REPORT DIGEST

DEPARTMENT OF NATURAL RESOURCES

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2020

Release Date:  July 14, 2021

FINDINGS THIS AUDIT:  30

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  3 -- 3 -- 6
Category 2:  5 -- 19 -- 24
Category 3:  0 -- 0 -- 0
TOTAL:  8 -- 22 -- 30

FINDINGS LAST AUDIT: 23

Category 1: Findings that are material
weaknesses in internal control and/or
a qualification on compliance with
State laws and regulations (material
noncompliance).
Category 2: Findings that are
significant deficiencies in internal
control and noncompliance with State
laws and regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the
Auditor General
FRANK J. MAUTINO, 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 Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

Because of the significance and
pervasiveness of the findings
described within the report, we
expressed an adverse opinion on the
Department of Natural Resources’
(Department) compliance with the
specified assertions which comprise a
State compliance examination.  The
Codification of Statements on
Standards for Attestation Engagements
(AT-C § 205.72) states a practitioner
“should express an adverse opinion
when the practitioner, having obtained
sufficient appropriate evidence,
concludes the misstatements,
individually or in the aggregate, are
both material and pervasive to the
subject matter.”

Further, this digest covers our
Compliance Examination of the
Department for the two years ended
June 30, 2020.  A separate Financial
Audit of the Department’s Capital
Asset for the year ended June 30, 2020
was previously released on February
10, 2021.  In total, this report
contains 30 findings, 1 of which was
also reported in the Financial Audit.

SYNOPSIS

• (20-2) The Department did not
exercise adequate internal controls
over its reporting and maintenance of
accounts receivable.
• (20-4) The Department did not have
adequate control over preparation of
monthly reconciliations.
• (20-6) The Department had weaknesses
over its general information
technology controls.
• (20-16) The Department failed to
monitor and enforce concessionaire
lease agreements regarding rental and
reserve payments.
• (20-24) The Department did not have
adequate controls over voucher
processing.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE CONTROLS OVER ACCOUNTS
RECEIVABLE

The Department did not exercise
adequate internal controls over its
reporting and maintenance of accounts
receivable.   We performed detailed
testing of accounts receivable
including the Quarterly Summary of
Accounts Receivable – Accounts
Receivable Activity Report (Form C-97)
and Quarterly Summary of Accounts
Receivable – Aging of Total Gross
Receivables (Form C-98) on the
following funds:  the State Boating
Act Fund (039), the State Parks Fund
(040), the Wildlife and  Fish Fund
(041), the Plugging and Restoration
Fund (137), the Underground Resources
Conservation Enforcement Fund (261),
and the Illinois Historic Sites Fund
(538). During testing, we noted the
following weaknesses:

• During Fiscal Year 2019, the
Department implemented a new
Enterprise Resource Planning (ERP)
System to centralize various
processes, including accounts
receivable maintenance and reporting,
reduce manual processing and simplify
existing workflows.  However, the
Department failed to effectively
utilize the ERP System to improve its
accounts receivable maintenance and
reporting process. The Department
continued to rely on numerous
subsystems by manually preparing and
compiling reports and operating
without a subsidiary ledger.

• Two of 37 (5%) receivables selected
for detailed testing, totaling $5,489,
were paid in full before June 30,
2019, but continued to be reported as
receivables as of June 30, 2019.  In
addition, one of 37 (3%) receivables,
totaling $2,525, was not due as of
June 30, 2020 but was reported as a
receivable as of June 30, 2020. Also,
six of 37 (16%) receivables selected
for detailed testing, totaling
$44,847, did not agree with the
supporting documents.  Specifically,
the accounts receivable balance was
understated by a total of $22,923 when
compared to the supporting documents.

• The Department was unable to provide
support for accounts written-off,
totaling $16,000, for Fund 137 in the
1st quarter of Fiscal Year 2019.

• The Department was the lessor in
several real property rental
agreements but did not track the
timing of the rental payment due dates
against related receipts to determine
if receivables should be recorded and
reported to the Office of Comptroller
on its Fund 538 Form C-97.  Total real
property rental receipts reported by
the Department for Fund 538 were
$157,371 and $90,163 in Fiscal Year
2020 and Fiscal Year 2019,
respectively.  Potential receivable
amounts could not be determined.

• The Department did not make
sufficient attempts to either collect
its aged accounts receivable or write
off uncollectible accounts receivable
greater than one year old.  As of June
30, 2020, the outstanding receivables
aged more than a year totaled
$1,569,336, $2,076,167, $123,074, and
$208,398 for Funds 137, 261, 884, and
962, respectively. (Finding 2, pages
17-20)  This finding has been repeated
since 2014.

We recommended the Department
implement the necessary internal
controls to ensure accounts receivable
are consistently and accurately
reported to the Office of Comptroller.
Also, we recommended the Department
ensure accounts receivable are timely
pursued for collection and, if not
collectible, submitted for
uncollectible certification and
subsequently written off and
establish controls to evaluate all
accounts receivable over $250 and more
than 90 days past-due and place them
under the Office of Comptroller’s
Offset System. Further, we recommended
the Department utilize the ERP System
to improve its accounts receivable
maintenance and reporting process.
Lastly, we recommended the Department
review rental transactions to
determine the amount of receivable to
be reported quarterly and at the end
of the year.

Department officials agreed with our
recommendation and stated they will
implement the necessary internal
controls to ensure accounts receivable
are consistently and accurately
reported to the Office of Comptroller.

INADEQUATE CONTROLS OVER PREPARATION
OF MONTHLY RECONCILIATIONS

The Department did not have adequate
controls over preparation of monthly
reconciliation of its significant
accounts and transactions with the
Office of Comptroller’s (Comptroller)
records.

During our testing, we noted the
Department did not perform monthly
reconciliations.  Specifically, the
Department did not reconcile its
internal records with the following
Comptroller’s reports:

• Revenue Status Report (SB04) and
Cash Report (SB05) of Non-Shared Funds
for 18 of 24 (75%) months from January
2019 through June 2020.

• Appropriations Status Report (SB01)
for 18 of 24 (75%) months from January
2019 through June 30 2020 and lapse
periods of Fiscal Years 2019 and 2020.

• Object Expense/Expenditures By
Quarter (SA02) and Appropriation
Transfer Report (SB03) for 24 of 24
(100%) months during Fiscal Years 2019
and 2020.

As a result, the Department could not
prepare certain Compliance Report
Components using their internal
records and reconcile them to
Comptroller records; therefore, the
Components and related analyses were
omitted from the Department’s
Compliance Examination Report.
(Finding 4, pages 23-24).  This
finding has been repeated since 2016.

We recommended the Department ensure
monthly reconciliation of its activity
are performed, documented, and
reviewed on a timely basis. We also
recommended the Department prepare the
Compliance Report Components using
their internal records and reconcile
them to the Comptroller reports.

Department officials agreed with our
recommendation and stated they will
strive to ensure all required
reconciliations of activities are
performed, documented and reviewed on
a timely basis.

WEAKNESSES OVER GENERAL INFORMATION
TECHNOLOGY CONTROLS

The Department had weaknesses over its
General Information Technology
Controls (GITC).

During testing of seven applications,
we requested the Department provide a
population of users of these
applications.  The Department provided
a population of users of each
application; however, we were unable
to obtain sufficient evidence to
verify the completeness of the
population for four of seven (57%)
applications.  Due to this condition,
we were unable to conclude the
Department’s population records were
complete and accurate as required by
the Attestation Standards promulgated
by the American Institute of Certified
Public Accountants (AT-C § 205.35).

Although the population limitations
noted above hindered our ability to
conclude whether the selected sample
was a representative of the
population, we reviewed the GITC over
these applications and noted the
following:

• User access rights were not
periodically reviewed.  The Department
did not perform security reviews for
six of seven (86%) applications to
ensure employees’ access to systems
was appropriate.

• Users were granted access without
proper authorization.  The Department
could not provide access
authorizations for three of 15 (20%)
new users tested.

• User access rights were not timely
removed.  We noted 30 of 30 (100%)
separated employees continued to have
access to two applications. The
Department did not evaluate whether
the separated employees accessed the
applications subsequent to their
separation from the Department.

• A change management policy did not
exist for applications managed by the
Department. (Finding 6, pages 28-30)

We recommended the Department design a
process to maintain a complete and
accurate population of application
users, ensure authorizations for
granting access are properly
maintained, ensure access rights are
periodically reviewed and appropriate
changes are made, and adopt a change
management policy for applications
managed by the Department.

Department officials agreed with our
recommendation and stated they will
ensure authorizations for granting
access are properly maintained and
access rights are periodically
reviewed and appropriate changes are
made as well as timely deactivation of
users no longer needing access.

FAILURE TO ENFORCE CONCESSIONAIRE
LEASE AGREEMENTS

The Department failed to monitor and
enforce concessionaire lease
agreements regarding rental and
reserve payments.

During the examination period, the
Department had concession and lease
agreements with approximately 66
concessionaires located at State parks
throughout the State.  The
Department’s concession coordinators
are responsible for negotiating and
enforcing lease terms, overseeing the
site, approving rates charged, and
collecting rental payments.  These
concession and lease agreements are
being monitored by the Department
using an agreement tracking database.
The Department received rental fees
from concessionaires totaling $547,290
and $445,091 during Fiscal Years 2019
and 2020, respectively. The weaknesses
we noted are described below.

During our testing of 50 rental
payments from seven concession and
lease agreements, we noted the
following:

• 17 (34%) rental payments were not
timely remitted to the Department,
ranging from 1 to 150 days late.

• One (2%) rental payment was missing
supporting documents. As a result, we
were unable to verify if the rental
payment was timely remitted to the
Department.

During our testing of 72 reserve
account monthly remittances for the
four largest concessionaires/lessees
measured in terms of rental payments
and/or deposits, we noted the
following:

• 20 (28%) concessionaires’ reserve
deposit slips were not timely
submitted to the Department, ranging
from 1 to 55 days late.

• Five (7%) concessionaires’ reserve
deposit slips were not date stamped
upon receipt by the Department. As a
result, we were unable to determine if
the reserve deposits were remitted
timely.

During our testing of compliance with
the reporting requirements of the
concession agreements for the four
largest concessionaires/lessees
measured in terms of rental payments
and/or deposits, we noted the
following:

• Five of 42 (12%) required reports
consisting of balance sheet, income
(profit and loss) statement, and
schedule of gross revenue and
reconciliations were not timely
submitted to the Department, ranging
from 2 to 47 days late.

• 23 of 42 (55%) required reports
consisting of financial statements,
profit and loss statement, annual
forecast of operating revenues and
expenses, budget of capital
expenditures, summary of concession’s
marketing plan, and annual cash flow
analysis were not submitted to the
Department.

• One of 42 (2%) required reports
consisting of a profit and loss
statement was not date stamped upon
receipt by the Department.  As a
result, we were unable to determine if
the report was timely submitted to the
Department.
During our test of controls over
monitoring of seven concession and
lease agreements, we noted an
agreement’s (14%) late payment penalty
of $454 was not charged and collected
from the concessionaire/lessee.
(Finding 16, pages 51-54)  This
finding has been repeated since 2006.

We recommended the Department monitor
concessionaires to enforce its
contractual agreements and send
concessionaires formal written
communication when they fail to comply
with their contractual obligations to
the Department.

Department officials agreed with our
recommendation and stated they were
sending notices/letters to the lessees
reminding them of the deadline when
the reports are due and would contact
the lessees to request items that were
past due.

INADEQUATE CONTROLS OVER VOUCHER
PROCESSING

The Department did not have adequate
controls over voucher processing.  We
noted the following weaknesses during
our testing of 338 vouchers:

• 95 (28%) vouchers, totaling
$8,909,575, were approved for payment
one to 316 days late.

• Seven (2%) vouchers, totaling
$1,113,794, did not have documentation
of the receipt date of the vendor’s
bill.  Of those, one voucher, totaling
$600,000, did not have the approval by
the immediate supervisor or any
authorized designee.  As a result, we
were unable to determine the
timeliness of approval and payment of
these vouchers.

• 50 (15%) vouchers, totaling
$1,245,052, were paid from two to 360
days late.

• Three (1%) vouchers, totaling
$28,125, did not have purchase orders
or other obligation documentation.

• Five (1%) vouchers for purchases of
fuel, totaling $169,440, did not have
supporting charge tickets.  As a
result, we were unable to determine if
the fuel charges were for State
vehicles.  (Finding 24, pages 70-72)
This finding has been repeated since
2014.

We recommended the Department improve
its voucher processing system to
ensure vouchers are timely approved
and paid.  We also recommended the
Department ensure receipts, charge
tickets, and invoices are maintained
to support payments made and improve
its process to document the receipt of
a proper bill and approval.

Department officials agreed with our
recommendation and stated they had
taken steps to improve the voucher
processing system with the
implementation of a new State-wide
accounting system and improved
procedures to ensure vouchers are
timely approved and paid.

OTHER FINDINGS

The remaining findings pertain to (1)
inadequate controls over capital
assets, historical artifacts, World
Shooting and Recreational Complex
operations, payroll and long-term
leave of absences, receipts, overtime,
performance evaluations, agency
workforce reports, contractual
agreements, the investment of public
funds, fuel reconciliations, and bank
reconciliations; (2) lack of
contingency planning or testing to
ensure recovery of computer systems;
(3) weaknesses with payment card
industry data security standards; (4)
weaknesses in cybersecurity programs
and practices; (5) internal audit
deficiencies; (6) noncompliance with
mandated duties and non-game wildlife
protection act; (7) failure to comply
with historical sites act, issue off-
highway vehicle usage stamps, and
update policy and procedures manual;
and (8) property control and petty
cash weaknesses.  We will review the
Department’s progress towards the
implementation of our recommendations
in our next compliance examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Department for the
two years ended June 30, 2020, as
required by the Illinois State
Auditing Act.  Because of the effect
of the noncompliance described in
Finding 2020-001 through Finding
2020-030, the accountants stated the
Department did not materially comply
with the specified requirements
described in the report.

This compliance examination was
conducted by Roth & Co., LLP.

JANE CLARK
Division Director

This report is transmitted in
accordance with Section 3-14 of the
Illinois State Auditing Act.

FRANK J. MAUTINO
Auditor General

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