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Inventory was overstated
Inaccurate property control records
Lack of supporting documentation Equipment not tagged Failure to comply with Department Directives
Untimely deposits Accounts Payable understated Former employee has access to AIS |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NEED TO ENHANCE CONTROLS OVER INVENTORY The review of the Center’s inventory
procedures disclosed numerous control weaknesses. We noted the following:
·
7 of 22 (32%)
inventory items tested were valued incorrectly resulting in an inventory
overstatement of $5,620 at 6/30/08 and $18,248 at 6/30/07.
·
The inventory
software, The Inventory Management System (TIMS), is not assigning the cost
of freight to the unit cost of inventory items.
·
The Center
does not use any type of tagging system during inventory counts to prevent
double counting. A lack of proper
inventory price reporting, costing and procedures increases the possibility
that inventory balances could be misstated and distort the financial position
of the Center. (Finding 1, pages 10-11)
We recommended the
Center comply with the Department’s Administrative Directives and institute
procedures to strengthen controls over inventory, counting procedures and
proper pricing. Center officials
accepted the recommendation and stated that the facility will make every effort
to ensure compliance with Departmental policies on inventory. NEED TO IMPROVE PROPERTY REPORTING The Center did not maintain accurate
property control records. The following
exceptions were noted during testing of the Center’s property control records
and the Agency Report of State Property (C-15):
·
5 of 30
(17%) transfers tested, totaling $2,834, lacked supporting documentation to
verify their value and to document that the equipment was properly
transferred to the correct facility.
·
10 of 20 (50%)
equipment items, totaling $8,541, that were physically inspected had no tag
number.
·
New
computer equipment is not being tagged or checked in as received.
·
There is
an unidentified person who has access rights to the Property Control System
(PCS). This person has rights to add,
change, and delete information within the system.
Failure to maintain accurate and
secure property control records increases the potential for fraud and
possible loss or theft of State property.
We recommended the Center strengthen controls over State property reporting, and comply with the State Property Control Act, applicable SAMS procedures, and the Illinois Administrative Code to ensure accurate reporting of State property information. Also, the Center should strengthen its controls over property control and reinforce the importance of properly notifying Property Control management of additions and transfers into the Center. Further, the Center should investigate the unidentified person who has access rights to the PCS and delete the access code, if appropriate, in a timely manner. Center officials accepted the recommendation and stated that the facility will make every effort to ensure compliance with property control procedures and policies. NEED TO IMPROVE INTERNAL CONTROLS OVER LOCALLY HELD FUNDS The Center did not comply with the Department’s Administrative Directives for locally held funds. We noted the following exceptions during our examination of the Center’s locally held funds: · 2 of 24 (8%) receipts tested, totaling $111,413, were not deposited timely. The receipts were deposited two days late. · 2 of 33 (6%) locally held fund vouchers tested for proper inclusion in accounts payable were omitted from year-end GAAP reporting packages. Accounts payable understatements for fiscal year 2007 and 2008 were $209 and $203, respectively. · The Center’s current Warden has been signing checks for disbursements but is not on the authorized check signer cards held by the Center’s banking institution. Failure to adhere to the Department’s Administrative Directive concerning the timeliness of deposits and authorized check signers increases the susceptibility of assets to mishandling or misappropriation. Failure to properly classify and report balances or establish year-end cutoff procedures could result in the distortion of agency financial reporting records. (Finding 3, pages 14-15) We recommended the Center comply with the Department’s Administrative Directives and ensure that monies received are deposited in a timely manner. The Center should strengthen year-end cutoff procedures and exercise diligence in the preparation of year-end GAAP reports to ensure reporting accuracy. In addition, the Center should strengthen its control regarding authorized check signers. Center officials accepted the recommendation and stated that the facility will make every effort to ensure timeliness and compliance. COMPUTER ACCESS CONTROLS LACKING A former Center employee still has access to the Accounting Information System (AIS). A former employee of the Business Office, who retired in October 2004, still had user access to the AIS as of the end of fieldwork. Failure to terminate computer user access after employees leave employment increases the susceptibility of assets to mishandling or misappropriation. (Finding 4, page 16) We recommended the Center make a request to the Department to remove access to the AIS system and follow up on a timely basis. Center officials accepted our recommendation and stated that the facility will make every effort to ensure timeliness in revoking computer access. AUDITORS' OPINION
We conducted a limited
scope compliance attestation engagement of the Center as required by the
Illinois State Auditing Act. We also
performed certain procedures with respect to the accounting records of the
Center to assist our audit of the entire Department. Financial statements for the entire
Department will be presented in the Central Office report.
_____________________________________ WILLIAM G.
HOLLAND, Auditor General WGH:AKS:pp SPECIAL ASSISTANT AUDITORSOur Special Assistant Auditors were Schorb & Schmersahl, LLC. |
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