REPORT DIGEST

 

STATE UNIVERSITIES RETIREMENT SYSTEM

 

COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2004

 

Summary of Findings:

Total this audit             1

Total prior audit 4

Repeated from last audit 1

 

Release Date:

April 28, 2005

 

 

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 is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

      The bank reconciliations were not performed or reviewed by an official independent of the accounting function.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Financial Information and Activity Measurers summarized on the reverse page.}

 


STATE UNIVERSITIES RETIREMENT SYSTEM

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

Year Ended June 30, 2004

 

FINANCIAL OPERATIONS

FY 2004

FY 2003

Revenues

Contributions

Participants..............................................

Employer..................................................

Total Contributions..............................

Investment Income

Net appreciation in fair market value..........

Interest....................................................

Dividends.................................................

Securities lending......................................

Less: Investment expense.........................

Net Investment Income.......................

Total Revenues.............................

Expenses

Total benefits..................................................

Other expenses...............................................

Total Expenses.............................

Excess (deficiency) of Revenues over (under) expenses..........................................................

 

 

$275,144,174

1,783,315,990

$2,058,460,164

 

$1,669,635,805

132,573,212

83,433,974

3,532,875

23,871,283

$1,865,304,583

$3,923,764,747

 

$915,947,276

51,472,597

$967,419,873

 

$2,956,344,874

 

 

 

$275,901,085

310,016,721

$585,917,806

 

$37,985,978

159,186,178

72,861,166

2,954,892

17,596,727

$255,391,487

$841,309,293

 

$837,332,238

48,372,692

$885,704,930

 

$(44,395,637)

INVESTMENT PORTFOLIO ANALYSIS (Fair Market Value)

JUNE 30, 2004

JUNE 30, 2003

Total equities........................................................

Total fixed income securities..................................

Cash and short-term investments...........................

Real estate investments.........................................

Mutual funds and variable annuities........................

Accrued investment income...................................

Total Portfolio at Fair Market Value.................

$8,425,888,500

4,163,615,140

257,301,092

317,832

249,347,518

27,485,586

$13,123,955,668

 

$6,176,436,373

3,531,907,779

398,174,643

748,250

170,428,929

32,031,269

$10,309,727,243

ADMINISTRATIVE EXPENSES

FY 2004

FY 2003

Personal services and benefits...............................

Other professional fees and services......................

Depreciation.........................................................

Postage............................................................

Printing and copying services.................................

Building operations expenses.................................

Self-managed plan................................................

Other expenses.....................................................

Total Administrative Expenses.........................

$7,023,642

1,197,785

1,770,819

261,614

134,476

221,273

453,687

453,198

$11,516,494

 

$6,847,556

1,500,472

1,760,283

423,459

176,289

229,200

457,607

518,139

$11,913,005

SELECTED ACCOUNT BALANCES

JUNE 30, 2004

JUNE 30, 2003

Investments at Market Value.................................

Securities lending collateral....................................

Cash & short term investments..............................

Pending investment sales.......................................

Accrued investment income receivable...................

Other assets.........................................................

Total assets....................................................

Securities lending collateral....................................

Payable to brokers for unsettled trades...................

Other payables.....................................................

Total liabilities.................................................

Net assets held in trust for pension benefits............

$12,839,168,990

1,945,631,693

257,301,092

261,070,448

27,485,586

31,694,876

$15,362,352,685

1,945,631,693

530,592,835

24,748,624

$2,500,973,152

$12,861,379,533

 

$9,879,521,331

1,210,412,320

398,174,643

420,616,551

32,031,269

85,847,907

$12,026,604,021

1,210,412,320

878,398,038

32,759,004

$2,121,569,362

$9,905,034,659

SUPPLEMENTARY INFORMATION

FY 2004

FY 2003

Total investment administrative expenses................

Investment return (unaudited)................................

Average number of employees..............................

Number of active members...................................

Number of inactive members.................................

Number of retirement benefit recipients..................

Number of survivors benefit recipients...................

Number of disabilities benefit recipients..................

$23,067,221

17%

122

81,242

66,727

30,795

6,427

902

$16,815,880

2.9%

122

78,936

61,447

29,020

6,138

864

EXECUTIVE DIRECTOR

 

 

During Audit Period and Currently: Mr. James M. Hacking


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent review of bank reconciliation not performed

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

This digest covers our compliance examination of the System for the year ended June 30, 2004. A financial audit covering the year ended June 30, 2004 is being issued separately.

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

LACK OF SEGREGATION OF DUTIES

 

The System did not have an adequate segregation of duties over the bank reconciliation process. Bank reconciliations were performed by the same individual that performed accounting functions and were not reviewed by a responsible official independent of the accounting function. System personnel stated this was caused by an employee's role changing and the duty of bank reconciliation review not being reassigned. (Finding 1, page 11) This finding was first reported in 2003.

 

The System agreed with our finding and responded they implemented a procedure at the end of fiscal year 2004 to have an independent staff member review the bank reconciliation. (For the previous System response, see Digest Footnote #1.)

 

We will review progress toward the implementation of our recommendation in our next examination. The System response was provided by Mr. Steve Hayward, Internal Auditor.

 

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

 

 

WGH:KMA:pp

 

SPECIAL ASSISTANT AUDITORS

 

BKD, LLP were our special assistant auditors.

 

 

DIGEST FOOTNOTES

 

#1 - LACK OF SEGREGATION OF DUTIES - Previous System Response

 

2003: SURS agrees with this finding and will have an independent staff member review the bank reconciliation.