REPORT DIGEST DUQUOIN STATE FAIR COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2017 Release Date: April 26, 2018 FINDINGS THIS AUDIT: 10 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 3 -- 7 -- 10 Category 3: 0 -- 0 -- 0 TOTAL: 3 -- 7 -- 10 FINDINGS LAST AUDIT: 10 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 SYNOPSIS • (17-1) Noncompliance with provisions of the Illinois Horse Racing Act. • (17-2) The Fair did not adequately monitor the beer vendor. • (17-3) Fair management did not demonstrate adequate controls over complimentary grandstand tickets at the 2017 and 2016 Fairs. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NONCOMPLIANCE WITH THE ILLINOIS HORSE RACING ACT The DuQuoin State Fair (DSF) was not in compliance with the Illinois Horse Racing Act of 1975. During testing, we noted DSF provided only a 2 day racing program in Fiscal Year 2017 and 2016. DSF is required to provide at least a 5 day racing program to be conducted at the State Fair each year. (Finding 1, page 11) This finding has been repeated since 2011. We recommended the DSF comply with provisions of the Act or seek legislative remedy to assist in compliance. Fair officials agreed with the finding and stated management will look into the possibility of legislative remedy. INADEQUATE MONITORING OF BEER VENDOR The DuQuoin State Fair (DSF) did not adequately monitor the beer vendor. During our beer contract testing, we noted the DSF did not reconcile the beer inventory payment (based on a percentage of sales) to the beginning and ending beer inventory. When we requested the payment and compared it to the calculation of beer sales from the beer inventory, we noted the beer vendor underpaid by approximately $1,913 and $2,355 during the 2017 Fair and 2016 Fair, respectively. The DSF personnel were not aware of the underpayment until notified by the auditors. (Finding 2, page 12) We recommended the DSF implement controls to monitor the beer vendor and seek underpayments from the beer vendor. Fair officials agreed with the finding and stated they did reconcile both 2016 and 2017 beer inventory and they are still working to resolve this issue. LACK OF CONTROLS OVER COMPLEMENTARY GRANDSTAND TICKETS The DSF did not demonstrate adequate controls over complimentary grandstand tickets during the 2017 and 2016 Fairs. During our testing of complimentary tickets provided for grandstand events, we noted the following: • For 2017, the complimentary ticket issuance records for 4 of 6 entertainers were inaccurate. DSF records had a net understatement of 16 complimentary tickets. • For 2016, the DSF failed to provide documentation of complimentary tickets requested for 9 tickets. The individuals who received these tickets and the justification for issuing them are unknown. (Finding 3, pages 13-14) We recommended the DSF maintain a record of the distribution of complimentary grandstand tickets as required by the Illinois Administrative Code. Fair officials agreed with the finding and stated they will continue to train employees on how to reconcile complimentary tickets and ensure supporting documents are on file. OTHER FINDINGS The remaining findings pertain to inadequate controls over credentials, space rentals, camping revenues, gates and parking admissions and grandstand ticket office receipts, and weaknesses in contract administration and receipt and expenditure reconciliations. We will review the DSF’s progress towards the implementation of our recommendations in our next compliance examination. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the DSF for the two years ended September 30, 2017, as required by the Illinois State Auditing Act. The accountants stated the DSF complied, in all material respects, with the requirements described in the report. This compliance examination was conducted by Adelfia LLC. 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:skm DIGEST FOOTNOTES #1 – NONCOMPLIANCE WITH THE ILLINOIS HORSE RACING ACT – prior response 2015: DSF agrees with the finding and will continue to strive to comply while legislative remedies are being sought.