REPORT DIGEST

OFFICE OF THE STATE FIRE MARSHAL

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2016

Release Date:  April 12, 2017

FINDINGS THIS AUDIT:  5

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 0 -- 1
Category 2:  3 -- 1 -- 4
Category 3:  0 -- 0 -- 0
TOTAL:  4 -- 1 -- 5

FINDINGS LAST AUDIT: 5

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

SYNOPSIS

• (16-1) The Office did not comply with
statutory provisions regarding the use
of assets within the Illinois Finance
Authority’s Fire Truck Revolving Loan
Fund.
• (16-2) The Office did not establish
and maintain a Statewide Arsonist
Database or make such Database
available to the public via its website
as required by the Arsonist
Registration Act.
• (16-4) The Office was not able to
locate computer equipment during Fiscal
Years 2015 and 2016.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

NONCOMPLIANCE WITH THE ILLINOIS FINANCE
AUTHORITY ACT

The Office of the State Fire Marshal
(Office) did not comply with statutory
provisions regarding the use of assets
within the Illinois Finance Authority’s
Fire Truck Revolving Loan Fund
(Authority’s Fund).

During testing, the auditors noted the
following timeline regarding the $8
million Fiscal Year 2015 appropriation
the Office received to deposit moneys
from the Fire Prevention Fund into the
State Treasury’s Fire Truck Revolving
Loan Fund (State Treasury’s Fund).

07-01-14:  Public Act 098-0681
appropriated $8 million from the Fire
Prevention Fund to the Office for
deposit into the State Treasury’s Fund.
12-04-14:  The State Comptroller
processed a voucher submitted by the
Office to completely expend the $8
million appropriation from the Fire
Prevention Fund.  The $8 million was
deposited into the State Treasury’s
Fund.
01-12-15:  The State Comptroller
processed a voucher submitted by the
Office to spend the entire $8 million
now on deposit in the State Treasury’s
Fund to the Authority’s Fund.  To
process this transaction, the Office
charged this expenditure against the
continuing appropriation authorized by
the Illinois Finance Authority Act
(Act) (20 ILCS 3501/825-80(c-1)) to
distribute the amount, if any, of cash
received into the State Treasury’s Fund
to the Authority’s Fund so long as the
Office and the Illinois Finance
Authority (Authority) entered into an
interagency agreement that the moneys
distributed would be used “for loans to
fire departments and fire protection
districts to purchase fire trucks and
brush trucks and for no other purpose.”
01-12-15:  The Governor signed
Executive Order 2015-008 requiring the
Governor’s Office of Management and
Budget to review all grants requiring
the expenditure of State funds to
determine whether the grant is
essential to operations.
01-15-15:  The Authority received the
$8 million warrant from the State
Treasury’s Fund for deposit into the
Authority’s Fund.
01-20-15:  The Authority deposited the
$8 million warrant into the Authority’s
Fund.
01-26-15:  The Governor’s Office of
Management and Budget finished its
review of the Office’s grants and
determined the Fire Truck Revolving
Loan Program was not essential.  The
Office sent the Authority a letter
requesting the Authority return the $8
million.
01-27-15:  An official with the
Governor’s Office of Management and
Budget e-mailed the Authority’s
Executive Director stating the $8
million “will not (be) available for
use by the Illinois Finance Authority.
Please contact me with any concerns, as
I understand there may be audit
issues.”
02-20-15:  The Authority’s Executive
Director sends an e-mail to officials
from the Office and Governor’s offices
indicating a “legal obstacle” to
returning the $8 million.
03-26-15:  Public Act 099-0002
authorized a transfer of $23 million
from the Fire Prevention Fund into the
General Revenue Fund by the conclusion
of Fiscal Year 2015.
04-17-15:  An official with the
Governor’s Office sent an e-mail to the
Authority’s Executive Director that the
Governor’s legal team has reviewed the
transaction and requested compliance
with the letter from the Office to the
Authority dated January 26, 2015.
04-21-15:  The Authority’s Executive
Director, after briefing both the
Authority’s Chair of the Board of
Directors and the Audit Committee Chair
about the “potential for audit or legal
exposure to the Authority by complying
with this request,” directs the
Authority’s Chief Financial Officer to
return the $8 million to the Office.
The Authority authorizes the return of
the $8 million back to the Office.
05-12-15: The State Comptroller
processed the $8 million Expenditure
Adjustment Transmittal, classified by
the Office as an overpayment, to
redeposit these moneys against the
appropriation from the Fire Prevention
Fund, not the State Treasury’s Fund.
In accordance with the Statewide
Accounting Management System (SAMS)
Manual (Procedure 25.20.20), the Office
should have returned the $8 million
from the original appropriation that
generated the repayment being refunded,
which was the State Treasury’s Fund as
it was the appropriated fund that paid
the moneys to the Authority’s Fund.  If
this had been done, however, the Office
would have been obligated to return the
money deposited into the State
Treasury’s Fund back to the Authority’s
Fund under the continuing appropriation
provisions of the Act (20 ILCS
3501/825-80(c-1)).  Therefore, the
Office did not charge the return of the
$8 million against the proper fund and
appropriation.
06-03-15:  The State Comptroller
processed a fund transfer from the Fire
Prevention Fund into the General
Revenue Fund for $12.5 million.
06-24-15:  The State Comptroller
processed a fund transfer from the Fire
Prevention Fund into the General
Revenue Fund for $5.7 million.  The
total transfers were $18.2 million.
08-31-15:  The Office lapsed the $8
million appropriation from the Fire
Prevention Fund for deposit into the
State Treasury’s Fund.  However, the
Office continues to show the $8 million
appropriated expenditure from the State
Treasury’s Fund for deposit into the
Authority’s Fund.

During testing, the auditors noted the
Office did not:

• comply with the SAMS Manual
(Procedure 25.20.20) by charging the
refund against the proper
appropriation;

• enforce its Intergovernmental
Agreement between the Authority and the
Office (Agreement) to limit the usage
of moneys in the Authority’s Fund to
loans to local governments; and,

• ensure its expenditure records and
the records of the State Comptroller
properly reflected the interfund cash
transfer from the Fire Protection Fund
to the State Treasury’s Fund.  (Finding
1, pages 8-11).

We recommended the Office enforce its
agreement by limiting the Authority’s
usage of resources to any restriction
imposed upon their use by law, or see a
legislative remedy if management
perceives a need to address some other
public policy concern.

Office officials stated they agreed
with the auditors’ finding but believe
they acted in the best interests of the
State to preserve their ability to
maintain their operations.

Illinois Finance Authority officials
stated they cannot run the fire truck
loan program without the assistance of
the State Fire Marshal to initiate and
manage the program.  They also stated
the Authority would not have been able
to loan money to purchase fire trucks
if the Fire Marshal was unable to
continue operations.

NONCOMPLIANCE WITH ARSONIST
REGISTRATION ACT

The Office did not establish and
maintain a Statewide Arsonist Database
or make such Database available to the
public via its website as required by
the Arsonist Registration Act.
(Finding 2, pages 12-13)

We recommended the Office follow up
with the Department of State Police to
obtain arsonist information and create
a hyperlink/database that can be
published and made available for the
public via the Office’s website.

Office officials accepted the
recommendation and stated they will
make arsonist registration information
available to the public using a
hyperlink when made available by the
Illinois State Police.

Illinois State Police Officials stated
they assumed the process used for the
Law Enforcement Agencies Data System
(LEADS), used to handle sex offenders,
could be reused for arsonists. However,
due to out-of-date technology, changes
to the files are difficult.  Officials
also stated legislative changes to
clarify statutory responsibilities and
funding to purchase or build a
Statewide registry software application
and related processes is required.

INADEQUATE CONTROLS OVER COMPUTER
EQUIPMENT

The Office was not able to locate
computer equipment during Fiscal Years
2015 and 2016.

We reviewed the Office’s Annual
Certification of Inventory Reports
submitted to the Department of Central
Management Services (DCMS) and noted
four computers were missing.
Specifically, in Fiscal Years 2015 and
2016, the Office stated it was unable
to locate two laptops (totaling $3,109)
and two tablet computers (totaling
$2,919).

The Office has established procedures
regarding the proper storage of
electronic data; however, there is a
possibility that confidential or
personal information could reside on
the missing computers.  Although only
one of the missing laptops had
encryption, we found the Office had not
performed a formal assessment to
determine if any confidential
information was maintained on the other
missing computers.  Additionally,
Office personnel were not able to
provide property transfer forms or any
other documentation showing what
happened to the missing computers.
(Finding 4, pages 15-16)

We recommended the Office:

•  Perform a detailed assessment to
determine if any of the missing
computers contained confidential
information.

•  Review current practices to
determine if enhancements can be
implemented to prevent the loss or
theft of computers.

•  Establish procedures to immediately
assess if a computer may have contained
confidential information whenever it is
reported lost, stolen or missing during
the annual physical inventory, and
document the results of the assessment.

•  Ensure confidential data is
encrypted on computer equipment that is
susceptible to loss or theft.

Office officials accepted the
recommendation and stated they have
completed the implementation of a new
inventory system which will increase
controls over inventory and decrease
errors with barcode technology.
Additionally, Office officials
acknowledged the possibility of
confidential data residing on laptops
and tablet hard drives and stated they
have controls in place to minimize the
risk of potential exposure of
confidential information and are
working on additional controls to
minimize the risk as well.

OTHER FINDINGS

The remaining findings pertain to
performance evaluations not being
completed timely and failure to ensure
employees were duly licensed and
insured.  We will review the Office’s
progress towards the implementation of
our recommendations in our next
compliance examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Office for the two
years ended June 30, 2016, as required
by the Illinois State Auditing Act.
The accountants qualified their report
on State compliance for Finding
2016-001.  Except for the noncompliance
described in this finding, the
accountants stated the Office complied,
in all material respects, with the
requirements described in the report.

This compliance examination was
conducted by Winkel, Parker & Foster,
CPA PC.

BRUCE L. BULLARD
Division Director

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

FRANK J. MAUTINO
Auditor General

FJM:MEG