REPORT DIGEST

DEPARTMENT OF INSURANCE

FINANCIAL AND COMPLIANCE AUDIT

For the Two Years Ended:

June 30, 2001

Summary of Findings:

Total this audit 1
Total last audit 0
Repeated from last audit 0

Release Date:
February 21, 2002

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

  

 

 

 

 

 

 

 

SYNOPSIS

 
  • The Department did not obtain adequate collateral for assets held in a custodial capacity in the Security Deposit Fund. Assets were understated and certain financial disclosures were not made during the financial reporting process.

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the reverse page.}

DEPARTMENT OF INSURANCE
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 2001
EXPENDITURE STATISTICS

FY 2001

FY 2000

FY 1999

Total Expenditures (All Funds)

$33,998,668

$27,197,052

$23,927,328

Personal Services
% of Total Expenditures
Average No. of Employees

$16,597,014
48.8%
368

$15,726,714
57.8%
359

$14,750,728
61.7%
371

Other Payroll Costs (FICA, Retirement)
% of Total Expenditures

$5,988,273
17.6%

$5,335,021
19.6%

$4,939,710
20.6%

Contractual Services
% of Total Expenditures

$3,848,256
11.3%

$2,927,020
10.8%

$2,246,116
9.4%

All Other Operations Items
% of Total Expenditures

$2,299,386
6.8%

$1,832,690
6.7%

$1,939,868
8.1%

REFUNDS TOTAL

% of Total Expenditures

$5,265,739

15.5%

$1,375,607

5.1%

$50,906

0.2%

Cost of Property and Equipment

$6,073,000

$5,686,000

$5,705,000
SELECTED ACTIVITY MEASURES

FY 2001

FY 2000

FY 1999
Financial/Corporate Regulation

Financial Statement Analysis

 

518

 

556

 

572

Field Financial Examinations

111

132

124

Consumer Services
Insurance Agency Examinations


410


492


429

Closed Complaint Files

18,706

16,423

14,371

Market Conduct Examinations

25

50

51

Pension Division
Pension Fund Examinations


36


38


28
AGENCY DIRECTOR(S)

During Audit Period: Nathaniel Shapo
Currently: Nathaniel Shapo

 

 

 

 

 

 

 

Uninsured, uncollateralized balance in the Security Deposit Fund was approximately $6,230,000 at June 30, 2001

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

SECURITY DEPOSIT FUND

The Department did not obtain adequate collateral for assets held in a custodial capacity in the Security Deposit Fund, assets were understated and certain financial disclosures were not made during the financial reporting process. We noted the following:
  • The Department did not obtain adequate collateral to ensure the funds in the Security Deposit Fund were completely safeguarded. At June 30, 2001, the uninsured, uncollateralized balance in the Security Deposit Fund was approximately $6,230,000.
  • The Department did not recognize investment earnings on deposit in the Security Deposit Fund on its year-end generally accepted accounting principles (GAAP) reporting packages and financial statements. At June 30, 2001 and 2000, the investment earnings in the Security Deposit Fund totaled $1,211 and $102,684, respectively.
  • The Department did not complete and submit the "Analysis of Deposits and Investments" form to the Office of the Comptroller as required by the Statewide Accounting Management Systems (SAMS) Procedure 27.20.79.

We recommended the Department obtain additional collateral for uninsured deposits, report the investment earnings on deposit in the bank account in their year-end GAAP reporting and financial statements and submit appropriate GAAP reporting forms to the Office of the Comptroller for the required deposits and investments disclosures. We further recommended, if the Department contends the accounts are exempt from the collateral requirements set forth in the State Officers and Employees Money Disposition Act that it obtain a formal written legal opinion from the Office of the Attorney General or that it seek clarification of the requirements from the legislature.

Department officials agreed with our recommendation and stated they will seek legislative clarification regarding the Department’s responsibilities under 215 ILCS 5/404.1. Department officials also responded that they have never considered the State Officers and Employees Money Disposition Act to be applicable to its duties under Section 404.1 and they are concerned that the current law may lead to such an interpretation.

AUDITORS’ OPINION

Our auditors report the Department of Insurance’s financial statements, as of and for the years ended June 30, 2001 and 2000 are fairly presented in all material respects.

 

 

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WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

Sikich Gardner & Co., LLP were our special assistant auditors for this audit.