REPORT DIGEST GUARDIANSHIP AND ADVOCACY COMMISSION COMPLIANCE
EXAMINATION For the Two Years Ended: June 30, 2007 Summary of Findings: Total this audit 6 Total last audit 1 Repeated from last audit 0 Release Date: March 25, 2008
State of Illinois Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
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SYNOPSIS
· The Commission did not exercise adequate controls over employee attendance to ensure employees’ work hours and benefit time were properly recorded and documented. · The Commission had inadequate segregation of duties in the areas of expenditure control and State property during the examination period. · The Commission did not have adequate controls over its locally held fund. · The Commission did not deposit local fund receipts in a timely manner. · The Commission did not comply with the State Officials and Employee Ethics Act regarding review of statements of economic interest.
{Expenditures and Activity
Measures are summarized on the reverse page.} |
GUARDIANSHIP AND ADVOCACY COMMISSION
COMPLIANCE EXAMINATION
For
The Period Ended June 30, 2007
COMMISSION STATISTICS |
FY 2007 |
FY 2006 |
FY 2005 |
Total Expenditures (All Appropriated Funds). |
$8,762,460 |
$7,785,235 |
$7,975,078 |
OPERATIONS TOTAL.................................. %
of Total Expenditures......................... |
$8,762,460 100% |
$7,785,235 100% |
$7,975,078 100% |
Personal
Services................................... % of Operations Expenditures........... Average No. of Employees............... |
$6,611,064 75% 115 |
$6,056,054 78% 111 |
$5,885,655 74% 109 |
Other
Payroll Costs (FICA, Retirement)... % of Operations Expenditures........... |
$1,252,714 14% |
$966,432 12% |
$1,367,704 17% |
Contractual
Services............................... % of Operations Expenditures........... |
$257,831 3% |
$240,464 3% |
$142,003 2% |
Travel............................................................. % of Operations Expenditures........... |
$175,283 2% |
$168,209 2% |
$140,482 2% |
Telecommunications......................................... % of Operations Expenditures........... |
$239,075 3% |
$213,662 3% |
$244,714 3% |
All
Other Operations Items...................... % of Operations Expenditures........... |
$226,493 3% |
$140,414 2% |
$194,520 2% |
Ward Trust Fund Cash
in banks......................................... |
$2,362,063 |
$1,322,420 |
$1,356,778 |
Cost of Property and Equipment ..................... |
$765,927 |
$867,630 |
$976,703 |
Total Receipts Deposited into State Treasury..... |
$86,569 |
$70,951 |
$74,110 |
SELECTED ACTIVITY MEASURES (Not examined) |
FY 2007 |
FY 2006 |
FY 2005 |
·
Office of State Guardian No. of Wards served......................................... Ave. No. of Assigned Cases per Worker........... |
5,059 119 |
5,179 116 |
5,316 126 |
·
Legal Advocacy Service No. of Client Cases Handled............................ |
8,523 |
8,797 |
7,551 |
·
Human Rights Authority No. of Cases Handled.................................... |
275 |
472 |
748 |
AGENCY DIRECTOR(S) |
During Examination Period: Dr. Mary L. Milano (effective 10/24/05),
John Wank, Acting (7/1/05 to 10/23/05), Currently: Dr. Mary L. Milano |
Employees’ timekeeping records were inaccurate Timekeeping discrepancies
Employee accrued benefit balances were overstated
Prior approval not obtained Timesheets did not document the number of hours worked
Commission agrees with auditors Internal control weaknesses related to expenditures and State property
Caseworkers and legal staff will be employed ahead of
administrative positions when funding becomes available Auditors’ Comment Bank balance exceeded the FDIC insurance limit by
$512,657 A separated employee had signature authority over the
Commission’s locally held fund
Commission does not accept the finding
Auditors’ Comment
Receipts were deposited late Commission does not accept the finding
Auditors’ Comment Failure to comply with the State Officials and
Employees Ethics Act Commission stated review by the ethics officer was not
possible Policy to be revised
Auditors’ Comment |
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
INADEQUATE CONTROLS OVER
EMPLOYEE ATTENDANCE RECORDS
The Guardianship and Advocacy Commission
(Commission) did not exercise adequate
controls over employee attendance to ensure employees’ work hours and benefit
time were properly recorded and documented. We noted the following:
·
Nineteen of 25
(76%) employees’ timekeeping records tested did not agree when comparing
their certified time sheets, Official Leave Request (OLR) forms, and the
Central Time and Attendance System (CTAS).
The certified time sheets are monthly calendars in which each employee
is required to sign in and out upon arrival and departure each day and
certify as time worked on official State business. However, auditors noted that in many cases, employees entered
their customary work hours in their certified time sheets in advance without
accounting for the use of accrued leave time or other absences. - Nineteen
employees’ recorded benefit time taken on CTAS or OLR forms did not agree to
the certified time sheets. We noted
75 discrepancies between certified time sheets and CTAS totaling 348
hours. In addition, we noted 59
discrepancies between certified time sheets and OLR forms totaling 161 hours. - Six employees’ OLR forms did not agree to CTAS reports. We noted 5 instances when employees requested and used 14 hours of compensatory or holiday time, but the time used was not entered into CTAS. In addition, we noted 3 employees where 30 hours of benefit time was requested and used but not entered into CTAS. As a result, the employees’ accrued benefit balances were overstated by 44 hours.
We
recommended the Commission implement controls to ensure employees complete
Official Leave Requests for time off, accurately complete the certified time
sheets and agree those records to the Central Time and Attendance System to
ensure accrued absence balances are accurate. Further, the Commission should correct any employee’s accrued
absence balance noted as incorrect.
The Commission should also comply with the State Officials and
Employees Ethics Act by having employees document the time spent each day on
official State business to the nearest quarter hour The Commission accepted the finding and stated they will endeavor to increase controls in this area. INADEQUATE SEGREGATION OF DUTIES The Guardianship and Advocacy
Commission (Commission) had inadequate segregation of duties in the areas of
expenditure control and State property during the examination period. We noted the following:
·
One person had authority to perform
procurement functions, receive goods and services, prepare and approve
vouchers, maintain accounting records, and perform monthly expenditure
reconciliations. ·
One person had authority to approve
non-electronic data processing (EDP) property purchases, tag non-EDP
inventory, maintain the property records, and complete the quarterly reports
of State property. (Finding 2, page 11-12) We recommended the Commission allocate sufficient personnel in order
to maintain effective internal control over the record keeping and accounting
duties concerned with expenditure and property control. Commission officials stated they agreed with the Auditor General’s auditors’ assertion that the underlying cause of the deficiency was due to a limited number of staff. The Commission noted that Office of State Guardian caseworkers, Human Rights Authority caseworkers and Legal Advocacy Services legal staff will be employed ahead of administrative positions when funding becomes available and when funding allows, additional administrative staff will be hired. Commission officials agreed that good business practices should be followed. However, they point out that all vouchers cited in the audit contained at least four separate and distinct signatures or written consents on the documentation authorizing the approval and payment for the purchases in addition to the Director’s stamped authorization.
In an auditors’ comment we stated the auditors made no “assertion that the underlying cause of the deficiency was due to a limited number of staff.” The auditors did not conduct a human resource study in conjunction with the audit. The Commission is referring to a memo written by an auditor after interviewing Commission staff. During this interview, Commission staff stated the deficiency was due to a limited number of staff. With regard to the comment concerning vouchers with multiple approvals, it is important to note the finding highlights the fact that one person had the authority to perform all functions of procurement and voucher processing which increases the likelihood that a loss from errors or irregularities could occur and would not be found in the normal course of employees carrying out their assigned duties. It is the permissible condition which is the weakness. INADEQUATE CONTROLS
OVER LOCALLY HELD FUND The Guardianship and Advocacy
Commission (Commission) did not have adequate controls over its locally held
fund. The Commission maintains one
locally held fund which includes all individual ward accounts. During our testing, we noted the
following:
·
The Commission
did not obtain additional collateral for uninsured account balances. We noted one ward’s account whose funds
were in excess of the amount of federal deposit insurance coverage
(FDIC). According to FDIC
regulations, each ward’s account is insured up to $100,000. The ward’s
account exceeded the $100,000 limit beginning October 30, 2006 and as of June
2007 the ward’s account balance was $512,657 over the FDIC limit. No additional collateral had been
obtained to protect the funds.
·
The Commission did not remove a
separated employee as an authorized signatory for the locally held fund. We noted an employee had separated from
the Commission on October 31, 2006 yet still had signature authority for the
locally held fund as of December 5, 2007. (Finding 3, pages 13-14)
We recommended the Commission monitor the ward’s account
balances and obtain additional collateral when balances exceed the amount of
federal deposit insurance coverage.
Further, the Commission should implement controls to ensure that
employees’ signature authority over the locally held fund is removed upon
separation from the Commission.
The Commission stated they did not accept
the finding and stated the
Commission holds private funds on behalf of its wards. The Probate Act of
1975 governs investments made by the Commission on behalf of its wards. The Commission
stated it met the standards of the prudent investor rule as it pertains to
the funds of the rare individual ward that exceed $100,000. The bank provided
its financial statements to the Commission, and the bank’s solvency and financial health
were not in question; therefore the risk of loss was negligible. In an auditor’s comment we stated the finding discussed ward deposit accounts, not investments made by the Commission on behalf of its wards. The auditors tested these funds under the assumption that the money held on behalf of the wards of the State should be administered by the Commission with at least the same due diligence as is required of the State funds, and State law requires the purchase of a bond or other pledged security for all deposits in excess of $100,000. UNTIMELY DEPOSIT OF LOCALLY HELD FUND RECEIPTS The Guardianship and Advocacy
Commission (Commission) did not deposit local fund receipts in a timely
manner. We noted 30 of 50 (60%) receipts
selected for testing were not deposited in a timely manner. These receipts,
totaling $144,015, were deposited from 1 to 5 days late. We recommended the Commission strengthen its controls over the deposit of local fund receipts to ensure timely deposit. (Finding 5, page 17-18) Commission officials stated they
did not accept the finding. They state the
funds in question were all private assets
belonging to disabled wards of the State handled by the Commission’s Office
of State Guardian. For the purpose of this finding, the Commission stated
they hold only private funds of its wards,
and these funds were not the State’s resources. Further, the audit finding cites “good business practices” and the
workpaper prepared by the auditors referenced
the criteria used as the Public Funds Act. The Commission
noted the assets in question were not public funds, and the Public
Funds Act does not apply. With regard to the delays in deposit between 1 and 5 days, according to the Commission, the finding fails to take into account mail delivery, holidays, and weekends. The Commission also noted the finding fails to note that the Commission maintained a system of internal controls for collecting such receipts and a centralized system for endorsing and depositing the receipts. The wards’ receipts may originate in any one of the nine regional offices throughout the State. The regional caseworker must identify the receipt as properly belonging to a specific ward, complete the necessary form, and mail the receipt and documentation to the Fiduciary Operations Office in Springfield. The Commission states all receipts were processed within two working days of arrival in Springfield and mailed to the bank for deposit. The Commission stated no benefit would be gained by decentralizing fiduciary operations in the manner implied by the audit in order to speed up deposits. In an auditor’s comment, we noted the recommendation did not suggest or imply that the Commission should decentralize fiduciary operations. The Public Funds Deposit Act was not used as criteria for the finding. The auditors perform tests believing that the Commission should expedite deposits held in trust for the wards. The Commission states that all receipts are processed within two working days of arrival in Springfield; however, 21 of the 30 (70%) late deposits noted in the finding were deposited 3 to 7 working days after arrival in the Springfield office, not within 2 working days as claimed by the Commission. The auditors did not have the date received in Springfield for the remaining 9 receipts and could only use the date received in the regional office for determining timeliness. STATEMENTS OF ECONOMIC INTEREST NOT REVIEWED The
Guardianship and Advocacy Commission (Commission) did not comply with the
State Officials and Employee Ethics Act (Act) regarding review of statements
of economic interest. The
Commission’s designated ethics officer did not review all of the 2006 and
2007 employee statements of economic interest prior to filing with the
Secretary of State. We
recommended the Commission comply with the State Officials and Employees
Ethics Act by ensuring the ethics officer reviews all statements of economic
interest before they are filed with the Secretary of State. (Finding 6, page
19-20) The Commission stated the ethics officer did review all statements of economic interest submitted to him for review in both 2006 and 2007, prior to filing with the Secretary of State. They stated not all staff who are required to submit statements of economic interest submitted the forms to the ethics officer before submission to the Secretary of State. Consequently, review by the ethics officer was not possible. The response stated although the State Officials and Employee Ethics Act does require the ethics officer to perform the indicated review, nothing in the law or agency policy compels staff to submit statements to the ethics officer prior to filing with the Secretary of State. The Commission stated the law establishes a duty on the part of the ethics officer to review only those statements that are submitted to the ethics officer; no duty to submit for review prior to filing exists in the law. The Commission stated the policy will be revised to compel submission of Statements of Economic Interest with the ethics officer prior to filing with the Secretary of State in order to facilitate prior review by the ethics officer despite the lack of clarity in the law. In an auditors comment we noted that although the Commission stated there was a “lack of clarity” in the law, the State Officials and Employees Ethics Act (Act) (5 ILCS 430/20-23) states “Ethics Officers shall review statements of economic interest and disclosure forms of officers, senior employees, and contract monitors before they are filed with the Secretary of State (emphasis added).” Since the Commission is responsible for ensuring it complies with applicable laws and regulations, the ethics officer should have ensured the required review was performed during the examination period. OTHER FINDING
The remaining finding pertains to noncompliance with annual report submission and posting requirements. This matter is reportedly being given attention by the Commission. We will review the Commission's progress toward implementation of our recommendations in our next examination. AUDITORS’ OPINION
We
conducted a compliance examination of the Commission as required by the
Illinois State Auditing Act. We have
not audited any financial statements of the Commission for the purpose of
expressing an opinion because the Commission does not, nor is it required to,
prepare financial statements. ___________________________________ WILLIAM G. HOLLAND, Auditor General WGH:PH:pp
AUDITORS ASSIGNED
This examination was performed by the staff of the Office of the Auditor General. |