Office of the Auditor General, Iles Park Plaza, 740 E. Ash St., Springfield, IL 62703 • Tel: 217-782-6046 or TTY 888-261-2887
This Report Digest and a Full Report are also available on the internet at www.auditor.illinois.gov
ILLINOIS GRAIN INSURANCE CORPORATION
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Two Years Ended: June 30, 2011
Summary of Findings:
Total this audit:
Total last audit:
Repeated from last audit:
2
2
1
Release Date: March 27, 2012
INTRODUCTION
The Illinois Grain Corporation, a component unit of the State of Illinois, was created for the purpose of providing the economic stability of agriculture by establishing funds to pay grain producers and other claimants for losses incurred by the failure of a grain dealer or warehouseman. Fiscal support to carry out the responsibilities of the Corporation is provided by the Department of Agriculture.
SYNOPSIS
• The Corporation has not established the $2,000,000 Grain Insurance Reserve Fund as required by the Grain Code.
• The Corporation’s accounting system had several errors relating to receivables.
{Expenditures and Activity Measures are summarized on the reverse page.}ii
FINANCIAL ACTIVITY
Statement of Revenues, Expenses and
Change in Net Assets
Operating Revenues:
Charges for Services........................................
223,000$
266,000$
1,568,000$
Less Charges Written Off................................
-
(44,000)
-
Total Operating Revenues..........................
223,000
222,000
1,568,000
Operating Expenses:
Environmental and Business Regulation.........
13,000
16,000
35,000
Operating Income (Loss).....................................
210,000
206,000
1,533,000
Nonoperating Revenues:
On Behalf Contributions..................................
13,000
16,000
13,000
Recovery on Claims Paid.................................
11,000
284,000
-
Interest and Investment Income.......................
8,000
8,000
47,000
Total Nonoperating Revenues....................
32,000
308,000
60,000
Change in Net Assets............................................
242,000
514,000
1,593,000
Net Assets (Deficit), Beginning of the Year..........
6,772,000
6,258,000
4,655,000
Net Assets (Deficit), End of the Year..................
7,014,000$
6,772,000$
6,248,000$
Statement of Net Assets
Cash and Cash Equivalents....................................
6,961,000$
6,716,000$
5,264,000$
Other Receivables..................................................
4,000
7,000
968,000
Due from Primary Government.............................
49,000
49,000
26,000
Total Assets............................................................
7,014,000
6,772,000
6,258,000
Net Assets (Deficit)...............................................
7,014,000$
6,772,000$
6,258,000$
SCHEDULE OF GRAIN
DEALERS (UNAUDITED)
2011
2010
2009
Active dealers - beginning of year.........................
312
319
337
Add: New dealers...................................................
7
9
9
Less: Closed or insolvent dealers...........................
(16)
(16)
(27)
Active Dealers - end of year...................................
303
312
319
During Examination Period: Tom Jennings
Currently: Robert F. Flider, Acting
ILLINOIS GRAIN INSURANCE CORPORATION
FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
For the Two Years Ended June 30, 2011
CORPORATION PRESIDENT
2009
2010
2011iii
$2 million Reserve Fund not funded
Appropriation request not made
Corporation officials agree with auditors
Accounts receivables subsidiary ledgers did not agree to the trial balance
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
GRAIN INSURANCE FUND NOT FUNDED
The Illinois Grain Insurance Corporation has not funded the $2,000,000 Grain Insurance Reserve Fund required by the Grain Code.
As of the end of examination fieldwork, the Corporation had not established the $2,000,000 Grain Insurance Reserve Fund.
The Corporation’s management indicated the Grain Insurance Reserve Fund was not funded because the funds were not appropriated. Management also indicated they did not request an appropriation in fiscal years 2010 and 2011 because of budgetary constraints on the General Revenue Fund. (Finding 1, page 11) This finding has been repeated since 2005.
We recommend the Corporation comply with the law by working with the Office of Management and Budget to obtain the necessary appropriation to fund the Grain Insurance Reserve Fund or seek legislative relief from the statutory requirement.
Corporation officials agreed with our recommendation and stated they will request the appropriation in future budget years. (For previous agency response, see Digest Footnote 1)
ERRORS NOTED IN ASSESSMENT ACCOUNTING SYSTEM
The Illinois Grain Insurance Corporation’s accounting system had several errors relating to assessment receivables that required adjustments.
When testing receivables, we noted the subsidiary receivable ledger had 28 accounts netting a balance of $1,525 even though the trial balance indicated a balance of zero. Account errors ranged from a few cents to over $2,000.
The Corporation’s management stated that staff was unaware of the need to adjust the subsidiary receivable as well as the trial balance.
We recommended the Corporation provide necessary training and develop procedures to facilitate proper posting and reconciliation of its accounting system.iv
Corporation officials agree with auditors
Corporation officials agreed with our recommendation and will review both the system and its procedures for correcting errors in the receivables.
AUDITORS’ OPINION
Our auditors state the June 30, 2011 financial statements of the Grain Insurance Corporation are presented fairly in all material respects.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:EVB:rt
SPECIAL ASSISTANT AUDITORS
Sikich, LLP was our special assistant auditors for this audit and examination.
Digest Footnotes
1. GRAIN INSURANCE RESERVE FUND NOT FUNDED
2009: “The Agency agrees with the finding and will attempt to obtain appropriation to fund the Grain Insurance Reserve Fund.”
