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FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
EFFICIENCY INITIATIVE PAYMENTS
The Department of
Agriculture made payments for efficiency initiative billings from improper
line item appropriations.
Public Act 93-0025, in part, outlines a program for
efficiency initiatives to reorganize, restructure and reengineer the business
processes of the State. The State
Finance Act details that the amount designated as savings from efficiency
initiatives implemented by the Department of Central Management Services
(CMS) shall be paid into the Efficiency Initiatives Revolving Fund. “State agencies shall pay these
amounts…from the line item appropriations where the cost savings are
anticipated to occur.” (30 ILCS 105/6p-5)
The Department
received three FY04 billings and two FY05 billings for savings from
efficiency initiatives totaling $1,096,112. The billings were for procurement,
information technology and vehicle fleet management efficiency
initiatives.
The Department
could not provide documentation on any guidance for the FY04 billings from
CMS detailing where savings were to occur.
Additionally, Department staff could not provide evidence of savings
that CMS would have provided the Department for amounts billed during
FY04.
Based on our review, we
question whether the appropriate appropriations, as required by the State
Finance Act, were used to pay for the anticipated savings. We found that the Department made payments
in FY04 for these billings not from line item appropriations where the
cost savings were anticipated to have occurred but based on an attempt to
spread the payments across different funds and line item appropriations. However, without specific guidance from
CMS regarding the nature and type of savings initiatives, it is unclear
whether these were the appropriate lines from which to make procurement
savings payments. For the FY04
payments we found:
·
The
Department paid $400,000 toward the procurement initiative billing from an
Illinois State Fair fund lump sum line item appropriated “to satisfy
obligations related to the development, use and operation of a multi-purpose
outdoor theater…”
·
The
Department paid $90,300 toward the information technology billing in FY04
from personal services line item appropriations.
The FY05
billings contained more detail and it appears the Department paid these from
proper appropriations. (Finding 1,
pages 10-12)
We recommended that the Department only
make payments for efficiency initiative billings from line item
appropriations where savings would be anticipated to occur. Further, the Department should seek an
explanation from the Department of Central Management Services as to how
savings levels were calculated, or otherwise arrived at, and how savings
achieved or anticipated impact the Department’s budget.
Department
officials agreed with our recommendation and indicated the exceptions were
corrected in FY05.
QUESTIONABLE BENEFIT AND DOCUMENTATION RELATED TO INTERAGENCY
AGREEMENT
The Department entered into an interagency agreement with the
Department of Central Management Services (CMS) that had vague terms and
questionable benefit to the Department, and was inadequately documented.
The Department entered into an interagency agreement on September 16,
2004 with CMS whereby the Department would pay up to $100,000 retainer fees
including commission and travel expenses to a vendor for “strategic marketing
services” beginning July 1, 2004 and concluding June 30, 2005. The services to be provided were to
include, but were not limited to, a State credit card program and
beverage-vending program.
The Department paid the vendor $76,566. The Department’s obligations under the interagency agreement
mirrored CMS’s obligation to pay a monthly retainer fee to the vendor of
$15,000 per month plus expenses.
The Department attributed two sponsorship agreements for the 2004
Illinois State Fair to the services of the vendor under the interagency
agreement. However, when auditors
requested documentation to provide evidence of the vendor’s services in
acquiring these sponsorships, the Department was unable to provide any
documentation to that effect. The
Department provided no evidence that the vendor provided the State credit
card program or beverage-vending program services as promised under the
agreement.
Under the first sponsorship agreement the Department received a
$25,000 sponsorship to be paid before May 31, 2004. The Department entered into the agreement on August 9,
2004. Under the second
sponsorship agreement the Department is too receive $60,000 payable over five
years, plus 16% of gross sales receipts.
The Department entered into this agreement on October 18, 2004 and has
collected $24,000 through June 30, 2005.
(Finding 2, pages13-14)
We recommended the Department enter into interagency agreements that
more clearly specify the terms and benefits to be received in exchange for
payments made. Also the Department
should improve its documentation of contract performance. Further the Department should reduce
interagency agreements to writing before the commencement of services.
Department officials agreed
with our recommendation and stated that any future interagency agreements
would more clearly specify the terms and benefits to be received in exchange
for payments made, would be reduced to writing before the commencement of
services, and would improve its documentation of contract performance.
UNTIMELY PROCESSING OF CONTRACT OBLIGATION DOCUMENTS
The Department did not process
contract obligation documents in a timely manner.
During our detailed testing of
contractual obligation documents, we noted that the Department entered into
469 contracts in fiscal year 2004 and processed 13 (3%) late filing
affidavits and 6 (1%) professional and artistic affidavits in fiscal year
2004. In fiscal year 2005 the Department entered into 341 contracts and
processed 124 (36%) late filing affidavits and 22 (6%) professional and
artistic affidavits. The contracts
ranged from 5 to 401 days late in fiscal year 2004 and from 4 to 201 days
late in fiscal year 2005. (Finding 3,
page 15)
We recommended the Department
improve its controls and procedures over contract obligation documents to
minimize the use of the Late Filing Affidavits and Professional and Artistic
Services Affidavits and work toward processing contract obligation documents
in a timely manner.
Department
officials agreed with our recommendation and stated it is monitoring
contracts more closely to ensure timely filing.
WEAKNESSES IN COMPUTER SYSTEMS DEVELOPMENT METHODOLOGY
During the prior audit period, it was noted
that the Department did not have written policies in place related to system
development by external developers and did not assure all systems were
consistently developed, thoroughly tested, and adequately documented.
During the prior audit period, the
Department had contracted for $362,500 for the development of the Non-Fair
Event System and the State Fair System.
It was noted that these systems were not adequately documented and
were developed in a software language that was not supported by the
Department.
During the current audit period, we
determined that the Department still has not developed written policies to
address the areas noted above and did not assure all systems were
consistently developed, thoroughly tested, and adequately documented. (Finding 5, pages 17-18)
We recommended the Department update its
Systems Development Methodology to include procedures related to new system
developments and modifications to existing systems by external
developers.
Department officials agreed with our
recommendation and indicated it would update its System Development
Methodology to include procedures related to all work performed by external
developers. In addition, the Bureau
of Computer Services has advised all program managers that any specific
Information Systems needs are to be communicated to, reviewed by, and
approved by the Bureau of Computer Services.
DISASTER CONTINGENCY PLAN
FOR COMPUTER SYSTEMS NOT ADEQUATE
During the prior
audit period, it was noted that the Department did not have an adequate and
tested comprehensive disaster contingency plan to ensure its critical
computer systems can be recovered in the event of a disaster.
The Department has
been migrating from a mainframe to a LAN environment; however, its Crisis
Management/Disaster Recovery Plan (Plan) has not been updated to reflect the
change. The Plan, last updated in
January 2005, only provided a framework for developing an appropriate
response to a disaster event that would impact the Department. The Plan was not comprehensive and did not
contain detailed procedures for recovering the Department’s computer
operations.
It was also noted that the Plan was not tested during fiscal year
2005. (Finding 6, pages 19-20)
We
recommended the Department update its Crisis Management/Disaster Recovery
Plan to reflect the current environment and ensure it is adequate for
recovering its computer operations within an acceptable timeframe. The Department should perform routine
testing at least annually to assure the Plan is adequate for recovering the
Department’s current operational environment.
Department
officials agreed with our recommendation and indicated they would update its
Disaster Recovery/Business Continuity Plan to reflect the current IT
environment.
LACK OF ADEQUATE TIME REPORTING
The Department did not maintain adequate time sheets of time worked
by employees as required by the State Officials and Employees Ethics Act
(Act).
The Department did not maintain a positive timekeeping system for its
employees documenting time spent on official state business in quarterly hour
increments. The Department had also
not updated its personnel policy to comply with the Act.
The Act (5 ILCS 430/5-5(c)) requires the Department to develop a personnel
policy for all employees to document their time. The Act requires all employees to complete a time sheet
documenting hours worked each day on official state business to the nearest
quarter hour. (Finding 7, page 21)
We recommended the Department update its personnel policies and
continue implementing the requirement to complete timesheets documenting
hours worked each day on official State business to the nearest quarter hour
for all employees.
Department officials agreed with our
recommendations and indicated it had implemented the recommendations as of
June 1, 2005.
INADEQUATE SEGREGATION OF
DUTIES OVER CASH RECEIPTS OF THE ILLINOIS COLT STAKES/CHAMPIONSHIP PURSE FUND
The Department did not have an adequate segregation of duties over
the cash receipts of the Illinois Colt Stakes/Championship Purse Fund.
The person responsible for preparation of the deposit slips for the
Purse Fund also delivered the deposits to the bank, received the monthly bank
statements, performed the monthly bank reconciliations, and prepared the
locally held funds quarterly report of receipts and disbursements submitted
to the Comptroller. Management
personnel did not perform a supervisory review of the Purse Fund deposits,
reconciliations or reports. The
amount of deposits during fiscal years 2004 and 2005 within the Purse Fund
was $1,883,000 and $1,811,000, respectively.
Good internal control procedures require that either duties be
adequately segregated or management oversight controls be strengthened to
compensate for instances where an adequate segregation cannot be
achieved. (Finding 10, page 25)
We recommended the Department allocate the resources necessary to
either implement compensating management controls or segregate duties over
the fiscal operations of the Purse Fund.
Department
officials agreed with our recommendation and stated it is developing policies
and procedures for cash receipts that provide segregation of duties.
STATUS OF RECOMMENDATIONS IN MANAGEMENT AUDIT OF THE REGULATION OF GRAIN
DEALERS AND WAREHOUSEMAN
The Department did not fully implement six
of ten recommendations presented in the Management Audit – Regulation of
Grain Dealers and Warehouseman and the Administration of the Grain Insurance
Fund (Management Audit) conducted by the Office of the Auditor General. The audit was released in December 2003
pursuant to the Legislative Audit Commission Resolution Number 125.
During the current examination period we
noted the following:
¨
The
Department did not perform background checks and has no formal written policy
and procedure regarding the tracking of individuals whose licenses have been
terminated or revoked.
¨
The Department, in conjunction with other interested
parties, has been attempting to finalize promulgated rules for the new examination
process as outlined in Public Act 93-225 but have not been able to complete
them at this time.
¨
The Department’s current policy also does not require
at least one board member at the exit conference, nor are Board members
required to receive copies of exams.
¨
The Department’s current policy also does not
establish guidelines for notification of successor agreements and the Department has not created a policy
manual regarding violations and corrective actions.
¨
The
Department has not performed a re-evaluation of the Fund’s capacity to pay
claims. (Finding 15, pages 30-35)
We recommended the Department:
¨
Allocate the resources necessary to conduct
background checks of all license applicants including its officers,
directors, partners and managers and track the information on the database
established by the Department.
¨
Continue in
its efforts to complete the examination guidelines and include in those
guidelines:
·
Guidelines
for notification of successor agreements and closeout examinations;
·
Requirements
to provide copies of examination reports to licensee board members,
directors, and owner of licensees;
·
Promulgate
rules to implement the examination process delineated in Public Act 93-225;
·
Guidelines
for taking and tracking corrective action;
¨
Evaluate the
Grain Insurance Fund’s current capacity to pay claims and continue to
periodically review the Fund’s capacity to pay claims in the future.
Department officials agreed with our
recommendation and stated it has taken steps to address the auditors’
recommendations.
OTHER FINDINGS
The remaining findings are reportedly being given attention by the
Department. We will review progress
toward implementing our recommendations in our next examination.
Mr. Laura Lanterman, Chief Fiscal Officer, provided the responses to
our findings and recommendations.
_______________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JAF:pp
SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen LLP were our special assistant auditors for
this State compliance examination.
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