STATE COMPLIANCE EXAMINATION
For the Two Years Ended June 30, 2010
Summary of Findings this Audit Cycle:
• Compliance Examination: 6
• Financial Audit (previously reported 4-7-11): 6
TOTAL findings: 12
Summary of findings from previous financial and compliance audit cycle: 8
Repeated from last audit: 3
Release Date: June 9, 2011
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 Full Report are also available on the worldwide web at www.auditor.illinois.gov
The Financial Statement Audit Report for the year ended June 30, 2010 was previously released on April 7, 2011. That audit contained six (6) findings. This report addresses State compliance findings pertaining to the State Compliance Examination Report. In total, this report contains twelve (12) findings, six (6) of which were also reported in the Financial Audit Report.
• The Illinois Student Assistance Commission did not include the required explanations on all contract late filing affidavits for contracts filed late with the Illinois Office of the Comptroller.
• The Illinois Student Assistance Commission has not established a program of college savings instruments for Illinois citizens.
• The Illinois Student Assistance Commission did not expend appropriated funds in accordance with the purpose for which the funds were appropriated by the State.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INCOMPLETE CONTRACT AFFIDAVITS AND LATE FILINGS
The Illinois Student Assistance Commission (Commission) did not include the required explanations on all affidavits for contracts filed late with the Illinois Office of the Comptroller.
During our examination of contracts paid from non-appropriated funds, we noted that 3 of 20 (15%) contracts were submitted to the Office of the State Comptroller late. Further, although the late Filing Affidavits were submitted to the Office of the State Comptroller, they did not contain an explanation as to why the contract was not filed timely. These contracts totaled $410,000 and were filed between 25 to 58 days late.
According to Commission management, the late filings were due to human error. (Finding #7, page 25)
We recommended the Commission comply with Statewide Accounting Management System (SAMS) requirements and file all executed contracts within the required timeframe. In those situations when a contract cannot be filed timely, we recommended the Commission include a properly completed Late Filing Affidavit.
Commission officials accepted our recommendation and indicated they would comply with SAMS requirements.
FAILURE TO ESTABLISH COLLEGE SAVINGS PROGRAM
The Illinois Student Assistance Commission (Commission) has not established a program of college savings instruments for Illinois citizens.
During our examination, we noted the Commission has not implemented a college savings program for Illinois citizens in accordance with the Higher Education Student Assistance Act (Act) (110 ILCS 947/75) effective August 13, 1989.
The Act states, “The Commission is authorized to develop and provide a program of college savings instruments to Illinois citizens.” The Act further states, “The Commission shall market and promote the College Savings Program to the citizens of Illinois.”
According to Commission officials, a college savings program known as the ICAN program was established by the Commission, in accordance with the Act. However, the program was discontinued in 2002 due to lack of activity. Commission officials stated that they submitted a proposal to the General Assembly to repeal 110 ILCS 947/75, which was introduced as Amendment NO. 1 to House Bill HB 2185 on April 18, 2007. The bill failed to pass. Commission officials indicated that they were exploring the possibility of establishing a new College Savings program. (Finding #11, page 30)
We recommend the Commission establish a college saving program in accordance with the Act or continue to seek legislation to remedy the statutory requirements.
Commission officials stated they will review the matter and will request a repeal of the Act if appropriate.
NEED TO COMPLY WITH APPROPRIATION AUTHORIZATION
The Illinois Student Assistance Commission (ISAC) did not expend appropriated funds in accordance with the purpose for which the funds were authorized.
During our compliance examination, we noted that ISAC was appropriated $3,500,000 to the Student Loan Operating Fund (SLOF) in both fiscal years 2009 and 2010 for costs associated with the development and maintenance of ISAC’s federal loan system (Odyssey). In reviewing the expenditures in the SLOF, we noted that in fiscal year 2010 a total of $18,000 was expended on awards and grants to students. In fiscal year 2009 a total of $756,000 was loaned to the Illinois Designated Account Purchase Program (IDAPP) for operational purposes.
According to Commission management, there was a discrepancy in the language between the Comptroller’s appropriation report and the language in the Public Act itself. As a result certain payments were processed from the incorrect line. (Finding #12, page 31)
We recommended that the Commission comply with requirements for the use of public funds of the State in accordance with the purpose for which such funds have been appropriated or otherwise authorized by law.
Commission officials accepted our recommendation and indicated they would comply with requirements for the use of public funds of the State.
The remaining findings are reportedly being given attention by the University. We will review the University’s progress towards the implementation of our recommendations in our next audit.
The auditors conducted a State compliance examination of the Commission for the two years ended June 30, 2010. A financial audit covering the year ended June 30, 2010 was issued separately.
WILLIAM G. HOLLAND
Our special assistant auditors for this State compliance examination were McGladrey & Pullen LLP.