REPORT DIGEST

STATE UNIVERSITIES RETIREMENT SYSTEM

COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2016

Release Date:  April 12, 2017

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  0 -- 0 -- 0
Category 3:  1 -- 0 -- 1
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: 2

Category 1:	Findings that are
material weaknesses in internal control
and/or a qualification on compliance
with State laws and regulations
(material noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State
laws and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the
Auditor General
FRANK J. MAUTINO, 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 our compliance
examination of the State Universities
Retirement System (System) for the year
ended June 30, 2016.  A separate
Financial Audit as of and for the year
ending June 30, 2016, was previously
released on December 22, 2016.  In
total, this report contains one
finding, which was not reported in the
Financial Audit.

SYNOPSIS

• (16-01) The System did not always
obtain fully completed disclosures from
investment managers as required in the
Illinois Pension Code.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

NONCOMPLIANCE WITH THE ILLINOIS PENSION
CODE

The State Universities Retirement
System (System) did not always obtain
fully completed disclosures from
investment managers as required in the
Illinois Pension Code.

During testing, the auditors noted four
of nine (44%) investment manager
disclosures returned to the System
where the investment manager did not
properly disclose the number of
contracts with minority, female and
disabled person owned businesses and
the number of contracts with other than
those businesses owned by minority,
female or disabled persons. (Finding 1,
pages 11-13)

We recommended the System comply with
the Illinois Pension Code or seek
legislative remedy.

System management disagreed with the
finding. In their response to the
finding System management stated they
are required by law to operate under
the broad financial and fiduciary
standards set forth in 40 ILCS 5/1-109.
They further stated that many of the
investment managers indicated that they
did not know, did not track or could
not legally provide all of the
requested information.

AUDITOR’S OPINION

The auditors stated the financial
statements of the System as of June 30,
2016, and for the year then, are fairly
stated in all material respects.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the System for the year
ended June 30, 2016, as required by the
Illinois State Auditing Act.  The
accountants stated the System complied,
in all material respects, with the
requirements described in the report.

This financial audit and compliance
examination were conducted by BKD LLP.

BRUCE L. BULLARD
Division Director

This report is transmitted in
accordance with Section 3-14 of the
Illinois State Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:TLK