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REPORT DIGEST JUDGES’ OF FINANCIAL AUDIT For the Year Ended: Release Date: January 15, 2007
State of Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
To obtain a copy of the
Report contact: Office of the Auditor
General
(217) 782-6046 or TTY (888)
261-2887 This Report Digest and the
Full Report are also available on the worldwide web at http://www.state.il.us/auditor |
SYNOPSIS¨
The unfunded liability of
the Judges’ Retirement System of the State of ¨
The System did not have a
process to review financial journal entries independent of the person who
initiates and posts them to the financial records. ¨
Subsequent to the System’s
June 30, 2008 fiscal year end the overall investment portfolio managed by the
Illinois State Board of Investment, which includes the System’s investments,
experienced a significant decline due to unprecedented unfavorable market
conditions. {Financial data is summarized on the reverse page} |
JUDGES’ RETIREMENT SYSTEM
OF
FINANCIAL
AUDIT
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OPERATING STATEMENT
ANALYSIS |
FY 2008 |
FY 2007 |
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REVENUES: Contributions - Participants..................................... Contributions – Employer / Appropriations................
Total Contributions.............................................. Increase
/ (Decrease) in Fair Value of Investments..... Investment Income – Net of Management Expenses. Interest Earned on Cash Balances...........................
Total Revenues................................................... EXPENSES: Benefits................................................................. Refunds.................................................................. Administrative Expenses............................................ Total Expenses.................................................... Revenue Over / (Under) Expenses........................... |
$ 15,443,114 46,977,961 $ 62,421,075 (53,819,542) 15,181,515 661,567 $ 24,444,615 $ 80,512,592 842,003 500,396 $ 81,854,991
$(57,410,376) |
$ 14,152,973 35,236,800 $ 49,389,773 82,846,751 14,742,583 568,347 $147,547,454 $ 75,615,866 620,577 454,210 $ 76,690,653 $ 70,856,801 |
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INVESTMENT SUMMARY – (All investments held in the |
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Foreign Obligations........................................................................... Corporate Obligations....................................................................... Common Stock & Equity Funds........................................................ Preferred Stock............................................................................... Foreign Equity Securities.................................................................. Hedge Funds................................................................................... Real Estate Investments................................................................... Private Equity.................................................................................. Money Market Instruments............................................................... Infrastructure Funds......................................................................... Bank Loans..................................................................................... Forward Foreign Currency
Contracts................................................
Total Investment Portfolio............................................................ Other ISBI Assets Less
Liabilities..................................................... ISBI Net Assets........................................................................ ISBI assets owned by other retirement
systems, SERS & GARS........ Judges’ Retirement System Investments....................................... |
$ 852,045,701 113,005,430 1,058,164,332 4,241,685,933 5,094,532 1,984,314,463 598,985,402 1,332,081,349 524,628,589 307,481,504 209,975,518 202,137,983 (72,622) $11,429,528,114 (114,474,953) $11,315,053,161
(10,725,897,464) $ 589,155,697 |
$ 1,184,275,884 72,189,687 1,228,970,012 6,059,409,027 1,865,020 1,365,647,941 496,404,578 1,189,614,911 563,366,021 535,699,912 108,436,449 0 (108,696) $12,805,770,746 (253,574,585) $12,552,196,161 (11,894,002,437) $ 658,193,724 |
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ADMINISTRATIVE
EXPENSES |
FY 2008 |
FY 2007 |
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Retirement, Insurance & Social Security............................................ Contractual Services........................................................................ Electronic Data Processing............................................................... Printing............................................................................................ Telecommunication.......................................................................... Travel............................................................................................. Commodities.................................................................................... Operation of Automotive Equipment.................................................. Provision for Depreciation................................................................ Total
Administrative Expenses................................................... |
$251,377 123,163 98,437 9,310 4,375 2,292 3,942 546 1,049 1,420 4,485 $500,396 |
$226,155 96,956 99,158 9,700 3,310 2,317 6,576 624 775 1,700 6,939 $454,210 |
FUNDING PROGRESS
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Actuarial Accrued
Liability................................................................. Actuarial Value of
Assets................................................................... Unfunded Actuarial
Accrued Liability.................................................. Funded Ratio..................................................................................... |
$1,457,336,054 612,680,574 $ 844,655,480 42.0% |
$1,385,339,573 670,090,950 $ 715,248,623 48.4% |
EXECUTIVE
SECRETARY
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During Engagement Period: Tim Blair, Acting Currently:
Tim Blair, Acting |
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Unfunded liability at
Same individual prepares and posts the financial
journal entries
ISBI investment portfolio decreased approximately $2.1 billion subsequent to June 30, 2008 |
INTRODUCTION This digest covers our financial audit
of the Judges’ Retirement System of Illinois (System) for the year ended UNDERFUNDING OF THE SYSTEM
The actuarial accrued liability was
valued at $1,457.3 million at FINDING,
RECOMMENDATION AND SYSTEM RESPONSE
During our testing, we noted the same individual
prepares and posts the financial journal entries. System personnel indicated the lack of appropriate personnel to perform a meaningful review contribute to the current procedures. A lack of an independent review of journal entries leaves the System open to risks of error and material misstatement of financial information. Because of the lack of an independent review of journal entries, we are considering this to be a significant deficiency in the System’s internal control.
We recommended someone other than the person
preparing and posting the journal entries review the journal entries and the
related supporting documentation for accuracy and that the review be
documented. (Finding 08-1, page 24)
System management concurred
with the recommendation and indicated they will institute a system to have
all financial journal entries and supporting documentation reviewed by a
person independent of the person that initiates them. SUBSEQUENT
EVENT Subsequent to the System’s June 30, 2008
fiscal year end the overall investment portfolio managed by the Illinois
State Board of Investment (Board), which includes the System’s investments, experienced
a significant decline due to unprecedented unfavorable market
conditions. Based on unaudited
information the Board’s investment portfolio declined approximately $2.1
billion from the June 30, 2008 balances based on the readily determinable
market values provided by the Board. AUDITORS' OPINION Our
auditors state the ____________________________________ WILLIAM G.
HOLLAND, Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS BKD LLP were our special assistant
auditors for this audit. |