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

$240,464

$142,003

Travel.............................................................

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

$175,283

$168,209

$140,482

Telecommunications.........................................

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

$239,075

$213,662

$244,714

All Other Operations Items......................

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

$226,493

$140,414

$194,520

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.

Two of 25 (8%) employees tested did not have prior approval for using 6 hours of accrued compensatory time.

Twenty-five of 25 (100%) employees’ certified time sheets did not document the number of hours worked each day on official State business to the nearest quarter hour. (Finding 1, pages 9-10)

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.

SYNOPSIS

Employees’ timekeeping records were inaccurate

INADEQUATE CONTROLS OVER EMPLOYEE ATTENDANCE RECORDS

· 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)

AUDITORS’ OPINION