REPORT DIGEST ILLINOIS GRAIN INSURANCE CORPORATION FINANCIAL AUDIT AND COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2017 Release Date: March 15, 2018 FINDINGS THIS AUDIT: 5 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 4 -- 5 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 4 -- 5 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 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 • (17-1) The Corporation did not fund the $2,000,000 Grain Insurance Reserve Fund as required by the Grain Code. • (17-3) 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. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS GRAIN INSURANCE RESERVE FUND NOT FUNDED The Illinois Grain Insurance Corporation (Corporation) did not fund the $2,000,000 Grain Insurance Reserve Fund as required by the Grain Code (Code). In 2005, the Corporation remitted the $4,000,000 balance due to the General Revenue Fund that was borrowed prior to June 30, 2003. The Corporation has not yet established the $2,000,000 Grain Insurance Reserve Fund as required by the Code after repayment of funds owed to the General Revenue Fund. (Finding 1, pages 12-13). This finding has been repeated since 2005. We recommended the Corporation comply with the law 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 the finding and stated the Board of Directors, along with the Corporation Advisory Committee, will address the non-funding of the Grain Insurance Reserve Fund at the March 29, 2018 annual meeting. (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 on behalf of the Corporation and agree to subject themselves to the Code. During testing of the five existing cooperative agreements, auditors found the cooperative agreement failed to contain two provisions required by the Code in four of the agreements. Also, one cooperative agreement could not be located. (Finding 3, pages 15-16). This finding has been repeated since 2013. We recommended the Corporation execute revised cooperative agreements which include all of the requirements outlined in the Code with federal warehouse licensees participating in the Fund. Corporation officials agreed with the finding and stated they will request new cooperative agreements from federal warehouse licensees participating in the Illinois Grain Insurance Fund. (For the previous Corporation response, see Digest Footnote #2.) OTHER FINDINGS The remaining findings pertain to the untimely deposit of cash receipts and weaknesses and errors in reports submitted to the Illinois Office of the Comptroller. We will review the Corporation’s progress towards the implementation of our recommendations in our next financial audit / compliance examination. AUDITOR’S OPINION The auditors stated the financial statements of the Corporation as of and for the years ended June 30, 2017, and June 30, 2016, are fairly stated in all material respects. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Corporation for the two years ended June 30, 2017, 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. This financial audit / compliance examination was conducted by Adelfia LLC. JANE CLARK Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:LJK DIGEST FOOTNOTES #1 – GRAIN INSURANCE RESERVE FUND NOT FUNDED 2015: 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, 2016. Based on the recommendations of the Board, funding will be sought from the Governor’s Office of Management and Budget (GOMB) 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. #2 - CORPORATION AGREEMENTS WITH FEDERAL LICENSEES DID NOT INCLUDE ALL REQUIRED STATEMENTS 2015: The Corporation agrees with the finding and has implemented the recommendation.