REPORT DIGEST

 

DEPARTMENT

OF HUMAN SERVICES

CENTRAL OFFICE

 

FINANCIAL AUDIT

For the Year Ended

June 30, 2005

 

COMPLIANCE EXAMINATION

For the Two Years Ended

June 30, 2005

 

Summary of Findings:

Total this report††††††††††† ††††††††† 37

Total last report††††††††††† ††††††††† 36

Repeated findings††††††††††††††††   17

 

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 and the Full Report are also available on

the worldwide web at

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

 

SYNOPSIS

 

®       The Department of Human Services (Department) did not bill residents in State mental health and developmental facilities in a timely manner, resulting in significant lost revenue to the State and inaccurate Department account receivable balances.

®       The Department had various internal control weaknesses over commodities inventories at several Central Office locations including warehouses and at mental health and developmental facilities and schools.

 

®       The Department did not claim over $24 million under the federal Special Education Grants for Infants and Families with Disabilities (Early Intervention) program in a timely manner.†††

 

®       The Department had numerous internal control weaknesses in the Departmentís Home Service Program.

 

®       The Department had various procedural weaknesses related to reviewing final grant expenditures reported by providers and the Departmentís subsequent recovery of unspent grant funds.

 

®       The Department purchased items without soliciting competitive bids and made the purchases in small amounts circumventing the Illinois Procurement Code.

 

®       The Departmentís mental health and developmental centers and schools (facilities) did not obtain all required signatures on contracts before their starting dates.

 

®       The Department entered into contracts for medical services in which the indemnification clause was modified without documented approval of legal counsel.

 

®       The Department did not maintain time sheets for its employees in compliance with the State Officials and Employees Ethics Act.

 

®       The Department did not maintain adequate records for State vehicles assigned to employees.

 

®       The Department had inadequate procedures for the disposal of confidential information.

 

®       The Department had a number of inefficiencies in the business office at its Treatment and Detention Facility due to a lack of updated computer software and integrated systems.

 

®       The Department did not fund the Illinois African-American Commission as mandated by State law.

 

 

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

 


DEPARTMENT OF HUMAN SERVICES - CENTRAL OFFICE

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Two Years Ended June 30, 2005

 

EXPENDITURE STATISTICS

(expressed in thousands)

FY 2005

FY 2004

FY 2003

  • Total Expenditures (All Funds)...................

OPERATIONS TOTAL.....................................

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

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

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

††††† Average Number of Employees.....................

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

††††† % of Operations Expenditures

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

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

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

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

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

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

Medical Preparation and Food Supplies......

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

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

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

GRANTS TOTAL.......................................

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

PERMANENT IMPROVEMENTS TOTAL...

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

REFUNDS TOTAL......................................

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

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

$4,386,877

$720,938

16.4%

$291,913

40.5%

*14,651

$85,405

11.8%

$65,459

9.1%

$19,538

2.7%

$11,687

1.6%

$180,801

25.1%

$66,135

9.2%

$3,660,855

83.5%

$640

.0%

$4,444

.1%

$114,405,563

$4,267,811

$757,519

17.8%

$302,167

39.9%

*15,384

$72,627

9.6%

$102,212

13.5%

$19,255

2.6%

$15,236

2.0%

$173,000

22.8%

$73,022

9.6%

$3,495,389

81.9%

$1,869

.0%

$13,034

.3%

$123,083,877

$4,085,204

$769,003

18.8%

$317,973

41.3%

*15,621

$79,207

10.3%

$100,431

13.1%

$15,504

2.0%

$15,874

2.1%

$167,655

21.8%

$72,359

9.4%

$3,301,426

80.8%

$129

.0%

$14,646

.4%

$126,578,290

SELECTED ACTIVITY MEASURES (unaudited)

FY 2005

FY 2004

FY 2003

Clients / Persons Served

††††† Home Services...............................................

††††† Bureau of Blind Services................................

††††† Disability Determination Services .................

††††††Alcohol and Substance Abuse (unduplicated) ...

Temporary Assistance to Needy Families

††††† Average number of monthly participants............

††††† Average monthly program payments.................

††††† Average monthly disbursement per participant..

Child Care

††††† Average number of children served per month..

††††† Annual program payments..............................

††††† Average cost per child per month...................

Food Stamps (Federal and State Programs)

††††† Average number of monthly participants.........

††††† Average monthly program payments..............

††††† Average monthly disbursement per participant.

 

35,645

2,726

161,612

90,725

 

95,748

$9,253,214

$97

 

197,334

$691,920,700

$292

 

1,039,565

$98,261,958

$95

 

34,158

3,175

153,403

78,000

 

104,255

$10,538,454

$101

 

189,282

$656,718,600

$289

 

1,137,015

$113,882,729

$100

 

28,926

2,894

152,895

88,666

 

114,357

$10,370,275

$91

 

191,000

$597,191,200

$256

 

931,820

$84,938,902

$91

DEPARTMENT SECRETARY

During Audit Period:Carol L. Adams, Ph.D.

Currently:Carol L. Adams, Ph.D.

* Includes employees for the entire Department of Human Services including individual Mental Health and Developmental Facilities, Centers for Rehabilitation and Education, and Schools for the Deaf and Visually Impaired.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department facilities failed to bill residents for services

 

 

 

 

5 facilities were significantly delinquent in their billings

 

Estimates of unbilled services ranged from $3 to $9 million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Auditors could not determine propriety of $1.321 million of inventory

 

 

Year end inventory of pharmaceutical not taken at 3 facilities

 

 

 

Strong internal controls require a centralized oversight function related to commodity inventories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$24 million of federal funds not claimed timely

 

 

 

Department fiscal year 2003 and 2004 financial statements were misstated

 

 

 

Federal expenditures on the Departmentís fiscal year 2003 and 2004 Schedule of Expenditures of Federal Awards was understated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerous internal control weaknesses were identified from an independent review contracted by the Department

 

 

 

 


Supervisors only review 10% of the case files annually

 

 

 

There was little or no monitoring of the program by local office officials

 

 

The fraud division did not appear to be adequately staffed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant close out process is complex and not standardized

 

 

 

 

 

 

 

 

 


3 files did not contain documentation on how lapse recoveries were resolved

 

 

 

 

 

No documentation of how $3.8 million of a ďrefundable advanceĒ was to be recovered from a provider

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Four pieces of identical equipment totaling $38,600 were purchased separately within 10 days of each other

 


Eight purchases of similar office supplies were made without seeking competitive bids

 

 

 

Procurement Code notes purchases are not to be divided into small purchases to circumvent the competitive procurement process

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


158 contracts at facilities were started prior to all required signatures being obtained

 

 

 

 

13 additional facility contracts were noted as starting prior to all required signatures being obtained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract indemnification clauses modified without following established controls

 

 

 

 


Eight contracts contained modifications to the indemnification clauses that shifted some or all of the liability from the contactor to the Department and State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department is not maintaining time sheets for its employees in compliance with a statutory mandated requirement

 

 

 

 

Act requires employees to submit time sheets of time spent on official State business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Missing information for 31 of 37 personally assigned vehicles

 

7 of 37 employees assigned vehicles failed to file required annual license and insurance certification

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Confidential information was found in a recycling bin

 

 

 

 

 

Confidential information should be adequately secured at all times

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Staff did not fully utilize the Departmentís primary accounting system

 

 

 

Trust fund system is not efficient and requires staff to maintain additional documents

 

 

 

 

 

 

Difficult to determine if dormant accounts are included in trust fund system

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Failure to fund program

 

 

 

 

 

 

Department could not provide evidence that funding was requested

 

INTRODUCTION

 

†††† This report presents our audit of the financial statements of the entire Department of Human Services (Department) for the year ended June 30 2005, and a State compliance examination of the Departmentís Central Office operations for the two years ended June 30, 2005.Limited scope compliance examinations for the two years ended June 30, 2005 were also performed at 8 Developmental Centers, 7 Mental Health Centers, 2 combination Mental Health / Developmental Centers, and 3 Rehabilitation Service Facilities.Separate reports for each one of these Centers have also been issued.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

FAILURE TO BILL RESIDENTS IN A TIMELY MANNER

 

†††† The Department did not bill residents in State mental health and developmental facilities in a timely manner, resulting in significant lost revenue to the State and inaccurate Department account receivable balances.

††††† †††† Of the 17 State operated facilities that provide services to recipients of mental health or developmental disability care, 5 were noted as being significantly delinquent in their billings.Department personnel further stated there may be billing delinquency problems at almost all facilities.Unbilled amounts could not be determined due to significant weaknesses in the controls, but Department estimates of unbilled services range from $3 million to $9 million.

 

†††† Failure to record receivables as services are provided is poor internal control and is ineffective cash management and non-compliance with the Fiscal Control and Internal Auditing Act.(Finding 05-1, pages 17-18)

 

†††† We recommended the Department allocate sufficient staff resources to each facility to process all delinquent billings and process all future billings in a timely manner.

 

†††† Department officials agreed with our recommendation and indicated resources had been allocated to this function as of March 2006.Consultants/contractors will take over some billing systems at facilities so other Department staff can work on billing residents.Further, additional staff may also be hired.

 

INADEQUATE CONTROLS OVER COMMODITIES

 

†††† During our testing we noted several exceptions and weaknesses over commodity inventories.The weaknesses were noted at various Central Office locations including warehouses and at mental health and developmental facilities and schools.Some of the inventory problems noted were:

 

        The auditors were not able to determine the propriety of recorded inventories totaling $1.321 million at two facilities.

        13 locations were tested with discrepancies and/or weaknesses noted at 10 (77%) of these locations.

        3 facilities failed to perform a year-end physical inventory count of their pharmaceutical inventory.

        2 facilities operated independent inventory systems in addition to the Department inventory system.

 

Generally accepted accounting principles require the proper valuation, reduction of overstocking, and control over annual physical inventory processes to ensure complete and accurate inventories for financial reporting purposes.Strong internal controls require a centralized oversight function related to commodities.This is important considering the Department made commodities expenditures of $37.838 million during fiscal year 2005.(Finding 05-2, pages 19-21)†††

 

We recommended the Department establish a centralized oversight function related to commodities to allow for strengthened inventory controls.

 

Department officials agreed with our recommendation and stated they will investigate centralizing this function.

 

 

 

FAILURE TO CLAIM EARLY INTERVENTION COSTS AND PROPERLY ADJUST FINANCIAL STATEMENTS

 

We noted the Department incurred costs under the Early Intervention program from April 2003 to June 2004 totaling $24 million.These costs were not claimed with the federal government until fiscal year 2005, in some instances approximately 15 months after the costs were incurred.In addition, the Department did not report these reimbursements as receivables and related federal revenue in its fiscal year 2003 and 2004 financial statements in accordance with generally accepted accounting principles.This materially misstated the fiscal year 2004 Department financial statements and necessitated a prior period adjustment of over $24 million in the fiscal year 2005 Department financial statements.

††††

In addition, costs reported as part of the State-wide single audit in the Departmentís fiscal years 2003 and 2004 Schedule of Expenditure of Federal Awards were also understated by a total of approximately $24 million.The Departmentís failure to draw down these funds in a timely manner resulted in program expenditures being funded with State resources when federal resources were available.(Finding 05-3, pages 22-23)†††

 

We recommended the Department establish controls to ensure all federal reimbursements are drawn down in a timely manner and are properly recorded in the Departmentís financial statements and Schedule of Expenditures of Federal Awards.

 

Department officials agreed with our recommendation and indicated they are reviewing their accounting process for the Early Intervention Program.Further, changes to procedures for cash draws have already been implemented and other enhancements to the accounting process are scheduled for implementation before July 1, 2006.

 

INTERNAL CONTROL WEAKNESSES IN THE HOME SERVICES PROGRAM

††††††

The Home Services Program allows individuals with disabilities (customers) who are at risk of placement in a nursing home to remain in their homes.Department officials stated they had concerns regarding the controls within the program due to staff discovery of instances of fraud and abuse.As a result, the Department hired an independent contractor (public accounting firm/consultant) to perform a review of the program.The review noted numerous internal control weaknesses in the program.We discussed the weaknesses identified in the review with Department managers and noted the weaknesses were still prevalent.Some of the weaknesses noted were:

 

        Supervisors generally review between 2 to 5 case files each month; this review process results in less than 10% of case files being reviewed each year, which is not adequate to ensure staff are compliant with program requirements.

        There was little or no monitoring of the program by local office officials to ensure that program objectives were met.On average each supervisor is responsible for approximately 873 customer files during fiscal year 2004 and 880 customer files during fiscal year 2005.

        The fraud division did not appear to be adequately staffed to effectively identify, address or monitor fraudulent activities.We noted the fraud division consisted of one person during fiscal year 2004, and four individuals at the end of fiscal year 2005.During fiscal year 2005, the fraud division investigated 717 reported cases of fraud.

 

Adequate review, monitoring and staffing are important to provide internal controls over the Home Services Program due to the size and decentralization of the program.(Finding 05-4, pages 24-26)

 

We recommended the Department implement a number of procedures to strengthen internal controls over the Home Services Program.

 

The Department agreed with our recommendation and indicated corrective action has been taken on implementing procedures to strengthen the internal controls over the Home Services Program.††

 

WEAKNESSES IN THE GRANT CLOSE OUT PROCESS AND RECOVERY OF UNSPENT FUNDS

 

†††† We noted weaknesses in the Departmentís procedures for reviewing final grant expenditures reported by grantees and the Departmentís subsequent recovery of unspent grant funds.

 

†††† Annually, the Department reconciles approximately $1 billion of grants and contracts awarded to over 1,000 providers.The Department awards grants in two basic manners:1) reimbursements to grantees based on eligible grant costs, or 2) payment based on services projected to be provided in the contract or grant agreement.We noted because of varying methods for determining unspent grant amounts and the multiple ways of recovering these amounts the process is complex and not always standardized.The current grant close-out and recovery process also causes confusion among recipients of the grant funds.Some of the specific weaknesses noted were:

 

          The Department does not adhere to the Illinois Administrative Code when delineating close-out responsibilities among its divisions or offices.†††

 

        During our review of fiscal monitoring files of providers we noted insufficient documentation existed to justify the resolution of lapse recoveries being taken to the informal hearing process.We noted 3 instances in which the files did not contain documentation on how the lapse recoveries were resolved in the informal hearing process.
 

        During our testing of Financial Reporting Packages filed by providers for fiscal year 2004 we noted one provider had a balance due to the Department of approximately $7 million reported as a ďRefundable AdvanceĒ from a fiscal year 2004 contract.This balance due was partially resolved by decreasing the providerís fiscal year 2005 contract by $3.2 million, but there was no documentation of how the remaining $3.8 million balance was to be recovered.This appeared to be an isolated incident.

†††† These weaknesses are a result of a lack of a standardized overall methodology for closing out grants and recovering unspent grant funds.(Finding 05-6, pages 29-31)

 

†††† We recommended the Department follow its Administrative Directive for closing out grants and recovering unspent grant funds.Further, the Department should collect unspent funds in compliance with the Grant Funds Recovery Act, and strengthen procedures for reviewing grantee audits to ensure unspent funds are properly collected.

 

†††† Department officials agreed with our recommendation and noted the Departmentís Office of Contract Administration was responsible for all grant close-outs for fiscal year 2006.The Department noted the remaining balance cited was recouped (deducted from future services) in fiscal year 2006.

 

CIRCUMVENTION OF COMPETITIVE PROCUREMENT REQUIREMENTS IN THE ILLINOIS PROCUREMENT CODE

 

The Department circumvented the Illinois Procurement Code (Code) by purchasing items without soliciting competitive bids.These purchases appeared to be strung in small amounts to avoid the requirements of the Code.Had the following purchases been made all at once they would have been required to be competitively procured.

 

  • The Department purchased 4 identical pieces of equipment within a 10-day period during fiscal year 2004 from the same vendor using separate purchase orders.These items were not competitively procured and individually cost $9,650 and totaled $38,600.

 

  • The Department made 8 purchases of office supplies (envelopes and labels) during fiscal year 2005 from the same vendor totaling $33,591 without seeking competitive bids.The Department should have solicited competitive bids for these supplies since these purchases were in excess of $10,000 within the first three months of the fiscal year.

 

The Code states contracts are to be awarded through competitive sealed bids unless exempted and procurements are not to be divided as to constitute a small purchase, which would exempt the purchase from the Code.In addition, the Code notes if there is a repetitive need for small procurements of the same type, competitive sealed bids or proposals should be considered for procurements of those needs. (Finding 05-8, pages 34-35)††

 

We recommended the Department adhere to the procurement and purchasing requirements of the Illinois Procurement Code.

 

Department officials agreed with our recommendation and noted they have developed procedures to address the recommendation and have developed monitoring tools to track compliance with the new policy.

 

UNTIMELY SIGNING AND EXECUTION OF WRITTEN CONTRACT AGREEMENTS

 

During our testing of contractual expenditures we noted the Departmentís mental health and developmental centers and schools (facilities) did not obtain all the required signatures on the contracts before their starting date.The contracts tested were for a variety of goods or services ranging from medical, administrative and laboratory services to repairs and maintenance.We noted the following during our testing:

 

  • Exceptions were identified at 19 of the 20 facilities tested.Auditors identified that 158 of 286 (55.3%) contracts tested were not signed by all parties prior to the beginning date as set forth in the contract agreement.The average length of time between the beginning date of the contract and the final required signature was 115 days, with a range of 2 days to 365 days.

  • Additional testing of facility contracts was performed at the Departmentís Central Office in which 13 additional contracts were noted as not being signed by all parties prior to the beginning date as set forth in the contract agreement.The average length of time between the beginning date of the contract and the final required signature was 110 days, with a range of 42 days to 280 days.

 

Failure to have the contract agreements signed before the beginning of the contract period does not bind the service provider for compliance with applicable laws, regulations and rules.(Finding 05-9, pages 36-37)

 

We recommended the Department implement procedures to ensure contracts are signed before the beginning date as set forth in the contract agreements.

Department officials agreed with our recommendation and stated they will work with the Department of Central Management Services to verify if they have any procedures to address this finding or work with them to develop guidelines.

 

MODIFICATION OF INDEMNIFICATION CLAUSES WITHOUT DOCUMENTED APPROVAL OF THE DEPARTMENTíS OFFICE OF LEGAL SERVICES

 

The State of Illinois and the Department have boilerplate documents attached to contracts to ensure State contracts are consistent, fair and do not expose the State to unnecessary liability.Department contracts contain a standard indemnification clause, which sets forth the Department will assume no liability arising from the actions of the contractor and the contractor will hold the Department harmless against any and all liability arising from intentional torts, negligence, or breach of contract by the provider.During our testing we noted the following instances in which the liability and indemnification clause was modified without following established controls:

 

  • One contract was identified in which a modification was attached that held the Department responsible for and agreed the Department would indemnify the provider for all liability arising out of professional services furnished by the provider to patients hospitalized at a mental health center.The Departmentís Office of Legal Services reviewed the contract and noted this modification was unacceptable.The Office of Contract Administration approved the contract with the modification.The contract was deobligated 14 days later, leaving the Department exposed to liability during that 14-day period.

  • Three contracts were identified in which a modification was attached that held the Department responsible for and agreed the Department would indemnify the provider(s) for all liability arising out of academic and/or administrative services performed by the provider(s).One of the modifications was noted as being approved by the Office of Contract Administration, documentation could not be provided where the Departmentís Office of Legal Services approved any of the three modifications.

 

  • Two contracts, which were renewals, contained modifications, which held the Department responsible for all liability resulting from the provider(s) administrative services.Modifications to these indemnification clauses are inconsistent with other contracts.

  • Two contracts were modified to contain the language ďTo the extent permitted by Illinois LawĒ.The Office of Contract Administration approved one of the contracts; documentation could not be provided that the Office of Legal Services had approved the changes.

 

All of the contracts were for medical services performed by doctors and inconsistently shifted some or all of the liability from the contactor to the Department without documented approval by the Departmentís Office of Legal Services.(Finding 05-10, pages 38-39)

 

We recommended the Department implement procedures to ensure contracts with modified or additional terms be sent to the Office of Legal Services for review and approval prior to being signed/executed by the Department.

 

Department officials agreed with our recommendation and noted the Office of Contract Administration implemented a new policy for all of fiscal year 2006 whereby the Departmentís Office of Legal Services must approve all contract changes before the contract is executed.

TIME SHEETS NOT MAINTAINED IN COMPLIANCE WITH THE STATE OFFICIALS AND EMPLOYEES ETHICS ACT

 

We noted the Departmentís employees did not maintain time sheets in compliance with the State Officials and Employees Ethics Act (Act).

 

Employee time is tracked through the use of the Daily Staff Attendance Report which is a sign-in sheet maintained by the timekeeping group each calendar day.The Daily Staff Attendance Report does not document the time spent each day on official state business to the nearest quarter hour in compliance with the Act.Senior management employees separately document their time on time sheets in 15-minute increments.

 

The Act requires the Department to adopt personnel policies consistent with the Act.The Act requires employees to periodically submit time sheets documenting the time spent each day on official state business to the nearest quarter hour.(Finding 05-14, page 45)

 

We recommended the Department amend it policies to require employees to maintain time sheets in compliance with the Act.

 

Department officials agreed with our recommendation and indicated they will work with the Department of Central Management Services, as lead agency on the Personnel Rules, to ensure the Departmentís timekeeping policy is in compliance with the Act.

 

INADEQUATE RECORDS FOR STATE VEHICLES ASSIGNED TO DEPARTMENT EMPLOYEES

 

†††† The Department did not have adequate accounting records for Department owned vehicles.

 

During the engagement period, the Department had 540 vehicles, 37 of which were specifically assigned to Department employees.The Department tracks mileage and maintenance for all vehicles on a fleet database.We tested records for all 37 personally assigned vehicles during the engagement period, some of the exceptions noted were:

 

          31 of 37 personally assigned vehicles tested had missing mileage and maintenance information in the database.

          7 of 37 employees personally assigned a vehicle failed to file the required annual certification relating to license and insurance coverage.

          One vehicle was involved in an accident, but the database contained no record reflecting repair charges.

          The Department does not have polices or procedures to ensure that assigned vehicles are maintained.It is assumed the operator of an assigned vehicle will have the oil changed, but they are not required to do so.

 

Complete and accurate information is critical to effectively manage the Departmentís fleet of vehicles.In addition, good business practice requires the Department to have a system in place to provide the vehicle coordinator with the proper information needed to properly monitor the Departmentís vehicles.(Finding 05-21, pages 56-57)

†††† We recommended the Department enter and maintain complete, accurate and timely information in its fleet database.We also recommended the Department monitor the assignment of vehicles and ensure all the required certifications are obtained on a timely basis.†††

 

†††† Department officials agreed with our recommendation and indicated procedures have been put in place that will alleviate this problem.

 

INADEQUATE PROCEDURES FOR THE DISPOSAL OF CONFIDENTIAL INFORMATION

 

While performing testing procedures at the Departmentís Central Office we observed confidential information in a recycling dumpster in an area that was open and accessible to people not employed by the Department.The material in the dumpster included payroll voucher reports containing employee names and social security numbers, technical computer information, and screen prints containing confidential information.

 

Confidential, sensitive and personal identifiable information collected and maintained by the Department should be adequately secured at all times.As such, it is the Departmentís responsibility to ensure adequate procedures for safeguarding all confidential information have been established, effectively communicated to all personnel, and continually enforced.(Finding 05-25, pages 64-65)

 

We recommended the Department establish adequate Department-wide procedures for properly disposing of confidential information.Once established, the Department should effectively communicate the procedures to all Department personnel, and enforce compliance with its procedures ensuring all confidential information is kept secured until no longer needed, and then properly disposed.

 

Department officials agreed with our recommendation and identified numerous policies and procedures of corrective action to address the handling of confidential information.

 

INEFFICIENCIES IN THE BUSINESS OFFICE AT THE TREATMENT AND DETENTION FACILITY

 

†††† We noted the business office at the Departmentís Treatment and Detention Facility (TDF) had inefficiencies due to lack of updated computer software and integrated systems.We also identified weaknesses in maintaining the TDF Trust Fund checkbook, receipts, and accounts.Some of the issues noted were:

 

          The TDF business office staff did not utilize the Departmentís primary accounting system, the Consolidated Accounting and Reporting System (CARS) to its full potential.The business manager utilizes separate spreadsheets to track vendor payments and spending availability.

          The trust fund system was written in the early 1980s and does not reflect advancements in computer programming which increase functionality.Consequently, staff are sometimes not able to retrieve the reports they need to answer inquiries without spending unnecessary time running multiple reports.The trust accountant must also maintain separate spreadsheet files that report this information in the desired format.

          The trust fund system dumps trust fund data after three months so that it is no longer retrievable electronically.This requires the TDF to maintain older records in printed format.

          When a committed person leaves the system, the committed personís account stays on the system usually with a zero balance.These accounts should be removed from the system as soon as possible for good internal control.By not removing the accounts it is difficult to determine whether there are dormant accounts on the system.

 

Using outdated trust and commissary systems and not utilizing the Department-wide CARS system to its full potential can lead to weakened internal control, duplication of work, inefficiencies, and inadequate financial information available to management.(Finding 05-31, pages 75-76)

 

†††† We recommended the Department develop necessary reports from CARS rather than developing spreadsheets separate from the accounting system to track vendor payments and spending availability.We also recommended the Department upgrade the TDF trust fund accounting system to provide management with timely and useful accounting information.

 

†††† Department officials agreed with our recommendation and stated they have requested additional staffing for the business office at the new Rushville location.

 

FAILURE TO FUND THE ILLINOIS AFRICAN-AMERICAN COMMISSION

 

††††† The Department did not fund the Illinois African-American Commission as mandated by State law.

 

††††† The Illinois African-American Family Commission Act (20 ILCS 3903 et seq.) established the Illinois African American Family Commission.Section 25 of the Act states, ďThe African-American Family Commission shall receive funding through appropriations available for its purposes made to the Department on Aging, the Department of Children and Family Services, the Department of Commerce and Economic Opportunity, the Department of Corrections, the Department of Human Services, the Department of Public Aid, the Department of Public Health, and the Department of Transportation.Ē

 

††††† The Act established a 15-member Illinois African-American Commission to guide the efforts of and collaborate with the Departments mentioned above.The Act intends to improve the tremendous challenges facing the African-American family in Illinois such as the ďhuge disparities in education, employment, income, child welfare, criminal justice, and health.ĒThe State has not funded this program.

 

††††† The Department could not document that funding had been requested.(Finding 05-35, page 82)

 

††††† We recommend the Department seek funding for the Illinois African-American Family Commission as mandated by State law.

 

††††† Department officials agreed with our recommendation and stated they will collaborate with the other State agencies and participate in an interagency funding analysis and request.

 

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.

 

††††† Mr. Robert Stanek, Chief Financial Officer, provided the Departmentís responses.

 

AUDITORSí OPINION

 

††††† Our auditors state the June 30, 2005 financial statements of the Departmentís are fairly presented in all material respects.

 

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:RPU:pp

 

SPECIAL ASSISTANT AUDITORS

 

††††† The public accounting firm of Sikich LLP was our special assistant auditor for this engagement.