REPORT DIGEST ILLINOIS STATE FAIR COMPLIANCE EXAMINATION For the Two Years Ended: September 30, 2011 Release Date: May 17, 2012 Summary of Findings: Total this audit: 6 Total last audit: 1 Repeated from last audit: 1 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 (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION The Illinois State Fair is an operating entity of the Department of Agriculture. The Department is responsible for fulfilling the statutory obligation to hold the annual Illinois State Fair. The Fair is held to promote agriculture and the agriculture industry, and to provide for exhibits and activities in the fields of industry, education, arts and crafts, labor, entertainment and other areas of interest to the people of the State. SYNOPSIS • The Illinois State Fair has not developed formalized written policies and procedures for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act. • The Illinois State Fair collected nominating, sustaining and starting fees in excess of amounts allowed under the Illinois Horse Racing Act of 1975. • The Illinois State Fair did not exercise adequate controls over temporary employee timesheets. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF WRITTEN POLICIES AND PROCEDURES FOR DISTRIBUTION OF GRANDSTAND COMPLIMENTARY TICKETS The Illinois State Fair (ISF) has not developed formalized written policies and procedures for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act. The ISF reserves the right to receive and distribute no more than 250 grandstand complimentary tickets per performance as part of each performer’s contract at no cost to the ISF. Of the 2,250 authorized grandstand complimentary tickets, the ISF issued 1,997 tickets, with a retail value of $54,352, to various parties during the 2010 and 2011 Illinois State Fair. Of the 1,997 grandstand complimentary tickets distributed, 1,412 tickets, with a retail value of $38,840, were given in exchange for advertising, marketing, promotions, in-kind donations and corporate sponsorships, which management stated benefitted the ISF. The remaining 585 tickets, valued at $15,512, were distributed to various individuals including the Department of Agriculture Director, Fair Manager, and the Governor’s Office. The ISF, however, failed to maintain a detailed accounting and justification for the distribution of these tickets. While many of these 1,997 grandstand complimentary tickets were distributed for promotional activities or bartering or exchange of services beneficial to the ISF, the grandstand complimentary tickets distributed included 406 tickets distributed to advisory board members, charitable organizations, fundraisers and State employees, which were not supported by any justification as to why the distribution of these tickets was advantageous or beneficial to the operation of the ISF. In addition, the ISF could not always document the specific individual(s) receiving the grandstand complimentary tickets. (Finding 1, pages 9-10) We recommended the ISF develop and implement rules in accordance with the Illinois Administrative Procedures Act, for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act. ISF officials agreed with the finding and stated it will develop and implement rules for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act. NONCOMPLIANCE WITH THE ILLINOIS HORSE RACING ACT OF 1975 The Illinois State Fair (ISF) was not in compliance with the Illinois Horse Racing Act of 1975 concerning the nominating, sustaining and starting fees exceeding 2% of the purse for certain races. The nominating, sustaining, and starting fees of $135,510 paid by the entrants for the ISF’s racing events in 2011 amounted to 21% of the purses and exceeded the 2% limit outlined by the Act by approximately $122,330. (Finding 2, page 11) We recommended the ISF comply with the provisions of the Illinois Horse Racing Act. ISF officials agreed with the finding and stated it will comply with the provisions of the Illinois Horse Racing Act. NEED TO IMPROVE CONTROLS OVER TEMPORARY EMPLOYEE TIMESHEETS The Illinois State Fair (ISF) did not exercise adequate controls over temporary employee timesheets. During our examination, we noted seven of 30 (23%) timesheets were incomplete or completed at the end of the temporary employee’s shift. We noted some timesheets were completed when the auditor attempted to review them. We also noted timesheets were completed at the end of the employee’s shift, instead of indicating when the employee arrived for the shift. (Finding 4, page 13) We recommended the ISF implement additional controls to ensure employee attendance is documented properly on a daily basis. ISF officials agreed with the finding and stated it will implement additional controls to ensure employee attendance is documented properly on a daily basis. OTHER FINDINGS The remaining findings are reportedly being given attention by the Illinois State Fair. We will follow up on our findings during the next examination of the ISF. AUDITORS’ OPINION We conducted a compliance examination of the Illinois State Fair as required by the Illinois State Auditing Act. The Fair has no funds that require an audit leading to an opinion of financial statements. WILLIAM G. HOLLAND Auditor General WGH:EVB:rt SPECIAL ASSISTANT AUDITORS Sikich, LLP were our Special Assistant Auditors for this engagement.