ENVIRONMENTAL PROTECTION AGENCY
FINANCIAL AND COMPLIANCE AUDIT
For the Two Years Ended:
Summary of Findings:
State of Illinois
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046 or TDD (217) 524-4646
This Report Digest is also available on
ENVIRONMENTAL PROTECTION AGENCY
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1998
|SERVICE EFFORTS AND ACCOMPLISHMENTS||
|AIR POLLUTION CONTROL
Vehicle emission tests performed
LAND POLLUTION CONTROL
Federal superfund cleanup (State-lead)
State cleanup projects completed
Leaking Underground Storage Tanks:
WATER POLLUTION CONTROL
Wastewater loans issued
Drinking water loans issued
|During Audit Period: Mary Gade
Currently: Thomas V. Skinner
* Includes re-issuance of storm-water permits on a five year cycle.
Late proposal cost State in excess of $6,000 in lost interest income
Duplicate payments made totaling in excess of $59,000
The Agency did not have adequate data entry and pre-audit procedures
Allowance for doubtful accounts understated
No tests or updates have been made since June 1993
FINDINGS, CONCLUSIONS, AND
INDIRECT COST RATE PROPOSAL NOT
The Agency did not submit an indirect cost rate proposal on a timely basis resulting in delayed federal reimbursement of indirect costs and lost interest earnings for the State.
The Agency had not prepared and submitted an indirect cost rate proposal to its federal cognizant agency (U.S. EPA) for fiscal year 1998 until January 1998 and was prohibited from claiming reimbursement for indirect costs pending approval of the rate. The indirect cost rate proposal for fiscal year 1998 was required to be submitted prior to January 1997.
Agency officials have stated that the untimely submission was due to time constraints and other obligations on the person who was responsible for its preparation.
The receipt of indirect cost reimbursements of approximately $3,395,000 was delayed resulting in the loss of interest income to the State in excess of $6,000. However, federal grant funds available to the Agency were fully reimbursed and all allowable costs have been claimed. (Finding 98-1, pages 22-23)
Agency officials accepted our recommendation to establish adequate procedures to ensure indirect cost proposals are filed on a timely basis and state that this condition has been corrected.
DUPLICATE PAYMENT OF VENDOR INVOICES
The Agency had not established controls sufficient to prevent all duplicate payments of vendor invoices. For fiscal years 1997 and 1998, 42 duplicate payments totaling in excess of $59,000 were made to Agency vendors.
Differences in inputting procedures resulted in identical vendor invoice numbers being entered more than one way in the system and bypassing the control feature. The State Comptrollers Office has established Statewide Accounting Management System Procedure 17.10.30 which requires the Agency to conduct a pre-audit of vouchers before processing for payment.
The Agency did not have adequate data entry and pre-audit procedures to ensure duplicate payment of invoices are not made. The amount reported above represents only the known duplicate payments based on refunds received. Additional duplicate payments could have been made and gone undetected or unreported due to the weaknesses in controls. (Finding 98-3, page 26)
Agency officials accepted our recommendation to establish and implement adequate controls to ensure that vendor invoice information is consistently entered into the system and that adequate pre-audit procedures are utilized. Further, Agency officials stated that procedures are being reviewed and they will establish controls to prevent this from occurring in the future.
INADEQUATE ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
The Agency did not adequately allow for estimated uncollectible accounts receivable. The accounts receivable balance at June 30, 1998 was $9,515,000 with an allowance for uncollectible accounts of $198,000.
Subsequent evaluation of the accounts receivable by the Agency determined that, of the receivables turned over to the Attorney Generals Office, $1,044,000 should be reserved as estimated uncollectible accounts at June 30, 1998.
Agency personnel stated that during the audit period they did not have formal procedures to ensure that all offices and bureaus routinely reported on the amounts of accounts receivable estimated to be uncollectible. (Finding 98-4, pages 27-28)
Agency officials accepted our recommendation that they review accounts receivable on a quarterly basis to determine if the allowance for uncollectible accounts adequately reflect those amounts.
INADEQUATE COMPUTER DISASTER
The Agency did not have an adequate plan for reacting to disasters.
The Agency has approximately $7.6 million of computer equipment located at its facilities throughout the State. The Agency has over 1,270 microcomputers connected to local area networks (LANs) that process critical applications.
The planning document for the system is dated October 1992. The plan does not include recovery procedures for LANs. No tests or updates have been made since June 1993. An alternative work site has not been agreed on and the names, addresses and phone numbers of essential personnel were not current.
An effective disaster recovery plan can greatly assist management in coping with service disruptions resulting from fire, floods, storm, power failures or vandalism. (Finding 98-7, pages 32-33)
Agency officials accepted our recommendation to provide an effective disaster contingency plan for reacting to disasters and stated that with the completion of the centralization process, the disaster recovery process will be restarted and a disaster recovery plan should be completed and tested by December 31, 1999.
The remaining findings and recommendations are less significant and have been given attention by the Agency. We will review progress towards the implementation of our recommendations during the Agencys next audit.
The responses to our findings and recommendations were provided by Stuart Gresham, Chief Internal Auditor.
Our auditors state the June 30, 1998 and June 30, 1997 combined financial statements of the Agency are fairly presented, except for the effects of such adjustments, if any, as might have been determined to be necessary had they been able to examine evidence regarding Year 2000 disclosures.
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were Sikich Gardner & Co, LLP.