REPORT DIGEST

 

CAPITAL DEVELOPMENT BOARD

 

FINANCIAL AUDIT

For the One Year Ended:

June 30, 2008

And

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2008

 

Summary of Findings:

Total this audit†     †††††††††††† 5

Total last audit†††††††††††††      8

Repeated from last audit    3

 

Release Date:

February 11, 2009

 

 

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 TTY (217) 524-4646

 

This Report Digest and Full Report are also available on

the worldwide web at www.auditor.illinois.gov

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

®      Adequate controls were not maintained over the collateralization of construction retention trust accounts.

 

®      Requirements of the Art-in-Architecture Program were not met.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


 

 

CAPITAL DEVELOPMENT BOARD

FINANCIAL AUDIT

For the Year Ended June 30, 2008

COMPLIANCE EXAMINATION

For the Two Years Ended June 30, 2008

 

EXPENDITURE STATISTICS

FY 2008

FY 2007

FY 2006

        Total Expenditures (All Funds)*.......

 

OPERATIONS TOTAL......................

††††† % of Total Expenditures................

††††† Personal Services...........................

††††††††††† % of Operations Expenditures..

††††††††††† Average No. of Employees......

††††† Other Payroll Costs (Retirement,

††††† Social Security, Group Insurance).

††††††††††† % of Operations Expenditures..

††††† Contractual Services......................

††††††††††† % of Operations Expenditures..

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

††††††††††† % of Operations Expenditures..

 

CONSTRUCTION TOTAL................

††††† % of Total Expenditures................

 

        Cost of Property and Equipment......

        Cost of Construction in Progress......

$222,085,157

†††††††††††††††††††††

$13,308,781

6.0%

$7,663,215

57.6%

130

 

$3,480,648

26.1%

$553,209

4.2%

$1,611,709

12.1%

 

$208,776,376

94.0%

 

$2,024,847

$18,045,024

$363,027,378

 

$12,352,575

3.4%

$7,323,181

59.3%

126

 

$2,971,822

24.0%

$467,019

3.8%

$1,590,553

12.9%

 

$350,674,803

96.6%

 

$2,149,175

$44,117,432

$466,490,466

 

$10,959,319

2.3%

$6,582,567

60.1%

136

 

$2,607,630

23.8%

$354,121

3.2%

$1,415,001

12.9%

 

$455,531,147

97.7%

 

$2,309,051

$26,494,174

SELECTED ACTIVITY MEASURES

FY 2008

FY 2007

FY 2006

Number of Active Construction Projects....

Number of Design Contracts Processed......

Average Variation from Planned Schedule:††

Design Phase............................................

Construction Phase...................................

Number of Change Orders.........................

Percent of Change Orders to Contract Value

296

87

 

40.98%

6.47%

1,516

5.57%

426

139

 

11.4%

-6.3%

1,998

7.6%

443

39

 

34.8%

31%

1,808

6.87%

* Appropriated and non-appropriated funds

 

EXECUTIVE DIRECTORS

During Audit Period: ††† James Riemer, Executive Director (5/13/08 through present)

††††††††††††††††††††††††††††††††††† James Riemer, Acting Executive Director (4/16/08 through 5/12/08)

††††††††††††††††††††††††††††††††††† Janet Grimes, Executive Director (7/1/06 through 4/15/08)

Currently:James Riemer, Executive Director

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Local funds of $1.922 million were uninsured and uncollateralized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects lacked proof of installment insurance for artists

 

Projects did not have minutes from committee meetings


Public Arts Advisory Committee positions were vacant, including the Chairman

 

 

INTRODUCTION

 

The Capital Development Board serves as the non-road, construction management arm of the Illinois government.

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

INADEQUATE INTERNAL CONTROL FOR UNINSURED AND UNCOLLATERALIZED DEPOSITS

 

††††† The Board did not maintain adequate controls over the collateralization of locally held construction retention trust accounts.

 

††††† At June 30, 2008, the Board had a total bank balance of $5.82 million held in local funds as retainage on open construction projects, including $1.922 million which was uninsured and uncollateralized. The Board did not obtain additional collateral for some deposit amounts exceeding the Federal Deposit Insurance Corporation coverage. (Finding 1, pages 11-12) This finding was first reported in 2005.

 

††††† We recommended the Board continue to monitor account balances and act to ensure that bank accounts are collateralized adequately.

 

††††† Board officials agreed with our finding. The Board responded that a new policy was implemented January 1, 2008 that new retention trust agreements will be allowed only if the bank complies with collateralization requirements. (For previous response, see digest footnote #1.)

†††††

 

ART-IN-ARCHITECTURE PROGRAM NONCOMPLIANCE

 

††††† The Board did not comply with all the requirements set forth by the Art-in-Architecture Program.

 

††††† The Capital Development Board Act (Act) mandates that through the Art-in-Architecture Program, the Board spend one-half of one percent of the construction appropriation for State-funded building or renovation projects on the purchase of artwork for these projects (20 ILCS 3105/14).

 

††††† We tested 6 of 11 (55%) Art in Architecture projects and noted:

 

        Five of six (83%) projects did not have proof of installment insurance for artists used in the projects.

        Three of six (50%) projects did not have minutes from committee meetings as required by the Open Meetings Act.

        Nine of twelve (75%) positions on the Public Arts Advisory Committee were vacant.Further, the Committee Chairman position had been vacant for eight years.The Act requires the committee choose a Chairman and requires committee members be appointed by the Governor and the General Assembly.(Finding 08-5, Pages 20-21)

††††† We recommended that the Board ascertain that all Art in Architecture project requirements are met.Further, we recommended that:

 

        The installment insurance form or documentation that no insurance is needed should be maintained.

        Committees should maintain minutes of each meeting.

        The Board should continue communication with the Governor and General Assembly to request vacant committee positions be filled.

        A chairman should be appointed to the Public Arts Advisory Committee.

 

††††† Board officials agreed with our finding and recommendations.Further, officials responded that the appointment of committee members is under the control of the Governorís Office, the House, and the Senate.Officials stated they have reminded and will continue to remind those bodies of the vacancies.

 

 

 

OTHER FINDINGS

 

††††† The remaining findings are reportedly being given attention by the Board.We will review the Boardís progress toward the implementation of our recommendations in our next compliance examination engagement.

 

 

AUDITORSí OPINION

 

Our auditors stated the financial statements of the Capital Development Board for the year ended June 30, 2008 are fairly presented in all material respects.

 

 

†††††††††††††††††††††† ††††† ____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:LKW

 

 

SPECIAL ASSISTANT AUDITORS

 

E.C. Ortiz & Co., LLP were our special assistant auditors for this engagement.††

 

 

DIGEST FOOTNOTE

 

#1 INADEQUATE INTERNAL CONTROL FOR UNINSURED AND UNCOLLATERALIZED DEPOSITS-Previous Board Response

 

2007: We agree with the finding. CDB sent agreement amendments requiring collateralization to 71 accounts. Responses were returned by 24.Those not responding with a signed agreement cited their inability to provide the collateralization due to internal guidelines or a prohibitive cost. CDB will begin a new policy that new retention trust agreements be allowed only if the bank specifically responds to the collateralization requirement beginning January 1, 2008.Those accounts already in place will remain.We understand that the potential for a repeat finding will exist until the old accounts are all paid out.