REPORT DIGEST

DEPARTMENT OF AGRICULTURE

FINANCIAL AND COMPLIANCE AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For the Two Years Ended:
June 30, 1999

Summary of Findings:

Total this audit 13
Total last audit 14
Repeated from last audit 4

Release Date:
March 23, 2000

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217)782-6046 or TDD (217) 524-4646
This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

SYNOPSIS

  • The Department circumvented appropriation restrictions by transferring administrative Service employees to unrelated divisional appropriations during fiscal year 1998 and 1999. Also, the Department did not charge other costs to the correct appropriation line items.
  • Excessive expenditures were made from the General Revenue Fund for federal projects.
  • Indirect cost reimbursements of over $535,000 in fiscal year 1998 and $390,000 in fiscal year 1999 for the Meat and Poultry Inspection program should have been deposited into the General Revenue Fund instead of a fund for federal grants.
  • At June 30, 1999 approximately $589,000 in receivables from federal agencies were not reported to the Comptroller as required.

 

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the reverse page.}

DEPARTMENT OF AGRICULTURE
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1999

EXPENDITURE STATISTICS

FY 1999

FY 1998

FY 1997

Total Expenditures (All Funds)

$113,507,533

$91,388,164

$77,277,120

OPERATIONS TOTAL

% of Total Expenditures

$67,000,714

59.0%

$66,637,536

72.9%

$47,924,665

62.0%

Personal Services
% of Operations Expenditures
Average No. of Employees

$24,730,048
36.9%
595

$23,882,808
35.8%
617

$23,598,871
49.2%
633

Other Payroll Costs (FICA, Retirement)
% of Operations Expenditures

$5,831,992
8.7%

$4,925,707
7.4%

$4,471,931
9.3%

Contractual Services
% of Operations Expenditures

$7,942,248
11.9%

$16,845,017
25.3%

$7,836,507
16.4%

All Other Operations Items
% of Operations Expenditures

$28,496,426
42.5%

$20,984,004
31.5%

$12,017,356
25.1%

GRANTS, PERMANENT IMPROVEMENTS, REFUNDS - TOTAL

% of Total Expenditures

 

$46,506,819

41%

 

$24,750,628

27.1%

 

$29,352,455

38.0%

Cost of Property and Equipment

$131,948,869

$125,877,803

$122,450,078

SELECTED ACTIVITY MEASURES

FY 1999

FY 1998

Calendar 1997*

Consumer Complaints - Weights & Measures

Number of complaints
Number of valid complaints

 


188
15

 


123
11

*(charged reporting year)


106
9

FY 1999

FY 1998

FY 1997

Consumer Complaints - Motor Fuel

Number of complaints
Number of valid complaints

 

36
7

 

32
9

 

71
17

AGENCY DIRECTOR(S)

During Audit Period: Ms. Becky Doyle (7/1/97 - 1/18/99)
Mr. Joseph Hampton (1/19/99 - 6/30/99)
Currently: Mr. Joseph Hampton

 

 

 

 

Transfer of Administrative Service employees to unrelated divisional appropriations

 

 

 

 

 

 

 

Administrative costs reallocated

 

 

 

 

 

 

 

 

 

 

 

 

 

Excessive expenditures made from the General Revenue Fund for federal projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect costs deposited in federal grant fund, not General Revenue Fund

 

 

 

 

 

 

 

 

$589,000 in receivables from federal agencies not reported to the Comptroller

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS

CIRCUMVENTIONS OF APPROPRIATION RESTRICTIONS

The Department circumvented appropriation restrictions by transferring Administrative Service employees to unrelated divisional appropriations during fiscal years 1998 and 1999. During a seven month test period for selected divisions, this amounted to $352,471 for fiscal year 1998 and $269,596 during fiscal year 1999.

Department officials indicated transfers were necessary to maintain employees due to inadequate appropriations in certain areas. (Finding 3, page 20) This finding has been repeated since 1991.

We recommended the Department expend funds only for the purpose for which such funds have been appropriated. The Department should plan future staffing levels within appropriations received. The Department agrees that the administrative function needs to be fully funded and is working toward that goal.

We also noted that the Department has not charged other costs to correct appropriation line items. Findings in prior audits noted that the Department did not have a documented methodology or a consistent practice for charging such items as postage, telecommunications, and operation of automotive equipment. As appropriations were exhausted, expenditures were charged to whichever line items had remaining available funds. During fiscal years 1998 and 1999 the Department continued to charge expenditures to incorrect appropriations. The Department developed a methodology for determining the total shortage of needed administrative appropriations and for allocating those amounts to various divisions and programs within those divisions. The total reallocated administrative costs for fiscal year 1999 was $2,243,000. Department personnel have stated that these methods were used because appropriations were not adequate for administrative purposes. (Finding 2, page 19) This finding has been repeated since 1993.

We recommended the Department seek appropriations for individual line items and programs in accordance with their needs. The Department responded that the administrative function needs to be fully funded and that the Department is working toward that goal. (For previous Agency responses, see Digest Footnote #1)

EXCESSIVE EXPENDITURES FROM THE GENERAL REVENUE FUND FOR FEDERAL PROJECTS

Expenditures from the Wholesome Meat Fund are used for the costs of the Meat Inspection Program. The federal government reimburses 50% of the cost, and the State of Illinois funds the other 50% from the General Revenue Fund. The Department spent $294,188 more from the General Revenue Fund in fiscal year 1998 for meat inspection than from federal funds. In fiscal year 1999, the Department spent $137,644 more. Half of these amounts should have been paid from federal reimbursements that were deposited into the Wholesome Meat Fund. A surplus of about $312,000 had accumulated in the Wholesome Meat Fund as of June 30, 1999. (Finding 6, page 24).

We recommended the Department reimburse the General Revenue Fund for excess expenditures and pay only 50% of the costs for the Meat Inspection Program from General Revenue in future years. The Department agreed and stated it will begin to draw down federal funds based on the accumulated program costs with the goal of achieving a 50-50 distribution of costs between the General Revenue Fund and the Wholesome Meat Fund.

INDIRECT COST REIMBURSEMENTS NOT DEPOSITED IN APPROPRIATE FUND

The Department has deposited 100% of indirect cost reimbursements for the Meat and Poultry Inspection program into the federal Wholesome Meat Fund although indirect costs are paid approximately 90% from the State’s General Fund and approximately 10% from the Wholesome Meat Fund. The 10% portion had accumulated from previous reimbursements. By law, indirect cost reimbursements are required to be deposited into the fund from which the original expenditures were made. The Meat and Poultry Inspection program earned $535,878 in indirect cost reimbursements in the federal fiscal year ended September 30, 1998 and $390,314 through June 30, 1999 for the federal fiscal year ending September 30, 1999. These indirect costs should have been deposited into the General Revenue Fund. (Finding 9, page 27).

We recommended that the Department request that appropriations currently made for administrative expenses of the Wholesome Meat Fund be made from the General Revenue Fund and that future indirect cost reimbursements be deposited into the General Revenue Fund. The Department agreed and stated it will pursue appropriation changes with the Bureau of the Budget.

GRANT RECEIVABLES NOT REPORTED TO STATE COMPTROLLER

The Department had not included amounts receivable from federal grantor agencies for grants in the quarterly receivable reports it prepares for the Comptroller. At June 30, 1999 approximately $589,000 in receivables from federal agencies were not included in the Quarterly Summary of Accounts Receivable reported to the Comptroller. (Finding 13, page 31)

We recommended the Department properly track grant funds and report them to the Comptroller as required. The Department agreed.

OTHER FINDINGS

The remaining findings were less significant and were being given attention by the Department. We will review progress toward implementing all recommendations in our next audit.

AUDITORS’ OPINION

Our auditors state the combined financial statements for the Department of Agriculture as of June 30, 1999 and June 30, 1998, and for the years then ended are fairly presented in all material respects.

 

 

 

 

_______________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KMC:pp

SPECIAL ASSISTANT AUDITORS

Our Special assistant auditors for this audit were Sleeper, Disbrow, Morrison, Tarro & Lively.

DIGEST FOOTNOTES

#1: CIRCUMVENTION OF APPRORPIATION RESTRICTIONS – PREVIOUS AGENCY RESPONSES:

Administrative Transfers:

1997: "…The cost allocation study underway will provide a consistent methodology to charge administrative costs among its many line-items… the Department must allocate costs among its many line-items in order to achieve statutory objectives and programmatic goals."

1995: "The Department does not concur. The Department asserts that administrative costs are allocable to all programs administered by the Department. Due to the recommendation from the previous audit, an effort to reduce such charges has resulted in no administrative personnel charges to the various programs in FY 95." (We disagreed with the Department in an auditor's comment following this response.)

1993: "The Department will implement the recommendation."

1991: "The Department will comply with the recommendation. However, it should be noted that these personnel transfers were within the purposes of the appropriations involved."

Allocation Plan:

1997: "The Department is developing a consistent and documented cost allocation methodology to charge State cost among line-items."

1995: "The Department does not concur. The Department asserts that it has properly documented the charges." (The response then goes into detail to support the rationale for specific charges. In an Auditor's Comment following this response, we did not agree.)

1993: "The Department will implement the recommendation. Over the past two fiscal years, the agency has undergone a major reorganization. Various organization units were moved or combined with other units which did not match the structure in the appropriations passed by the General Assembly. In addition, personnel were physically moved, which created difficulty in tracking telephones, vehicles, and other support costs to the proper appropriations. The current budget request is structured to match the new organization chart."