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REPORT DIGEST STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS COMPLIANCE
EXAMINATION For the Year Ended: June 30, 2005 Summary of Findings: Total this report 1 Total prior report 2 Repeated findings 0
Release Date:
May 2, 2006
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 http://www.state.il.us/auditor
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SYNOPSIS ¨ The State Employees’ Retirement System was not depositing cash receipts from its Chicago office on a timely basis.
{Financial Information and Activity Measures are summarized on the reverse page.} |
STATE EMPLOYEES' RETIREMENT
SYSTEM OF ILLINOIS
INFORMATION
FROM FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
YEAR
ENDED JUNE 30, 2005
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OPERATING STATEMENT ANALYSIS |
FY 2005
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FY 2004
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Contributions - State agencies & appropriations.... Total Contributions............................................... Net investment income.................................................. Net
appreciation in fair value of investments............ Interest
earned on cash balances................................ Total Revenue ....................................................... EXPENSES: Benefits - Retirement annuities......................................... Benefits -
Survivors' annuities......................................... Benefits - Disability benefits............................................ Benefits - Lump-sum death benefits............................... Total Benefits............................................................ Refunds................................................................................ Administration.................................................................... Total Expenses.......................................................... Excess of revenue over
expenses.................................... |
$ 209,334,207 427,434,612 $ 636,768,819 227,422,797 721,856,118
4,300,338 $1,590,348,072 $ 935,677,837 57,542,913 36,828,758
33,920,915 $1,063,970,423 14,105,301 8,311,269 $1,086,386,993 $ 503,961,079 |
$ 199,826,465 1,864,673,411
$2,064,499,876 159,147,084 1,261,941,570 823,886 $3,486,412,416 $ 879,638,039 54,186,031 33,482,302
10,894,638 $ 978,201,010 12,442,600 7,693,348 $
998,336,958 $2,488,075,458 |
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FY 2005
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FY 2004
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$
9,840,077,880
(518,000,000) $
9,322,077,880 250,491,153 (23,068,356) $
227,422,797 476,037,549 245,818,569 $
721,856,118 $ 949,278,915 $10,271,356,795 |
$7,436,093,948
982,895,278 $8,418,989,226 176,024,267 (16,877,183) $
159,147,084 687,466,890
574,474,680 $1,261,941,570 $1,421,088,654 $9,840,077,880 |
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Contributions Available to Invest
(iNVESTMENTS USED FOR Benefits and Expenses) |
FY 2005 |
FY 2004 |
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State agencies & appropriations....................
Total Contributions (5)............................... DEDUCTIONS:
Benefits..................................................................... Refunds.................................................................. Administration...................................................... Total Deductions (6).................................... Contributions Available
to Invest (Investments used to Pay Benefits
and Expenses) (5)-(6).............................................................. |
$209,334,207
427,434,612 $ 636,768,819 $1,063,970,423 14,105,301 8,311,269 $1,086,386,993 $(449,618,174) |
$ 199,826,465
1,864,673,411 $2,064,499,876 $ 978,201,010 12,442,600 7,693,348 $ 998,336,958 $1,066,162,918 |
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SUPPLEMENTARY
INFORMATION |
FY 2005
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FY 2004
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Number of System
employees.................................................................... Retirees and beneficiaries currently receiving
benefits (unaudited).... Total members (unaudited).......................................................................... Total
active members (unaudited)............................................................. Total
return on investments (unaudited)................................................. |
81 54,828 91,423 69,163 10.1% |
81 54,298 93,418 70,621 16.4% |
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EXECUTIVE SECRETARY
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During Audit Period: Robert V. Knox Currently: Robert V. Knox |
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System did not deposit $106,788 of receipts from their Chicago
office timely
State statute requires cash receipts to be deposited within
certain timeframes
Funding legislation was changed to reduce the required employer
(State) contributions for fiscal years 2006 and 2007
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INTRODUCTION
This
digest covers our compliance examination of the State Employees’ Retirement
System (System) for the year ended June 30, 2005. A financial audit covering the year ending June 30, 2005 was
issued separately.
It
should be noted that, pursuant to the Illinois Pension Code, investments of
the System are managed by the Illinois State Board of Investment.
FINDING,
CONCLUSION, AND RECOMMENDATION
Late
Deposits of Cash Receipts
During our testing of cash receipts received by the System’s Chicago office we noted the deposit of these cash receipts were not made into the State Treasury in accordance with the statutory requirements. We determined 8 of 20 (40%) deposits were not made timely. The 8 deposits noted as exceptions totaled $106,788 or approximately 85% of the total deposits of $126,264 received by the Chicago office during fiscal year 2005. The eight exceptions were deposited within a range of time from 2 days to 4 days after being received by the Chicago office.
The State Officers and
Employees Money Disposition Act (Act) requires any single receipt exceeding
$10,000 to be deposited into the State Treasury the day of actual physical
receipt. In addition, the Act requires that when an accumulation of receipts
is greater than $10,000 the receipts are required to be deposited within 24 hours
and when an accumulation of receipts is between $500 and $10,000 they must be
deposited within 48 hours of actual physical receipt.
System
personnel indicated
the time delays
of getting the cash receipts deposited are attributable to the process of forwarding
these cash receipts to the Springfield office.
We recommended the System review their current
policy and implement procedures to assure that all cash receipts received at
the Chicago office be deposited into the State Treasury on a timely basis, or
the System should request an extension of time from the Treasurer and
Comptroller to make the deposits.
(Finding 1, page 8)
System management concurred with our recommendation and
indicated a review of the current policy will be conducted and either a new
procedure will be implemented to insure that all cash receipts at the Chicago
Office are deposited into the State Treasury on a timely basis, or an
extension will be requested.
Mr. Robert V. Knox, Executive Secretary provided the System’s response to the finding.
CHANGE IN FUNDING LEGISLATION
In June 2005, Public Act 94-0004 became
law. This legislation further
modified the funding plan of the System by reducing the amount of required
employer contributions for fiscal year 2006 and 2007 that would have
otherwise been required under the previous funding legislation. The required State contributions for
fiscal years 2008 through 2010 will then be increased incrementally as a
percentage of the participant payroll so that by fiscal year 2011 the State
is contributing at the required level contribution rate to achieve the
financing objective of a 90% funded status by the end of fiscal year
2045.
AUDITORS’ OPINION
We conducted a compliance attestation
examination of the System for the year ended June 30, 2005 as required by the
Illinois State Auditing Act. A financial audit covering the year ending June
30, 2005 was issued separately.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen, LLP were our special assistant auditors for this engagement. |
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