transaction. Affiliates of the owners of the hotels filed a lawsuit against the Trustee and the Treasurer seeking specific performance of the buy-sell agreement on the terms agreed to.

On March 13, 2000 the Court in Madison County entered a judgement order requiring the Trustee and the Treasurer to sell the mortgage loans on the hotel properties to the plaintiffs. The Court found that the plaintiffs were ready, willing and able to perform the buy-sell agreements at the time originally set for closing in 1995. The Trustee and the Treasurer appealed the order. Briefings on the appeal were completed in February 2001 with oral arguments following. At June 30, 2002, no ruling was yet issued on the appeal.