REPORT DIGEST KANKAKEE RIVER VALLEY AREA AIRPORT AUTHORITY FINANCIAL AUDIT AND COMPLIANCE EXAMINATION For the Year Ended: June 30, 2012 Release Date: April 11, 2013 Summary of Findings: Total this audit: 2 Total last audit: 2 Repeated from last audit: 2 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 INTRODUCTION This digest covers the financial audit and compliance examination of the Kankakee River Valley Area Airport Authority (Authority) for the year ended June 30, 2012. The Authority received no appropriations from the Illinois General Assembly and funds were not held in the State Treasury. The Authority was financed solely through interest income received from locally held funds. SYNOPSIS • The Authority had inadequate segregation of duties in the area of expenditure control. • The Authority failed to comply with the Kankakee River Valley Area Airport Authority Act. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE SEGREGATION OF DUTIES The Kankakee River Valley Area Airport Authority (Authority) had inadequate segregation of duties in the area of expenditure control. During testing, we noted that the Authority’s Vice Chairman had the ability to write and sign checks, reconcile bank statements, and maintain all Authority records. However, the Authority had not written a check since August 2004. (Finding 1, page 9) This finding was first reported in 2008. We recommended the Authority implement adequate segregation of duties over recordkeeping, expenditure approval, and reconciliation. The Authority agreed with the recommendation. (For the previous Authority response, see Digest footnote #1.) NONCOMPLIANCE WITH KANKAKEE RIVER VALLEY AREA AIRPORT AUTHORITY ACT The Authority failed to comply with certain provisions of the Kankakee River Valley Area Airport Authority Act (Act). We noted the following deficiencies: • The Authority did not create and submit a written statement and report to the Governor covering its activities for the preceding fiscal year by November 15th as required by statute. • The Authority had one vacancy requiring appointment. As of June 30, 2012, Will County did not appoint an individual to fill the vacant Authority seat. • Seven (100%) Authority members did not file bonds in the amount of $100,000 or file their constitutional oath of office with the Office of the Secretary of State in accordance with the Act. (Finding 2, pages 10-11) This finding was first reported in 2005. We recommended the Authority prepare and submit a written statement and report covering its activities over the preceding fiscal year to the Governor by November 15th of each year as required. In addition, we recommended the Authority ensure members are appointed as required by the Act. Further, we recommended the Authority strengthen controls to ensure the Authority obtains the constitutional oath of office and bond in the penal sum of $100,000 for appointed members and that the oaths and bonds are filed with the Office of the Secretary of State or seek legislative remedy. The Authority agreed with the recommendation. (For the previous Authority response, see Digest footnote #2.) AUDITORS’ OPINION The auditors stated the financial statements of the Authority as of June 30, 2012, and for the year ended, are fairly presented in all material respects. STATE COMPLIANCE EXAMINATION – ACCOUNTANT’S REPORT The auditors qualified their report on State Compliance for finding 12-2. Except for the noncompliance described in this finding, the auditors state the Authority complied, in all material respects, with the requirements described in the report. WILLIAM G. HOLLAND Auditor General WGH:PH AUDITORS ASSIGNED This audit was performed by the staff of the Office of the Auditor General. DIGEST FOOTNOTES #1 INADEQUATE SEGREGATION OF DUTIES 2011: The Authority agrees with the recommendation. Due to the Authority’s lack of board members, the member remaining was scheduling a meeting with the Kankakee Board Chairman to discuss the Authority’s future. #2 NONCOMPLIANCE WITH KANKAKEE RIVER VALLEY AREA AIRPORT AUTHORITY ACT 2011: The Authority agrees with the recommendation. With the lack of board members and activity, it was thought no report was necessary. There is a meeting scheduled with the Kankakee County Board Chairman to discuss the Authority’s future.