REPORT DIGEST

 

DEPARTMENT OF AGRICULTURE

ILLINOIS STATE FAIR

 

COMPLIANCE EXAMINATION

For the Two Years Ended:

September 30, 2005

 

Summary of Findings:

Total this audit                          9

Total last audit                        10

Repeated from last audit           3

 

Release Date:

June 20, 2006 

 

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

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (217) 261-2887

 

This Report Digest and Full Report are also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

 

SYNOPSIS

 

¨      The Department did not maintain adequate controls over camping revenue and permits at the Illinois State Fair.

 

¨      The Department did not obtain proof of insurance from Illinois State Fair vendors.

 

¨      The Department did not have adequate control over gate/parking admissions at the Illinois State Fair.

 

¨      The Department did not have supporting documents for recipients of the All-Access Pass issued during the 2005 Illinois State Fair.

 

¨      The Department did not have adequate segregation of duties in its Non-Fair Space Rental Division.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Revenues, expenditures and supplementary information are summarized on the reverse page.}

 


 

ILLINOIS DEPARTMENT OF AGRICULTURE

ILLINOIS STATE FAIR

COMPLIANCE EXAMINATION

For The Two Years Ended September 30, 2005

 

REVENUE AND EXPENDITURE STATISTICS

FY 2005

FY 2004

FY 2003

·         Total Revenue                                                                       

            Tickets.................................................................................

                % of Revenue.................................................................

            Space Rental: Fair..............................................................

                % of Revenue.................................................................

            Entry Fees...........................................................................

                % of Revenue.................................................................

            Promotions.........................................................................

                % of Revenue.................................................................

 

·         Total Expenditures (All Funds)..........................................

            Personal Services..............................................................

                % of Expenditures.........................................................

            Other Payroll Costs (FICA, Retirement).........................

                % of Expenditures.........................................................

            Contractual Services.........................................................

                % of Expenditures.........................................................

            Allocated Costs.................................................................

                % of Expenditures.........................................................

            Premiums and Awards......................................................

                % of Expenditures.........................................................

            All Other Operations Items..............................................

                % of Expenditures.........................................................

 

·         (Deficiency) of Revenues Over Expenditures..................

$4,140,914

$2,342,697

56.6%

$1,106,249

26.7%

$304,104

7.3%

$387,864

9.4%

 

$7,454,718

$700,413

9.4%

$250,619

3.3%

$2,494,863

33.5%

$2,815,150

37.8%

$800,388

10.7%

$393,285

5.3%

 

$(3,318,804)

$3,557,915

$1,773,055

49.8%

$1,136,993

32.0%

$309,377

8.7%

$338,490

9.5%

 

$7,350,255

$691,897

9.4%

$252,860

3.4%

$2,172,218

29.6%

$2,721,948

37.0%

$855,603

11.7%

$655,729

8.9%

 

$(3,792,340)

$3,853,851

$2,185,714

56.7%

$1,146,213

29.7%

$241,326

6.3%

$280,598

7.3%

 

$7,102,159

$650,592

9.2%

$214,215

3.0%

$2,425,797

34.2%

$2,628,746

37.0%

$953,907

13.4%

$228,902

3.2%

 

$(3,248,308)

SUPPLEMENTARY INFORMATION

FY 2005

FY 2004

FY 2003

Employment Statistics (Approximate)

            Full Time Employees.........................................................

            September through May (Temporary)...........................

   June (Temporary)...............................................................

   July through August (Temporary)..................................

Selected Activity Measures

   Gate Admissions – Tickets Sold (Unaudited)...............

   Estimated Attendance (Unaudited)................................

   Grandstand Shows – Tickets Sold Unaudited).............

   Grandstand Show Revenues............................................

   Grandstand Show Expenditures......................................

Competitive Events

   Competitive Events Revenues.........................................

           Competitive Events Expenditures...................................

Pari-mutuel Wagering

   Pari-mutuel Wagering Receipts.......................................

   Pari-mutuel Wagering Expenditures...............................

 

9

10

51

124

 

249,251

672,615

45,316

$1,080,899

$1,197,403

 

$103,765

$867,020

 

$163,854

$256,659

 

    11

   10

   53

126

 

246,074

671,334

29,519

$493,983

$945,621

 

$100,734

$1,013,988

 

$194,091

$272,536

 

9

13

36

116

 

252,201

725,000

40,850

$850,721

$1,299,124

 

$106,153

$858,509

 

$201,812

$279,683

AGENCY DIRECTOR

 

 

 

During Audit Period:  Mr. Charles A. Hartke

Currently:  Mr. Charles A. Hartke

 


 

 


 

 

 

 

 

 

 

 

 

 

 

 


Some campers were not charged the proper amount for camping

 

 

 

 

 

 

 


Some camping permits tested for the 2004 and 2005 Fair were not properly completed

 

 

 

 

 

 

 


Vendor not charged for 6 additional camping spaces resulting in a loss of $1,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Some contracts tested did not obtain proof of insurance as required by the terms of their contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gate was unattended for a period of time


Volunteer observed taking cash but not tearing the ticket and placing it in the collection box


Four gates were understaffed

 

 


Contractor underestimated staffing requirement

 

 

 

 

 


Contractor did not make up shortages

 

 

 

 

 

 

 

 

 

 


Parked vehicles with no parking passes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No documentation to indicate individuals issued passes and the purpose of issuing the passes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


One person is responsible for entering revenue and processing cash deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Expenditures exceeded revenue for the 2005 Fair by $3,313,804 and by $3,792,340 for the 2004 Fair

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS

 

 

INADEQUATE CONTROLS OVER CAMPING REVENUES AND PERMITS

 

The Department of Agriculture (Department) did not maintain adequate controls over camping revenue and permits at the Illinois State Fair (Fair) to ensure all revenues for camping were received. 

 

The Department rents campsites at the fairgrounds during the time of the fair.  Total camping revenue for the 2004 and 2005 Fairs was $84,780 and $76,810, respectively.  During our sample testing of 30 camping permits during the 2004 Fair, we noted that the Department did not receive the proper amount of camping revenue from 6 campers (20%) resulting in overcharges to campers of $50.  During our sample testing of 32 camping permits during the 2005 Fair, we noted that the Department did not receive the proper amount of camping revenue from 13 campers (41%) resulting in a loss to the Fair of $175. 

 

During our sample testing of 30 camping permits during the 2004 Fair, we noted that the Department did not properly complete 11 camping permits (37%) resulting in an identifiable loss of $75.   During our sample testing of 32 camping permits during the 2005 Fair, we noted that the Department did not properly complete 7 of the camping permits (22%).  The problems noted with the permits included missing information, inconsistent dates, and miscalculations of the number of days camped.  We also noted 7 permits were not properly displayed on the camper during the 2005 Fair.  The amount of lost revenue from the improperly displayed permits in 2005 could not be identified. 

 

The Department entered into a special agreement with a vendor during the 2004 Fair that allowed the vendor 10 complimentary camping spaces.  We noted that the vendor had a total of 16 camping spaces.  However, the Department did not charge the vendor for the 6 additional camping spaces, resulting in a loss to the Fair of $1,800 in camping revenues.  (Finding 1, pages 8-9)

 

We recommended the Department improve control procedures over camping revenue and receipts.  Further the Department should improve controls over the completion and monitoring of camping permits. 

 

Department officials agreed with the finding and stated it will review its procedures for camping revenue and receipts and make changes as necessary. 

 

 

PROOF OF INSURANCE NOT OBTAINED

 

The Department did not obtain proof of insurance from Illinois State Fair vendors, as required by terms of their contract for the 2005 Fair.

 

The Department entered into contractual agreements with vendors to provide services at the Fair.  During the 2005 Fair, the Department did not obtain proof of insurance from 10 of 30 contracts sampled (33%) as required by the terms of their contracts.  (Finding 2, page 10)

 

We recommended the Department implement procedures to ensure the Department does not sign contracts until proof of insurance is obtained from the vendor.

 

Department officials agreed with our recommendation and stated that they will ensure that all vendors provide proof of insurance at check-in and that no one is allowed to set up at the Fair without having provided the proof of insurance. 

 

 

INADEQUATE CONTROLS OVER GATES AND PARKING ADMISSION

 

The Department did not have adequate control over gate/parking admissions at the Illinois State Fair (Fair).

 

The Department sells parking space at the Fair each year.  Total gate admissions for the 2004 and 2005 fairs was $943,612 and $958,353, respectively.

 

During the gate observations in 2004 Fair, the following exceptions were noted:

 

·        One gate was unmanned for over 30 minutes.

·        Unsold tickets were left unattended.

·        A volunteer at one gate was observed taking cash from two different groups of pedestrians for the purchase of a ticket, however, they were not tearing off a ticket and placing it in the appropriate collection box.

·        Four gates were understaffed causing the volunteer to sell and take tickets.

·        During detail testing of the entire gate admissions process, it appeared that the contractor did not have adequate controls over ticket sales and gate admissions.  It appeared the contractor underestimated the staffing requirement needed to provide adequate supervision, adequate staff at the gates, and still perform the required cash and ticket reconciliations and reporting of those daily amounts in a timely manner.

·        The contractor did not make up any shortages of gate and parking revenues as required by the contract.  The contractor deposited $3,608 less than what should have been deposited in admission revenue based on unsold tickets. 

 

During the gate observations in 2005 Fair, the following exceptions were noted:

·        Non-paid credentials were not collected.

·        One gate was undermanned causing the volunteer to sell and take tickets from pedestrians.

·        Parking permits for vehicles were checked but passengers were not checked if they have valid admission tickets.

·        We noted parked vehicles with no parking passes (employee or purchased pass) displayed in their cars.  (Finding 4, pages 12-14)

 

We recommended the Department enhance its controls over gate and parking admissions.

 

Department officials agreed with our recommendation and indicated that controls were substantially improved in 2005, and that it will review procedures with the gate/parking contractor to ensure that gate and parking admissions are handled with maximum accuracy.   

 

 

NO SUPPORTING DOCUMENTS FOR ALL-ACCESS PASSES

 

The Department did not have supporting documents for recipients of the All-Access Pass issued during the 2005 State Fair. 

 

During the 2005 Fair, 147 All-Access Passes were distributed to various individuals at the discretion of the Fair Manager and the Fair did not keep supporting documentation to indicate individuals issued passes and the purpose for issuing the passes. Additionally, per review of the All-Access Passes, we noted that no documentation was presented detailing any limitations, if any, on the use of these passes and whether these limitations had been communicated to the recipients.  (Finding 8, page 18)

 

We recommended Fair personnel document the issuance of non-paid All-Access Passes and clearly communicate the use/limitation of such passes in writing to the recipient.

 

Department officials agreed with our recommendation and stated that beginning with the 2006 Fair, there will not be any All-Access Passes distributed.

 

 

INADEQUATE SEGREGATION OF DUTIES OVER NON-FAIR SPACE RENTAL

 

The Department did not have adequate segregation of duties in its Non-Fair Space Rental Division.

 

During the 2005 Fair examination, we noted that one person in the Non-Fair Space Rental Division is responsible for entering revenue accounting information into Fair Management System (FMS) for Non-Fair rentals, and processing and depositing cash receipts.  Non-fair space rentals totaled $1,015,211 in fiscal year 2005. 

 

Good internal control procedures require that responsibilities for maintaining accounting records be segregated from responsibilities with access to cash or other assets.  (Finding 9, page 19)

 

We recommended Fair personnel allocate the resources necessary to segregate duties over the fiscal operations of the Non-Fair Space Rental.

 

Department officials agreed with our recommendation and stated it will review current procedures and establish new procedures to ensure there is an adequate separation of duties.

 

 

OTHER FINDINGS

 

The remaining findings are reportedly being given attention by the Department.  We will review the Department’s progress toward implementing our recommendations in our next audit.

 

Ms. Laura Lanterman, Chief Fiscal Officer, provided the responses to our findings and recommendations. 

 

FINANCIAL RESULTS OF THE FAIR

 

      Fair expenditures exceed revenues by $3,313,804 and $3,792,340 for the years ended September 30, 2005 and 2004, respectively.  (page 24)

 

ACCOUNTANTS’ REPORT

 

      The auditors’ have applied certain limited procedures to the accompanying supplementary information of the Illinois State Fair, except for information marked “not examined”.

 

 

_______________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

 

SPECIAL ASSISTANT AUDITORS

 

      McGladrey & Pullen LLP were our special assistant auditors for this examination.