* A new Auditor General’s report found that the state uses 263 different financial reporting systems…
Thursday’s audit says many of the systems are “archaic.”
More than half aren’t compatible with each, which requires data to be entered manually when information from one system is going to be used in another. That increases the chance of mistakes.
It takes Illinois more than a year to compile a final spending report after each budget ends. Auditor William Holland says that could cost the state money lowering Illinois’ bond rating.
* You can read the audit by clicking here. There’s much more…
• Negative Factor Affecting Bond Ratings. The audited financial statements contained in the CAFR [Comprehensive Annual Financial Report] are one of the primary documents used by the bond rating agencies when assessing the State’s financial condition. The bond rating agencies view negatively the late release of the audited financial statements. Illinois’ untimely financial reports have been highlighted as negative factors in two recent reports issued by Moody’s. […]
• Negative Impact on Federal Funding. Each year, the State of Illinois depends heavily on funding received from the federal government. In fiscal year 2009, Illinois expended $23.7 billion in federal awards. Officials from the federal Department of Health and Human Services, which is the federal oversight agency for Illinois, noted that, although it was unlikely that a State would lose its federal funding, untimely financial reporting could have an effect on the amount of discretionary funding received. In May 2010, the Illinois Student Assistance Commission received a letter from the U.S. Department of Education regarding the single audit. The letter stated that if the audit was not submitted within 15 days, it would be classified as missing. The letter further stated that the Secretary of Education may “…suspend the payment of account maintenance fees, default fees, and claims to an entity that does not submit its audit within the required time period.”
In other words, this is really hurting us.
* Another reason why these reports are so important…
• State Financial Management/Oversight Adversely Affected. Legislative and oversight bodies are one of the primary users of financial reports. When financial reports are not available, legislative and oversight officials are forced to use outdated information or unaudited numbers.
* More details…
In addition to the lack of a centralized GAAP compliant financial reporting system, other factors have an adverse impact on the timeliness and accuracy of financial reporting:
• The Comptroller’s Office is responsible for financial reporting but does not have authority over the agencies from which it collects information. Furthermore, there is no penalty if the agencies do not cooperate with the Comptroller. The Comptroller’s Office and the Governor’s Office should work together to establish financial reporting target completion dates and ensure that such dates are met.
• The State of Illinois has a complex fund structure that utilized an estimated 900 funds in fiscal year 2009. A complex fund structure increases the level of effort necessary to account for and report transactions and increases the risk of errors and omissions.
• Many State agencies have a lack of competent trained staff in the area of financial reporting and reported that the personnel system impedes their ability to hire qualified staff.
• Agencies reported that only 16 percent of the systems are compliant with Generally Accepted Accounting Principles (GAAP).
• Half of the financial reporting systems in use at State agencies are more than 10 years old.
• Fifty-three percent of the financial reporting systems are not interrelated which consequently requires manual intervention to convert data from one system so it can be used in another.
• The total estimated cost of maintaining the systems in fiscal year 2010 was not determinable. Agencies provided cost estimates totaling $24 million which covered only 56 percent of the systems.
I’ve been reading Auditor General reports like this since I started doing this job, back in 1990. It’s simply amazing to me that Illinois can’t get its act together. Or, maybe I shouldn’t be so amazed. How about disgusted? Yeah, that’s better.
What a mess.
…Adding… And speaking of screwed up numbers, Gov. Pat Quinn’s office recently released a list of past-due bills it owes to vendors, universities, schools, etc. Turns out, the list has lots of mistakes. Here are a few in the Southland…
According to the list, the state owes Trinity Services $17.70. But [Rep. Renee Kosel] said the nonprofit agency, which helps the disabled, may be owed more than $1 million.
Dr. Susan Rife, an Orland Park physician on the list for $55, believes that figure is much too low. Her office bills the state for Medicaid patients, and the state is at least six months behind in paying, she said.
“It’s why doctors are refusing patients on public aid,” Rife said. “My office does not take any new patients who are on public aid. Now, if circumstances change with my current patients, we make accommodations.”
Rife said she would be in favor of the state borrowing to pay its vendors but only if it wasn’t from the federal government.
Some 640 Southland creditors were owed $500 or less from the state. About 290 of those are owed $100 or less, but 25 towns and school districts each still await $1 million or more in state payments, according to the SouthtownStar’s analysis.