REPORT DIGEST

ILLINOIS EDUCATIONAL FACILITIES AUTHORITY

(Close-out Audit)

FINANCIAL AND COMPLIANCE AUDIT

For the Six Months Ended:

December 31, 2003

Summary of Findings:

Total this audit                          1

Total last audit                          0

Repeated from last audit           0

Release Date:

August 24, 2004

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 1-888-261-2887

This Report Digest is also available on

the worldwide web at

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

SYNOPSIS

¨         The Illinois Educational Facilities Authority did not record $33,934 in expenses and liabilities for bond counsel services incurred in prior fiscal years.

{Financial Information and Activity Measures are summarized on the next page.}

The Authority did not record $33,934 in bond counsel services incurred in prior years on their books and records

INTRODUCTION

      On July 17, 2003, the Governor signed Public Act 93-205 into law, which created the Illinois Finance Authority and consolidated seven of the State’s existing financing authorities, including the Illinois Educational Facilities Authority, into the Illinois Finance Authority as of January 1, 2004.  Under Public Act 93-205, the Illinois Finance Authority will succeed to the rights and duties of the existing finance authorities as of January 1, 2004.  Public Act 93-205 also repeals the existing financing authorities' authorizing legislation as of January 1, 2004.  This is the final audit of the Illinois Educational Facilities Authority.

FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS

The Illinois Educational Facilities Authority (Authority) did not record $33,934 in expenses and liabilities for bond counsel services incurred in prior fiscal years.

In our review of contractual expenses, we noted three (3) of fourteen (14) vouchers tested (21%) totaling $44,983 from one law firm included $33,934 of bond counsel services incurred in prior fiscal years that were not recorded on the books and records of the Authority.  The invoices included charges for services rendered in prior fiscal years as follows:

Fiscal Year                                     Amount

6/30/99                                          $      174

6/30/00                                             13,008

6/30/01                                             11,217

6/30/02                                               1,128

6/30/03                                               8,407

                                                      $ 33,934

Generally accepted accounting principles require the recognition of expenses and liabilities in the accounting period they are incurred.

According to Authority personnel, billings for these services were received at the end of the five-year contract term and were for miscellaneous charges incurred by the bond counsel throughout the contract term. The Authority did not estimate and record these liabilities in the prior fiscal years because they anticipated the contract firm would discount these charges.  (Finding 1, pages 10-11)

We recommended the Authority develop a system to identify and estimate the cost of services incurred but not billed at the end of each fiscal year.

In their response the new Illinois Finance Authority agreed with our recommendation and indicated that they had created a process to record expenses in the period they are incurred.

 AUDITORS' OPINION

      Our auditors state the December 31, 2003 financial statements of the Illinois Educational Facilities Authority are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

SPECIAL ASSISTANT AUDITORS

      E.C. Ortiz & Co. were our special assistant auditors for this audit.