REPORT DIGEST

 

ILLINOIS

CONSERVATION

FOUNDATION

 

FINANCIAL &

COMPLIANCE AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                      3

Total last audit                      0

Repeated from last audit       0

 

Release Date:

March 30, 2004

 

 

 

 

 

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 TDD (217) 524-4646

 

This Report Digest is also available on

the worldwide web at

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

 

 

 

SYNOPSIS

  • The Foundation had deposits in banks in excess of the FDIC insurance limits. Further, the Foundation had not requested the banks to pledge any additional collateral to secure the deposits.
  • The Foundation did not comply with certain parts of the Fiscal Control and Internal Auditing Act, the State Comptroller Act and the Illinois Procurement Code as follows:
    • A required internal control certification was not filed with the Office of the Auditor General.
    • Information on locally held funds was not submitted to the Office of the State Comptroller.
    • Copies of grants in excess of $10,000 were not filed with the Office of the State Comptroller. The Foundation awarded 57 grants to sub-grantees in excess of $10,000.

 

 

 

 

 

 

 

 

{Financial Information is summarized on the reverse page.}

 

  ILLINOIS CONSERVATION FOUNDATION

 

     FINANCIAL AND COMPLIANCE AUDIT

FOR THE FISCAL YEAR ENDED JUNE 30, 2003

 

OPERATING STATEMENT (Governmental Funds)

FY 2003

FY 2002

Revenues:  Fund Raising Events

                    Donations - Restricted

                    Grants and Receipts from Other Governments

                    Donations Ė Unrestricted

                    Merchandise Sales Ė Unrestricted

                    Investment Income - Unrestricted

                    Investment Income - Restricted

                    Decrease In Fair Value Of Restricted Investments

                    On-Behalf Payments

                    Change in Prepaid Expenses

                    Illinois First Grant ;

                              Total Revenue

Expenditures: General Administrative

                    Education Education

                    Natural Resources and Recreation Programs

                    On-Behalf Payments

                              Total Expenditures

Change In Net Assets

Net Assets, Beginning of Year

Net Assets, End of Year

$ 85,031

889,434

1,362,410

60,401

1,047

38,573

3,700

(2,084)

225,005

614

0

$2,664,131

$ 203,780

10,542

1,995,610

225,005

$2,434,937

$ 229,194

3,603,050

$3,832,244

$ 92,628

1,947,779

1,392,540

63,476

454

88,420

1,680

(29,453)

0

5,981

150,000

$3,713,505

$ 176,535

6,775

3,422,935

0

$3,606,245

107,260

3,495,790

$3,603,050

STATEMENT OF NET ASSETS (Governmental Funds)

June 30, 2003

June 30, 2002

Assets:        Cash And Cash Equivalents

                    Accounts Receivable

                    Accrued Investment Income

                    Inventory

                    Prepaid Expenses

                    Investments

                              Total Assets

Liabilities:   Accounts Payable

Net Assets: Natural Resources & Recreation - Restricted

                    Endowment/Nonexpendable Ė Restricted

                    Education - Restricted

                    Unrestricted

                              Total Net Assets

$3,727,612

27,577

2,410

14,978

6,595

65,002

$3,844,174

$ 11,930

$3,450,860

65,002

9,703

306,679

$3,832,244

$3,540,704

17,263

4,332

2,782

5,981

64,365

$3,635,427

$ 32,377

$3,200,578

64,365

19,266

318,841

$3,603,050

FOUNDATION EXECUTIVE DIRECTOR(S)

During Audit Period: John D. Schmitt (until March 13, 2003), Jess Hansen (effective May 15, 2003)

Currently: Jess Hansen

 

 

 

 

 

 

$89,061 in bank balances was unprotected by FDIC insurance or other collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required internal control certification not submitted to the Office of the Auditor General.

 

 

Information on locally held funds was not submitted to the Office of the Comptroller.

 

 

 

 

Copies of grants in excess of $10,000 were not filed with the Office of the Comptroller.

 

 

 

The Foundation awarded 57 grants to sub-grantees in excess of $10,000.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

BANK BALANCES IN EXCESS OF FDIC INSURANCE

During our audit of cash balances, we noted the Foundation did not request securities from their banks to collateralize bank balances in excess of the FDIC insurance limit of $100,000. A total of $89,061 in bank balances was unprotected by collateral at June 30, 2003.

The State Officers and Employees Money Disposition Act (30 ILCS 230/2c) (Act) requires State agencies obtain appropriate collateral whenever funds deposited exceed the $100,000 FDIC insurance limit. The Foundation is considered a component unit of the State of Illinois and should be following the Act.

Foundation management indicated the situation arose due to a lack of sufficient supervision of the bank balances. (Finding 1, page 16)

We recommended the Foundation request the necessary collateral be pledged by the banks in sufficient amount so as to provide protection for their bank balances.

Foundation management indicated they will establish procedures for monitoring the amounts maintained in bank accounts to minimize account balances in excess of FDIC limits. In addition, it was indicated they will work with the appropriate banks to reduce the Foundationís risk and will request collateral from the banks where appropriate.

NONCOMPLIANCE WITH STATUTORY MANDATES

As part of our audit we tested the Foundationís compliance with certain statutory mandates. We noted three instances where, through our interpretation of the statutory mandates, the Foundation was not complying.

First, we noted the Foundation was not filing an annual certification of their systems of internal control with the Office of the Auditor General as required by the Fiscal Control and Internal Auditing Act (FCIAA). Foundation management indicated they had not been filing the certification because they did not interpret the statute to apply to them; however, the Foundation recently indicated it now agrees with the auditorís interpretation.

Second, we noted the Foundation was not filing documentation of the establishment of their locally held funds/accounts or quarterly reports of locally held fund/account activity with the Office of the State Comptroller as required by the State Comptroller Act (Act). The Foundation has three locally held funds/accounts that are held outside of the State Treasury. Foundation management noted they did not believe the locally held fund requirements apply to them as the Foundation was created as a not-for-profit corporation under the General Not for Profit Corporation Act of 1986.

Third, the Foundation was not filing copies of their grants in excess of $10,000 with the Office of the Comptroller as required by the Illinois Procurement Code (Code). The Illinois Conservation Foundation Act notes the Foundation is exempt from the Code when only private funds are used for procurement expenditures. During fiscal year 2003 the Foundation received approximately $1.36 million of federal grant funds. These funds maintain their public identity until they are expended for goods or services and would not be considered private funds.

The Foundation awarded 57 grants over $10,000 during fiscal year 2003 from the federal funds they received. Foundation management indicated the language to exempt the Foundation from the Code when private funds are used for procurement expenditures was added to clarify the Foundation is exempt from the Code.

Failure to comply with the Fiscal Control and Internal Auditing Act, State Comptroller Act and the Illinois Procurement Code are violations of statutorily mandated responsibilities. (Finding 2, pages 17-18)

We recommended the Foundation either comply with the applicable requirements set forth in the statutes or seek a formal written interpretation from the State of Illinois Office of the Attorney General regarding the applicability of the statutes to the Foundation.

Foundation management responded they will begin filing the annual internal control certification with the Office of the Auditor General starting with the certification due May 1, 2004. Foundation management also noted they will work with the Attorney General, Comptroller and other State entities to clarify requirements that are applicable to the Foundationís activities. In addition, Foundation management responded that they will seek legislation to further clarify the statutory requirements applicable to the Foundation as a not-for-profit corporation.

OTHER FINDING

The remaining finding is less significant and is reportedly being given attention by the Foundation. We will review the Foundationís progress toward the implementation of our recommendation in our next audit.

Mr. Jess Hansen, Executive Director of the Illinois Conservation Foundation provided the Foundationís responses.

AUDITORíS OPINION

Our auditors stated the Illinois Conservation Foundationís financial statements as of and for the year ended June 30, 2003 were fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:RPU:pp

SPECIAL ASSISTANT AUDITORS

Ginoli & Company LTD were our special assistant auditors.