REPORT DIGEST

 

 

ILLINOIS

DEPARTMENT OF

JUVENILE JUSTICE

 

 

GENERAL OFFICE

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2008

 

Summary of Findings:

Total this report†††††††††††         25

Total last report††††††††††† †††††† N/A

Repeated findings††††††††††††   †N/A

 

Release Date:

September 8, 2009

 

 

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

 

 

 

 


SYNOPSIS

 

 

 

®      The Department of Juvenile Justice (Department) did not provide all the requested documentation to the auditors in a timely manner and generally demonstrated a lack of cooperation during the audit.

 

®      The Department did not maintain accurate and adequate equipment and capital asset records.

 

®      During testing, exceptions were identified related to the administration and accounting of the Departmentís locally held residentís benefit funds (bank accounts).

 

®      The Department failed to satisfy the legislative intent of its appropriation authority for the hiring of front line staff during fiscal years 2007 and 2008.

 

®      The Department did not comply with statutory requirements in providing commissary / concession type services to residents at five youth centers.

 

®      Exceptions were noted in the administration of the residents benefit fund at the youth centers.

 

®      The Department does not have an automated payroll timekeeping system.

 

 

 

 

 

 

 

 

 

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


 

 

DEPARTMENT OF JUVENILE JUSTICE - GENERAL OFFICE

COMPLIANCE EXAMINATION

For The Two Years Ended June 30, 2008

 

EXPENDITURE STATISTICS

FY 2008

FY 2007

 

Total Expenditures (All treasury held funds, excluding funds appropriated to Youth Centers)†††††††††††††††††††††††††††

$17,408,213

$16,050,382

 

 

 

 

 

††††††† Personal Services............................................................

††††††††††† % of Total Expenditures..............................................

††††††††††† Average No. of Employees..........................................

††††††††††† Average Employee Salary............................................

$5,287,420

30.2%

82

$††† †64,481††

$4,542,831

28.3%

79

$†††† 57,504

 

††††††† Other Payroll Costs (FICA, Retirement)..........................

††††††††††† % of Total Expenditures..............................................

$1,245,823

7.2%

$†† 846,079

5.3%

 

††††††† Contractual Services........................................................

††††††††††† % of Total Expenditures..............................................

$4,679,950

26.9%

$3,794,215

23.6%

 

††††††† Lump Sum Appropriations...............................................

††††††††††† % of Total Expenditures..............................................

†††††††† Repairs and Maintenance................................................

†††††††††††† % of Total Expenditures.............................................

†††††††† Electronic Data Processing.............................................

††††††††† †††% of Total Expenditures.............................................

†††††††† Telecommunications.......................................................

††††††††† †††% of Total Expenditures.............................................

†††††††† Commodities..................................................................

†††††††††† †% of Total Expenditures..............................................

$5,385,971

30.9%

$†† 185,165††

1.1%

$†† 517,862††

3.0%

$†††† 32,360††

0.2%

$†††† 45,799††

0.3%

$6,713,980

41.8%

$             0 

0.0%

$†††† 60,139††

0.4%

$†††† 19,253††

0.1%

$†††† 48,676 

0.3

 

††††††† All Other Operations Items..............................................

††††††††† †††% of Total Expenditures.............................................

$†††† 27,863††

0.2%

$†††† 25,209 

0.2%

 

 

 

 

 

SELECTED ACTIVITY MEASURES (not examined)

FY 2008

FY 2007

 

YOUTH CENTERS

†††††††† Average Daily Population................................................

†††††††† Rated Capacity...............................................................

†††††††† Population Under Capacity.............................................

†††††††† Average Annual Costs....................................................

 

1,364

1,754

(390)

$78,846

 

1,428

1,754

(326)

$70,915

 

ē       ANALYSIS OF EMPLOYEE OVERTIME (Whole Department)

Overtime Hours Paid......................................................

Value of Overtime Hours Paid........................................

Compensatory Hours Used............................................

 

 

116,670

$4,529,133

52,198

 

 

79,533

$2,825,282

43,704

 

Value of Compensatory Hours Used...............................

ē         SERVICE EFFORTS AND ACCOMPLISHMENTS

Percentage of juveniles returned to youth centers after

†††† three years................................................................

$1,369,068

 

 

52.9%

$1,093,017

 

 

54.9%

 

 

AGENCY DIRECTOR

 

During Audit Period: Kurt C, Friedenauer, Acting Director

†††† Currently:Kurt C, Friedenauer, Director

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Four findings included in the report were considered material weaknesses in internal control

 

 

 

 

 

 

 

 

 

 

 


Lack of cooperation during engagement

 

 


51 requests for audit documentation were received 31-120 days after due date

 

 

 

 

 


Failure to adequately respond to auditor requests

 

 

 

 

 

 

 

 


Department noted timing constraints and competing priorities caused the problems in providing auditors with information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department was unable to provide auditors with capital asset information

 

 

 

 


Unable to perform reconciliation between capital asset reports and property system

 

 


Departments property records commingled with those of DOC

 

 

 

 


Capital asset reports filed late with the Comptroller

 

 

 

 

 

 


Department indicated limitations with the current system created recordkeeping difficulties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Youth Centers not able to reconcile benefit fund activity to bank account

 

 

 


Two Youth Centers could not access online banking website

 

 

 


Receipts could not be traced to source documents

 

 

 

 

 

Exceptions were noted as being the result of the timing of the creation of the Department

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Department failed to hire front line staff based on funds appropriated for that purpose

 

 

 

 

 

 

 

 


Youth Centers reported 117 front line staff left employment with the Department during fiscal years 2007 and 2008

 

 

 

 


Additional personal services costs were incurred due to the overtime as a result of the reduction in staffing levels

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Five Centers utilize the same vendor for commissary / concession service but do not have a formalized contract

 

 

 

 

 

 

 

 


Contract used by one Center did not provide complete information

 

 

 

 

 

 

 


Contract was not approved by Department Director

 

 

 

 

 

 

Required contract information was not publicized in the Illinois Procurement Bulletin

 

 

 

 

 

 

Identical items priced differently at 3 Center within close proximity to each other

 

 

 

 


Prices charged Youth include a 25% mark-up

 

 

 

 

 

 

 


Department indicated exceptions were due to oversight

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exceptions noted at Youth Centers in administration of benefit funds

 

 

 

 

Resident benefit fund committees did not meet at five Youth Centers

 

 

 


Required minutes of committee activity not maintained at two Youth Centers

 

 

 

Department does not have an administrative directive relating to the use, reporting and safeguarding of gift / purchase cards

 

 

 

Department indicated staffing limitations and errors were the reason for the exceptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Need to fully automate payroll timekeeping system

 

 

 

 

 

 


Timekeeping data for Department employees is manually tabulated and then entered into the payroll system

 

 

 

 

 


Department attributes problem to lack of funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department did not comply in all material respects with State compliance determinations

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

 

††††† Effective June 1, 2006, Public Act 94-0696 established the Department of Juvenile Justice (Department).This Act transferred certain rights, powers, duties, and functions that were exercised by the Juvenile Division of the Department of Corrections (DOC).Effective July 1, 2006, DOCís school district was transferred to the Department.

 

††††† The report presents our compliance attestation examination of the Departmentís General Office operations for the two years ended June 30, 2008.This is the first compliance examination of the Department.During the two years ended June 30, 2008 the Department administered 8 youth centers.

 

The auditors identified 4 findings involving internal control that they considered to be material weaknesses.A material weakness is a significant deficiency in the internal control that results in more than a remote likelihood that material noncompliance will not be prevented or detected by the Departmentís internal control.The material weaknesses are described in the Schedule of Findings on pages 12 to 22 of the report.Following is a summary of some of the findings included in the Department report.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

REQUESTED DOCUMENTATION TO PERFORM TESTING NOT PROVIDED TIMELY OR AT ALL

 

The Department did not provide all the requested documentation to the auditors in a timely manner and generally demonstrated a lack of cooperation during the engagement.

 

As a result of the Departmentís auditor request protocol a number of requested documents to perform the compliance examination testing were not provided timely.Documents related to 135 requests were provided after the due date they were requested to be provided.Further, 51 of the requests were received 31 to over 120 days late, with 10 being over 120 days late.

 

In addition to providing requested documentation late, the Department did not adequately respond to all auditor requests.Specifically they failed to provide the auditors with all the requested documents.As a result, for those requests where documents were partially provided, auditors could not complete the associated testing and considered the missing items to be exceptions.

 

There were also 8 requests for documentation that the Department failed to complete and had to be considered exceptions during the testing.These are included as part of other findings in the report.

 

Department management stated they were unable to provide the requested information timely because of timing constraints and competing priorities.(Finding 1, pages 12 - 14)

 

We recommended the Department reevaluate and restructure its external audit process to ensure requested documentation is provided in a timely manner as required by the Illinois State Auditing Act.

 

Department officials accepted our recommendation and responded they are in the process of reviewing their operations and plan a restructuring of the audit liaison function.

 

INACCURATE AND INADEQUATE EQUIPMENT AND CAPITAL ASSET RECORDKEEPING

 

The Department utilizes the DOC Automated Property Control System (APCS).The auditors identified the following inadequacies in the Departmentís property/fixed asset recordkeeping process:

 

        The Department was unable to provide auditors with detailed equipment and capital assets information.The auditors were unable to test the composition of the transactions reported on the Agency Report of State Property Forms (C-15) in fiscal year 2008.In addition, the Department did not provide the auditors with the supporting summary worksheets for any of the quarterly fiscal year 2007 Form C-15 submissions.

 

        Due to the lack of transaction detail noted above, a reconciliation of the Departmentís Form C-15 submissions for fiscal year 2008 to the property listings generated by the APCS at the end of each month could not be performed.

 

        The Department could not provide the auditors with monthly detailed property transaction reports for the examination period because the Departmentís property records are commingled with those of the DOC and Department personnel could not extract Department-only data from APCS related to transactions.

 

        The Department did not adequately document the date 3 of the 8 required quarterly Form C-15s were prepared and submitted to the Office of the Comptroller.Four of the 8 quarterly C-15s were filed late, ranging from 90 to 286 days late.The Form C-15 reports filed for fiscal year 2008 were revised and submitted subsequent to year end.

 

Failure to maintain adequate fixed asset records results in noncompliance with State statutes and Comptroller requirements and increases the risk of equipment theft or loss occurring without detection, and has resulted in inaccurate property/fixed asset reporting.Department management stated limitations with the current system created difficulties in the recordkeeping.(Finding 3, pages 18 - 20)

 

We recommended the Department strengthen its procedures over property and equipment to ensure accurate recordkeeping and accountability for all State assets.

 

Department officials indicated the recommendation is partially implemented and responded procedures are in place to ensure timely and accurate reporting to the best of the ability of the agency.

 

 

Inadequate administration of the locally held residents benefit fund

 

††††† During the examination period, the Departmentís locally held funds were managed independently at each Illinois Youth Center (IYC) with the exception of the residentís portion of the Juvenile Justice Benefit Fund. The DOC General Office has assumed responsibility for the administration of the bank account of the residentís portion of the Benefit Fund.

 

The auditors noted the following weaknesses during the testing of the residentís portion of the Juvenile Justice Benefit Fund for the two years ended June 30, 2008:

 

         The sub-account from which disbursements are made includes transactions from all of the facilities (juvenile, adult, and ATC).The level of detail provided online makes it difficult to determine to whom the transaction belonged.As a result, very few IYCs perform a reconciliation of their activity to that which is recorded in the bank account.

 

         During testing at the IYCs it was found that 2 of 8 (25%) could not access the online banking website.

 

        Testing could not be performed on receipts in the Departmentís residentís portion of the Benefit Fund.Receipts could not be traced to source documentation, as the source documents are not maintained by DOCís General Office.In addition, receipts could not be traced into the bank statements because the Department did not provide the requested bank statements.

 

Failure to adequately administer its locally held fund could lead to fraud, theft, or the use of unavailable monies in the fund causing overdraft charges.Inadequate administration also represents noncompliance with State statutes.Department management stated the exceptions were directly related to the timing of the creation of the Department.(Finding 4, pages 21 - 22)

 

We recommended the Department work with the IYC personnel to ensure current and relevant financial information is available to them via the online banking site and within the accounting system.We also recommended sufficient source documentation should be maintained to support the receipts deposited.

Department officials indicated the recommendation has been implemented and responded the funds of the two Departments were split in fiscal year 2009.

 

Failure to Expend PERSONAL SERVICE APPROPRIATIONS IN COMPLIANCE WITH LEGISLATIVE INTENT

 

The Department failed to satisfy the legislative intent of its appropriation authority during fiscal years 2007 and 2008 by not expending funds that the legislature appropriated to hire new front line staff. Public Act 94-798 authorized the Department to expend $1,250,000 from the General Revenue Fund for expenses related to hiring front line staff in fiscal year 2007.The Department spent $153,235 from that appropriation.In addition, Public Act 95-0348 authorized the Department to expend $1,606,900 from the General Revenue Fund for hiring 50 additional front line staff in fiscal year 2008.The Department spent $0 from that appropriation.Based on the information provided by the Youth Centers, no new front line staff were added during fiscal year 2007 or 2008.††††

 

The lack of utilizing the amounts appropriated by the legislature in fiscal year 2007 and 2008 for new front line staff added to the short staffing at the Youth Centers.†† Based on the information gathered during testing, the Youth Centers reported 117 front line staff left employment with the Department during fiscal years 2007 and 2008.Required and volunteer overtime is being used to cover staffing shortages.†††††

 

Not using the authorized appropriation authority violates the intent of the General Assembly for the hiring of additional frontline staff to alleviate the staffing concerns and the significant use of overtime at the Departmentís Youth Centers.Department management stated new educational requirements for front line staff required a new job classification to be established, which took two years to complete.In addition, Department management indicated reserves on spending during fiscal year 2008 also prevented them from hiring front line staff.(Finding 5, pages23 - 24)

 

We recommended the Department take steps necessary to meet the intent of the General Assembly when utilizing its appropriation authority.† ††

 

Department officials indicated they were constrained from hiring new front line staff by conditions outside of their control.† †

 

NONCOMPLIANCE WITH STATUTORY REQUIREMENTS IN PROVIDING COMMISSARY/
CONCESSION TYPE SERVICES TO RESIDENTS OF YOUTH CENTERS

 

The Departmentís St. Charles Youth Center entered into a contract with a vendor to provide commissary / concession services.Five other Youth Centers (Chicago, Harrisburg, Joliet, Pere Marquette and Warrenville) decided to use the same vendor to provide commissary / concession service but are not a party to the contract between the vendor and the St. Charles Youth Center and do not have a formal written contract with the vendor.Based on information provided by the Department, the vendor for the six Youth Centers noted above was paid approximately $266,000 and $226,000 by the residents, respectively for fiscal years 2007 and 2008 for commissary / concession goods.

 

The following exceptions were noted with the commissary / concession services contract and operations:

 

         The contract entered into with the vendor was not prepared in a standard contract format and did not provide complete information. The contract was prepared by piecing together a request for proposal from the vendor to which the contract was awarded.In addition, the witness area, description of contractual purpose, date an invitation for bid was issued and description of contractual needs being addressed on the signature page were not completed.

 

        The contract was not approved by the Department Director, which at the time would have been the Director of the Department of Corrections.The Assistant Warden of Operations signed the contract both on behalf of the St. Charles Youth Center and the Department.The subsequent renewal of the vendor contract was signed by the St. Charles Youth Center Superintendent, but was not signed by the Director of the Department.†††††††††††††††††††††

 

        Neither the solicitation for the commissary / concession service nor the subsequent notice of contract award was publicized in the Illinois Procurement Bulletin.Documentation was provided that proposals were received from three companies, but it was unclear sufficient publication and distribution of the request for proposal had been made.In addition, the contract file did not contain information indicating the basis on which the award was made or that the contract was awarded to the company with the most advantageous proposal to the State.

 

        It was also noted at June 30, 2008, the vendor price lists being used at three Youth Centers (Warrenville, St. Charles and Joliet) had 29 identical food /snack items priced differently.The three Youth Centers are within 25 miles of each other.

 

        The prices charged the residents include a mark-up on the item to provide a 25% profit to be retained in the Youth Center residents benefit fund. The Youth Centers, through the vendor, collect the 25% commission.There is no statutory guidance on what is a reasonable markup / commission on goods to be sold to the residents.Since the Youth Centers do not have any expenses related to operating a commissary and incur minimal costs in distributing the purchased items from the vendor, the 25% commission collected from the commissary / concession service sales appears to be excessive.

 

Utilizing a vendor without a formal contract is non-compliance with the Illinois Procurement Code.In addition, neither party has any document to bind them to specific terms regarding the services to be provided or compensation to be paid.Department management stated the exceptions noted were due to an oversight.(Finding 7, pages 27 - 29)

We recommended the Department comply with the statutory and Illinois Administrative Code requirements for selecting, awarding and contracting for commissary / concession service to the Youth Centers.In addition, we recommend the Department review the process for pricing goods sold to residents to ensure equitable pricing between Youth Centers that are in close proximity as well as determining a reasonable amount to collect as commission on the commissary / concession sales.

 

Department officials accepted our recommendation and indicated they will work to properly bid and award a contract for the services.

 

Inadequate administration of the benefit funds at the youth centers

 

Auditors noted numerous exceptions regarding the administration and operation of the benefit funds at the Departmentís Youth Centers.As a result of testing performed at the Youth Centers the following exceptions were identified:

 

         Five Youth Centers were identified (Chicago, Joliet, Pere Marquette, St. Charles and Warrenville) where the inmate benefit fund committee did not officially meet during the examination period. Benefit fund committees are to meet and approve expenditures.All of the noted Youth Centers expended funds from their respective inmate benefit fund accounts on a regular basis during the examination period.

 

         Two Youth Centers were identified (Murphysboro and Kewanee) where the inmate benefit fund committee did not keep required minutes of the actions taken when they met during the examination period.

 

         Testing of the inmate and employee benefit fund expenditures identified 4 Youth Centers (Pere Marquette, St. Charles, Kewanee and Joliet) where store gift / purchase cards were used to make purchases. The Youth Centers had purchased and or replenished the amounts available on the gift / purchase cards in excess of $8,000.The Department does not have a written administrative directive relating to the use, reporting, and safeguarding of gift / purchase cards.

 

The lack of following the prescribed formal administrative directive results in a breakdown of the authorization process and documentation of decisions and could lead to inappropriate expenditures not being prevented.Department management stated the exceptions were due to staffing limitations and errors at the Centers.(Finding 8, pages 30 - 31)

 

We recommended the Department remind Youth Center staff of the requirements related to benefit fund administration and that a formal administrative directive should be prepared to cover the overall gift / purchase card process.†††

 

††††† Department officials accepted our recommendation and indicated they will make every effort to ensure compliance.

 

PAYROLL TIMEKEEPING SYSTEM NOT AUTOMATED

 

††††††††††† The Department-wide payroll timekeeping system is not fully automated.During the current engagement period the Departmentís human resources responsibilities were consolidated with a number of other State agencies as part of the Public Safety Shared Services Center (PSSSC).The PSSSC was scheduled to create / implement an automated timekeeping system, but it was not created.

As noted in the previous audits of DOC, in which the Departmentís current operations were included, each youth center as well as other functions of the current Department continue to maintain a manual timekeeping system for approximately 1,100 employees.Most employees sign in and out, sign-in sheets are sent to a timekeeping clerk.Other information, including notification of absence and call-in reports, are also forwarded to the timekeepers.No automation is involved except for the processing of payroll warrants.

 

Department officials indicated the automated payroll system project was delayed due to various issues that arose during the creation of the PSSSC.They stated a project began in August 2008, but ceased in January 2009 due to lack of funding.

 

††††† Prudent business practices suggest that controls available through an automated timekeeping system can provide greater efficiency and reduce the potential for costly errors or employee abuse.(Finding 11, page 36) †††

††††† We recommended the Department implement an automated timekeeping system.

 

††††† Department officials accepted our recommendation and noted at this time they do not have the resources to purchase a new timekeeping system.

 

OTHER FINDINGS

 

††††† The remaining findings are reportedly being given attention by the Department.We will review the Departmentís progress toward the implementation of our recommendations in our next engagement.

 

AUDITORSí OPINIONS

 

The Independent Accountants Report on State Compliance on Internal Control Over Compliance and on Supplementary Information for State Compliance Purposes noted the Department did not comply in all material respects with the requirements regarding:

 

        Applicable laws and regulations, including the State uniform accounting system, in its financial and fiscal operations, and;

 

        Requirements regarding money or negotiable securities or similar assets handled by the Department on behalf of the State or held in trust by the Department regarding properly and legally administering, accounting and accurate recordkeeping thereto in accordance with law.

 

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:RPU:pp

 

 

 

SPECIAL ASSISTANT AUDITORS

 

††††† Sikich LLP were our special assistant auditors for this engagement.