REPORT DIGEST

 

ILLINOIS DEPARTMENT OF PUBLIC AID

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2003

AND

COMPLIANCE AUDIT

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                       1

Total last audit                       3

Repeated from last audit       1

 

 

Release Date:

April 15, 2004

 

 

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 is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

SYNOPSIS

 

  • The Department's Key Information Delivery System did not reflect accurate child support accounts receivable balances.

 

 

 

                                             DEPARTMENT OF PUBLIC AID

 

                                      FINANCIAL AND COMPLIANCE AUDIT

                                            For The Period Ended June 30, 2003

 

EXPENDITURE STATISTICS (in thousands)

FY 2003

FY 2002

FY 2001

! Total Expenditures

$8,540,085

$7,907,076

$7,428,291

OPERATIONS TOTAL

% of Total Expenditures

$544,604

6.38%

$515,055

6.51%

$423,243

5.70%

Personal Services

% of Operations Expenditures

Average No. of Employees (whole numbers)

$115,412

21.19%

2,529

$115,749

22.47%

2,855

$112,272

26.53%

2,905

Other Payroll Costs (FICA, Retirement, Group Insurance)

% of Operations Expenditures

$34,693

6.37%

$35,219

6.84%

$32,373

7.65%

Contractual Services

% of Operations Expenditures

$106,505

19.56%

$107,811

20.93%

$99,622

23.54%

All Other Operations Items

% of Operations Expenditures

$287,994

52.88%

$256,276

49.76%

$178,976

42.29%

AWARDS AND GRANTS

% of Total Expenditures

$7,995,481

93.62%

$7,392,021

93.49%

$7,005,048

94.30%

! Cost of Property and Equipment

$49,983

$48,068

$49,331

SELECTED ACTIVITY MEASURES

FY 2003

FY 2002

FY 2001

Adjudication Processing Time

In Calendar Days (General Fund)

24.6 Days

29.9 Days

22.1 Days

Accounts Payable and Accrued Liabilities (General Fund)

(in thousands)

$1,829,053

$1,309,067

$1,064,898

AGENCY DIRECTOR(S)

During Audit Period:vvvvvMs. Jackie Garner (effective 3/1/01), Mr. George Hovanec, Interim
                                        (effective 11/15/02) and Barry Maram (effective 2/26/03)

Currently: Mr. Barry S. Maram

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Errors noted in 15 of 143 receivable balances reviewed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CHILD SUPPORT ACCOUNTS RECEIVABLE BALANCES

The Departmentís Key Information Delivery System (KIDS) did not reflect accurate accounts receivable balances.

We reviewed 36 child support cases as of June 30, 2003 in order to verify the accuracy of the accounts receivable balance. We noted errors in 4 of the 36 (11%) receivable balances reviewed. The errors noted consisted of an overstatement of one account of approximately $17,500; an incorrect emancipation date in another case; and two cases did not have new court order information.

In addition, the Department reviewed 107 child support cases as of June 30, 2003 in order to verify the accuracy of the accounts receivable balances. The auditors examined the accuracy and completeness of the Departmentís supporting documentation of its internal case file reviews. The following items were noted:

  • In 7 of the 107 (7%) cases reviewed, the reported receivable balances were understated by approximately $24,047; and
  • In 4 of the 107 (4%) cases reviewed, the reported receivable balances were overstated by approximately $5,745. This finding has been repeated since 1998.

The Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires State agencies to maintain systems of internal control necessary to properly record, account for, report and maintain accountability over the Stateís resources. In addition, good internal controls dictate the Department maintain sufficient records and financial reports to properly account for assets when the governmental unit is functioning as an agent for another party. (Finding 1, pages 11-13)

We recommended the Department continue its efforts to improve data integrity in KIDS. We further recommended the Department continue to apply the necessary resources to strengthen its control over financial reporting of child support activity in order to reduce to a low level the risk that misstatements in amounts material to the financial statements will not be detected within a timely period by employees in the normal course of performing their assigned functions.

Department officials accepted our recommendation and stated, as in any system, data integrity improvement is a continual process and is ongoing at the Agency. The Department has improved its internal controls and has implemented an annual review of the account balances. The Department believes that it has sufficient controls to provide reasonable assurance that all transactions are recorded as necessary to permit the preparation of the financial statements in accordance with generally accepted accounting principles. (For previous Department responses, see the Digest Footnote)

AUDITORSí OPINION

Our auditors state the June 30, 2003 financial statements are fairly presented in all material respects.

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

 

SPECIAL ASSISTANT AUDITORS

BKD LLP were our special assistant auditors.

 

DIGEST FOOTNOTE

 

#1 INADEQUATE CHILD SUPPORT ACCOUNTS RECEIVABLE BALANCES Ė Previous Agency Responses

2002: "The Department accepts the finding. The Department will continue its efforts in identifying and correcting all data integrity problems in the KIDS system. Data integrity improvement is a continual process in all systems. IDPA has made significant strides in accounts receivable reporting as evidenced by the removal of the qualification on the Departmentís financial statements by the external auditors."

2001: "The Department is fully committed to continue all of the data base integrity efforts currently in place in order to ensure that accurate account balances are maintained. The resources necessary to accomplish this goal have been and will continue to be in place. To ensure accurate balances, the allocation of resources is a top priority for the Department, within the realm of overall budget constraints."

2000: "IDPA does not concur with the references made to data integrity problems in this finding. Based on the Department of Health and Human Services (DHHS) FSA 88 certification follow-up in Chicago on August 19, 1999, IDPA and the State of Illinois demonstrated to DHHS' satisfaction that conditions associated with data integrity were fully satisfied. For reasons unknown to DHHS, IDPA was never officially informed until April 2001 that data integrity conditions were fully satisfied. In light of this information, which has been shared with OAG and PTW, IDPA believes that KIDS is fully certified in compliance with FSA 88.

IDPA is continuing its efforts in identifying and correcting all data integrity problems. This does not represent an acknowledgement that data integrity issues are severe and that a statement in this finding is warranted. Data integrity improvement is a continual process in all systems. DPA is also applying all necessary resources to ensure KIDS meets the additional federal requirements for Federal Welfare Reform and the needs of the State, within the constraints of available state and federal appropriations and cash resources.

IDPA has made great strides in accounts receivable reporting during the last two years. The Department is able to support its account receivable balances with case level detail."

1999: "ACCEPTED - As of October 1, 1999, the Division of Child Support Enforcement (DCSE) has implemented the Data Base Cleanup Project to cleanse data currently in the KIDS system. Additionally, by April 1, 2000, the DCSE will establish a quality control process which will require supervisory staff to randomly select cases and review balances for accuracy. By March 1, 2000, the DCSE will be contracting with a third party to provide additional data clean up services for the KIDS system."

"IMPLEMENTED - The KIDS system is certified as meeting Federal requirements. Staff will continue to be dedicated to maintain and operate the KIDS system to satisfy any needs of the State. It is the intent of the Department to thoroughly plan future large system development projects to ensure that contractual provisions are met and the operational systems are implemented in a timely manner."

1998: "Accepted. The lack of accounts receivable documentation is being addressed by the establishment of an internal financial accountability workgroup. This workgroup has the responsibility to ensure that reporting requirements are met and that supporting documentation for these financial records are maintained in accordance with federal record retention requirements."