|
Delays and errors in preparation and submission of GAAP reporting packages
Inaccurate records over property and equipment totaling in excess of $973 million
Incomplete commodity inventory records maintained
Department expended approximately $1.2 million and $1.4 million in fiscal years 2002
and 2001, respectively on paper and printing
$50,234 improperly prepaid communication charges
Inefficiencies and errors in calculating employee accumulated leave due to manual
timekeeping system
Timekeeper added 40 hours of accrued leave to an employee’s balance
Department lacked adequate controls over its 1,600 plus State vehicles
|
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
LACK OF TIMELY INFORMATION REPORTED AND INADEQUATE PREPARATION OF GAAP PACKAGES
The Department's preparation and submission of
Generally Accepted Accounting Principles (GAAP) reports were not performed on a timely
basis causing financial reporting delays. All GAAP packages required to be submitted to
the Office of the State Comptroller’s Office by the Department were submitted between
29 and 69 days late.
We also noted the following:
- The accounting information required to be submitted to the Office of the Comptroller to
report capital assets and accumulated depreciation was submitted 350 days late.
- The accounting information required to be submitted to the Office of the Comptroller to
report beginning balances and a reconciliation of receivables was not submitted for any
fund.
- The Capital Asset form (SCO-538) was prepared incorrectly and contained numerous errors.
- The Department did not have procedures to identify liabilities for capital projects and
land acquisition costs payable to local governments from reappropriated accounts.
We recommended the Department implement procedures to ensure GAAP financial reports are
prepared in an accurate and timely manner and review and revise, as necessary, its current
system of gathering programmatic expenditures information to improve the timeliness of its
financial reporting, as well as personnel devoted to the task. (Finding 1, pages 12-13)
Department officials agreed with our recommendation and stated they will establish new
methodologies to gather information to improve the timeliness and accuracy of their
financial reporting. These methodologies will address the concerns identified by the
auditors, and the Department will also strive to provide additional personnel in its
preparation of its annual GAAP reports.
INACCURATE PROPERTY CONTROL RECORDS
The Department did not maintain accurate records over its property and equipment
totaling in excess of $973 million. We selected a sample of 248 equipment items from 14
Department locations. We noted the following:
- 22 items were not properly tagged with a Department property control tag.
- 19 items were located at sites other than the location listed on the property control
records.
- Four items were obsolete or unusable, but were still maintained on the property control
listing.
- The Department did not remove a building and land valued at $2,752,179 from its property
records even though the property had been transferred to another Agency in August 1999.
- The Department was inconsistent in the manner in which it recorded historical treasures,
works of art and other collections.
We recommended the Department remind all employees of its property control procedures
to ensure that such procedures are followed. (Finding 2, pages 14-15)
Department officials agreed with our recommendation and stated they will immediately
remind all location supervisors of the Agency’s property control procedures to ensure
that such procedures are followed and will follow-up on the specific instances noted in
the finding.
FAILURE TO MAINTAIN ACCURATE COMMODITY INVENTORY RECORDS FOR GAAP REPORTING PURPOSES
The Department did not maintain accurate and complete commodity inventory records
for GAAP reporting purposes.
During our review of fiscal year 2001 and 2002 GAAP package submissions, we noted the
Department did not record the value of paper or printed publications for sale as
inventories and erroneously included postage amounts as commodity inventories rather than
as pre-paid postage.
We recommended the Department maintain a record of all paper and printed material for
sales as part of its commodity inventories and properly record and classify amounts on
GAAP package submissions. (Finding 3, pages 16-17)
Department officials agreed with our recommendation and stated it will implement
procedures to ensure that paper and printed publications for sale are included in the
Agency’s commodities inventory reported in its GAAP submission. Department officials
also stated the Department will implement procedures to reconcile the delivery of
publications shipped to multiple sites.
IMPROPER FISCAL YEAR EXPENDITURES
The Department improperly prepaid fiscal year 2002 costs totaling $50,234 from
fiscal year 2001 appropriations, in violation of the State Finance Act.
The Department paid $60,000 to the Department of Central Management Services for a
$9,766 vendor invoice, resulting in an prepayment of $50,234.
We recommended the Department not advance pay expenses. (Finding 4, pages 18-19)
Department officials agreed with our recommendation and stated this was an isolated
occurrence resulting from a misinterpretation of the State Finance Act. Department
officials also stated no further prepayments have been made.
TIMEKEEPING SYSTEM IS NOT AUTOMATED
The Department-wide timekeeping system is not automated, resulting in
inefficiencies and errors in accurately calculating employee accumulated leave. The
Department employs over 2000 employees and each division within the Department maintains a
manual timekeeping system. We noted the following weaknesses:
- The Department calculated accrued leave incorrectly for 11 of 85 (13%) employees
selected for testing.
- One timekeeper added an additional 40 hours of accrued leave to an employee’s
balance. This error was not noted even though the report had been approved by three
separate employees and was also examined by the Department’s personnel staff as part
of an annual review.
- The Department’s timekeeping process is not universal throughout the Department.
The Division of Mines and Minerals uses the CMS Timekeeping System and the Illinois Waste
Management Resource Center and the Illinois State Water Survey have their own timekeeping
systems; however, most of the divisions use the DNR Manual Timekeeping System which is
paper intensive allowing for human errors.
We recommended the Department implement an automated timekeeping system to strengthen
internal controls and eliminate the multiple timekeeping systems currently used by the
Department. (Finding 5, pages 20-21)
Department officials agreed with our recommendation and stated they will evaluate
existing timekeeping systems available to the Department at minimal cost. Subject to
staffing and funding levels, the Department will work toward implementing an automated
system in calendar year 2004. In the meantime, the Department will immediately remind all
timekeepers and supervisors of their responsibility to confirm all timesheet calculations
prior to signing such documents.
INADEQUATE PROCEDURES REGARDING STATE VEHICLES
The Department did not have adequate controls over its State vehicles. We noted the
following:
- 8 out of 25 personally assigned vehicles were not approved in writing by the Director as
required;
- 25 out of 314 in FY01 and 30 out of 319 employees in FY 02 reported driving their
assigned vehicle less than 1,000 miles during a three-month period. Personally assigned
vehicles were not evaluated annually to determine the assignment was still justifiable and
in the best interest of the State;
- 2 out of 9 employees did not effectively utilize the Department’s vehicle fleet.
These travelers were approved to use their personal vehicles between 6,389 miles and
14,690 miles, resulting in reimbursement totaling as much as $4,638;
- 30 out of 60 accidents involving State vehicles were not reported in a timely manner.
The reports were submitted between 1 and 371 days late;
- Odometer readings were not maintained; and
- Documentation to ensure personally assigned vehicles were adequately maintained was not
readily available.
We recommended the Department strengthen its controls regarding State vehicles in
regards to the items noted. (Finding 6, pages 22-26)
Department officials agreed with our recommendation and stated they have initiated a
thorough evaluation of its vehicle management process which will be completed in March
2003. As part of the evaluation, the Department will review all assignments to ensure they
are in the best interest of the State and ensure documentation of the Director’s
approval of vehicle assignments is retained. In addition, the Department will develop
procedures to require an annual review of vehicle assignments and strengthen its
procedures for monitoring employee use of personal vehicles and for documenting odometer
readings and maintenance records.
OTHER FINDINGS
The remaining findings were less significant and are reportedly being given
attention by the Department. We will review progress towards the implementation of our
recommendations in our next compliance audit.
Mr. Brad Hammond, Chief Internal Auditor for the Department, provided the responses.
AUDITORS’ OPINION
We conducted a compliance audit of the Department as required by the Illinois
State Auditing Act. We have not audited any financial statements of the Department for the
purpose of expressing an opinion because the Department does not, nor is it required to,
prepare financial statements
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:JSC:pp
AUDITORS ASSIGNED
Our special assistant auditors for this audit were Sikich Gardner & Co.
LLP.
|
