FY11-IMSA-Fund-Fin-Comp-Full

              STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
FINANCIAL AUDIT AND
COMPLIANCE EXAMINATION
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
Performed as Special Assistant Auditors
For the Auditor General, State of Illinois
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Years Ended June 30, 2011 and 2010
TABLE OF CONTENTS
Page
Agency Officials 1
Management Assertion Letter 2
Compliance Report
Summary 3
Accountants’ Reports
Independent Accountants’ Report on State Compliance, on Internal Control
Over Compliance, and on Supplementary Information for State
Compliance Purposes 5
Independent Auditors’ Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards 8
Schedule of Findings
Current Findings 10
Prior Findings Not Repeated 11
Financial Statement Report
Summary 12
Independent Auditors’ Report 13
Management’s Discussion and Analysis 15
Basic Financial Statements
Statements of Net Assets 21
Statements of Revenues, Expenses, and Changes in Net Assets 22
Statements of Cash Flows 23
Notes to the Financial Statements 24
Supplementary Information for State Compliance Purposes
Summary 33
Fiscal Schedules and Analysis
Analysis of Significant Variations in Revenue 34
Analysis of Significant Variations in Expenses 35
Analysis of Operations
Agency Functions and Planning Program 36
Average Number of Employees 37
Supporting Service Expenses 37
Schedule of Support Provided by IMSA Fund to the Academy 38
Schedule of Services Provided by the Academy to IMSA Fund 38
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Years Ended June 30, 2011 and 2010
1
AGENCY OFFICIALS
Vice President for Advancement - Illinois Mathematics and
Science Academy (to 6/30/2011) Ms. Suzyn M. Price
Vice President of Strategy and Advancement - Illinois
Mathematics and Science Academy (7/1/2011 to Current) Ms. Cathy Veal
Executive Director of Development – Illinois Mathematics and
Science Academy (11/3/2011 to Current) Mr. Paul F. Milano
Director of Operations for Advancement Mr. Thomas Walter
BOARD OF DIRECTORS
Officers
Chairman (7/1/2010 to 12/31/2010) Mr. Gregory K. Jones
(1/1/2011 to Current) Dr. Stephanie Pace Marshall
President (to 7/22/2010) Mr. Herbert B. Knight
(7/23/2010 to 12/31/2010) Dr. Stephanie Pace Marshall
(1/1/2011 to Current) Mr. John Hoesley
Vice President of Fund Board Ms. Pamela Blackwell
Vice President of Finance (to 12/31/2010) Mr. John Hoesley
(1/1/2011 to 11/30/2011) Mr. Herbert B. Knight
Vice President of Governance Mr. Fidel Marquez, Jr.
Treasurer (7/1/2010 to 6/8/2011) Mr. John Hoesley
(6/9/2011 to 11/30/2011) Mr. Herbert B. Knight
Secretary (to 6/30/2011) Ms. Suzyn M. Price
(7/1/2011 to Current) Mr. Thomas Walter
Directors
Ms. Maureen E. Sullivan Dr. Stephanie Pace Marshall
Mr. Vasu Kulkarni Mr. Michael Sloan
Mr. Jarvis Yeh (to 6/30/2011) Ms. Chelsy A. Hopper
Mr. Martin J. DiMarzio Mr. Fidel Marquez, Jr.
Mr. Herbert B. Knight (to 11/30/2011) Ms. Jean K. Holley (to 6/14/2011)
Ms. Vanessa C. Gage Ms. Pamela Blackwell
Mr. John Hoesley Mr. Gregory K. Jones
Mr. Jordan Koss Mr. G. Thomas Castino (to 6/14/2010)
Mr. Michael Suh (10/3/2011 to Current)
Agency Offices are located at:
1500 W. Sullivan Road, Suite 200, Aurora, Illinois 60506 – 1000
Borschnack, Pelletier & Co.
Certified Public Accountants
200 E. Court St., Suite 608
Kankakee, IL 60901
Ladies and Gentlemen:
We are responsible for the identification of, and compliance with, all aspects of laws, regulations,
contracts, or grant agreements that could have a material effect on the operations of the IMSA Fund
for Advancement of Education. We are responsible for and we have established and maintained an
eff~c;:tive system of, internal controls over compliance requirements. We have performed a:n
evaluation of the IMSA Fund for Advancement of Education's compliance with the following
assertions during the two years ended June 30, 2011. Based on this evaluation, we assert that
during the years ended June 30, 2011 and June 30, 2010, the IMSA Fund for Advancement of
Education has materially complied with the asse'rtions below.
A. The IMSA Fund for Advancement of Educ::ation has obligated, expended, received and
used funds in accordance with the purpose for which such funds have been appropriated or
otherwise authoriz;ed by law.
B. The IMSA Fund for Advancement of Educa.tlon has obligated, expended, received and
used funds in accordance with any limitations, restrictions, conditions or mandatory directions
imposed by law upon such obligation, expenditure, receipt or use .
C. The IMSA Fund for Advancement of Education has complied, in all material respects, with
applicable laws and regulations, including the State uniform accounting system, in its financial
and fiscal operations.
D. Revenues and receipts coUected by the I.MSA Fund for Advc:mcernent of Education are in
accordance with applicable laws and regulatioAs and the accounting and record keeping of such
revenues and receipts is fair, accurate and in accordance with law.
E. Money or negotiable securities or similar assets handled by the IMSA Fund for
Advancement of Education or held in trust by the Fund have been properly and l.egally
t:!dministered, and the accounting and recordkeeping relating thereto is proper, accurate and in
accordance with law.
Yours very truly,
£~JJ.\J~~ lMSA Fund for Advancement of Education
(y~}/~
Cathy Veal
Vice President of Strategy and Advancement
Thomas Walter
Director of Operations
~IMSA Illinois M~l~cmali<;S and Ss:ien~e>~cademy
IMSA Fund for-Advancement .of Education
150o·west Sullivan Road 1 Aurofa. Illinois 60506-10.00
P (630)907-5040 E glving@imsil edu
F (630) 907-5940 W www.ims;l.edu/giving
2
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Years Ended June 30, 2011 and 2010
3
COMPLIANCE REPORT
SUMMARY
The compliance testing performed during this examination was conducted in accordance with
Government Auditing Standards and in accordance with the Illinois State Auditing Act.
ACCOUNTANTS’ REPORT
The Independent Accountants’ Report on State Compliance, on Internal Control Over Compliance
and on Supplementary Information for State Compliance Purposes does not contain scope
limitations, disclaimers, or other significant non-standard language.
SUMMARY OF FINDINGS
Current Prior
Number of Report Reports
Findings 1 1
Repeated findings 1 0
Prior recommendations implemented
or not repeated 0 3
SCHEDULE OF FINDINGS
Item No. Page Description Finding Type
CURRENT FINDINGS – GOVERNMENT AUDITING STANDARDS
11-1 10 Financial Statement Reclassifications Material Weakness
CURRENT FINDINGS – STATE COMPLIANCE
In addition, the following finding which is reported as a current findings relating to Government
Auditing Standards also meets the reporting requirements for State Compliance.
11-1 10 Financial Statement Reclassifications Noncompliance
PRIOR FINDINGS NOT REPEATED
11 None
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Years Ended June 30, 2011 and 2010
4
EXIT CONFERENCE
The IMSA Fund for Advancement of Education waived holding an exit conference in a
communication from Thomas Walter dated December 1, 2011.
The Response to the recommendation was provided by Thomas Walter in a communication dated
November 29, 2011.
lletier
Certifod Public Accounlllnts & CoiiSullllnts
200 East Court Street • Suite 6o8 • Kankakee, IL 60901
815.933.1771 • fax: 815.933.1163
INDEPENDENT ACCOUNTANTS' REPORT ON STATE COMPLIANCE,
ON INTERNAL CONTROL OVER COMPLIANCE, AND ON
SUPPLEMENTARY INFORMATION FOR STATE COMPLIANCE PURPOSES
Honorable William G. Holland
Auditor General
State of Illinois
And
Board of Directors
IMSA Fund for Advancement of Education
Aurora, Illinois
Compliance
As Special Assistant Auditors for the Auditor General, we have examined the IMSA Fund for
Advancement of Education's (a component unit of the State of Illinois) compliance with the
requirements listed below, as more fully described in the Audit Guide for Financial Audits and
Compliance Attestation Engagements of Illinois State Agencies (Audit Guide) as adopted by the
Auditor General, during the two years ended June 30, 2011. The management of the IMSA Fund
for Advancement of Education is responsible for compliance with these requirements. Our
responsibility is to express an opinion on the IMSA Fund for Advancement of Education's
compliance based on our examination.
A. The IMSA Fund for Advancement of Education has obligated, expended, received, and
used funds in accordance with the purpose for which such funds have been appropriated
or otherwise authorized by law.
B. The IMSA Fund for Advancement of Education has obligated, expended, received, and
used funds in accordance with any limitations, restrictions, conditions or mandatory
directions imposed by law upon such obligation, expenditure, receipt or use.
C. The IMSA Fund for Advancement of Education has complied, in all material respects,
with applicable laws and regulations, including the State uniform accounting system, in
its financial and fiscal operations.
D. Revenues and receipts collected by the IMSA Fund for Advancement of Education are in
accordance with applicable laws and regulations and the accounting and recordkeeping of
such revenues and receipts is fair, accurate and in accordance with law.
5
6
E. Money or negotiable securities or similar assets handled by the IMSA Fund for
Advancement of Education or held in trust by the IMSA Fund for Advancement of
Education have been properly and legally administered and the accounting and
recordkeeping relating thereto is proper, accurate, and in accordance with law.
We conducted our examination in accordance with attestation standards established by the
American Institute of Certified Public Accountants; the standards applicable to attestation
engagements contained in Government Auditing Standards issued by the Comptroller General of the
United States; the Illinois State Auditing Act (Act); and the Audit Guide as adopted by the Auditor
General pursuant to the Act; and, accordingly, included examining, on a test basis, evidence about
the IMSA Fund for Advancement of Education’s compliance with those requirements listed in the
first paragraph of this report and performing such other procedures as we considered necessary in
the circumstances. We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the IMSA Fund for Advancement of
Education’s compliance with specified requirements.
In our opinion, the IMSA Fund for Advancement of Education complied, in all material respects,
with the compliance requirements listed in the first paragraph of this report during the two years
ended June 30, 2011. However, the results of our procedures disclosed an instance of
noncompliance with those requirements, which are required to be reported in accordance with
criteria established by the Audit Guide, issued by the Illinois Office of the Auditor General and
which is described in the accompanying schedule of findings as finding 11-1.
Internal Control
Management of the IMSA Fund for Advancement of Education is responsible for establishing
and maintaining effective internal control over compliance with the requirements listed in the
first paragraph of this report. In planning and performing our examination, we considered the
IMSA Fund for Advancement of Education’s internal control over compliance with the
requirements listed in the first paragraph of this report as a basis for designing our examination
procedures for the purpose of expressing our opinion on compliance and to test and report on
internal control over compliance in accordance with the Audit Guide, issued by the Illinois
Office of the Auditor General, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the IMSA Fund for Advancement of Education’s internal control over
compliance.
A deficiency in an entity’s internal control over compliance exists when the design or operation
of a control over compliance does not allow management or employees, in the normal course of
performing their assigned functions, to prevent, or detect and correct, noncompliance with the
requirements listed in the first paragraph of this report on a timely basis. A material weakness in
an entity’s internal control over compliance is a deficiency, or combination of deficiencies, in
internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a requirement listed in the first paragraph of this report will not be
prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be deficiencies, significant deficiencies, or material
weaknesses. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses, as defined above.
There were no immaterial findings that have been excluded from this report.
The IMSA Fund for Advancement of Education's response to the finding identified in our
examination is described in the accompanying schedule of findings. We did not examine the
IMSA Fund for Advancement of Education's response and, accordingly, we express no opinion
on the response.
Supplementary Information for State Compliance Purposes
As Special Assistant Auditors for the Auditor General, we have audited the financial statements
of the business-type activities of the IMSA Fund for Advancement of Education as of and for the
year ended June 30, 2011, which comprise the IMSA Fund for Advancement of Education's basic
financial statements, and have issued our report thereon dated December 12, 2011. The
accompanying supplementary information, as listed in the table of contents as Supplementary
Information for State Compliance Purposes, is presented for purposes of additional analysis and
is not a required part of the basic financial statements of the IMSA Fund for Advancement of
Education. The 2011 Supplementary Information for State Compliance Purposes has been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the basic financial statements for
the year ended June 30, 2011, taken as a whole.
We have also previously audited, in accordance with auditing standards generally accepted in the
United States, the IMSA Fund for Advancement of Education's basic financial statements for the
years ended June 30, 2010 and June 30, 2009. In our reports dated January 4, 2011 and December
8, 2009, we expressed unqualified opinions on the financial statements of the business-type
activities of the IMSA Fund for Advancement of Education. In our opinion, the 2010 and 2009
Supplementary Information for State Compliance Purposes is fairly stated in all material respects
in relation to the basic financial statements for the years ended June 30, 2010 and June 30, 2009,
taken as a whole.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, management, and the Board of
Directors of IMSA Fund for Advancement of Education and is not intended to be and should not be
used by anyone other than these specified parties.
December 12, 2011
7
lletier
Certified Public Accoulltants & Consultants
200 East Court Street • Suite 6o8 • Kankakee, IL 60901
815.933.1771 • fax: 815.933.1163
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable William G. Holland
Auditor General
State of Illinois
And
Board of Directors
IMSA Fund for Advancement of Education
Aurora, Illinois
As Special Assistant Auditors for the Auditor General, we have audited the financial statements
of the business-type activities of the IMSA Fund for Advancement of Education (a component
unit of the State of Illinois), as of and for the year ended June 30, 2011 which comprise the
IMSA Fund for Advancement of Education's basic financial statements, and have issued our
report thereon dated December 12, 2011. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards issued by the Comptroller General of
the United States.
Internal Control Over Financial Reporting
Management of the IMSA Fund for Advancement of Education is responsible for establishing and
maintaining effective internal control over financial reporting. In planning and performing our
audit, we considered the IMSA Fund for Advancement of Education's internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, and not for the purpose of expressing an opinion on the
effectiveness of the IMSA Fund for Advancement of Education's internal control over financial
reporting. Accordingly, we do not express an opinion on the effectiveness of the IMSA Fund for
Advancement of Education's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose described
in the preceding paragraph and was not designed to identify all deficiencies in internal control over
financial reporting that might be significant deficiencies or material weaknesses and therefore, there
8
can be no assurance that all deficiencies, significant deficiencies or material weaknesses have been
identified . However, as described in the accompanying Schedule of Findings we identified certain
deficiencies in internal control over financial reporting that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected on a timely basis. We consider the deficiency described in finding 11-1 in the
accompanying Schedule of Findings to be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the IMSA Fund for Advancement of
Education's financial statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not
an objective of our audit, and accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
The IMSA Fund for Advancement of Education's response to the finding identified in our audit
is described in the accompanying schedule of findings. We did not audit the IMSA Fund for
Advancement of Education's response and, accordingly, we express no opinion on the response.
This report is intended solely for the information and use of the Auditor General, the General
Assembly, the Legislative Audit Commission, the Governor, management and the Board of
Directors of the IMSA Fund for Advancement of Education and is not intended to be and should
not be used by anyone other than these specified parties.
December 12, 2011
9
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
CURRENT FINDINGS
For the Year Ended June 30, 2011
10
11-1 Finding: Financial Statement Reclassifications
The IMSA Fund for Advancement of Education (Fund) did not initially properly report its cash
and investments and net asset classifications on its June 30, 2011 financial statements.
During our audit we noted the following financial statement reporting matters that required
reclassification:
 The Fund incorrectly reported $284,263 of certificates of deposit with original maturity
dates of greater than three months as cash equivalents instead of investments in the
Statement of Net Assets. After bringing this matter to their attention, the Fund
reclassified its certificates of deposit to investments.
 The Fund initially included $19,477 of earnings on its permanent endowments in the net
asset category “Restricted Net Assets, Nonexpendable.” The language of these written
endowments clearly allows the earnings on the assets to be expended in accordance with the
terms of the agreement. After bringing this to their attention, the Fund corrected this
reporting error and has reported the earnings in the net asset category “Restricted Net
Assets, Expendable.”
The Fund’s Board of Directors and management share the ultimate responsibility for the Fund’s
internal control over financial reporting. This responsibility should include an adequate system
of review of the completeness and accuracy of the Fund’s financial statements and disclosures to
ensure that the financial statements are presented in accordance with accounting principles
generally accepted in the United States of America (GAAP).
The Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires the Fund to establish and
maintain a system of internal fiscal and administrative controls which would include controls over
the accurate preparation of financial statements.
Fund officials stated that this error was a result of management oversight.
Failure to prepare accurate financial statements in accordance GAAP may result in financial
statements that are materially misstated. (Finding Code Nos. 11-1, 10-1)
Recommendation
We recommend Fund management thoroughly review its financial statements and verify amounts in
order to ensure the financial statements are properly presented in accordance with accounting
principles generally accepted in the United States of America.
Fund Response
The Fund acknowledges the finding, made all the reclassifications and resubmitted its financial
statements to the auditors. In total, the Net Assets of the Fund were reported correctly on the
year-end financial statements.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
PRIOR FINDINGS NOT REPEATED
For the Year Ended June 30, 2011
11
There were no prior findings in the prior reports that were not repeated.
12
FINANCIAL STATEMENT REPORT
SUMMARY
The audit of the accompanying financial statements of the IMSA Fund for Advancement of
Education as of and for the years ended June 30, 2011 and 2010 was performed by Borschnack,
Pelletier & Co.
Based on their audits, the auditors expressed unqualified opinions on the Fund’s basic financial
statements as of and for the years ended June 30, 2011 and 2010.
lletier
Certified Public Accountants & Consultants
200 East Court Street • Suite 608 • Kankakee, IL 60901
815.933.1771 • fax: 815.933.1163
INDEPENDENT AUDITORS' REPORT
Honorable William G. Holland
Auditor General
State of Illinois
And
Board of Directors
IMSA Fund for Advancement of Education
Aurora, Illinois
As Special Assistant Auditors for the Auditor General, we have audited the accompanying
financial statements of the business-type activities of the IMSA Fund for Advancement of
Education (a component unit of the State of Illinois), as of and for the years ended June 30, 2011
and 2010, which comprise the IMSA Fund for Advancement of Education's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
the IMSA Fund for Advancement of Education's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the business-type activities of the IMSA Fund for Advancement of
Education, as of June 30, 2011 and 2010 and the changes in financial position and cash flows,
thereof for the years then ended in conformity with accounting principles generally accepted in
the United States of America.
13
In accordance with Government Auditing Standards, we have also issued a report dated
December 12, 2011 on our consideration of the IMSA Fund for Advancement of Education's
internal control over financial reporting and on our tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the internal control
over financial reporting or on compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Standards and should be considered in assessing the
results of our audit.
The Management's Discussion and Analysis on pages 15 through 20 is not a required part of the
basic financial statements but is supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
December 12, 2011
14
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
15
The purpose of this analysis is to provide an objective and easy to read analysis of the IMSA
Fund for Advancement of Education’s (Fund) Financial Statements based on currently known
facts, decisions, and/or conditions. These financial statements are the responsibility of
management and should be read in conjunction with the footnotes as a complete financial report.
Statement of Net Assets
The Statement of Net Assets presents the assets, liabilities, and net assets of the Fund as of the
end of the fiscal year (essentially a fiscal snapshot of the Fund as of that point in time). Readers
are able to determine the assets available to continue the Fund’s operations as well as determine
the amount the Fund owes its vendors.
CONDENSED STATEMENTS OF NET ASSETS
For the Years Ended June 30,
2011 2010
ASSETS
Cash and Cash Equivalents $ 919,169 $ 840,984
Investments 3,293,581 2,683,087
Accounts Receivable 81,065 62,803
Contribution Advances 311,810 156,708
Prepaid Expenses 4,863 3,470
Pledges Receivable, Net 1,101,095 52,262
TOTAL ASSETS $ 5,711,583 $ 3,799,314
LIABILITIES
Accounts Payable $ 16,438 $ 32,556
Deferred Revenue 3,644 6,375
TOTAL LIABILITIES 20,082 38,931
NET ASSETS
Unrestricted Net Assets 3,980,182 2,446,151
Restricted Net Assets, Expendable 1,639,194 1,269,107
Restricted Net Assets, Nonexpendable 72,125 45,125
TOTAL NET ASSETS 5,691,501 3,760,383
TOTAL LIABILITIES AND NET ASSETS $ 5,711,583 $ 3,799,314
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
16
Fiscal year ended June 30, 2011 ended with an increase in net assets of $1,931,118. This change
was influenced by significant gains in the investment portfolio and a large increase in pledges
receivable. Overall cash and investments increased by $688,679. Liabilities recorded in 2011
decreased and remained minor overall.
Pledges Receivable
Pledges receivable are voluntary nonexchange transactions. Revenue was recognized by the
Fund in the year when all of the eligibility requirements were met in accordance with
Governmental Accounting Standards Board Statement No. 33. During fiscal year 2011, the Fund
received a pledge of $1,000,000 from a single donor.
Contribution Advances
Contribution advances represent grants that may be spent over consecutive fiscal years. The
Fund and the Academy identify those awards that may be carried over into another fiscal year. In
order to account for those particular awards the Fund records them as contribution advances.
Grants that have an award date ending on or before June 30th (the last day of the fiscal year) and
remain unspent are returned to the Fund by the Academy. Grant refunds are then placed back
into the respective account to be used at a later date.
Net Assets
Net assets are divided into three major categories. Unrestricted net assets include amounts not
subject to donor-imposed stipulations and include all of the activities of the Fund, except for
those that are classified as restricted. Restricted expendable net assets include amounts that are
subject to donor-imposed stipulations. These stipulations limit the use of the resources for
specific purposes. Restricted nonexpendable net assets are to be held and invested in perpetuity
with earnings thereof to be used for purposes as determined by the donors who made the
contribution.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
17
Statement of Revenues, Expenses, and Changes in Net Assets
The purpose of the Statement of Revenues, Expenses, and Changes in Net Assets is to present
the revenues recognized by the Fund, both operating and non-operating, and expenses incurred
by the Fund. Revenues primarily consist of contributions to the Fund, interest and dividend
income, and support from the Academy. Expenses consist of amounts incurred to support and
carry out the mission of the Fund.
CONDENSED STATEMENTS OF REVENUES, EXPENSES,
AND CHANGES IN NET ASSETS
For the Years Ended June 30,
2011 2010
OPERATING REVENUES
Contributions $ 2,077,145 $ 885,010
Operating Agreement with Academy 269,600 259,441
Other Operating Revenues 85,495 21,361
TOTAL OPERATING REVENUES 2,432,240 1,165,812
OPERATING EXPENSES
Academy Support 836,585 1,029,230
Management and General 99,910 90,984
Fundraising 54,412 72,938
Operating Agreement with Academy 269,600 259,441
TOTAL OPERATING EXPENSES 1,260,507 1,452,593
OPERATING INCOME (LOSS) 1,171,733 (286,781)
NON-OPERATING REVENUES AND EXPENSES 732,385 325,021
CONTRIBUTIONS TO PERMANENT ENDOWMENTS 27,000 6,125
CHANGE IN NET ASSETS 1,931,118 44,365
NET ASSETS – BEGINNING OF YEAR 3,760,383 3,716,018
NET ASSETS – END OF YEAR $ 5,691,501 $ 3,760,383
Operating Revenue
The total Contributions of the Fund increased 134.7% from fiscal year 2010 to fiscal year 2011.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
18
Non-Operating Revenues and Expenses
The Fund’s net gains on investments increased during the past fiscal year. The Fund recorded
interest and dividend income of $69,942 and net gains on investments of $662,443 during fiscal
year 2011. Interest and dividend income decreased 7.2% from fiscal year 2010 to fiscal year
2011 and gains (losses) in investments increased 165.3% from fiscal year 2010 to fiscal year
2011.
Academy Support
The Fund recognized $836,585 and $1,029,230 in fiscal years 2011 and 2010, respectively, in
direct support to the Academy. The decrease was due to the Academy not spending as much of
the awards it was given. As a result, contribution advances increased by $155,102.
Academy Support is program services for those activities that the reporting organization was
created to conduct and which, along with any activities commenced subsequently, form the basis
of the organization’s current exemption from tax. They may be self-funded or funded out of
contributions, accumulated income, investment income, or any other source. Fundraising
expenses are not reported as program-related expenses even though one of the functions of the
organization is to solicit contributions for other organizations.
Fundraising
Fundraising expenses are total expenses incurred in soliciting contributions, gifts, grants, etc.
Reported as fundraising expenses are all expenses, incurred in:
A. Publicizing and conducting fund raising campaigns
B. Soliciting bequests and grants
C. Preparing and distributing fundraising manuals
D. Conducting special events to generate contributions
The fiscal year 2011 Fundraising expenses decreased 25.4% compared to fiscal year 2010.
Management and General
Management and general expenses and fundraising expenses combined, decreased from
$163,922 in fiscal year 2010 to $154,322 in fiscal year 2011.
Management and General Expenses includes expenses incurred directly by the Fund’s operations
except those provided by the Academy pursuant to the operating agreement. These include
meetings of the Board of Directors; committee and staff meetings (unless held in connection with
specific program services or fundraising activities); general legal services, general liability
insurance, office management, auditing, and preparation, publication, and distribution of an the
annual report; and investment expenses.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
19
Change in Net Assets
Net Assets increased by $1,931,118 over the past fiscal year. The increase can be attributed to
improved budgetary management and increases in investment holdings as well as increased
contributions. The fund continues to use existing fund balances to support Academy projects.
Statement of Cash Flows
The Fund uses the Statement of Cash Flows to identify cash provided from operations, investing
and financing activities. The Fund had a $78,185 increase in cash and cash equivalents during
fiscal year 2011. This primarily resulted from gains on investment positions. Operating activities
resulted in a cash outflow of $70,706.
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended June 30,
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Supporters and Grantors $ 1,057,554 $ 919,521
Cash Paid to Grantee, Suppliers and Employees (1,128,260) (1,189,189)
(70,706) (269,668)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and Dividends Received 69,942 75,332
Cash Payment for the Purchase of Investments (1,237,406) (1,346,962)
Cash Proceeds from Sale of Investments 1,289,355 1,634,448
121,891 362,818
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash Received for Permanent Endowments 27,000 6,125
27,000 6,125
NET INCREASE IN CASH AND CASH
EQUIVALENTS 78,185 99,275
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 840,984 741,709
END OF YEAR $ 919,169 $ 840,984
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Years Ended June 30, 2011 and 2010
20
Economic Outlook
The Fund continues to invest in various investment securities. During the current fiscal year, the
overall economy and financial markets began to stabilize, and many of the Fund’s investment
holdings recovered and increased from prior fiscal periods. However, there was still substantial
doubt about the future economic outlook of financial markets at year-end, and investment
securities were exposed to various risks such as interest rate, market and credit risks.
The Fund has maintained a higher cash equivalents balance because of its projection to support
the Academy. While the market environment remains uncertain, the Fund believes its prudent
investment strategy and policies will continue to show improved results in future fiscal years.
STATE OF ILLINOIS
2011 2010
ASSETS
Current Assets
Cash and Cash Equivalents $ 919,169 $ 840,984
Investments 3,221,456 2,637,962
Accounts Receivable 81,065 62,803
Contribution Advances 311,810 156,708
Prepaid Expenses 4,863 3,470
Pledges Receivable, Net 198,865 52,262
Total Current Assets 4,737,228 3,754,189
Non-Current Assets
Pledges Receivable, Net 902,230 -
Endowment Investments 72,125 45,125
Total Non-Current Assets 974,355 45,125
TOTAL ASSETS $ 5,711,583 $ 3,799,314
LIABILITIES
Accounts Payable $ 16,438 $ 32,556
Deferred Revenue 3,644 6,375
TOTAL LIABILITIES 20,082 38,931
NET ASSETS
Unrestricted Net Assets 3,980,182 2,446,151
Restricted Net Assets, Expendable 1,639,194 1,269,107
Restricted Net Assets, Nonexpendable 72,125 45,125
TOTAL NET ASSETS 5,691,501 3,760,383
TOTAL LIABILITIES AND NET ASSETS $ 5,711,583 $ 3,799,314
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
STATEMENTS OF NET ASSETS
As of June 30, 2011 and 2010
The accompanying notes to the financial statements are an integral part of this statement.
21
STATE OF ILLINOIS
2011 2010
Operating Revenues
Contributions $ 2,077,145 $ 885,010
Operating Agreement with Academy 269,600 259,441
Program Fees 16,099 19,470
In-Kind Contributions of Goods and Equipment 72,175 860
Special Events (Net) (4,764) 680
Other Operating Revenues 1,985 351
Total Revenues 2,432,240 1,165,812
Operating Expenses
Academy Support 836,585 1,029,230
Management and General 99,910 90,984
Fundraising 54,412 72,938
Operating Agreement with Academy 269,600 259,441
Total Expenses 1,260,507 1,452,593
Operating Income (Loss) 1,171,733 (286,781)
Non-Operating Revenues and Expenses
Interest and Dividend Income 69,942 75,332
Net Gains (Losses) on Investments 662,443 249,689
Net Non-Operating Revenue (Expenses) 732,385 325,021
Income (Loss) Before Other Revenues 1,904,118 38,240
Contributions to Permanent Endowments 27,000 6,125
Total Other Revenues 27,000 6,125
CHANGE IN NET ASSETS 1,931,118 44,365
NET ASSETS - BEGINNING OF YEAR 3,760,383 3,716,018
NET ASSETS - END OF YEAR $ 5,691,501 $ 3,760,383
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS
For the Years Ended June 30, 2011 and 2010
The accompanying notes to the financial statements are an integral part of this statement.
22
STATE OF ILLINOIS
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Supporters and Grantors $ 1,057,554 $ 919,521
Cash Paid to Grantee, Suppliers and Employees (1,128,260) (1,189,189)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (70,706) (269,668)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and Dividends Received 69,942 75,332
Cash Payment for the Purchase of Investments (1,237,406) (1,346,962)
Cash Proceeds from Sale of Investments 1,289,355 1,634,448
NET CASH PROVIDED BY INVESTING ACTIVITIES 121,891 362,818
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Cash Received for Permanent Endowments 27,000 6,125
NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES 27,000 6,125
INCREASE IN CASH AND CASH EQUIVALENTS 78,185 99,275
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 840,984 741,709
END OF YEAR $ 919,169 $ 840,984
RECONCILIATION OF OPERATING (LOSS) INCOME TO
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
Operating (Loss) Income $ 1,171,733 $ (286,781)
Adjustments to Reconcile Operating (Loss) Income to
Net Cash (Used In) Provided by Operating Activities:
Changes in Certain Assets and Liabilities:
Accounts Receivable (18,262) 7,276
Contribution Advances (155,102) (26,740)
Prepaid Expenses ( 1,393) 133
Pledges Receivable (1,048,833) 9,489
Accounts Payable (16,118) 29,710
Deferred Revenue ( 2,731) (2,755)
Total Adjustments (1,242,439) 17,113
NET CASH PROVIDED BY OPERATING ACTIVITIES $ (70,706) $ (269,668)
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2011 and 2010
The accompanying notes to the financial statements are an integral part of this statement.
23
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
24
NOTE A – ORGANIZATION
The IMSA Fund for Advancement of Education (Fund) is a nonprofit 501(c)(3) corporation
established and maintained for the purposes of benefiting, performing the functions of, or
carrying out certain charitable, educational, literary and scientific purposes of the Illinois
Mathematics and Science Academy (Academy). The Academy was created through an Act of
the State of Illinois General Assembly to offer a uniquely challenging education for students
talented in the areas of mathematics, science, and technology. The Academy also functions as a
laboratory for the development and testing of new techniques of mathematics, science, and
humanities teaching for secondary schools throughout Illinois. Providing support to and on
behalf of the Academy is the IMSA Fund’s primary program service. Funding for this program
service is derived from contributions from various individuals, corporations, and foundations
located primarily within the United States.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Fund have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP), as prescribed by the
Governmental Accounting Standards Board (GASB). To facilitate the understanding of the data
included in the financial statements, the Fund’s significant accounting policies are summarized
below.
1. Financial Reporting Entity
As defined by GAAP, the financial reporting entity consists of a primary government, as
well as its component units, which are legally separate organizations for which the
elected officials of the primary government are financially accountable. Financial
accountability is defined as:
1) Appointment of a voting majority of the component unit’s board and either (a) the
primary government’s ability to impose its will, or (b) the possibility that the
component unit will provide a financial benefit to or impose a financial burden on
the primary government; or
2) Fiscal dependency on the primary government.
Based upon the required criteria, the IMSA Fund has no component units, but is a component
unit of the State of Illinois financial reporting entity. The financial balances and activities
included in these basic financial statements are, therefore, also included in the State's
comprehensive annual financial report.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
25
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. Financial Reporting Entity – (Continued)
The IMSA Fund for Advancement of Education, which was determined to be a
component unit of the State of Illinois, is combined and discretely presented in the State
of Illinois’ financial statements. The State of Illinois Comprehensive Annual Financial
Report may be obtained by writing to the State Comptroller’s Office, Financial Reporting
Department, 325 West Adams Street, Springfield, Illinois 62704-1871.
2. Basis of Accounting
For financial reporting purposes, the Fund is considered a special-purpose government
engaged only in business-type activities. Accordingly, the accompanying financial
statements of the Fund have been prepared on the accrual basis of accounting using the
economic resources measurement focus. Under the accrual basis, revenues are recognized
when earned, and expenses are recognized when a liability has been incurred.
3. Basis of Presentation
In accordance with GASB Statement No. 20, the Fund is required to follow all applicable
GASB pronouncements. Private-sector standards of accounting and financial reporting
issued prior to December 1, 1989 generally are followed in the financial statements to the
extent that those standards do not conflict with or contradict guidance of the
Governmental Accounting Standards Board. Private–sector standards issued after that
date are not followed.
4. Cash and Cash Equivalents
Cash and cash equivalents may include debt securities and certificate of deposit with a
maturity of 90 days or less at the time of acquisition, cash on hand, cash in banks, and
money market funds held in an investment account in the name of IMSA Fund for
Advancement of Education.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
26
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
5. Investments
Effective July 1, 2004, the IMSA Fund adopted GASB Statement No. 40, Deposit and
Investment Risk Disclosures. This GASB statement provides disclosure requirements
related to deposit and investment risks: credit risk, interest rate risk, and foreign currency
risk. Accordingly, these disclosures have been made in Note C – Deposits and
Investments.
6. Accounts Receivable
Accounts receivable primarily consist of grant refunds due from the Illinois Mathematics
and Science Academy. All accounts receivable are considered to be fully collectible and
therefore an allowance for doubtful accounts is not necessary.
7. Classification of Revenues
The Fund has classified its revenues as either operating or non-operating revenues
according to the following criteria:
Operating revenues generally include activities that have the characteristics of exchange
transactions or that are part of the Fund's mission to raise funds for the Academy, such as
gifts, contributions and other revenues generated in support of the Academy, per
contractual agreement with the Academy.
Non-operating revenues include investment income and other revenue sources that are
defined as non-operating revenues by GASB Statement No. 9, Reporting Cash Flows of
Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use
Proprietary Fund Accounting.
8. Net Assets
In the financial statements, equity is displayed in two components as follows:
Restricted – this consists of net assets that are legally restricted by outside parties
or by law through constitutional provisions or enabling legislation. When both
restricted and unrestricted resources are available for use, generally it is the
Fund’s policy to use restricted resources first, then unrestricted resources when
they are needed.
Unrestricted – this consists of net assets that do not meet the definition of
“restricted”.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
27
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
9. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE C – DEPOSITS AND INVESTMENTS
The Fund independently manages its cash and cash equivalents which are maintained outside the
State Treasury. A reconciliation of deposits and investments presented in this disclosure and the
financial statement captions shown on the Statement of Net Assets is as follows:
2011 2010
Carrying amount of Deposits $ 456,401 $ 530,576
Carrying amount of Investments 3,009,319 2,327,228
Money market funds 746,830 666,067
Petty cash 200 200
Total $ 4,212,750 $ 3,524,071
2011 2010
Cash and Cash Equivalents $ 919,169 $ 840,984
Investments 3,221,456 2,637,962
Endowment Investments 72,125 45,125
Total $ 4,212,750 $ 3,524,071
1. Deposits
Deposits with financial institutions had carrying amounts of $456,401 and $530,576 and bank
balances of $457,093 and $534,374 at June 30, 2011 and 2010, respectively. These amounts
represent cash in banks and certificates of deposit.
Custodial Credit Risk – Deposits: Custodial credit risk is the risk that in the event of a bank
failure deposits may not be returned. Deposits were fully insured by the Federal Deposit
Insurance Corporation (FDIC) or pledged collateral. Certificates of deposit were held in the
Fund’s investment brokerage account.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
28
NOTE C – DEPOSITS AND INVESTMENTS (Continued)
2. Investments
The primary objective of investment activities shall be to prudently preserve and grow financial
assets of the Fund. The Fund’s Investment Policy has the following guidelines 1) diversify the
portfolio to minimize losses and to maximize appreciation and income; 2) use only investment
grade instruments; and 3) stagger maturity dates to minimize yield risk.
Investments at June 30, 2011 consisted of the following managed funds:
Investment Maturities (in Years)
Investment Types
Fair
Value
No
Maturity
Date
Less
Than 1 1-5 6-10 10 +
Corporate Debt Securities $ 79,971 $ - $ - $ 79,971 $ - $ -
Corporate Equity 2,133,148 2,133,148 - - - -
U.S. Treasuries 198,476 - 47,076 151,400 - -
U.S. Agency Obligations 434,090 - 324,203 89,912 - 19,975
FNMA Mortgage
Backed Securities 10,436 - - 10,436 - -
Municipal Debt Securities 153,198 - 30,821 - - 122,377
Total $ 3,009,319 $ 2,133,148 $ 402,100 $ 331,719 $ - $ 142,352
Investments at June 30, 2010 consisted of the following managed funds:
Investment Maturities (in Years)
Investment Types
Fair Value
No
Maturity
Date
Less
Than 1 1-5 6-10
Corporate Debt Securities $ 79,802 $ - $ - $ 79,802 $ -
Corporate Equity 1,540,083 1,540,083 - - -
U.S. Treasuries 228,116 - 72,945 155,171 -
U.S. Agency Obligations 404,970 - - 394,825 10,145
FNMA Mortgage Backed
Securities 31,915 - - 21,263 10,652
Municipal Debt Securities 42,342 - - 42,342 -
Total $ 2,327,228 $ 1,540,083 $ 72,945 $ 693,403 $ 20,797
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
29
NOTE C – DEPOSITS AND INVESTMENTS (Continued)
In addition to the above investments, the Fund maintained money market funds (reported as cash
equivalents on the Statements of Net Assets) in investment accounts that had a carrying amount and
fair market value of $746,830 and $666,067 at June 30, 2011 and 2010, respectively. These funds
have maturities of less than 90 days, and had a weighted average years to maturity of approximately
0.1 and 0.164 at June 30, 2011 and 2010, respectively. No rating information is available for these
funds.
The Fund’s investments at June 30, 2011 and 2010 include uninsured and unregistered
investments for which the securities are held by the broker’s or dealer’s trust department or agent
in the Fund’s name.
Credit Risk: Credit risk exists when there is a possibility that the issuer or other counterparty to
an investment may be unable to fulfill its obligations. The Fund currently holds Federal National
Mortgage Association (FNMA) Mortgage Backed Securities. The principal on these multi-family
residential mortgage pools is guaranteed by FNMA. These securities are not rated.
The Fund’s investment policy precludes the Fund from investing in bonds with a credit rating of
less than A by Standard & Poor’s. As of June 30, the Fund’s investments in debt securities
(other than U.S. Treasuries) were rated as follows:
Standard &
Poor’s Rating
2011 Fair
Market Value
Standard &
Poor’s Rating
2010 Fair
Market Value
AAA $ 500,134 AAA $ 405,768
AA+ 30,821 AA+ 31,399
AA 45,976 A 79,802
A 79,972 Not rated 42,060
Not rated 20,792 Total $ 559,029
Total $ 677,695
Interest Rate Risk: Interest rate risk exists when there is a possibility that changes in interest
rates could adversely affect an investment’s value. The IMSA Fund has maintained its funds in
highly liquid investments, but has not adopted a formal policy that limits investment maturities
as a means of managing its exposure to fair value losses arising from increasing interest rates.
Foreign currency risk: The Fund was not exposed to foreign currency risk at June 30, 2011 or
June 30, 2010. The Fund’s investment policy includes limitation on investment types that
reduces the Fund’s exposure to foreign currency risk.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
30
NOTE C – DEPOSITS AND INVESTMENTS (Continued)
2. Investments (Continued)
The Fund experienced the following types of gains/losses on its investments during fiscal years:
2011 2010
Net realized gains (losses) on disposition of investments $ 218,752 $ 19,266
Net unrealized gains (losses) 443,691 230,423
Total net gains (losses) on investments $ 662,443 $ 249,689
NOTE D – PLEDGES RECEIVABLE
Outstanding pledges are reflected in the Statement of Net Assets for those promises/pledges to
give for which all time and other eligibility requirements have been met as provided for in GASB
Statement No. 33. At June 30, 2011 and 2010, pledges receivable were $1,101,095 and $52,262,
respectively. At June 30, 2011 and 2010, all pledges receivable were classified as either short-term
or long term. A $1,000,000 five year pledge was received in the fiscal year 2011 and a
discount of $39,000 was calculated in order to conservatively present the pledges receivable at
their net present value. Pledges are recorded net of the allowance for doubtful accounts of $5,729
and -0- as of June 30, 2011 and 2010, respectively.
NOTE E - SPECIAL EVENTS
Special events are stated net of costs of direct benefits to donors. For the year ended June 30,
2011, special events netted to ($4,764). For the years ended June 30, 2011 and 2010, the results
of the events were as follows:
2011 2010
Special Event Sponsorships $ 14,050 $ -
Special Event Revenue 18,070 680
Special Event Direct Expense (36,884) -
Net Total $ (4,764) $ 680
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
31
NOTE F – RELATED PARTY TRANSACTIONS
Effective August 29, 1996, the Fund entered into an agreement with the Illinois Mathematics and
Science Academy (Academy), which specifies the relationship between the two organizations.
This agreement states that the Fund is a separate corporate entity established primarily for the
purpose of benefiting, performing the functions of, and carrying out certain charitable,
educational, literary and scientific purposes of the Academy, and to assist the Academy in
achieving and furthering its educational, research, and service goals. The Fund has agreed to
provide financial support to the Academy (both directly and indirectly) and in exchange, the
Academy has agreed to provide office space, utilities, equipment and personnel to enable the
Fund to accomplish its purposes.
Both organizations acknowledge that State resources should not be used to provide for
fundraising activities, which do not result in a value to the Academy of the same or greater value
than what the Academy receives directly from the Fund. As long as the Academy receives direct
or indirect program support from the Fund, which is greater than the costs the Academy incurs
on behalf of the Fund, no reimbursement shall occur. If in any fiscal year those costs are greater
than the program support provided to the Academy, the Fund will reimburse the Academy for the
excess of the costs over the program support provided. For fiscal year 2011 and 2010, total
program support provided to the Academy by the Fund was $836,585 and $1,029,230,
respectively. The total costs incurred by the Academy for the Fund were approximately
$269,600 and $259,441, respectively.
At June 30, 2011 and 2010, accounts receivable due from the Academy were $81,065 and
$62,803, respectively.
At June 30, 2011 and 2010, contribution advances of $311,810 and $156,708, respectively had
been paid to the Academy but were deferred to the following year.
Other Related Parties
The Fund recognized contribution revenue from members of the Fund Board of Trustees and the
Academy Board of Trustees and those members’ affiliated corporations and foundations in the
amount of $54,360 and $56,429, during the years ended June 30, 2011 and 2010, respectively.
NOTE G – CONTINGENCIES – GRANTS
Amounts received or receivable from grantor agencies are subject to audit and adjustments by
grantor agencies. Any disallowed claims, including amounts already collected, may constitute a
liability of the Fund. The amount, if any, of expenditures which may be disallowed by the
grantor cannot be determined at this time although the Fund expects such amounts, if any, to be
immaterial.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
NOTES TO FINANCIAL STATEMENTS
June 30, 2011 and 2010
32
NOTE H – INCOME TAXES
IMSA Fund for Advancement of Education is a non-profit organization, which has been granted
a tax-exempt status as a public charity under Section 501(c) (3) of the Internal Revenue Code.
The Fund is required to pay Federal and State income taxes only on its net unrelated business
income. A provision for income taxes was not required for the years ended June 30, 2011 and
2010.
NOTE I – ENDOWMENTS
The Fund’s Board established a quasi-endowment fund during the year ended June 30, 2008.
This endowment’s principal objectives are the promotion and development of innovation and
excellence in achieving the Academy’s legislative mandate and strategic mission and objectives,
including non-recurring purposes of the Academy not regularly funded by the State of Illinois.
The balance of this fund as of June 30, 2011 and 2010 respectively was $2,255,559 and
$887,110. The principal of the endowment will not be expended, and is reported on the
Statements of Net Assets as “Unrestricted Net Assets”.
Two additional endowment funds were established pursuant to donors’ gifts during the year
ended June 30, 2007. These endowments require the principal to remain intact and are reported
on the Statements of Net Assets as “Restricted Net Assets, Nonexpendable”.
As permitted by State law, a distribution from investment earnings will be made available for
purposes designated by the Fund’s Board of Directors from the endowment funds. The only
authorized disbursements for the years ended June 30, 2011 and 2010 were for investment
management fees. Any portion of the annual, distributable funds not distributed in any given
year will be retained in the Endowment Fund in a pool of funds spendable in future years. Net
appreciation of donor restricted endowments was $18,417 and $0 as of June 30, 2011 and 2010,
respectively.
All of the endowment funds are pooled for investment purposes. Each fund shares
proportionally in any recognized or unrecognized capital gains and losses and in any other net
earnings generated by those investments. The Fund intends to retain accumulated earnings
generated by the quasi-endowment fund until the principal and accumulated earnings reach
$5,000,000 at fiscal year-end. Once the quasi-endowment fund attains this goal, an annual
spending amount will be calculated for the endowment for the following fiscal year.
NOTE J – SUBSEQUENT EVENTS
Subsequent to June 30, 2011, the Fund’s investments have experience some declines in market
value due to market volatility.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
SUPPLEMENTARY INFORMATION FOR STATE COMPLIANCE PURPOSES
For the Years Ended June 30, 2011 and 2010
33
SUMMARY
Supplementary Information for State Compliance Purposes presented in this section of the report
includes the following:
 Fiscal Schedules and Analysis
Analysis of Significant Variations in Revenue
Analysis of Significant Variations in Expenses
 Analysis of Operations
Agency Functions and Planning Program
Average Number of Employees
Supporting Service Expenses
Schedule of Support Provided by the IMSA Fund to the Academy
Schedule of Services Provided by the Academy to IMSA Fund
The accountants’ report that covers the Supplementary Information for State Compliance Purposes
presented in the Compliance Report Section states that it has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in the auditors’ opinion, it is
fairly stated in all material respects in relation to the basic financial statements taken as a whole.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
ANALYSIS OF SIGNIFICANT VARIATIONS IN REVENUE
For the Years Ended June 30, 2011 and 2010
34
Explanations for variances of $40,000 and 5% have been provided below.
Year Ending June 30,
2011 2010 2009
Contributions $ 2,077,145 $ 885,010 $ 901,018
Operating Agreement with Academy 269,600 259,441 263,964
In-Kind Contributions of Goods and
Equipment 72,175 860 6,461
Other Operating Revenues 1,985 351 -
Program Fees 16,099 19,470 3,495
Special Events (Net) (4,764) 680 (7,071)
Contributions to Permanent Endowments 27,000 6,125 -
Interest and Dividend Income 69,942 75,332 91,199
Gain (Loss) on Investments 662,443 249,689 (637,452)
Total $ 3,191,625 $ 1,496,958 $ 621,614
Contributions – The increase from fiscal year 2010 to fiscal year 2011 was due to increased
fundraising campaign efforts of the development staff which lead to a $1,000,000 pledge from a
major contributor in fiscal year 2011. Additional grant contributions for restricted purposes also
contributed to the increase in fiscal year 2011.
In-Kind Contributions – In fiscal year 2011 the Fund received large donations of goods and
equipment. No significant donations of goods and equipment occurred during fiscal year 2010
or fiscal year 2009.
Gain (Loss) on Investments – The downturn in the economy that started in fiscal year 2008 and
continued in fiscal year 2009 resulted in significant losses on investments. The upturn in the
economy that started in late fiscal year 2009 and continued into fiscal years 2010 and 2011
resulted in increased gains on the investments.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
ANALYSIS OF SIGNIFICANT VARIATIONS IN EXPENSES
For the Years Ended June 30, 2011 and 2010
35
Explanations for variances of $40,000 and 5% have been provided below.
Year Ending June 30,
2011 2010 2009
Operating Expenses
Academy Support $ 836,585 $ 1,029,230 $ 598,390
Management and General 99,910 90,984 143,402
Fundraising 54,412 72,938 99,292
Operating Agreement with Academy 269,600 259,441 263,964
Total Expenses $ 1,260,507 $ 1,452,593 $ 1,105,048
Academy Support – The decrease in fiscal year 2011 Academy support was a result of the
Academy not fully spending awards provided and resulted in a $155,102 increase in Contribution
Advances on the Statement of Net Assets. In fiscal year 2010, the Fund made an effort to
maximize contributions to the Academy as the Academy faced a decline in funding from other
sources.
Management and General – The decrease from fiscal year 2009 to fiscal year 2010 was the result
of cost-cutting measures and reduced consulting fees.
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
ANALYSIS OF OPERATIONS
For the Years Ended June 30, 2011 and 2010
36
AGENCY FUNCTIONS
The IMSA Fund for Advancement of Education (Fund) was incorporated February 6, 1986 as an
Illinois not-for-profit corporation. The Fund serves as the primary source of private funding for
the Illinois Mathematics and Science Academy (Academy).
The primary functions of the Fund are to raise funds from the private sector, oversee the
management and distribution of the Fund’s assets and to enrich the Academy’s education
programs. Private sector contributions also provide resources to enhance the Academy’s
continuing development as an educational laboratory for schools and teachers throughout
Illinois.
AGENCY PLANNING PROGRAM
The organization maintains a formal planning program, which is documented in the Fund’s
Board records. The Board of Directors of the Fund and the relevant Board Committees actively
plan fundraising programs in response to the Academy’s request for instructional programs and
development or enhancement of the Academy’s facilities.
Cathy Veal is the current Vice President of Strategy and Advancement of the Illinois
Mathematics and Science Academy. Thomas G. Walter is the current Secretary of the Fund.
The Fund is located at:
1500 W. Sullivan Road
Aurora, IL 60506-1000
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
ANALYSIS OF OPERATIONS
For the Years Ended June 30, 2011 and 2010
37
AVERAGE NUMBER OF EMPLOYEES
Year Ending June 30,
2011 2010 2009
Average number of employees -0- -0- -0-
The administration of all Fund activity is performed by employees of the Illinois Mathematics
and Science Academy (Academy). An agreement between the two organizations indicates that
the Fund has agreed to provide financial support to the Academy (both directly and indirectly)
and in exchange, the Academy has agreed to provide office space, equipment and personnel to
enable the Fund to accomplish its purpose in providing financial support to the Academy.
SUPPORTING SERVICE EXPENSES
Supporting service expenses represent those amounts incurred by the Fund to support
management and general (operational) activities and fundraising activities.
Year Ending June 30,
2011 2010 2009
Percent of total expenses represented by
supporting services 12.24% 11.28% 21.96%
Percentage Calculation:
Management and General $ 99,910 $ 90,984 $ 143,402
Fundraising 54,412 72,938 99,292
Total Support $ 154,322 $ 163,922 $ 242,694
Total Expenses $ 1,260,507 $ 1,452,593 $ 1,105,048
STATE OF ILLINOIS
IMSA FUND FOR ADVANCEMENT OF EDUCATION
(A Component Unit of the State of Illinois)
ANALYSIS OF OPERATIONS
For the Years Ended June 30, 2011 and 2010
38
SUMMARY OF ACADEMY AND IMSA FUND CONTRACT AGREEMENT
During fiscal years 2011 and 2010, the Academy engaged the Fund, under contract, to provide
fundraising services. As required by the contract, the Fund must provide direct or indirect
program support that exceeds the services provided by the Academy in order to have no
reimbursement of costs to occur.
SCHEDULE OF SUPPORT PROVIDED BY THE FUND TO THE ACADEMY
Year Ending June 30,
2011 2010 2009
Support provided:
Academy (includes direct payments) $ 764,410 $ 1,028,370 $ 591,929
Equipment Donations to the Academy 72,175 860 6,461
Total Funds Provided to the Academy $ 836,585 $ 1,029,230 $ 598,390
SCHEDULE OF SERVICES PROVIDED BY THE ACADEMY TO THE FUND
Year Ending June 30,
2011 2010 2009
Services provided:
Personal Services $ 226,940 $ 217,819 $ 213,040
Rent 27,302 25,802 25,052
Utilities 2,986 2,920 1,642
Equipment/Furniture Rental 5,244 4,630 4,126
Telephone Services 2,558 2,725 3,640
Maintenance Costs 3,438 3,236 2,275
Financial System Costs 1,132 2,309 14,189
Total $ 269,600 $ 259,441 $ 263,964
Note: The Fund conducts an annual review of accounting allocations for non-cash resources
provided by the Academy in order to better identify resources.