REPORT DIGEST

 

ILLINOIS STUDENT ASSISTANCE COMMISSION -

ILLINOIS

PREPAID TUITION PROGRAM

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

 

 

 

Release Date:

March 6, 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

www.auditor.illinois.gov

 

 

 

 

 

 

INTRODUCTION

 

 

††††† This report covers our financial audit of the Illinois Student Assistance Commission Ė Illinois Prepaid Tuition Program as of June 30, 2007 and for the year then ended.

 

 

SYNOPSIS

 

®      The Illinois Student Assistance Commission does not have sufficient controls over the financial reporting process for the Illinois Prepaid Tuition Program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

††††††† {Expenditures and Activity Measures are summarized on the reverse page.}


ILLINOIS STUDENT ASSISTANCE COMMISSION

PREPAID TUITION PROGRAM

FINANCIAL AUDIT

For The Year Ended June 30, 2007 (In Thousands)

 

FINANCIAL OPERATIONS

2007

2006

OPERATING REVENUES

††††† Income from investment securities.......................

††††† Application and other fees..................................

††††† Interest income (other).......................................

††††††††††† TOTAL......................................................

OPERATING EXPENSES

††††† Accreted tuition expenses...................................

††††† Management and professional services.............

††††† Investment management fees..............................

††††† Salaries and employee benefits...........................

††††††††††† TOTAL......................................................

Net Operating Income (Loss)..............................

Transfer out.............................................................

Change in Net Assets...........................................

Net Assets (Deficit), July 1.......................................

Net Assets (Deficit), June 30...............................

 

$124,331

2,259

†††††††† 533

$127,123

 

$54,684

3,179

3,042

††††††† 736

$61,641

$65,482

††††††††† (25)

$65,457

(29,135)

$36,322

 

 

$49,329

2,342

†††††††† 419

$52,090

 

$44,367

3,002

2,621

††††††† 740

$50,730

$1,360

††††††††† (25)

$1,335

(30,470)

$(29,135)

 

SELECTED BALANCE SHEET ACCOUNTS

June 30, 2007

June 30, 2006

Cash and cash equivalents........................................

Investments and marketable securities.......................

Current Liabilities:

††††† Tuition payable..................................................

††††† Accreted tuition payable.....................................

††††† Other current liabilities........................................

††††††††††† Total current liabilities...................................

Tuition & accretion payable, long-term.....................

Net Assets, (deficit).................................................

$ 7,268

986,333

 

28,832

2,170

†††† 1,071

$32,073

$925,199

$36,322

$10,746

777,302

 

24,758

1,863

†††††† 920

$27,541

$789,628

$(29,135)

ACTUARIAL (DEFICIT) as of June 30 - Per Actuarial Reports

2007

2006

Net assets, before tuition/accretion payable..............

††††† Add - Actuarial present value of future payments expected to be made by contract purchasers...

††††† Deduct - Actuarial present value of future payments expected to be paid by the program.........

Actuarial (deficit) as of June 30................................

Contracts purchased and outstanding.......................

$992,522

 

187,396

 

(1,264,132)

$(84,214)

††††††††† 50

 

$787,114

 

186,468

 

(1,120,511)

$(146,929)

††††††††† 47

 

AGENCY DIRECTOR(S)

 

 

During Audit Period:Mr. Andrew Davis (1/1/07-Current); Mr. Larry E. Matejka (7/1/06-12/31/06)

Currently:Mr. Andrew Davis

 

 

 

 

 

 

 

 

 

 

 

 


Insufficient controls

 

 

 


Certain financial statement disclosures were not properly calculated

 

 

 


Commission relies on contractual investment advisor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

 

NEED TO IMPROVE CONTROLS OVER FINANCIAL REPORTING

 

††††† The Illinois Student Assistance Commission (Commission) does not have sufficient controls over the financial reporting process.

 

††††† During our review of the draft financial statements of the Illinois Prepaid Tuition Program (the Program), the disclosures related to the multiple ratings of securities as required by the Governmental Accounting Standards Statement No. 40, Deposit and Investment Risk Disclosures were not properly calculated by the Commission. These disclosures were subsequently corrected and are properly disclosed on the final financial statements. The Programís investments subject to these disclosures totaled approximately $994 million.

 

††††† Commission officials stated that they rely on their contractual investment advisor to prepare this information.(Finding 1, page 30).

 

††††† Commission officials agreed with our recommendation to strengthen internal controls over financial reporting and stated it would implement quality control procedures.

 

 

OTHER FINDING

 

††††† The remaining finding concerned the Commissionís internal audit program.We will review progress toward implementation of all recommendations during the next audit.

 

 

 

 

 

AUDITORSí OPINION

 

††††† Our auditors stated the financial statements of the Program are fairly presented in all material respects.

 

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

 

SPECIAL ASSISTANT AUDITORS

†††††

††††††† Our special assistant auditors for this audit were McGladrey & Pullen, LLP.