REPORT DIGEST DEPARTMENT OF NATURAL RESOURCES FINANCIAL AND COMPLIANCE AUDIT (In Accordance with the Single Audit Act and OMB Circular A-133) For the Year Ended: Summary of Findings: Total this audit 14 Release Date: State of Illinois WILLIAM G. HOLLAND AUDITOR GENERAL To obtain a copy of the Report contact: (217)782-6046 or TDD (217) 524-4646 This Report Digest is also available on |
SYNOPSIS
{Expenditures and Activity Measures are summarized on the next page.} |
DEPARTMENT OF NATURAL RESOURCES
FINANCIAL AND COMPLIANCE AUDIT
For the Year Ended June 30, 1999
FY 1999 |
FY 1998 |
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Total Expenditures (All Funds) OPERATIONS
TOTAL Personal Services Other Payroll Costs (FICA, Retirement) Contractual Services All Other Operations Items GRANTS, REFUNDS, OTHER Cost of Property and Equipment (in thousands) |
$242,470,743 $161,638,753 $94,825,432 $21,000,267 $26,491,206 $19,321,849 $80,831,990 $721,296 |
$204,194,576 $152,217,050 $91,621,266 2,059 $17,732,068 $24,297,401 $18,566,315 $51,977,526 $692,372 |
SELECTED ACTIVITY MEASURES (Unaudited) | FY 1999 |
FY 1998 |
Acreage owned and managed Cost per acre managed Protected Natural Area Acreage Hunting Licenses Issued Fishing Licenses Issued Deer Permits Issued Law Enforcement Citations/Warning Issued Students Certified in Safety Education Classes Boating Hunting Snowmobile Trapping |
406,100 3,872 |
403,303 3,087 |
AGENCY DIRECTOR |
During Audit Period: Brent Manning Currently: Brent Manning |
Inadequate monitoring of federal grants
Errors in reporting program costs for the Abandoned Mined Land Reclamation Program
Questioned costs totaling $130,905
Ineligible costs charged to two Abandoned Mined Land Reclamation Programs
Questioned costs totaling $75,151
Indirect cost recoveries from seven different federal programs in excess of allowable amounts
Questioned costs totaling $71,200
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FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS SYSTEM FOR MONITORING FEDERAL GRANTS IS INADEQUATE The Department's system for monitoring the administration of federal grants to determine that federal grant funds are used in accordance with grant requirements and applicable State and federal laws, regulations, and rules has not included all grant programs and has not detected certain instances of noncompliance. In July, 1997 the Department adopted a new grant administration policy which reassigned the responsibility for Department-wide coordination and monitoring of federal grant programs to the Office of Fiscal Management (OFM). However, the policy was unclear as to what monitoring activities and responsibilities were expected of the OFM. During the current audit period, the Department drafted a revision to this policy to further define the OFM's overall responsibilities and monitoring activities. However, these procedures had not been finalized or implemented as of June 30, 1999. The Department administered 27 federal programs and expended $22,918,657 during FY 1999. Failure to adequately monitor all of its federal grants constitutes an internal control weakness and could result in the possible mismanagement of grant funds, questioned or disallowed costs, or the withdrawal of grant programs by the federal agencies. (Finding 2, pages 20-21) This finding has been repeated since 1996. We recommended the Department continue with its implementation of its new grant coordination policy to ensure general and specific grant requirements have been met for all federal grant programs. Department officials concurred with our recommendation and stated the procedures will be finalized and issued to Department staff in FY 2000. (For previous Department responses, see Digest Footnote #1.) INACCURATE REPORTING OF ABANDONED MINED LAND RECLAMATION PROGRAM COSTS The Department inaccurately reported costs for the Abandoned Mined Lands Reclamation Program (CFDA #15.252). Errors in reporting led to $130,905 of reported costs being questioned. The Department of Interior regulations (43 CFR 12.60 et seq.) state that "accurate, current, and complete disclosure of financially assisted activities must be made in accordance with the financial reporting requirements of the grant." (Finding 5, page 25) We recommended the Department make the necessary corrections and repayment for the Abandoned Mined Land Reclamation Program grant. Further, we recommended procedures utilized to prepare grant reporting be revised to insure accurate reporting of expenditures. Department officials concurred with our recommendation and stated the revised reports will be submitted to the Department of Interior in February 2000. In addition, the Department stated written procedures for monitoring this grant will be revised in FY 2000 to ensure accurate reporting of future grant expenditures. INELIGIBLE COSTS CHARGED TO THE ABANDONED MINED LAND RECLAMATION PROGRAM The Department charged ineligible costs to two of its Abandoned Mined Land Reclamation Program Grants (CFDA #15.252). As a result, questioned costs of $26,784 from grant number GR 70170 and $48,367 from grant number GR 80170 were reported. (Finding 6, pages 26-27) We recommended the Department make corrections and repayment for Abandoned Mined Land Reclamation Program grant questioned costs. Further, we recommended grant administration procedures include guidance concerning allowable cost principles and appropriate reviews thereof.
Department officials concurred with our recommendation and stated revised reports will be submitted to the U.S. Department of Interior in February, 2000. In addition, the Department plans to revise the program's written procedures in FY 2000 to provide guidance concerning allowable cost principles and review of program expenses.
INDIRECT COST RECOVERIES IN EXCESS OF APPROVED AMOUNTS The Department received indirect cost recoveries from various federal programs in excess of amounts allowed in its indirect cost agreement. The Department's indirect cost agreement provided that the approved rate was to be applied to a cost base of personal service costs, excluding health insurance because this cost was not equally distributed among all cost centers of the Department. However, the Department had not appropriately excluded health insurance costs from the federal programs. Inclusion of health insurance in the calculation of indirect costs led to questioned costs of $71,200 from seven different federal grants. (Finding 7, pages 28-29) We recommended the Department contact its cognizant agency and make the necessary arrangements to repay the overpayments of indirect cost recoveries and to correct financial reporting as applicable. Department officials concurred with our recommendation and stated they will work with their cognizant agency to resolve the questioned costs identified. In addition, the Department will revise the indirect cost calculation to include health insurance in the base. OTHER FINDINGS The remaining findings were less significant and are 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 Our auditors stated the Departments financial statements as of and for the year ended June 30, 1999 are fairly stated in all material respects.
____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JSC:pp SPECIAL ASSISTANT AUDITORS Sleeper, Disbrow, Morrison, Tarro & Lively were our special assistant auditors for this audit. DIGEST FOOTNOTES #1 SYSTEM FOR MONITORING ADMINISTRATION OF FEDERAL GRANTS IS INADEQUATE - Previous Department Responses 1998: We concur. The Department will continue our on-going efforts to strengthen the Agency's grant coordination processes. To address a prior audit finding, the Department in 1997 adopted a new grant policy which reassigned the responsibility for Department-wide coordination of Federal grant programs to the Office of Fiscal Management. Efforts to fully implement this policy are in progress. Since the prior audit the Department also has made enhancements to the Department's grant accounting system and held an in-house training seminar to educate Agency staff on Federal grant requirements and Department grant procedures. During FY 1999, the Office o Fiscal Management will complete Agency-wide procedures to more explicitly define the grant responsibilities of the Department's various offices. In addition, offices which participate in Federal programs will document their internal control systems for managing such programs. 1996: We concur. The Department is continuing our efforts to fully implement the Agency's grant coordination policy to ensure that general and specific grant requirements are met for all federal grant programs. As part of these efforts all divisions of the Department have been reminded of the requirements of the policy, and in July 1996 a revised edition of the Department's Finance Handbook was issued to Agency staff. This Handbook contains procedures for the administration of federal grant programs. In FY 1997, the Department also implemented revisions to our programmatic accounting system. This system will be used by all divisions to document costs on federal programs and will assist our efforts to monitor and coordinate all federal assistance programs. |