REPORT DIGEST

 

OFFICE OF THE
STATE FIRE MARSHAL

 

 

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2006

 

 

Summary of Findings:

Total this report††††††††††† ††††††††† 27

Total last report††††††††††††††††††††††† 9

Repeated from last report†††††††† 6

 

Release Date:

June 5, 2007

 

 

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 and Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

SYNOPSIS

 

®       The Office did not exercise proper control over the contract and monitoring of the monies paid from the Firefighters Memorial Fund.

 

®       The Office did not maintain adequate documentation for an Interagency Agreement.

 

®       The Office did not competitively procure services, timely approve contractual and grant agreements, or prepare and file written contracts as required.

 

®       The Office did not maintain adequate controls over employees designated to work from a home office or the Officeís various locations.

 

®       The Office did not sufficiently monitor and pursue collections on delinquent accounts receivable.

 

®       The Office did not adequately utilize its State vehicles, request approval for lesser usage, justify all vehicle assignments, or have established criteria or documentation for vehicle replacement decisions.

 

®       The Office did not adequately monitor and document meal reimbursements.

 

®       The Office had a high number of past due inspections of Boiler and Pressure Vessels.

 

®       The Office did not comply with licensing and fee provisions of the Pyrotechnic Distributor and Operator Licensing Act.

 

®  The Office did not adopt rules for the administration and enforcement of elevator safety and installation standards during the examination period.

 

 

 

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the next page.}


 

 

OFFICE OF THE STATE FIRE MARSHAL

COMPLIANCE EXAMINATION

For the Two Years Ended June 30, 2006

 

EXPENDITURE STATISTICS

FY 2006

FY 2005

FY 2004

Total Expenditures (All 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.........

††††† Lump Sums and Other Purposes...........

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

All Other Operations Items

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

 

AWARDS, GRANTS, AND OTHER........

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

 

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

$18,027,514

 

$14,285,583

79.2%

$7,604,629

53.2%

145

$52,446

 

$2,891,060

20.2%

$1,006,476

7.1%

$638,710

4.5%

$2,144,708

15.0%

 

$3,741,931

20.8%

 

$4,111,992

$15,902,771

 

$12,854,421

80.8%

$6,958,138

54.1%

138

$50,421

 

$3,298,021

25.7%

$270,701

2.1%

$763,815

5.9%

$1,563,746

12.2%

 

$3,048,350

19.2%

 

†††† $3,936,275

$13,239,832

 

$10,792,232

81.5%

$6,276,382

58.2%

124

$50,616

 

$2,617,245

24.3%

$626,428

5.8%

$469,253

4.3%

$802,924

7.4%

 

$2,447,600

18.5%

 

$3,868,470

SELECTED ACTIVITY MEASURES

(Not Examined)

FY 2006

FY 2005

FY 2004

Arson Investigations..........................................

Boiler and Pressure Vessel State Inspections.....

Fire Prevention Building Inspections..................

Firefighter Training Certifications.......................

Firefighter Training Examinations.......................

Underground Storage Tank (UST) Inspections..

UST Emergency Responses and Investigations..

1,369

22,641

15,099

11,066

12,422

4,413

660

1,193

21,214

12,445

9,645

11,829

3,438

1,029

1,064

18,535

13,545

9,278

11,819

3,122

804

 

AGENCY HEAD(S)

During Examination Period: David Foreman, State Fire Marshal (effective February 6, 2006)

†††††††††††††††††††††††††††††††††††††††††††††† Dave DeFraties, Interim State Fire Marshal (October 7, 2005 Ė ††††††††††† ††††††††††††††††††††††††††††††††††††††††††††††††† February 5, 2006)

†††††††††††††††††††† ††††††††††††††††††††††††††J.T. Somer, State Fire Marshal (July 1, 2004 Ė October 6, 2005)

†††††††††††††††††††††††††††††††††††††††††††††††

Currently: David Foreman, State Fire Marshal


 

 

 

 

 

 

 

 

 

 

 

 

 

 


$300,000 of unspent State funds were not recovered

 

 

 

 

 

 

 

 

 

 

 

 

 

The Illinois Procurement Code was not followed

 

 

 

 

Contract was signed 164 days late

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office lacked support for a $15,000 interagency agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant agreements not signed prior to beginning of grant period

 

 

 

 


Competitive procurement not used

 


Contractual liabilities not reduced to writing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No method to determine that employees worked during reported hours

 

Timekeeping documentation was not sufficient

 

No employee spot checks

 

Lack of supervision over field employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inadequate collection and write-off procedures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vehicles did not meet minimum usage requirement

 

 

 

 

 

 

 

 

 


No formal agency guidelines for replacement decisions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$538 in unallowable meal reimbursements

$725 reimbursed at higher than allowable rates

 

 


No documentation of State business purpose

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,930 (5.1%) past due inspections as of June 30, 2006

 

 

 

 

 

 

 

 

 

 


20% inspections over 90 days past due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


546 conditional licenses did not include photographs and expiration dates

 

 

 

 

 


$17,025 of nonrefundable license fees were refunded

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


No rules for enforcement of Elevator Installation Act

 

 

 

 

 

 

 

 

 

 

No rules for enforcement of Elevator Safety and Regulation Act

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

 

LACK OF CONTROLS OVER FIREFIGHTERS MEMORIAL FUND DISTRIBUTIONS

 

The Office of the State Fire Marshal (Office) did not exercise proper control over the contract and monitoring of the monies paid from the Firefighters Memorial Fund.We noted the following:

 

  • The Office had not determined the Foundationís plans for over $300,000 of unspent State funds received in prior years, nor did the Office request or recoup any overpayments from the Foundation.Further, the Foundationís $65,208 bill included $1,595 for inappropriate expenditures, such as alcohol, lunches, and limousine services.Although the Office only paid the Foundation the $50,000 FY05 contract maximum, it appears the Foundationís inappropriate expenditures were paid with the unspent State funds, which constituted the majority of the Foundationís cash balance.

 

Management stated they verbally requested that the Foundation have an external audit.Further, management stated that reimbursements were not provided in FY06, and unspent State funds will be offset against Foundation expenditures.

 

  • The Office did not use competitive procurement; nor did the Office demonstrate that services could only be economically and feasibly provided by the Foundation as required by the Illinois Procurement Code.Additionally, the Office failed to publish notices in the Illinois Procurement Bulletin as required for sole source procurement.

 

  • The Contract between the Office and the Foundation was signed 164 days after the beginning of services.In addition, the Contract Obligation Document (COD) included the incorrect contract start date. (Finding 1, pages 11-13)

 

We recommended the Office establish internal controls to ensure distributions from the Firefighters Memorial Fund are adequately monitored.Specifically, we recommended the following:

 

        The Office continue efforts to decrease the balance of unspent State funds held by the Foundation, seek a formal commitment regarding the Foundationís future plans for the unspent funds, and actively work to recoup prior overpayments to the Foundation.

 

        The Office should comply with the competitive procurement provisions of the Illinois Procurement Code or publish notices and document compliance with statutory provisions for sole source procurements.

 

        The Office should approve contracts prior to the performance of services and ensure that all documents regarding contracts are completed accurately.

 

Office officials agreed with the finding and stated the Office noted these deficiencies internally before the audit engagement, and has worked with IOIA to clarify the weaknesses and help make a stronger case for the need for correction.Officials further stated that the Foundation is cooperating with the Office on corrective action.

 

 

LACK OF DOCUMENTATION FOR INTERAGENCY AGREEMENT

 

The Office did not have adequate support for an Interagency agreement with the Governorís Office of Management and Budget (GOMB) detailing the methodology for determining the allocation to be paid by the Office for the billing of shared services.

 

The Office, along with 8 other agencies, entered into an Interagency Agreement with GOMB for the payment of an allocable share of the $104,000 cost of a pilot roll-out plan.The Officeís allocable share was determined to be $15,000; however, the Office was not provided documentation to support how the $15,000 was determined.

 

Office personnel stated they signed the agreement not to obtain services, but solely to share the cost of services performed.Office personnel further stated that the Interagency Agreement outlined the portion to be paid and no additional documentation was requested or provided.(Finding 2, page 14)

 

We recommended the Office require and maintain sufficient documentation to ensure contracted services have been provided and that the expenditures are reasonable and necessary.

 

†††† Office officials agreed with the finding and stated the Office will request both the backup and the allocation plan if shared payment of contracts occur again in the future.

 

 

INADEQUATE CONTROLS OVER CONTRACTUAL AGREEMENTS

 

The Office did not competitively procure services, timely approve contractual and grant agreements, or prepare and file written contracts as required.During our testing, we noted the following:

 

        Five of 6 (83%) grant agreements tested, totaling $5,122,800, were signed from 215 to 357 days after the beginning of the grant period.Further, two of 12 (17%) contractual agreements tested, totaling $38,110, were approved and subsequently submitted to the State Comptrollerís Office 34 and 53 days after services began.††

 

        The Office did not seek competitive sealed bids for equipment rental procured from one vendor in each fiscal year.Expenditures totaled $27,575 in FY05 and $27,261 during FY06.††

 

        The Office did not reduce to writing and file with the Comptroller liabilities with 2 vendors, totaling $44,075, during FY05 and 3 vendors, totaling $57,494, during FY06.Expenditures to each vendor exceeded $10,000 during a fiscal year.Further, the Office did not file two contracts, totaling $22,940, with the Comptroller. (Finding 3, pages 15-16)

 

We recommended the Office strengthen controls to ensure contractual and grant agreements are approved prior to the effective date and all required procurements are subjected to the competitive bidding process.Further, contracts should be reduced to writing and filed with the State Comptrollerís Office in a timely manner.

 

Office officials agreed with our finding and stated each of the instances in question involved extenuating circumstances that were difficult, if not impossible, for the Office to avoid or control.Officials further stated that the Office will continue to improve its procurement methods up to the time that procurement becomes a Shared Services function.

 

 

INADEQUATE CONTROLS OVER EMPLOYEES

 

The Office did not maintain adequate controls over employees designated to work from their home office or the Officeís various locations.As of June 30, 2006, the Office employed 145 employees, including 76 field employees.We noted the following:

 

        There was no method to determine that employees worked during reported hours;

        There was insufficient timekeeping documentation for State employees;

        There was no method to track where employees should be at any point in time;

        Office personnel did not perform spot checks on employees;

        The Office did not appear to have adequate oversight over employees assigned to all locations; and

        There was an apparent lack of supervision over field employees.

 

††††† Management stated that in May 2005, the Office implemented new internal controls over field staff, including timesheets, travel logs, itineraries, spot checks on employees, additional supervision, and reporting to management.Further, management stated they were finalizing updates to policies and procedures, and have plans for updated inspection tracking and electronic reporting for inspectors in the Division of Fire Prevention. (Finding 4, pages 17-18)

 

We recommended the Office enforce formal administrative controls over its employees, which include employee tracking, timekeeping, and spot checks of all employees.

 

Office officials agreed with our finding and stated the Office has been able to implement most of the planned internal controls mentioned in May 2005.

 

 

 

INADEQUATE COLLECTION AND ACCOUNTING FOR ACCOUNTS RECEIVABLE

 

††††† The Office did not sufficiently monitor and pursue collections on delinquent accounts receivable.We noted the following:

 

        The Officeís accounts receivable collection procedures were not adequate to ensure the proper collection of fees due each fund.

 

        Four of 26 (15%) Underground Storage Tank (UST) accounts totaling $7,800 reported as an accounts receivable at June 30, 2006 were greater than 5 years past due, yet the Office had not requested the Attorney General to certify any of them as uncollectible.

 

        As of June 30, 2006, we noted 10 of 26 (38%) UST accounts over $1,000 (totaling $18,600) that were 247 to 2,467 days past due.The Office had not referred any of these accounts to the Comptrollerís Offset System or outside collection agency. (Finding 7, pages 22-24)This finding was first reported in 1990.

 

We recommended the Office strengthen procedures to monitor and pursue collections on delinquent accounts receivable. Specifically, the Office should send regular billings for all accounts, refer delinquent accounts to the Comptrollerís Offset System and pursue other collection methods.

 

††††† Office officials agreed with our finding and stated the Office was able to do substantial work toward compliance with both the existing and the new requirements for collection of old debt during the audit period.†† (For the previous office response, see Digest footnote #1.)

 

 

INADEQUATE CONTROLS OVER THE PURCHASE AND USE OF VEHICLES

 

The Office did not adequately utilize its State vehicles, request approval for lesser usage, justify all vehicle assignments, or have established criteria or documentation for vehicle replacement decisions.The Office maintained a fleet of approximately 86 and 111 vehicles during FY05 and FY06, respectively.We noted the following:

 

        Forty-four (51%) vehicles during FY05 and 67 (60%) vehicles during FY06 were not sufficiently utilized to justify the need for the vehicles according to the Department of Central Management Services (DCMS) criteria of 1,500 miles per month. These vehicles were driven from 0 to 1,463 miles on average per month.Further, the Office did not submit any explanations of operational need resulting in lesser usage for DCMS approval.Eighteen of the vehicles were purchased during the examination period.Management stated the vehicles were necessary as most agency vehicles were driven by field staff who work from home offices located throughout the State.

 

        The Office replaced 36 vehicles during the period, expending $1,013,882, but had no formal agency guidelines for determining when it was most economical to replace vehicles.It was unclear whether these purchases were necessary, as the Office could not provide documentation for replacement decisions and many of its vehicles did not meet current minimum utilization standards.Management stated they do not have the ability or resources to establish†† internal guidelines for determining when it is most economical to replace vehicles and DCMS rules were considered sufficient due to the small size of the Office.(Finding 10, pages 28-29)

 

We recommended the Office comply with DCMS rules by ensuring that vehicles purchased are necessary and adequately utilized, transferring underutilized and unnecessary vehicles to surplus, and submitting an explanation of operational needs resulting in lesser vehicle usage for DCMS approval.Further, the Office should establish internal guidelines to ensure cost effectiveness of vehicle replacement and document the basis for purchase decisions.

 

††††† Office officials agreed with our finding and stated that in May 2007, the Office provided the Director of CMS an explanation of operational needs to resolve our low mileage vehicle concerns.

 

 

UNREASONABLE REIMBURSEMENTS

 

The Office did not adequately monitor and document meal reimbursements.We noted the following:

 

        Two of 7 (29%) reimbursements tested included meal expenses for State employees totaling $538.

        Six of 7 (86%) reimbursements included meal expenses of $725 for non-State employees at rates higher than allowed in travel regulations.Further, when 30% of the meals were purchased, the State employee reimbursed was not on travel status as required.

        Two of 7 (29%) reimbursements tested included reimbursement for tips, totaling $98.

        Five of 7 (71%) reimbursements did not specify why the expenditures were incurred in connection with State business.

        Two of 7 (29%) reimbursements did not include the names of the individuals for whom the meals were purchased. (Finding 13, pages 33-34)

 

We recommended the Office strengthen controls to ensure reimbursements to employees are reasonable, necessary, and properly documented in accordance with the Governorís Travel Control Board Guidelines.

 

Office officials agreed with the finding and stated the Office corrected this issue during the audit period.

 

BACKLOG OF BOILER AND PRESSURE VESSEL INSPECTIONS

 

The Office had a high number of past due inspections of Boiler and Pressure Vessels.Thirty-five of fifty (70%) Boiler and Pressure Vessel inspections tested were performed from 3 to 665 days late, with an average of 121 days late.Of the approximately 37,500 boilers and pressure vessels required to be inspected by the Office, there was an inspection backlog of 1,930 (5.1%) as of June 30, 2006.However, the percentage of past due inspections decreased in the past 2 years.

 

Furthermore, some of the required inspections were past due more than one year.The following chart illustrates the range of days past due for the 1,930 past due inspections as of June 30, 2006:

 

Office management stated the inspection database only identifies an inspection as due on or after the certificate expiration date.Personnel also stated that no violation situations were included in the backlog, which reduced safety risks. (Finding 21, pages 45-47) This finding was first reported in 2002.

 

We recommended the Office continue working to reduce the backlog of inspections and implement necessary controls to identify and perform inspections in a timely manner.

 

Office officials agreed with the finding and noted the Office currently has the lowest past due level in several decades.Officials further stated that no violations were included in the backlog.(For the previous office response, see Digest footnote #2)

 

 

NONCOMPLIANCE WITH PYROTECHNIC DISTRIBUTOR AND OPERATOR LICENSING ACT

 

The Office did not comply with licensing and fee provisions of the Pyrotechnic Distributor and Operator Licensing Act (Act).We noted the following:

 

        The Office did not issue the appropriate pyrotechnic license showing the name, address, and the photograph of the licensee and the dates of issuance and expiration as required by the Act.The Office notified operators and distributors, through letters, that they had been authorized, ďon a temporary basis during the processing of applications, to conduct outdoor professional displays.ĒThe letter, which served as a conditional license, did not include the photograph of the licensee, issuance, and expiration dates.The Office issued 546 conditional licenses between March 2006 and June 2006; however, no permanent licenses were issued as of January 29, 2007.

 

        The Office refunded pyrotechnic operators and distributorsí license fees totaling $17,025, which are nonrefundable per the Act.The Office refunded $75 of the $100 operatorís licensing fee for 227 individuals who first took an explosive licensing course between January 1 and June 30, 2006.

 

††††† Office personnel stated they could not issue permanent licenses until the administrative rules were approved by the Joint Committee on Administrative Rules.Management stated that licensing fees were partially refunded because the original fee structure was based on misinformation, which led to dual licensing requirements between the Office and the Department of Natural Resources.Further, management stated amendments to the administrative rules have been proposed to eliminate the dual licensing fees. (Finding 22, pages 48-49)

 

We recommended the Office comply with the Act by timely issuing the appropriate licenses showing the name, address, and the photograph of the licensee and the dates of issuance and expiration.Furthermore, the Office should comply with the Act, which specifically states refunds are not authorized.

 

Office officials agreed with the finding and stated that after the legislation was passed, the Office was unable to roll out a viable program by the effective date.Officials further stated the finding reflects their attempts at a contingency that allowed the maximum compliance achievable in the short term.

 

 

FAILURE TO ADOPT RULES FOR THE ADMINISTRATION AND ENFORCEMENT OF ELEVATOR SAFETY AND INSTALLATION LAWS

 

The Office did not adopt rules for the administration and enforcement of elevator safety and installation standards during the examination period.The Elevator Safety Division was created in January 2003 to oversee the enforcement of elevator safety standards.We noted the following:

 

        The Office did not adopt rules during the examination period for the administration and enforcement of the Elevator Installation Act (Act).The Act sets forth specific requirements for the installation and operation of all hospital elevators over 55 feet high and elevators over 80 feet high in offices, hotels, factory buildings and residential buildings.The Office estimates that between 20,000 and 25,000 elevators in Illinois meet the criteria of the Act.

 

        The Office did not adopt rules for the administration and enforcement of the Elevator Safety and Regulation Act (Act)†† This Act covers the design, construction, operation, inspection, testing, maintenance, alteration, and repair of elevators, escalators and other lifting mechanisms.

 

Office management stated that draft rules had been submitted to the Joint Committee on Administrative Rules on January 21, 2005, but were rejected on June 14, 2005 due to inconsistencies with the Acts.Emergency rules were developed and became effective July 21, 2006; however, they expired on December 18, 2006.(Finding 23, page 50) This finding was first reported in 2002.

 

We recommended the Office work with the Joint Committee on Administrative Rules to adopt rules consistent with the Elevator Safety and Regulation Act and the Elevator Installation Act to facilitate proper enforcement and administration of these Acts.

 

††††† Office officials agreed with the finding and stated the rules and the legislation were found to be weak, and the Office did not attempt to roll out a program with inherent weaknesses.Officials further stated that once final rules were adopted (April 24, 2007), the Office was ready and able to operate the program.(For previous office response, see Digest Footnote #3.)

 

 

OTHER FINDINGS

 

††††† The remaining findings are reportedly being given attention by the Office. We will review progress toward implementing those recommendations in our next examination.

 

 

 

AUDITORíS OPINION

 

††††† We conducted a compliance examination of the Office as required by the Illinois State Auditing Act.We have not audited any financial statements of the Office for the purpose of

expressing an opinion because the Office does not, nor is it required to, prepare financial statements.

 

 

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:LKW:jmo

 

AUDITORS ASSIGNED

 

††††† This examination was performed by the staff of the Office of the Auditor General.

 

 

DIGEST FOOTNOTE

 

#1 INADEQUATE COLLECTION AND ACCOUNTING FOR ACCOUNTS RECEIVABLE - Previous Office Response

 

2004: The Office acknowledges the finding and accepts the recommendations.In addition, the Office will investigate the use of the Comptroller and/or Attorney General for collections.

 

#2 BACKLOG OF BOILER AND PRESSURE VESSEL INSPECTIONS Ė Previous Office Response

 

2004: The Office accepts the finding and is in the process of hiring additional inspectors and has requested to fill all of its vacancies in the FY06 budget request in order to comply with the recommendations.

 

#3 FAILURE TO ADOPT RULES FOR THE ADMINISTRATION AND ENFORCEMENT OF ELEVATOR SAFETY AND INSTALLATION LAWS Ė Previous Office response

 

2004: The Office acknowledges the finding and the Division of the Elevator Safety will enforce the Act at such time as their administrative rules are approved by the Joint Committee of Administrative Rules and the inspection staff is hired.