REPORT DIGEST

ILLINOIS
FINANCE AUTHORITY

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

For the Year Ended:

June 30, 2007

 

Summary of Findings:

Total this year

†††† - Financial Audit        0*

†††† - Compliance Audit   8

                                           8

Total last year

†††† - Financial Audit        0*

†††† - Compliance Audit   7

                                           7

Repeated from last year

†††† - Financial Audit        0*

†††† - Compliance Audit   1

                                           1

*Financial Audit Previously Released

 

Release Date:

May 20, 2008

 

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 the Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

INTRODUCTION

 

††††† The Financial Statement Audit for the year ended June 30, 2007 was previously released on February 14, 2008.That audit did not contain any audit findings.

 

††††† This report addresses findings pertaining to the State Compliance Examination.In total, this report contains eight audit findings (numbers 1-8).

 

 

 

 

SYNOPSIS

 

 

®      The Authority did not have a policy to comply with the Farmers Home Administration program requirements for nondiscrimination.

®      The Authority did not report required revenue bond information to the Illinois Office of the Comptroller.

®      The Authority did not refer bad debts to the Illinois Office of the Comptrollerís offset system.

®      The Authority did not publish its contracts in the Illinois Procurement Bulletin and did not file Real Estate Lease Disclosure forms with the Illinois Office of the Comptroller.

 

 

 

 

 

 

 

 

 

 

 

{Revenue, Expenditures and Activity Measures are summarized on the next page.}


ILLINOIS FINANCE AUTHORITY

COMPLIANCE EXAMINATION

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

YEAR ENDED JUNE 30, 2007
 

FINANCIAL INFORMATION

FY2007

FY2006

        Total Revenues.........................................

$14,739,091

$16,050,562

††††† Administrative Service Fees........................

††††††† % of Revenues........................................

$6,632,365

45.0%

$4,370,470

27.2%

††††† Interest on Loans........................................

††††††† % of Revenues......................................

$3,666,594

24.9%

$3,591,255

22.4%

††††† Interest and investment income....................

††††††† % of Revenues........................................

$2,793,615

19.0%

$2,600,275

16.2%

††††† Annual fees................................................

††††††† % of Revenues........................................

$1,154,011

7.8%

$1,299,441

8.1%

††††† Appropriations from the State of Illinois........

††††††† % of Revenues........................................

-

0.0%

$3,800,000

23.7%

††††† Other Revenues.........................................

††††††† % of Revenues........................................

$492,506

3.3%

$389,121

2.4%

        Total Expenses..........................................

$10,749,742

$9,086,808

††††† Employee Related Expenses........................

††††††† % of Expenses.........................................

$3,638,102

33.9%

$3,030,627

33.4%

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

††††† Average Cost per Employee.......................

††††††† 28

$129,932

26

$116,563

††††† Interest Expense.........................................

††††† % of Expense............................................

$2,767,195

††† 25.7%

$3,088,416

†††† 34.0%

††††† Professional Services..................................

††††††† % of Expenses........................................... ................................................................. †††††

$2,642,074

24.6%

$1,782,438

19.6%

††††† Other Expenses..........................................

††††††† % of Expenses.........................................

$1,702,371

15.8%

$1,185,327

13.0%

        Excess of Revenues over Expenses.........

$3,989,349

$6,963,754

        Cash...........................................................

        Investments...............................................

        Conduit debt outstanding..........................

$41,125,776

$18,997,064

$21,638,350,000

$49,920,178

$16,882,342

$20,919,876,000

SELECTED ACTIVITY MEASURES

FY2007

FY2006

        Federal Program Loans Outstanding..............

$546,455

$400,694

        Total Number of Bond Issues and Loans Outstanding at June 30, (Unaudited)............

 

1,058

 

803

        Total Number of New Bond Issues and Loans (Unaudited)................................................

 

120

 

67

        Total Jobs Created or Retained (Unaudited)...

9,232

8,706

AGENCY EXECUTIVE DIRECTOR

During Audit Period: Ms. Jill Rendleman (Interim) (to 5/21/07); Ms. Kym Hubbard (from 5/21/07)

Currently: Ms. Kym Hubbard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


No policy to notify applicants of the nondiscrimination requirements

 

 

Applications did not disclose nondiscrimination requirements

 

 

 

 

 

 

 

Authority agrees with auditors

 

 

 

 

 

 

 

 

Outstanding conduit debt was $21.3 billion

 

 

 

 

Notices not filed timely

 

 

Bond transcripts did not match repayment schedules

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Authority agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

$293,645 in delinquent debts were not submitted to the Comptrollerís offset system

 

 

 

 

 

 

 

 


Authority agrees with auditors

 

 

 

 

 

 

 

 

Contracts tested were not always published in the Illinois Procurement Bulletin

 

Disclosures of financial interest could not be located

 


Real estate lease disclosures not filed

 

 

 

 

 

 

 

 

 

 

 

 

Authority agrees with auditors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

††††† The mission of the Authority is to foster economic development to the public and private institutions that create and retain jobs, and improve the quality of life in Illinois by providing access to capital.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

AUTHORITY MISSING POLICY ON NONDISCRIMINATION

 

††††† The Authority did not have a policy to comply with the Farmers Home Administration program requirements for nondiscrimination.

 

††††† During our testing of compliance with the Farmers Home Administration program, we noted the Authority did not have a formal policy to notify applicants of the requirements for nondiscrimination.Also, during our detailed testing of both loans made under the program during the current fiscal year totaling $317,000, we noted the application for the loans did not disclose the nondiscrimination requirements.

 

††††† Authority management stated they were unaware of this requirement due to an oversight in the administration of the program.(Finding 1, page 12)

 

††††† We recommended that the Authority implement a formal policy against discrimination that will inform applicants that the Authority does not discriminate based on the requirements of the program.

 

††††† Authority officials accepted the recommendation and stated it would revise its policies and applications for this program to ensure that all future applicants of this program are notified of the nondiscrimination requirements.

 

 

 

BOND INFORMATION NOT REPORTED TO THE ILLINOIS OFFICE OF THE COMPTROLLER

 

††††† The Authority did not report required revenue bond information to the Illinois Office of the Comptroller.

 

††††† During the fiscal year ended June 30, 2007, the total outstanding balance of conduit debt that was in the care of the Authority was $21.3 billion.

 

††††† The Comptrollerís office reported 184 delinquencies while the Authority had 20 delinquencies on its records.During our detailed testing, we selected 54 samples of delinquent records from the Comptrollerís listing.We noted that 14 (26%) notices were not submitted timely.We also selected 27 newly issued bonds for compliance.We noted that 2 out of 27 (7%) bond transcripts did not match the repayment schedules.The bond transcript is the document that specifies that actual repayment schedule for the bonds.

 

††††† Authority management stated that the discrepancy is due to the Authority personnel preparing the repayment schedules based on the bond agreement and not the actual bond transcript.(Finding 2, page 13)This finding was first reported in 2005.

 

††††† We recommended the Authority review its procedures to insure that the information submitted to the Comptrollerís office for newly issued bonds is submitted timely and that the information is accurate.Further, the Authority should insure that the Notice of Payment forms are submitted to the Comptrollerís office timely.

††††† Authority officials accepted the auditorís recommendation and stated it was currently reviewing ways to strengthen its policies to insure that repayment schedules reported to the Comptroller match the bond transcripts.

 

 

BAD DEBTS NOT REFERRED TO THE COMPTROLLERíS OFFSET SYSTEM

 

††††† The Authority did not refer bad debts to the Illinois Office of the Comptrollerís offset system.

 

††††† While reviewing the Authorityís policy for delinquent debts, we noted the Authority did not utilize the Comptrollerís offset system for delinquent debts as required by Statewide Accounting Management System (SAMS) procedures.The Authority had $293,645 in delinquent debts that should have been submitted to the Comptrollerís offset system.

 

††††† Authority Management stated that they were unaware of this requirement.(Finding 3, page 14).

 

††††† We recommended the Authority refer delinquent debts to the Comptrollerís offset system in accordance with SAMS procedures.

 

††††† Authority officials accepted the auditorís recommendation and stated it was currently in the process of establishing procedures to ensure that all bad debts over $1,000 and more than 90 days past-due are referred to the Comptrollerís offset system.

 

 

NONCOMPLIANCE WITH THE ILLINOIS PROCUREMENT CODE AND SAMS PROCEDURES

 

††††† The Authority did not publish its contracts in the Illinois Procurement Bulletin and did not file Real Estate Lease Disclosure forms with the Illinois Office of the Comptroller.

 

††††† We reviewed all 25 contracts entered into by the Authority for fiscal year 2007.We noted that 7 (28%) of the contracts totaling $129,435 were not published in the Illinois Procurement Bulletin.The Authority was also unable to locate the disclosures of financial interest statements for these 7 contracts.

 

††††† We also reviewed all lease agreements.We noted the Authority did not file the Real Estate Lease Disclosure form for all seven leases examined.

 

††††† Authority officials stated the failure to publish the seven contracts in the Illinois Procurement Bulletin and the failure to file the Real Estate Disclosure forms with the Comptroller was due to oversight.(Finding 4, page 15).

 

††††† We recommended the Authority publish all its contracts in the Illinois Procurement Bulletin in order to comply with the Act.In addition, we recommended that the Authority file its leases with the Comptroller and submit the required lease forms.

 

††††† Authority officials accepted the auditorís recommendation and stated it would comply with the Illinois Procurement Code and file the Real Estate Lease Disclosure forms with the Illinois Office of the Comptroller.

††

OTHER FINDINGS

 

††††† The remaining findings are reportedly being giving attention by the Authority.We will review progress toward implementing our recommendations in our next examination.

 

AUDITORSí OPINION

 

††††† We conducted a compliance examination of the Authority for the year ended June 30, 2007 as required by the Illinois State Auditing Act, the Single Audit Act and OMB Circular A-133.A financial audit covering the year ending June 30, 2007 was issued separately.

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

 

 

 

SPECIAL ASSISTANT AUDITORS

 

††††† McGladrey & Pullen, LLP were our special assistant auditors for this engagement.

 

DIGEST FOOTNOTE

 

#2 Ė BOND INFORMATION NOT REPORTED TO THE ILLINOIS OFFICE OF THE COMPTROLLER Ė Previous Commission Response

 

2006:The Authority accepts the recommendation.The Authority will continue to work with the Comptrollerís Office to eliminate discrepancies between the Comptrollerís reports and the Authorityís reports.