REPORT DIGEST JOHN A. GRAHAM CORRECTIONAL CENTER LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this report 4 Total last report 2 Repeated from last report 1 Release Date: August 6, 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 http://www.auditor.illinois.gov

SYNOPSIS · The Center’s commodities inventory procedures were not in accordance with the Department’s Administrative Directives and were insufficient to ensure the proper accounting and reporting of inventory. · The Center failed to comply with contract filing provisions for contractual services. In addition, contract files were not adequately maintained. · The Center did not take appropriate action to ensure dormant account balances were properly transferred to the General Revenue Fund. {Expenditures and Activity Measures are summarized on the reverse page.}

JOHN A. GRAHAM CORRECTIONAL CENTER

LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION

For The Two Years Ended June 30, 2008

EXPENDITURE STATISTICS	FY 2008	FY 2007	FY 2006
 Total Expenditures (All Appropriated Funds)	$37,715,560	$35,115,676	$34,691,675
Personal Services.......................................... % of Total Expenditures........................... Average Number of Employees................ Average Salary Per Employee.............	$23,493,508 62.29% 392 $59,932	$21,996,002 62.64% 407 $54,044	$21,931,261 63.22% 411 $53,361
Student, Member and Inmate Compensation.... % of Total Expenditures...................	$265,145 0.70%	$267,037 0.76%	$265,489 0.77%
Other Payroll Costs (FICA, Retirement)... % of Total Expenditures...................	$5,630,087 14.93%	$4,165,029 11.86%	$3,620,367 10.44%
Contractual Services................................ % of Total Expenditures...................	$5,943,768 15.76%	$6,128,142 17.45%	$6,487,558 18.70%
Commodities................................................ % of Total Expenditures........................ All Other Items……………………………. % of Total Expenditures…………………	$2,208,477 5.86% $174,575 0.46%	$2,281,187 6.50% $278,279 0.79%	$2,181,848 6.29% $205,152 0.59%
 Cost of Property and Equipment...................	$40,017,484	$39,764,694	$39,543,997

SELECTED ACTIVITY MEASURES (NOT EXAMINED)		FY 2008	FY 2007	FY 2006
Average Number of Inmates……………….. Ratio of Correctional Officers to Inmates……….. Cost Per Year Per Inmate….………………… Rated Inmate Capacity................... Approximate Square Feet Per Inmate………		1,811 1 / 6.0 $20,815 1,174 28	1,825 1 / 5.8 $19,223 1,174 28	1,930 1 / 6.1 $17,957 1,174 27
	CENTER WARDEN
	During Examination Period: Steven Bryant (7/01/06 – 4/30/07), Andrew Ott (4/30/07 – present)
	Currently: Andrew Ott

Inadequate Inventory Controls Inventory overstated Physical inventory counts not performed Lack of supporting documentation Failure to establish contract Contract and related documents missing Dormant Inmate Trust Fund account balances were not properly transferred to the General Revenue Fund. Department officials disagreed with auditors Auditors’ comment

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NEED TO IMPROVE CONTROLS OVER INVENTORY The John A. Graham Correctional Center’s (Center) commodities inventory procedures were not in accordance with the Department of Corrections’ (Department) Administrative Directives and were insufficient to ensure proper accounting and reporting of inventory transactions and balances. The reported value of the Center’s inventory at June 30, 2008 was misstated due to inaccurate and untimely record maintenance. As a result of the Center’s inadequate controls over inventory reporting, we were unable to report on the commodities balances at June 30, 2008 and 2007 in the Center’s Limited Scope Compliance Examination for the two years ended June 30, 2008 and 2007. The following conditions were noted during testing of the Center’s inventory records: All 20 (100%) requisitions and receiving reports, selected for testing, were entered from 1 to 55 days after issuance. The average delay was 25 days. Twenty of 60 (33%) count adjustments identified during observation of June 30, 2008 inventory procedures were not posted by the required year-end cutoff date. This resulted in an overstatement of $3,912. Physical inventory counts were not performed at June 30, 2008 for the mechanical storeroom. Requisitions were not prepared timely for inventory issuances from the inmates’ clothing storeroom. Two of 22 (9%) requisitions selected for cutoff testing totaling $14,402 could not be located. Center operations related to inventory lacked adequate segregation of duties. (Finding 1, Pages 10-12) We recommended that the Center comply with the Department’s Administrative Directives and institute procedures to strengthen controls over inventory procedures and related data processing. The Center should allocate sufficient and adequately trained staff to ensure perpetual inventory records are accurately maintained. Department officials accepted our finding and recommendation and stated the facility will make every effort to ensure compliance with Departmental policies on inventory. FAILURE TO COMPLY WITH CONTRACT REQUIREMENTS The Center failed to comply with contract filing provisions for contractual services as required by the Illinois Procurement Code and Statewide Accounting Management System (SAMS) procedures. Additionally, contract files were not adequately maintained. We noted the following weaknesses in compliance with contract requirements for the two years ended June 30, 2008: · A vendor was paid $6,124 for professional and artistic services in fiscal year 2007, but the terms were not reduced to writing, filed with the State Comptroller, or individually obligated on SAMS. · One of 5 (20%) contracts selected for testing along with other related contract documents could not be located when requested. Total expenditures under the contract totaled $79,124 for fiscal year 2007. (Finding 2, Pages 13-14) We recommended the Center implement procedures to ensure contracts are properly established and filed when anticipated expenditures reach statutorily defined contract thresholds, and the Center should exercise diligence in identifying vendors and anticipating expenditures that meet such criteria. Contract files should be properly maintained with all contract related documents in an orderly manner and in accordance with prescribed record retention policies. Department officials accepted our finding and recommendation and stated that the facility will make every effort to ensure compliance with procurement rules. FAILURE TO PROPERLY TRANSFER UNCLAIMED INMATE CASH ACCOUNT BALANCES The Center did not take appropriate action to ensure that dormant account balances were properly transferred to the General Revenue Fund (GRF). We noted the Center improperly offset Inmate Trust Fund accounts with positive cash balances against accounts with negative balances prior to transfer of unclaimed cash balances to the GRF. Testing revealed that the Center transferred $313 in June 2007; however, the transfer should have totaled $829. Furthermore, testing of the June 2008 dormant accounts indicated accounts totaling $636 were not transferred to GRF. Negative inmate account balances for the June 2008 test period totaled $1,854. (Finding 3, Pages 15-17) We recommend the Center take appropriate action to ensure dormant cash balances are timely transferred to the GRF. Department officials did not accept our finding and recommendation and stated that the Department of Corrections (Department) has implemented policies and procedures that it feels are appropriate to the Statute and Administrative Directives. · The inmate trust fund maintains individual accounts by inmate. · The accounts are reviewed when designated dormant. · The appropriate account balances are transferred to the general revenue fund as required. · The statute is silent on the Department’s ability to offset negative account balances with positive account balances. The end result of the policy is not a loss of revenue to the State as all funds are deposited into a legislatively appropriated fund on deposit at the Treasurer. In an auditors’ comment, we noted the Unified Code of Corrections requires the transfer of dormant accounts to the GRF. The Center did not transfer dormant accounts totaling $1,152 to the GRF. The negative balances are caused by the improper off-setting of one inmate's positive cash balance against another inmate's negative balance in the Inmate Trust Fund. Further, the Department’s administrative rules (20 Ill. Adm. Code 535.140(a)) state unclaimed money held for a period of one year may be transferred to the Inmate Benefit Fund and be expended for the special benefit of committed persons, which is inconsistent with the Unified Code of Corrections. The Center has a fiduciary responsibility for the inmate accounts and should be evaluating each account within the Inmate Trust Fund individually for potential transfer to the GRF. OTHER FINDING The other report finding pertains to inadequate controls over voucher processing. We will review the Center’s progress towards the implementation of our recommendations in our next audit. AUDITORS’ OPINION We conducted a compliance examination of the Center as required by the Illinois State Auditing Act. Financial statements for the entire Department will be presented in the Central Office report. ___________________________________ WILLIAM G. HOLLAND, Auditor General WGH:PDS:pp ASSIGNED AUDITORS Our special assistant auditors were West & Company, LLC.