For the Year Ended:
June 30, 2000

Summary of Findings:

Total this audit 17
Total last audit 20
Repeated from last audit 8

Release Date:
April 5, 2001

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State of Illinois
Office of the Auditor General



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Office of the Auditor General
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Springfield, IL 62703

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  • The Department received a qualified opinion on its financial statements for the year ended June 30, 2000 because of inadequate controls over certain areas, specifically:
  • Annual physical inventory of property was not reliable and adequate property records were not maintained.
  • Leases and installment purchases were not properly recorded or reported to the State Comptroller.
  • Emergency purchase vouchers issued to foster parents for clothing and furniture were not adequately controlled.
  • Inadequate oversight for expenditures made for children's personal and physical maintenance resulted in a lack of adequate documentation and questionable expenditures.
  • Child welfare and foster care files lacked required documentation as set by State law.
  • Written procedures had not been developed to ensure that a foster family home that is the subject of an indicated report is scheduled for re-examination at least annually.
  • Inadequate controls in a local office resulted in two employees being paid a total of $10,049 for unauthorized overtime.
  • The Department did not perform sufficient monitoring of its contractors which provide services to children. We selected three such providers to review onsite and identified various weaknesses which led us to question 40 percent of the dollars tested.




For The Year Ended June 30, 2000


FY 2000

FY 1999

Total Expenditures (All Funds)




% of Total Expenditures





Personal Services
% of Operations Expenditures
Average No. of Employees



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



Contractual Services
% of Operations Expenditures



All Other Operations Items
% of Operations Expenditures



% of Total Expenditures




% of Total Expenditures





Cost of Property and Equipment (unaudited)




FY 2000

FY 1999

Hotline Calls



Children served in-
Regular foster care
Specialized foster care
Relative care
Residential placements
Independent living



Finalized adoptions




During Audit Period: Mr. Jess McDonald
Currently: Mr. Jess McDonald




Auditors' Opinion Qualified






Physical inventory and property records not reliable









Information on leases and installment purchases not adequate










Emergency purchase vouchers are like "signed blank checks" and must be controlled
















Questionable expenditures made for children's personal and physical maintenance








Questionable purchases




Lack of documentation



Unauthorized purchaser


Untimely approval


Conflicts with Department policy





No evidence of charge-backs to caregivers





















Child case files incomplete and not timely prepared











Lack of written procedures to re-examine foster family homes









Unauthorized overtime totaling $10,049 paid to two employees


















Insufficient monitoring of contractors providing services to children














Contractor's Executive Director received questionable payments










Contractor had incomplete personnel files




Contractor's property records had weaknesses





Contractor paid rent to a related party




Contractor paid for non-client entertainment


Contractor lacked documentation to support gas purchases

Inspector General, created in 1993, lacks operational rules required by law
























Our audit of the financial statements of the Department of Children and Family Services for the year ended June 30, 2000 resulted in a qualified opinion. The Department did not maintain adequate control over its property and equipment, and did not maintain adequate records of leases and installment purchases. As a result of these weaknesses, certain amounts reported in the financial statements and accompanying notes are management's estimates and were not audited. These amounts could be materially misstated as follows:

Property and Equipment

Although the Department attempted a physical inventory of fixed assets for fiscal year 2000, it contained numerous errors and could not be relied upon. Our prior audit reported that annual inventories of fixed assets were not performed for fiscal years 1999 or 1998. The Department attempted to maintain a property control log and an Additions and Deletions Register for fiscal year 2000. However, equipment vouchers could not be traced to the inventory listing from CMS or any Department property control log. The prior audit reported these records were not maintained for fiscal year 1999. The Department's financial statements reported approximately $40 million in property, plant and equipment at June 30, 2000, $11 million in property additions and $5 million in property deletions for fiscal year 2000. (Finding 1, pages 14-15)

Leases and Installment Purchases

Information concerning new leases and multi-year installment purchases and the related acquired equipment was not accumulated or reported properly. Original contracts were not properly processed within the Department making it impossible for the Department or the State Comptroller to timely record, report and classify the transactions. Due to the lack of sufficient evidence as to the existence or amounts of such transactions, the General Long-Term Debt Account Group (other than vested vacation and sick pay), the General Fixed Assets Account Group and the related notes were not audited. (Finding 2, pages 16-17)

Department officials agreed with these findings and stated they have implemented new procedures and assigned specific responsibilities to staff to resolve the weaknesses noted.


The Department did not have adequate control over emergency purchase vouchers called "932 Forms". These forms are issued to enable foster parents to purchase emergency items for their foster children, such as clothing and furniture. The forms may be taken to certain retail department stores, and used similar to a "signed blank check" within an authorized limit. The "932 Forms" are supposed to report the identification number of the foster child being provided for. We noted that in certain circumstances, the "932 Forms" were charged to a "dummy child identification number." In addition, the stores were not being required to obtain identification from the bearer of the forms upon use and the forms did not have an authorized limit pre-printed on the face of the form. Finally, the issuance of these forms was not adequately tracked by the caseworker who issued them; rather an attempt was made to track them after they had been processed. Failure to maintain good controls over the use of these forms could result in purchases of unsanctioned items. (Finding 5, page 20)

Department officials agreed with our recommendation to improve controls over emergency purchase vouchers. They stated they implemented a revised "932 Form" as of July 1, 2000 and also enhanced controls over the use, approval and processing of the form.


The Department did not have adequate oversight for expenditures made for children's personal and physical maintenance. This has resulted in several problems ranging from a lack of adequate documentation for expenditures to questionable expenditures due to case status and service code discrepancies.

During Fiscal Year 2000, the Department expended $6.4 million from an appropriation for personal and physical maintenance for children. Department officials stated the majority of the initial and replacement clothing for children are paid from this appropriation. Additionally, expenditures include camp and educational fees, cultural enrichment, travel, graduation expenses, and tutoring. These payments are in addition to regular monthly payments to caregivers for the child's room, board, clothing and allowance.

We selected 100 vouchers paid from the children's personal and physical maintenance appropriation to test for appropriateness and adequacy of support. Lack of oversight contributed to exceptions in 49 of the 100 vouchers tested and resulted in questioned expenditures of $43,695. Some cases had multiple exceptions. The exceptions are summarized as follows:

  • We questioned 18 expenditures for reasons such as the child did not have an open case with the Department at the time of the purchase or the child was not eligible for the goods or services purchased because of the type of placement the child was in (such as foster home, home of parent, etc.). For some types of placements the payment items would be included in the contractual rate.
  • The Department lacked sufficient documentation to support the expenditure for some vouchers sampled. We noted 12 vouchers were missing receipts to support the items purchased, including clothing, tutoring, and camp expenses. We noted 11 vouchers lacked exceptional payment request forms or an explanation of the need for replacement clothing.
  • In 10 percent of the cases sampled, we questioned expenditures because someone other than the authorized purchaser signed the authorization.
  • In 9 percent of the cases sampled, we questioned expenditures because the good or service was purchased prior to the Department's authorization approval date.
  • Some purchases sampled did not appear to be consistent with Department policy. According to Department procedures, initial clothing purchases are a one-time-only expense authorized for a child in the first out-of-home placement at the time the case is opened or within six months of the time the case is opened. Replacement clothing purchases are necessitated by some extraordinary occurrence. Some clothing purchases we reviewed did not appear to meet either the one-time initial clothing criteria or the extraordinary criteria.
  • Since replacement clothing is the responsibility of the foster home, private agency, or residential facility, the Department's procedures outline the ability to charge back clothing purchases to these caregivers if the child has an inadequate wardrobe. Foster care providers receive regular monthly payments to cover the child's room, board, clothing and allowance. We did not find any evidence in the cases where repeated replacement clothing purchases were made that the Department was charging the replacement clothing cost back to the caregivers.

Oversight for these expenditures is detailed in Department Procedures/Rules promulgated by the Department and two types of purchase authorizations. The procedure details the eligible goods/services that can be purchased. The authorization details what was purchased and contains sections for the seller and purchaser to certify that the goods/services were delivered. We found a lack of review at both regional and Springfield central offices. Also, inconsistent processing methods contributed to questionable expenditures. (Finding 6, pages 21-26)

We recommended Department management implement consistent review procedures at regional offices that process expenditures for the personal and physical maintenance of children so that taxpayer funds are adequately protected. Further, the Department should, as stated in procedure, ensure that reasons for replacement clothing are noted on authorizations, or revise current procedures to match current Departmental operations. Finally, the Department should seek recovery of expenditures from the caregiver, if appropriate, when it is found that the child has an inadequate wardrobe.

Department officials responded they will strive to achieve a higher level of compliance with their own procedures regarding use of proper forms, multiple sign offs on forms, and additional supporting documentation.


The Department's Child Welfare and Foster Care files lacked required documentation. During our review of the Child Welfare Case Files, we noted that 4 out of 40 initial case plans were not prepared timely, ranging from 1 month to 3 months over the 30 day requirement. During our review of 40 Foster Care Files, we noted the files were missing 14 initial case plans, 4 initial court orders, and 15 re-determinations by the Eligibility Determination Unit. An initial service plan must be developed within 30 days of placement to meet Department Procedure 305.50 and State law (325 ILCS 5/8.2, Abused and Neglected Child Reporting Act). The failure to follow Department procedures and State law or maintain documentation of such is not in the best interest of the children being served. (Finding 10, pages 32-33)

Department officials agreed with our recommendation regarding the timely preparation and retention of initial case plans and stated they would continue to stress the importance of this requirement to all caseworkers.


The Department did not have written procedures to ensure that a foster family home that is the subject of an indicated report is scheduled for re-examination at least annually. The Childcare Act of 1969 (225 ILCS 10/4.3) requires that the Department establish a schedule for re-examination of the foster family home mentioned in an indicated report under the Abused and Neglected Child Reporting Act, at least once a year. The Department stated it had not yet dedicated the time necessary to develop written policies and procedures in this area. The risk of non-compliance with this State law is increased by the absence of written policies and procedures. (Finding 11, page 34)

Department officials agreed with our recommendation and stated they will revise current policies and procedures to include this mandated requirement.


Inadequate management controls in a local office resulted in the Department incurring $10,049 for unauthorized overtime costs for two employees. Department policy requires that overtime must be approved before compensation will be authorized. One employee incurred 397 non-supervisory approved hours of overtime during fiscal year 2000 at a cost of $8,853. All of the questionable overtime was incurred without a supervisor approving the required Overtime or Compensatory Time Request Form. The employee in question was also the back-up timekeeper. According to Department officials, the timekeeping computer system does not deny a timekeeper access to his or her own entries. In the absence of adequate management controls, such a system creates an opportunity for abuse.

In its investigation into this matter, the Department identified a second employee in the local office who incurred 31 hours of unapproved overtime, at a cost of $1,196. Department officials stated that the breakdown in controls occurred because supervisory management in the field office was not in place and properly functioning. (Finding 14, pages 37-38)

We recommended the Department examine the adequacy of management controls over the earning of overtime hours and entry into the Department timekeeping system. The Department should also pursue disciplinary action against employees who have been found to have violated Department policies regarding the accruing of overtime hours.

Department officials agreed and stated they will continue to pursue disciplinary action. They also stated they will take steps against any employee in the future who violates policies.


The Department does not perform sufficient monitoring of its contractors providing services to children. During FY 00, the Department was appropriated $738 million for foster homes and specialized foster care and prevention, and for institution and group home care and prevention. The Department contracts with approximately 600 providers around the State to furnish these services to children. The Department's Office of Internal Audits is responsible for monitoring purchase of service providers to ensure that State and federal pass-through money is expended in compliance with State and federal requirements (89 Ill. Adm. Code 434.9). Department personnel indicated that the audit responsibility, as well as desk reviews of provider audit reports, has been transferred to a fiscal monitoring unit located in Cook County.

We selected three providers that had contracts with the Department for FY 00 to perform onsite audit procedures in the areas of expenditures, payroll/personnel, and inventory. The operations of these providers were largely funded by the State, with monies from the Department constituting 92 to 96 percent of all monies received during FY 99 by each entity. State receipts to each entity during FY 99 ranged from $1 million to $9.8 million.

Our audit work largely focused on FY 99 because it was the most current year for which completed records/audits were available from the providers. We selected 220 transactions/expenditures by the three providers totaling $282,084 for testing. We questioned $113,768 or 40 percent of the dollars tested. Significant results of our testing are summarized below.

  • $42,000 was questioned for FY 99 expenditures that were classified as paybacks to an Executive Director for loans the Executive Director previously made to the agency. The transactions were questioned due to a lack of documentation showing the loans had been made to the organization.
  • $71,000 was questioned for seven loans made during FY 00 by an agency to its Executive Director and a Board member related to the Executive Director. No formal documentation existed showing that the agency's Board of Directors approved the loans.
  • $3,500 was questioned for an annual automobile insurance premium in FY 00 on an Executive Director's personal vehicle.
  • Approximately $80,000 in back wages was paid to an Executive Director in FY 99 for work performed from 1992 through 1995. These wages had not been reported on a W-2 form and taxes had not been paid as of December 2000 even though the payments were made during FY 99.
  • Personnel files were incomplete. An executive level employee had no performance appraisals, no application forms, and no pay authorization forms to signify pay rate in the personnel file. An Executive Director's file contained evidence of only one personnel evaluation - from June 1996. Two staff did not have evidence of a required degree in the file as specified in the position descriptions.
  • At one provider we were provided an updated inventory listing on the day of our testing. While State purchased items were tagged with a label - "DCFS" - the inventory list failed to have a dollar value for 58 percent of Department identified items. Also, the tagged items were not issued serial numbers making tracking difficult.
  • Tagged inventory items did not always trace to the inventory list. Additionally, the inventory listing did not identify which items had been purchased with State funds, as required by Departmental rules.
  • A provider pays $48,000 annually to rent its facility from a property management corporation which is controlled by a related party. The president of the property management corporation was working as a contractual employee for the provider during this time and is the spouse of the Executive Director. Financial reports required by the Department and prepared by the provider and filed with the Department failed to disclose this related party transaction.
  • $34,000 was questioned for items charged to corporate credit cards due to a lack of documentation for expenditures and unallowable expenditures for items such as non-client entertainment.
  • Lack of accountability for the use of corporate gas credit cards was discovered.

The above circumstances indicate the Department's current monitoring activities are not reasonably designed to detect instances of non-compliance with laws and regulations by purchase of service providers. Further, the Department's Inspector General position was created by statute in 1993 but has not yet adopted rules governing its operations as required by law. (Finding 17, pages 44-50)

We recommended the Department devote sufficient resources to perform increased monitoring of providers' activities for the protection of State and federal funds. The Department should take reasonable steps to ensure that its providers comply with applicable laws and regulations pertaining to their use of State or federal funds passed through the Department. Those monitoring activities should include reviews to determine provider expenditures are fully supported by documentation, personnel are properly licensed, pay rates are documented, assets purchased with State or federal funds are controlled, and related party transactions are documented as required by Department rules. Additionally, we recommended that the Inspector General adopt rules as required by statute as necessary to carry out that office's functions, purposes and duties.

With regard to the specific problems identified by our review of selected providers, the Department should immediately follow-up as necessary to determine whether any misuse of State or federal pass-through monies has occurred and, if so, whether such activities should be referred for further investigation by an appropriate investigatory agency, such as the Attorney General or State Police.

Department officials agreed with the auditor's conclusion and accepted the recommendations, stating, among other things, that it intends to complete the rulemaking process for the Inspector General, follow up on specific items questioned in the finding, and review its procedures for overseeing its contractors.


The remaining findings are being addressed by the Department. We will review progress toward the implementation of our recommendations in our next audit.

Mr. Jonathan Gaciala, Chief Auditor of the Department, provided the agency’s responses.


Our auditors expressed a qualified opinion on the Department’s June 30, 2000 financial statements because the Department did not maintain adequate control over its property and equipment, or its leases and installment purchases.



WILLIAM G. HOLLAND, Auditor General



Our special assistant auditors on this audit were Friedman Eisenstein Raemer and Schwartz, LLP.