2012 Department of Agriculture - Illinois State Fair Compliance Examination

              ILLINOIS STATE FAIR
COMPLIANCE EXAMINATION
For the Two Years Ended: September 30, 2011
Summary of Findings:
Total this audit:
Total last audit:
Repeated from last audit:
6
1
1
Release Date: May 17, 2012
INTRODUCTION
The Illinois State Fair is an operating entity of the Department of Agriculture. The Department is responsible for fulfilling the statutory obligation to hold the annual Illinois State Fair. The Fair is held to promote agriculture and the agriculture industry, and to provide for exhibits and activities in the fields of industry, education, arts and crafts, labor, entertainment and other areas of interest to the people of the State.
SYNOPSIS
• The Illinois State Fair has not developed formalized written policies and procedures for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act.
• The Illinois State Fair collected nominating, sustaining and starting fees in excess of amounts allowed under the Illinois Horse Racing Act of 1975.
• The Illinois State Fair did not exercise adequate controls over temporary employee timesheets.ii
REVENUE AND EXPENDITURE STATISTICS
Total Revenue...................................................................................
5,020,240$
4,376,995$
Tickets........................................................................................
3,182,570$
2,590,198$
% of Total Revenue................................................................
63.4%
59.2%
Space Rental: Fair......................................................................
1,155,656$
1,127,131$
% of Total Revenue................................................................
23.0%
25.7%
Entry Fees...................................................................................
385,635$
348,824$
% of Total Revenue................................................................
7.7%
8.0%
Sponsorship................................................................................
296,379$
310,842$
% of Total Revenue................................................................
5.9%
7.1%
Total Expenditures (All Funds).....................................................
7,793,810$
6,676,515$
Personal Services........................................................................
732,077$
672,296$
% of Total Expenditures.........................................................
9.4%
10.1%
Other Payroll Costs (FICA, Retirement)....................................
310,728$
336,699$
% of Total Expenditures.........................................................
4.0%
5.1%
Contractual Services...................................................................
2,900,854$
2,112,500$
% of Total Expenditures.........................................................
37.2%
31.6%
Allocated Costs..........................................................................
2,811,887$
2,111,358$
% of Total Expenditures.........................................................
36.1%
31.6%
Premiums and Awards...............................................................
714,928$
820,643$
% of Total Expenditures.........................................................
9.2%
12.3%
All Other Operations Items * ....................................................
323,336$
623,019$
% of Total Expenditures.........................................................
4.1%
9.3%
(Deficiency) of Revenues Over Expenditures...............................
(2,773,570)$
(2,299,520)$
SUPPLEMENTARY INFORMATION
2011
2010
Employment Statistics (Approximate)
Full Time Employees.............................................................
7
7
September through May (Temporary)....................................
7
7
June (Temporary)...................................................................
31
32
July through August (Temporary)..........................................
128
128
Selected Activity Measures
Gate Admissions - Tickets Sold (Not Examined)..................
279,214
255,531
Estimated Attendance (Not Examined)..................................
817,000
750,000
Grandstand Shows - Tickets Sold (Not Examined)...............
58,170
54,858
Grandstand Show Revenues...................................................
1,364,257$
932,913$
Grandstand Show Expenditures.............................................
1,555,467$
1,187,041$
Competitive Events
Competitive Events Revenues................................................
139,827$
138,323$
Competitive Events Expenditures..........................................
797,266$
770,026$
Pari-mutuel Wagering
Pari-mutuel Wagering Receipts..............................................
117,328$
105,579$
Pari-mutuel Wagering Expenditures......................................
200,106$
207,775$
During Examination Period: Tom Jennings
Currently: Robert F. Flider, Acting
ILLINOIS DEPARTMENT OF AGRICULTURE
ILLINOIS STATE FAIR
COMPLIANCE EXAMINATION
AGENCY DIRECTOR
2010
2011
For the Two Years Ended September 30, 2011
* Contractual payroll is included in All Other Operations Items iii
Complimentary tickets, valued at $54,352, issued
Tickets valued at $15,512 were distributed without a detailed accounting or justification for their distribution
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
LACK OF WRITTEN POLICIES AND PROCEDURES FOR DISTRIBUTION OF GRANDSTAND COMPLIMENTARY TICKETS
The Illinois State Fair (ISF) has not developed formalized written policies and procedures for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act.
The ISF reserves the right to receive and distribute no more than 250 grandstand complimentary tickets per performance as part of each performer’s contract at no cost to the ISF. Of the 2,250 authorized grandstand complimentary tickets, the ISF issued 1,997 tickets, with a retail value of $54,352, to various parties during the 2010 and 2011 Illinois State Fair. Of the 1,997 grandstand complimentary tickets distributed, 1,412 tickets, with a retail value of $38,840, were given in exchange for advertising, marketing, promotions, in-kind donations and corporate sponsorships, which management stated benefitted the ISF. The remaining 585 tickets, valued at $15,512, were distributed to various individuals including the Department of Agriculture Director, Fair Manager, and the Governor’s Office. The ISF, however, failed to maintain a detailed accounting and justification for the distribution of these tickets.
While many of these 1,997 grandstand complimentary tickets were distributed for promotional activities or bartering or exchange of services beneficial to the ISF, the grandstand complimentary tickets distributed included 406 tickets distributed to advisory board members, charitable organizations, fundraisers and State employees, which were not supported by any justification as to why the distribution of these tickets was advantageous or beneficial to the operation of the ISF. In addition, the ISF could not always document the specific individual(s) receiving the grandstand complimentary tickets. (Finding 1, pages 9-10)
We recommended the ISF develop and implement rules in accordance with the Illinois Administrative Procedures Act, for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair iv
Fair officials agree with auditors
Nominating, sustaining and starting fees amounted to 21% of the purses collected
Fair officials agree with auditors
Inadequate controls
Timesheets were incomplete or completed at the end of a shift
Act.
ISF officials agreed with the finding and stated it will develop and implement rules for the sale, barter or exchange of grandstand complimentary tickets in accordance with the State Fair Act.
NONCOMPLIANCE WITH THE ILLINOIS HORSE RACING ACT OF 1975
The Illinois State Fair (ISF) was not in compliance with the Illinois Horse Racing Act of 1975 concerning the nominating, sustaining and starting fees exceeding 2% of the purse for certain races.
The nominating, sustaining, and starting fees of $135,510 paid by the entrants for the ISF’s racing events in 2011 amounted to 21% of the purses and exceeded the 2% limit outlined by the Act by approximately $122,330. (Finding 2, page 11)
We recommended the ISF comply with the provisions of the Illinois Horse Racing Act.
ISF officials agreed with the finding and stated it will comply with the provisions of the Illinois Horse Racing Act.
NEED TO IMPROVE CONTROLS OVER TEMPORARY EMPLOYEE TIMESHEETS
The Illinois State Fair (ISF) did not exercise adequate controls over temporary employee timesheets.
During our examination, we noted seven of 30 (23%) timesheets were incomplete or completed at the end of the temporary employee’s shift. We noted some timesheets were completed when the auditor attempted to review them. We also noted timesheets were completed at the end of the employee’s shift, instead of indicating when the employee arrived for the shift. (Finding 4, page 13)
We recommended the ISF implement additional controls to ensure employee attendance is documented properly on a daily basis. v
Fair officials agree with auditors
ISF officials agreed with the finding and stated it will implement additional controls to ensure employee attendance is documented properly on a daily basis.
OTHER FINDINGS
The remaining findings are reportedly being given attention by the Illinois State Fair. We will follow up on our findings during the next examination of the ISF.
AUDITORS’ OPINION
We conducted a compliance examination of the Illinois State Fair as required by the Illinois State Auditing Act. The Fair has no funds that require an audit leading to an opinion of financial statements.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:EVB:rt
SPECIAL ASSISTANT AUDITORS
Sikich, LLP were our Special Assistant Auditors for this engagement.