REPORT DIGEST

 

CLYDE L. CHOATE

MENTAL HEALTH AND DEVELOPMENTAL CENTER

 

LIMITED SCOPE

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit†††††††††††††             8

Total last audit†††††††††††††             0

Repeated from last audit†††††††††† 0

 

Release Date:

June 13, 2006

 

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 Center did not complete an adequate year-end physical inventory and did not sufficiently maintain perpetual commodities inventory records.

®      The Center did not maintain proper documentation of property transactions and did not reconcile Center property records to amounts reported to the Illinois Office of the Comptroller.

®      The Center failed to document review of payroll vouchers, did not perform employee evaluations timely, and erroneously calculated an employeeís accrued vacation.

®      The Center lacked adequate internal controls and documentation for the operation of the Patient Travel Trust Fund.

 

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


 

 

CLYDE L. CHOATE MENTAL HEALTH AND DEVELOPMENTAL CENTER

LIMITED SCOPE COMPLIANCE EXAMINATION

For The Two Years Ended June 30, 2005

 

EXPENDITURE STATISTICS

FY 2005

FY 2004

FY 2003

         Total Expenditures (All Appropriated Funds)......

$36,265,043

$32,872,574

$31,985,202

††††††††† OPERATIONS TOTAL......................................

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

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

††††††††††††††† % of Operations Expenditures....................

††††††††††††††† Average No. Of Employees.......................

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

 

$36,141,109

99.66%

$26,583,554

73.55%

530

$50,158

$32,791,775

99.75%

$24,420,337

74.47%

524

$46,604

$31,903,602

99.74%

$23,499,686

73.66%

489

$48,057

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

††††††††††††††† % of Operations Expenditures....................

$6,053,530

16.75%

$4,753,698

14.50%

$5,018,358

15.73%

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

††††††††††††††† % of Operations Expenditures....................

$1,867,849

5.17%

 

$1,980,368

6.04%

$1,906,469

5.98%

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

††††††††††††††† % of Operations Expenditures....................

 

††††††††† GRANTS TOTAL....................................................

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

$1,636,176

4.53%

 

$123,934

0.34%

 

$1,637,372

4.99%

 

$80,799

0.25%

$1,479,089

4.63%

 

$81,600

0.26%

         Cost of Property and Equipment...........................

         Cost of Inventories on hand (not examined).........

$49,781,933

$567,639

$49,355,134

$403,708

$48,681,097

$390,543

 

SELECTED ACTIVITY MEASURES (Not Examined)

FY 2005

FY 2004

FY 2003

         Average Number of Residents...................................

267

278

279

         Ratio of Employees to Residents................................

2.0 to 1

1.9 to 1

1.8 to 1

         Cost Per Year Per Resident......................................

*

$162,461

$150,336

* The Department had not calculated these figures as of the end of fieldwork.

 

CENTER DIRECTOR(S)

†††† During Audit Period:Ms. Janice Farmer, Center Director

†††† Currently:Ms. Janice Farmer, Center Director

 

 

 

 

 

 

 

 

 

 

 

 

 

Poor record keeping and numerous weaknesses in internal controls prevented auditors from reporting on inventory

 

 

 

 

 

 

 

 

Requisitions not submitted to the business office timely

 

 

 

Physical inventory not completed close to the fiscal year-end

 

 

 

 

 

56% of our test counts could not be reconciled to Center records

 


Inventory transactions were not timely input into the system

 

 

 


The Center failed to follow a DHS Central office directive on inventory cutoff

 

 

 

 

 

 

 

 

Inventory removed without appropriate requisitions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auditor Recommendations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


A storage building contained property in excess of the Centerís current needs and scrap property

 

 

66% of the property transactions tested did not have proper documentation

 

 

Reconciliations of Center records to the records of the Illinois Office of the Comptroller were not performed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All 48 payroll vouchers totaling $6,258,595 showed no evidence of review by the Centerís management

 

 

 

 


10% of employee files examined contained either untimely employee evaluations or the employee evaluations had not been completed

 

 

 

 

 

 

 

Prior service credit error noted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auditor Recommendation

 

 

 

 


Officials disagree with auditor recommendation

 

 

 

 

 

 

 

 

Auditor Comment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No disbursements log maintained of expenditures

 

 


No reconciliations were performed of the travel expenditures to the unexpended cash balances

 

Fiscal year 2004 expenditure records could not be located for the disbursements totaling $4,700

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

INVENTORY NONCOMPLIANCE AND CONTROL WEAKNESSES

 

††††† The Center did not complete an adequate year-end physical inventory and did not sufficiently maintain perpetual commodities inventory records.

 

††††† The total value of commodities inventory at June 30, 2003 was $390,543.Total commodities expenditures were $1,331,468 and $1,237,837 for fiscal years 2005 and 2004, respectively.Because of poor record keeping and the numerous weaknesses noted in internal controls over commodities inventory, auditors were unable to report on commodities inventory balances at June 30, 2004 and June 30, 2005 in the Centerís limited scope compliance examination report.

 

††††† We noted the following exceptions and weaknesses during our testing of the Centerís commodity inventory records:

 

        General store (food) requisitions were not being submitted to the business office in a timely manner.During our inventory observation on June 21, 2005 we noted 19 outstanding inventory requisition forms that were not entered into the inventory management system.

 

        The Centerís complete physical inventory count was not performed close enough to fiscal year end to ensure accurate reporting of year-end inventory.

 

        Most of the same staff responsible for maintaining the inventory performed the physical inventory counts.

 

        No interim periodic inventory test counts were performed.

 

        40 of 72 (56%) items selected for test counts could not be reconciled to the June 30 Monthly Commodity Status Report.

 

        Inventory was not well maintained in the general store (food).The same inventory items were often stored in various locations.

 

        The Center was not inputting inventory transactions into their system on a timely basis.

 

        The Center failed to follow a memo from the Department of Human Services (DHS) for fiscal year 2005 inventory cutoff.DHS sent a memo to the Centers stating that fiscal year 2005 inventory transactions could be input until July 10, 2005.We noted the Center input fiscal year 2006 transactions before July 10th and Center personnel indicated that fiscal year 2005 transactions were input after July 10th.††††

 

        The business office frequently failed to forward weekly and monthly inventory reports to the storekeepers.

 

        Inventory items were removed from the general store (non-food) without appropriate requisitions.

 

††††† The Illinois Administrative Code (44 Ill. Adm. Code 1.6010) requires each state agency to have general supervision and accountability for tangible personal property and other supplies under its control and to conduct a periodic inventory of all warehouses and similar storage areas under its jurisdiction.

 

††††† Center management stated that the problems with inventory were caused by employee turnover, employees on leave of absence, and insufficient staff allocated to this area.(Finding 1, pages 10-12)

 

††††† We recommended that the Center:

 

        Devote the resources necessary to timely report inventory transactions to the business office;

        Require the completion of requisitions and timely input inventory transactions into the reporting system;

        Timely distribute inventory reports to the appropriate storekeepers;

        Conduct a complete physical inventory near the end of the physical year with staff independent of maintaining the inventory;

        Better organize general stores inventories by maintaining inventory items in one location;

        Consider conducting periodic test counts of inventory throughout the year to increase the accuracy of perpetual inventory records.

††††† The Department and Center agreed with our recommendations and stated that management was currently implementing directives and procedures and would conduct training to address the recommendations.

 

 

NONCOMPLIANCE WITH PROPERTY CONTROL PROCEDURES

 

††††† The Center is not in compliance with property control procedures.

 

††††† We noted the following conditions:

 

        During the tour of buildings and grounds, we noted a storage building that contained instances of oversupply and deterioration of property and equipment.The building contained 632 items valued at $213,258.Center officials acknowledged that some of the items were equipment in excess of the Centerís current needs and some of the items were likely scrap.

 

        21 of 32 (66%) property transactions tested did not have proper documentation maintained at the Center.

 

        Reconciliations were not performed between the Property Control System (agency records) and amounts reported to the Illinois Office of the Comptroller.We were able to reconcile Center records to the ending balances reported to the Comptroller for the fiscal years ended June 30, 2004 and 2005, but were unable to reconcile Center records to the activity reported to the Comptroller during the period.

 

††††† According to Center personnel, the property control weaknesses were the result of employee turnover and unintentional oversight.(Finding 2, pages 13-14)

 

††††† Department and Center management accepted our recommendations to review internal procedures to improve controls and ensure equipment transactions are properly reported including reconciling Center records to those reported to the Illinois Office of the Comptroller, to prepare transaction forms in accordance with Department Procedures, and to report and transfer Surplus property on a more timely basis.

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CONTROLS OVER PERSONAL SERVICES NEED IMPROVEMENT

 

††††† The Center failed to document review of payroll vouchers, did not perform employee evaluations timely, and erroneously calculated an employeeís accrued vacation.

 

        All 48 payroll vouchers examined totaling $6,258,595 showed no evidence of review by the Centerís management.

 

††††† Good internal control procedures require that Center personnel evidence their review of the payroll systems input that generates the payroll vouchers.††

 

        During our testing of employee files, we noted 5 of 50 (10%) files contained either untimely employee evaluations or employee evaluations that had not been completed.Three of the evaluations tested were performed an average of 6 months late.Two of the evaluations tested had not been performed in over a year as of the end of fieldwork September 30, 2005.

 

††††† The Illinois Administrative Code (80 IL Adm. Code 302.270) requires an agency to prepare an evaluation not less often than annually.

 

        Out of 50 records tested we discovered 1 (2%) file with an improper calculation of prior service credit on the Centerís current records dating back to when the employee was hired in 1998.An employee was erroneously given full-time prior service credit for part-time work performed at a state university resulting in the employee receiving an extra 13.8 days of vacation valued at approximately $1,800.The Center is reviewing the extra vacation granted to determine their course of action.

 

††††† Center personnel indicated clerical oversights and turnover in the Business Administrator position were reasons for the lack of documented review of the payroll systems input that generates the payroll vouchers.Center personnel stated that the untimely employee evaluations, were caused by insufficient staff to timely perform this function.Center personnel stated the accrued vacation error was a clerical oversight.(Finding 3, pages 15-17)

 

††††† We recommended the Center document approval of payroll vouchers, allocate the resources necessary to timely perform employee evaluations, and properly assess the prior service status of employees when calculating accrued vacation for new employees.

 

††††† The Department and Center disagreed with our recommendation and noted that the State Finance Act (30 ILCS 105/9.03) clearly states that the Chief Executive Officer or his designee shall certify payroll vouchers.However, the Department and Center noted that the Center Business Administrator would now verify the payroll vouchers each payroll period and would allocate the resources necessary to timely perform employee evaluations.

 

††††† The Department and Center noted that the error in calculating the improper service credit was action dated back to 1998 and was not a matter that arose during the timeframe of the audit.††

 

††††† In our auditorsí comment we noted that good internal control procedures would dictate that Center personnel located at the Clyde L. Choate facility in Anna, Illinois would need to evidence their review of the pertinent payroll input information.We noted that although the prior service calculation error occurred in 1998, the incorrect balance was still maintained on the facility records at the time of our examination.

 

 

INADEQUATE CONTROLS OVER PATIENT TRAVEL TRUST FUND

 

††††† The Center lacked adequate internal controls and documentation for the operation of Patient Travel Trust Fund.†††

 

††††† The following exceptions were noted during our testing of the Patient Travel Trust Fund:

 

        The Center failed to maintain a disbursements log summarizing Patient Travel Trust Fund expenditures.Disbursements totaled $4,700 and $5,026 in fiscal years 2004 and 2005, respectively.

 

        No reconciliations were performed of travel expenditures to unexpended cash balances.Appropriations from the travel line item to the Patient Travel Trust Fund were $5,800 and $3,300 in fiscal years 2004 and 2005, respectively.

 

        Fiscal year 2004 patient travel fund expenditures records could not be located.Disbursements from the fund in fiscal year 2004 were $4,700.

 

        Fiscal year 2005 patient travel fund expenditures could not be reconciled from agency records to supporting documentation.The unreconciled difference was $593.††

 

††††† Center personnel indicated that they were aware of inadequate controls over this fund and cited staff shortages caused by the long-term leave of absence taken by the travel fund supervisor.(Finding 4, pages 18-19)

 

††††† We recommend the Center strengthen internal controls over the Patient Travel Trust Fund to ensure that expenditures from the fund have adequate supporting documentation, are properly recorded in cash disbursements logs and are periodically reconciled to the unexpended cash balance by an independent person.†††

 

††††† Department and Center management agreed with our recommendations and indicated that they have reassigned the responsibility for the Patient Travel Trust Fund.

 

OTHER FINDINGS

 

††††† Department and Center management indicated that they are addressing the remaining findings and taking appropriate corrective action.We will review the Centerís progress toward implementation of our recommendations in our next compliance examination.

 

††††† Ms. Carol L. Adams, Secretary of the Illinois Department of Human Services provided the responses to our recommendations.

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AUDITORSí REPORT

 

††††† We conducted a limited scope compliance examination of the Center as required by the Illinois State Auditing Act.We also performed certain agreed upon procedures with respect to the accounting records of the Center to assist our financial audit of the entire Department.Financial statements for the Department will be presented in that report.

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_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JAF:pp

 

SPECIAL ASSISTANT AUDITORS

 

††††† Our special assistant auditors were West & Company, LLC.