REPORT DIGEST
DEPARTMENT OF AGRICULTURE
COMPLIANCE
EXAMINATION
For the Two Years
Ended: June 30, 2011
Release Date: April 5,
2012
Summary of Findings:
Total this audit: 7
Total last audit: 7
Repeated from last audit: 3
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703
(217) 782-6046 or TTY (888) 261-2887
This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov
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SYNOPSIS
• The Department did not exercise adequate controls over
State property.
• The Department did not have a formalized methodology to
document various federal expenditures reported to the Office of the State
Comptroller as part of the year-end reporting process for the statewide single
audit.
• The Department did not properly complete locally held fund
reports and did not remit checks that have been outstanding for more than 7
years to the State Treasurer.
• The Department did not exercise adequate controls over the
maintenance and recordkeeping of State vehicles.
• The Department did not report all collateral held for licensees as part of its year-end financial reporting in accordance with generally accepted accounting principles.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
NEED TO IMPROVE CONTROLS OVER STATE PROPERTY
The Department did not exercise adequate controls over State
property.
During our testing of the Department’s property for the two
year examination period, we noted:
• 165 items, totaling $96,969, were reported as lost or
stolen. This amount represents 7% of all
property deletions reported during the examination period.
• One item tested, totaling $2,962, was not located.
• One item was not recorded at the proper value on the
property listing. The item was
understated by $14,000 on the Department’s property control records.
We recommend the Department strengthen its controls over
State property to minimize loss or theft of items and to ensure proper
recording. (Finding 1, pages 9-10). This finding has been repeated since 2007.
Department officials agree with the finding and stated it
will strengthen controls over State property to minimize loss of theft of items
and to ensure their proper recording. (For the previous Department response,
see Digest Footnote #1)
INTERNAL CONTROL WEAKNESS OVER REPORTING FEDERAL COST
INFORMATION
The Department did not have a formalized methodology to
document various federal expenditures reported to the Office of the State
Comptroller as part of the year-end reporting process for the statewide single
audit.
During our testing of the federal expenditures reported to
the Office of the State Comptroller, we noted an error resulting in an understatement
of $91,000.
In addition, the documentation for federal reporting was
highly decentralized and maintained by various program personnel throughout the
Department. There was no formal
methodology to prepare and document federal reporting forms on a Department
wide basis.
We recommend the Department implement a formalized
methodology to document federal expenditures reported to the Office of the
State Comptroller. (Finding 2, pages 11-12)
Department officials agree with our finding and stated that
it will implement a formalized methodology to document federal expenditures
reported to the Office of the State Comptroller.
FAILURE TO PROPERLY COMPLETE LOCALLY HELD FUND REPORTS
The Department did not properly complete the quarterly
“Report of Receipts and Disbursements for Locally Held Funds” (C-17) submitted
to the Office of the State Comptroller for two Department funds.
During the testing of the C-17 reports submitted during the
audit period, we noted the following:
• All C-17 reports related to the Carcass Evaluation Fund
had cash balances that did not agree to the Department’s records. Balance differences ranged from $5,468 to
$6,666.
• Receipts and disbursements for the Carcass Evaluation Fund
are accumulated manually leaving no documentation trail to support the amounts
reported.
• Two of eight C-17 reports related to the Agriculture
Products Promotional fund had cash balances that did not agree to the
Department’s records. Balance
differences ranged from $250 to $1,230.
Auditors also noted that one fund had $1,105 in checks that
have been outstanding for at least 7 years.
The Department is required to submit outstanding checks that are 7 years
old or greater the Office of the Treasurer as unclaimed property under the
Uniform Disposition of Unclaimed Property Act.
We recommend the Department accurately and consistently
prepare C-17 reports based on balances reported on the Department’s accounting
records and implement procedures to ensure compliance with the Uniform
Disposition of Unclaimed Property Act. (Finding 3, pages 13-14)
Department officials agree with the finding and stated it will ensure that C-17 reports are completed accurately and ensure compliance with the Uniform Disposition of Unclaimed Property Act.
NEED TO IMPROVE CONTROLS OVER STATE VEHICLES
The Department did not exercise adequate controls over the
maintenance and recordkeeping of State vehicles.
During our examination of vehicles assigned to the
Department, we noted:
• 21 of 25 (84%) vehicles did not have an oil change
performed on a timely basis according to the Department of Central Management
Services (DCMS) guidelines.
• Three vehicles, totaling $40,963, that were transferred as
surplus were not removed from the Department’s property control records.
We recommend the Department review and strengthen procedures
to enforce DCMS policies for the maintenance of State vehicles and to ensure
property control records are accurate. (Finding 5, pages 17-18)
Department officials agree with the finding and stated it
will implement procedures to enforce DCMS policies for the maintenance of State
vehicles.
FAILURE TO REPORT COLLATERAL AS PART OF THE YEAR-END
REPORTING
The Department did not report all collateral held for
licensees as part of its year-end financial reporting in accordance with
generally accepted accounting principles (GAAP) to
the Office of the State Comptroller. Collateral totaling $598,000 was not
reported as part of the Department’s Grain Indemnity Trust Fund.
At June 30, 2011, the Department Held collateral totaling
$15,831,000. Of this, $1,015,000 should
have been reported as assets in the Department’s Grain Indemnity Trust
Fund. During our testing, we noted the
Department reported total collateral assets of $417,000 and had not accounted
for certificates of deposits totaling approximately $193,000, and a mortgage
totaling approximately $405,000, a total understatement of $598,000.
We recommend the Department implement procedures to report
all applicable collateral held for licensees in the Trust Fund in accordance
with GAAP.
(Finding 7, page 21)
Department officials agree with the finding and stated it
will report collateral held in the Trust Fund for licensees in accordance with GAAP.
OTHER FINDINGS
The remaining findings are reportedly being given attention
by the Department. We will follow up on
our findings during our next examination of the Department.
AUDITORS’ OPINION
We conducted a compliance examination of the Department of
Agriculture as required by the Illinois State Auditing Act. The Department 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.
DIGEST FOOTNOTES
#1 – NEED TO IMPROVE CONTROLS OVER
STATE PROPERTY - Previous Department Response
2009 - “The Agency agrees with the finding and has taken
steps to solve the recording and reporting issues. The Agency will continue to
attempt to minimize theft and loss.”