REPORT DIGEST

 

 

ILLINOIS CENTER FOR REHABILITATION AND EDUCATION

 

LIMITED SCOPE

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit††††††††            ††††† 3

Total last audit†††††††††††††             4

Repeated from last audit†††††††††† 1

 

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 maintain adequate commodity inventory records.

 

        The Center did not maintain adequate controls over its School Store Fund, a locally held fund.

 

        The Center did not exercise adequate controls over†† voucher processing.

 

 

 

 

 

 


ILLINOIS DEPARTMENT OF HUMAN SERVICES

ILLINOIS CENTER FOR REHABILITATION AND EDUCATION

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)...

 

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

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

 

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

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

††††††††††† Average No. of Employees............................

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

 

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

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

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

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

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

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

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

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

†††††

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

 

$5,043,272

 

$5,043,272

100%

 

$3,335,167

66.1%

69

$48,336

 

$733,939

14.6%

$784,373

15.6%

$72,100

1.4%

$117,693

2.3%

 

$10,740,776

 

 

$5,038,572

 

$5,038,572

100%

 

$3,432,748

68.1%

69

$49,750

 

$646,695

12.8%

$808,634

16.1%

$48,728

1.0%

$101,767

2.0%

 

$10,365,465

 

$4,826,148

 

$4,826,148

100%

 

$3,222,189

66.8%

66

$48,821

 

$660,765

13.7%

$818,703

16.9%

$47,704

1.0%

$76,787

1.6%

 

$9,487,083

 

 

 

 

 

SELECTED ACTIVITY MEASURES (Not Examined)

FY 2005

FY 2004

FY 2003

Average Number of Students..................................

39

37

38

Ratio of Employees to Students..............................

1.77 to 1

1.86 to 1

1.74 to 1

Cost Per Year Per Student...................................

*

$209,051

$204,857

*(Department had not calculated at the close of

fieldwork)

 

 

 

 

 

 

 

 

SUPERINTENDENT

During Examination Period:†††† Majorie Olson, Acting Superintendent (7/1/03 Ė8/31/03)

†††††††††††††††††††††††††††††††††††††††††††††††††† Therese Manderino, Superintendent (9/1/03-6/30/05)

Currently:††††††††† Therese Manderino

 

 

 


 

 

 

 

 

 

 

 

 

17% of the vouchers tested were recorded incorrectly

 

 

 

 

 

 

 


42% commodities purchases and requisitions tested were not recorded timely

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Cash was not deposited on a regular basis or adequately secured

 

 

 

 


84% disbursements tested totaling $3,641 and 100% receipts tested totaling $185 did not have adequate supporting documentation

 

 

 

 

The Center understated its receipts and disbursements on the locally held fund reports during FY04 and FY05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% of the vouchers tested totaling $24,465 were approved for payment late

 

 

 

 

 

††††††††††††††††††††††††

The required interest of $323 was not paid on one voucher tested, totaling $17,477

 

 

 

 

One voucher tested, totaling $3,228, did not contain supporting documentation

 

 

 

 

 

 

 

 

 

 

 

 

 

       

Center officials disagreed with the finding and stated the Business Office always makes every effort to process vouchers in a timely manner

 

 

 

 

 

 

 

Auditorís comment

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

 

INADEQUATE MAINTENANCE OF COMMODITIES INVENTORY SYSTEM

 

††††† The Center did not maintain adequate commodities inventory records.††

 

        Five of 29 (17%) vouchers tested were recorded incorrectly in the commodities system.Items on three vouchers were understated by $569 and items on two vouchers were overstated by $187 resulting in a net understatement of $382.††

 

††††† Center management stated the amounts were taken from the receiving reports and those reports reflect the items catalog price not actual purchase price.

 

        Fourteen of 33 (42%) commodities purchases and requisitions tested were not recorded into the Centerís commodity inventory system timely.Transactions were recorded from 33 to 242 days after receipt of the purchase or requisition.In addition, from July 1, 2003 through May 1, 2004, the Center did not have a commodities inventory system.††

 

††††† Center management stated the delays and lack of an inventory system were due to system conversion to the Department of Human Services (DHS) Commodity System.(Finding 1, pages 10-11) This finding was first reported in 1999.††

 

††††† We recommended the Center strengthen controls over its commodity inventory system and ensure all purchases and requisitions are recorded timely and purchases are entered into the commodity system at actual cost.

 

††††† Center officials agreed with the finding and stated they will strengthen the control over the Commodities Inventory System and ensure the timely recording of commodity transactions into the system using the actual cost.  (For the previous Center response, see Digest Footnote # 1)

 

INADEQUATE CONTROLS OVER LOCALLY HELD FUND

 

††††† The Center did not maintain adequate controls over its School Store Fund.

 

††††† The Center established the School Store Fund (Fund), a locally held fund, in FY03 to hold assets generated by School Store sales. Disbursements were to be used to restock the School Store supplies and fund student driven activities such as parties and field trips.†† We noted the following:

 

        Cash was not deposited on a regular basis or adequately secured.We noted cash was left in the drawer overnight and students were left alone to monitor the Storeís sales and cash drawer with no supervision.†† Only two cash deposits totaling $382 and five cash deposits totaling $911 were made to the Fundís bank account during FY04 and FY05, respectively.In addition, cash totals were not verified regularly or reconciled to accounting records.††

 

        Cash receipts and disbursements ledgers were not adequate.Twenty-one of 25 (84%) disbursements tested totaling $3,641 and 25 of 25 (100%) receipts tested totaling $185 did not have adequate supporting documentation.Various employees and volunteers took cash from the fund to make purchases such as food, office supplies, and toys for the Storeís inventory and recorded the amounts used in a log after the purchases were made. No additional documentation was maintained.Support for receipts consisted of written entries in a sales journal made by the student workers.

 

        The Center understated its receipts on the locally held fund reports (C-17s) during FY04 and FY05 by $257 and $364, respectively.The Centerís cash disbursements on the C-17s were understated by $335 in FY05 when comparing the amount reported to the disbursements log and accompanying receipts.

 

††††† Center management stated the Store is used as a learning tool for students. Volunteers and teachers are

††††† responsible for supervising and training the students. Those individuals documented the receipts and disbursements, and the accounting staff did not have the resources to do a detailed review of all transactions.(Finding 2, pages 12-13)

 

††††† We recommended the Center strengthen controls over the School Store Fund and ensure cash is adequately secured, receipts are deposited timely, and adequate supporting documentation of accounting records are maintained.In addition, we recommended management approve all fund disbursements and ensure the accuracy of the C-17 reports.

 

††††† Center officials agreed with the finding and stated they are in the processing of permanently closing the School Store Fund.

 

 

VOUCHER PROCESSING WEAKNESSES

 

†††† The Center did not exercise adequate control over voucher processing.

 

        Four of 79 (5%) vouchers tested, totaling $24,465, were approved for payment from 12 to 40 days late.

 

†††† Center management stated vouchers were approved late due to staff turnover, voucher processing errors, and late contract approval by the Department of Human Services (DHS) Central Office.

        The required interest of $323 was not paid on 1 of 79 (1%) vouchers tested, totaling $17,477.

 

†††† Center management stated the required interest was not paid due to DHS Central Office not notifying the Center that interest was due.

 

        One of 79 (1%) vouchers tested, totaling $3,228 for professional medical services, did not contain supporting documentation.

 

†† Center management stated the lack of documentation was due to staff turnover.

 

†† We recommended the Center implement controls to ensure vouchers are approved within the required time frame and to identify all vouchers not paid within 60 days to ensure the proper amount of interest is paid.†† In addition, we recommended the Center strengthen controls over voucher processing procedures including maintaining proper documentation.

 

††† Center officials disagreed with the finding and stated the Business Office always makes every effort to process all vouchers in a timely manner provided the contract documents are approved and processed on time through the DHS Central Office. They further stated voucher processing is always done within the time line needed to meet the State Prompt Payment Act, and that vouchers cannot be processed at the Center if the contracts or obligations are not loaded onto the Consolidated Accounting Reporting System (CARS) by the DHS Central Office.†† In addition, they stated they will ensure voucher processing procedures includes maintaining supporting documentation.

 

††† In our auditorís comment, we noted that the four vouchers in the finding were not approved within 30 days of receipt of a proper bill which is not in accordance with the Illinois Administrative Code (74 Ill. Adm. Code 900.70), and only one of the four vouchers had a contract that needed to be processed at the DHS Central Office.††

 

We further stated that the State Prompt Payment Act (Act) requires appropriate State officials or agencies to determine whether interest is due and automatically pay interest penalties.Appropriate State officials or agencies is defined in the Act (30 ILCS 540/1) as ďthe Director or Chief Executive or his designee of that State Agency or department or facility of such agency or Department.ĒTherefore, it is the Centerís responsibility to ensure interest is paid when statutorily required and the above noted interest of $323 was not paid to the vendor as required.

††††

Carol L. Adams, Ph.D., Secretary of the Department of Human Services, provided responses to our findings and recommendations.

 

 

AUDITORSí OPINION

 

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

 

 

 

††††††††††††††††††† __________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:PAH:pp

 

 

ASSIGNED AUDITORS

 

††††† The Auditor Generalís staff conducted this examination.
 
 
DIGEST FOOTNOTES

 

# 1 - INADEQUATE MAINTENANCE OF COMMODITIES INVENTORY Previous Center Response

 

2003:†† ďWe agree.†† We will review and enhance the systems and procedures to ensure that an adequate control exists over commodities inventory.†† We are now in the process of switching the current inventory system to DHS CIS in order to ensure accurate recording.Ē