REPORT DIGEST

ILLINOIS GRAIN INSURANCE CORPORATION

Financial Audit and Compliance Examination
For the Two Years Ended June 30, 2015

Release Date:  February 25, 2016

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  1 -- 3 -- 4
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 3 -- 4

FINDINGS LAST AUDIT: 4

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State laws
and regulations (material noncompliance).
Category 2:	Findings that are
significant deficiencies in internal control
and noncompliance with State laws and
regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 Grain Insurance Corporation
(Corporation), a component unit of the State
of Illinois, was created for the purpose of
improving the economic stability of
agriculture by establishing funds to pay
grain producers and other claimants for
losses incurred by the failure of a grain
dealer or warehouseman.  Fiscal support to
carry out the responsibilities of the
Corporation is provided by the Illinois
Department of Agriculture.

SYNOPSIS

• (15-1) The Corporation has not funded the
$2,000,000 Grain Insurance Reserve Fund as
required by the Grain Code.

• (15-3) The Corporation failed to ensure
that all required statements were included
in cooperative agreements in its
administration of federal licensees’
participation in the Illinois Grain
Insurance Fund.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

GRAIN INSURANCE RESERVE FUND NOT FUNDED

The Illinois Grain Insurance Corporation
(Corporation) has not established the
$2,000,000 Grain Insurance Reserve Fund as
required by the Grain Code (Code) after
repayment of funds owed the General Revenue
Fund in April 2005.

Based upon the recommendations from the
prior audit findings for this issue the
Corporation board recommended either funding
be sought from the Office of Management and
Budget or legislative relief be sought to
alleviate the statutory requirement.
Regarding the ongoing noncompliance, the
Corporation stated the funding for the Grain
Insurance Reserve Fund has not been
requested.  (Finding 1, page 11)  This
finding has been repeated since 2005.

We recommended the Corporation comply with
the Code by working with the Office of
Management and Budget to obtain the
necessary appropriation to fund the Grain
Insurance Reserve Fund or seek legislative
relief from the statutory requirement.

Corporation officials agreed with our
recommendation and stated the Board of
Directors of the Corporation, with input
from the Corporation Advisory Committee,
will address the non-funding of the Grain
Insurance Reserve Fund at its annual board
meeting to be held by April 30, 2016.   (For
the previous Corporation response, see
Digest Footnote #1.)

COOPERATIVE AGREEMENTS WITH FEDERAL
LICENSEES DID NOT INCLUDE ALL REQUIRED
STATEMENTS

The Corporation did not ensure all the
required statements were included in
cooperative agreements in its administration
of federal licensees’ participation in the
Illinois Grain Insurance Fund (Fund).

If a federal licensee wishes to participate
in the Fund, they must sign a cooperative
agreement with the Illinois Department of
Agriculture (Department) on behalf of the
Corporation and agree to subject themselves
to the Code.   During testing of the 15
existing cooperative agreements, auditors
found the standard cooperative agreement
failed to contain two required provisions of
the Code in all of the cooperative
agreements.

Corporation management indicated the
Department’s Bureau of Warehouse staff has
worked with the legal staff to draft a
revised cooperative agreement, but the
revised cooperative agreement had not yet
been implemented.   (Finding 3, pages 13-14)

We recommended the Corporation implement a
revised cooperative agreement which includes
all of the requirements outlined in the
Grain Code.

Corporation officials agreed with our
recommendation and indicated the Corporation
has implemented the recommendation.

OTHER FINDINGS

The remaining findings are reportedly being
given attention by the Corporation.
Auditors will review the Corporation’s
progress towards the implementation of all
the recommendations in the next engagement.

AUDITOR’S OPINION

The auditors stated the basic financial
statements of the Corporation as of and for
the years ended June 30, 2015 and 2014 were
fairly presented in all material respects.

ACCOUNTANT’S OPINION

We conducted a compliance examination of the
Corporation for the two years ended June 30,
2015, as required by the Illinois State
Auditing Act.  The auditors stated the
Corporation complied, in all material
respects, with the requirements described in
the report.

FRANK J. MAUTINO
Auditor General

FJM:rpu

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for this
audit/examination were Sikich LLP.

DIGEST FOOTNOTES

#1 GRAIN INSURANCE RESERVE FUND NOT FUNDED

2013:  The Corporation agrees with the
finding.  The Board of Directors of the
Illinois Grain Insurance Corporation (IGIC),
with input from the IGIC Advisory Committee,
will address the non-funding of the Grain
Insurance Reserve Fund at its annual board
meeting to be held by April 30, 2014. Based
on the recommendations of the Board, funding
will again be sought from the Office of
Budget and Management or legislative relief
will be sought to alleviate the statutory
requirement.  Upon the decision /
recommendation of the IGIC Board of
Directors, the corrective action will be
initiated.