REPORT DIGEST

 

DEPARTMENT OF TRANSPORTATION

 

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2008

 

 

 

Summary of Findings:

Total this audit                    30

Total last audit                    26

Repeated from last audit     21

 

Release Date:

June 4, 2009

 

 

 

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 the Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

SYNOPSIS

 

  • The Department failed to pro-rate certain Federal receipts between FY08 and FY09 for projects that had costs incurred during both fiscal periods.

 

  • The Department did not follow their formal commodities inventory policies or procedures in conducting the June 30, 2008 physical inventory. 

 

  • The Department failed to maintain sufficient documentation to substantiate its selection of contracted architect and engineer consultants. 

 

  • The Department failed to maintain adequate documentation to substantiate the awarding of contracts for land acquisition services related to highway construction projects.

 

  • The Department and local agencies were delinquent in performing bridge inspections during FY08.

 

  • The Department did not maintain adequate documentation of timely evaluation of land acquisition consultants and Architect-Engineer (A-E) consultants, and did not maintain adequate supporting documentation for a relocation payment.

 

  • The Department did not have adequate controls over tracking the costs and usage of State vehicles, the assignment of State vehicles to employees, and its reporting of vehicle accidents to DCMS.

 

  • The Department did not maintain supporting documentation for payments made to recipients from the Comprehensive Regional Planning Fund.

 

  • The Department did not maintain adequate documentation in its procurement file, failed to post the appropriate notification on the Illinois Procurement Bulletin, and did not timely receive reports required by the contract. 

 

 

 

 

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


DEPARTMENT OF TRANSPORTATION

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Year Ended June 30, 2008

 

EXPENDITURE STATISTICS

FY 2008

FY 2007

·         Total Expenditures...............................

 

$3,881,043,834

$4,065,279,446

     OPERATIONS TOTAL............................

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

$726,267,214

18.71%

$653,086,724

16.07%

         Personal Services.............................

            % of Operations Expenditures.....

            Average No. of Employees.........

$385,758,556

53.12%

5,326

$367,317,070

56.24%

5,469

         Other Payroll Costs (FICA,

          Retirement)..............................................

            % of Operations Expenditures.....

 

$93,632,116

12.89%

 

$70,512,215

10.80%

         Contractual Services.........................

            % of Operations Expenditures.....

$118,531,864

16.32%

$105,172,036

16.10%

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

            % of Operations Expenditures.....

$128,344,678

17.67%

$110,085,403

16.86%

     GRANTS TOTAL....................................

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

$1,416,341,723

36.49%

$1,460,084,316

35.91%

     CONSTRUCTION TOTAL...........................

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

$1,733,775,930

44.68%

$1,944,421,571

47.83%

     CAPITAL IMPROVEMENTS TOTAL.....

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

$4,658,967

0.12%

$7,686,835

0.19%

     CAPITAL ASSETS – GROSS

     (expressed in thousands)

         Infrastructure.......................................

         All Other..............................................

               Total..............................................

 

 

$22,895,369

    2,634,319

$25,529,688

 

 

$22,467,463

    2,571,266

$25,038,729 

SELECTED ACTIVITY MEASURES (Not  Examined)

FY 2008

FY 2007

·         Number of bridges maintained/improved................

272

274

·         Percent of bridges in need of repair......................

9.4%

9.7%

·         Number of lane miles of pavement maintained.......

42,875

42,774

·         Construction investment/lane mile.........................

$39,295

$44,326

·         Miles of pavement maintained/improved................

933

908

·         Percent of roads in need of repair ........................

14.4%

13.3%

AGENCY SECRETARY(S)

During Audit Period:  Mr. Milton Sees (01/26/07 – 3/01/09)

Currently:  Mr. Gary Hannig

 

 

 

 

 

 

 

 

 

 

 

 


Failure to pro-rate Federal receipts between FY08 and FY09

 

 

 

 

 

 

 

 

 


Liabilities were overstated by $8,887,086 in the Road Fund

 

 

 

 

 

 

 

 

 

 

 

 

 


Liabilities were overstated by $862,058 in the Federal Local Airport Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Entire inventory population was overstated by $600,360

 

 

 

 

 

 

 


Inventory valuation was overstated by $3,492,828

 

 

 

 

 

 

 

 

Pricing errors resulted in an overstatement of $935,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Failed to maintain sufficient documentation

 

 

 

 

 

 

 

No documentation detailing information concerning the need and scope of work

 

 

 


Only documentation for selection process was the agenda and a final committee report

 

 

 

 

 


Selection Committee did not have one of the five required members

 

 

 

 

 

 

 

 

 

 

 


Department partially agrees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auditors’ Comment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Failed to maintain adequate documentation

 

 

 

 

 

 

 

 


No memorandum justifying the need for services

 

 

Director of Highways did not approve Selection Committee members

 

 

 

 

 

 


Vendor not notified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 bridges changed to a 36 month inspection interval did not meet federally approved methodology

 

 

 

 

 

1,674 bridge inspections were delinquent according to Department intervals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Incorrect data has to be identified manually

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$96,000 for relocation and $356 in advertising could not be substantiated

 

 

 

 

 

Consultant evaluations did not have submission date

 

 

 


Consultant evaluations were not performed

 

 

 

 

 

 

 

 

 

 

 


Department partially agrees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auditors’ Comment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inadequate controls over vehicles

 

 

 

 

 

 

 

 

 

 

 


Failure to maintain written record of usage and approvals

 

 

 

 

 

 


No formal system to track usage of assigned take home vehicles

 

 

 

 

 

 


Vehicle assignments and accidents not timely reported to DCMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Did not maintain supporting documentation

 

 

 

 

 

 

 

 


Unable to determine if funds were used appropriately

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sealed utilization plans not maintained

 

 

Notification not posted on the Illinois Procurement Bulletin

 

 

 

Monthly and quarterly reports not received

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

NEED TO IMPROVE REVENUE RECOGNITION / DEFERRED REVENUE PRACTICES

 

      The Department failed to pro-rate certain Federal receipts between FY08 and FY09 for projects that had costs incurred during both fiscal periods.  Also, a material amount of revenue, which was earned prior to year end but received after the Department’s cut-off date of its review of lapse period receipts, was not recorded until the following year.

 

      During the review of accounts receivable and receipts, in thirty instances, the Department recognized federal reimbursement as revenue despite the contract service dates having activity spanning both Fiscal Year 2008 and Fiscal Year 2009 for which a pro-rate portion should have been applied.  In 16 other instances noted, the Department excluded the recognition of revenue from federal receipts, received during lapse period, for contracts which possessed service dates in Fiscal Year 2008.  The discrepancies resulted in the Department inaccurately excluding $3,405,019 of revenue which when extrapolated over the entire population of reimbursements caused liabilities to be overstated by $8,887,086 (Road Fund).  An adjusting journal entry was recorded to correct these differences along with the related receivable and deferred revenue amounts.

 

      Our review of accounts receivable and receipts during the lapse period disclosed five instances of improper recognition of deferred revenue.  In four of the instances, the Department recognized reimbursement of receipts as deferred revenue despite contract service dates having activity spanning both Fiscal Year 2008 and Fiscal Year 2009 or service dates only pertaining to Fiscal Year 2009 for which a pro-rated portion should have been applied.  The final instance noted pertained to a project recognized as deferred revenue even though reimbursement occurred during the lapse period (or cash received by the end of the lapse period).  The discrepancies resulted in the Department inaccurately recognizing $862,058 of deferred revenue which caused liabilities to be overstated by $862,058 (Federal Local Airport Fund).  An adjusting journal entry was recorded to correct these differences.  (Finding 1, pages 12-13 in the Compliance Report)

 

      We recommended the Department’s review of the accounts receivable be performed monthly to ensure that reimbursement projects are billed on a current basis and that receipts, where applicable, prorated between periods for revenue recognition in the appropriate accounting period.

 

      Department officials agreed with the finding and stated the Project Control Section in the Bureau of Budget and Fiscal Management is working on capturing data on federal revenues collected through July and August and the expenditure data to be able to prorate the data into the correct fiscal year in which it was earned.

 

INACCURATE COMMODITIES INVENTORY RECORDS

      The Department did not follow their formal commodities inventory policies or procedures in conducting the June 30, 2008 physical inventory.  In addition the Department does not maintain a perpetual inventory system.

 

      During our physical inventory counts, we noted discrepancies between audit test counts and Department inventory counts resulting in an overstatement of the year end inventory balance of $25,401, which, when extrapolated over the entire inventory population, resulted in an estimated overstatement of $600,360.  The Department did not post a journal entry for the overstatement of $600,360 due to materiality as this item was considered immaterial by the Department.  The Department was not able to reconcile between audit test counts and Department physical inventory counts for these differences.  It was also noted through inquiry that the Department did not count any commodities items with an estimated extended cost below $500.  We noted seven instances where the Department inaccurately recorded an inventory count which caused their inventory valuation to be overstated by $3,492,828.  The Department corrected the inaccuracies prior to recording the final inventory amount in the financial statements.

 

      During our price testing, we noted numerous items in the inventory listing contained pricing errors.  It was determined that certain commodities were given equal pricing across the state although actual commodity costs varied by location.  We noted discrepancies between final inventory prices and invoice prices resulting in an overstatement of the year end inventory amount of $191,335.  When extrapolated over the entire inventory population, this discrepancy resulted in an estimated overstatement of $935,870.  The Department did not post a journal entry for the overstatement of $935,870 due to materiality as this item was considered immaterial. (Finding 2, pages 14-16)   This finding was first reported in 1994.

 

      We recommended the Department continue training for formal inventory policies and procedures for all Districts/Sites and maintain commodities quantity and costing records throughout the year.  We also recommended the Department perform periodic physical inventory counts of commodities inventory and reconcile those counts to its commodities records, e.g. Materials Management Information.  Also, we strongly recommended Management implement a review at year-end to compare costs assigned per inventory listings to the most recent invoice amounts to ensure accuracy of the unit costs. 

 

      Department officials agreed with the finding and stated the Division of Highways staff is preparing a standard spreadsheet which goes out to all districts on which they will record the inventory counts.  Department officials also stated the district will average yard costs among commodity items to get an average district price.  Department officials further stated the Department will have a conference call, with all the districts approximately a month before the inventory is taken, emphasizing the importance of correct pricing and attention to detail.  (For the previous Department response, see Digest Footnote #1).

 

INSUFFICIENT DOCUMENTATION TO SUBSTANTIATE THE SELECTION OF ARCHITECT AND ENGINEER CONSULTANTS

 

      The Department failed to maintain sufficient documentation to substantiate its selection of contracted Architect and Engineer consultants. 

 

      According to Comptroller’s data, the Department expended $168,534,261 for A-E fees during FY08.   We tested 10 Department procurements during FY08 including 2 procurements for A-E consulting services and noted the following:

 

·        There was no documentation in 1 of 2 (50%) procurements tested that the division requiring the A-E services submitted detailed information concerning the need and scope of the work to its Director before the Department’s need for A-E services was published in the Bulletin.  

 

·        The Department only maintained the winning vendors’ statements of interests for the two procurements tested.  The Department reported receipt of 12 and 4 statements of interest for the tested contracts. In addition, the only documentation maintained for the selection process was a selection committee agenda and a final committee report that showed the ranking of vendors and the rating information.   There was no indication of who prepared the form and no approval signatures. 

 

·        The Selection Committee did not have one of the five required members in each of the procurements tested.  The Deputy Director of the Division of Highways for Program Development or designee was not a member of the Selection Committee.  (Finding 4, pages 19-22 in the Compliance Report)

 

      We recommended the Department maintain documentation of all its selection activities for A-E services including the documentation of its need for services, the statements of interest, and the Consultant Unit and Selection Committee activities, decisions, and approvals.   We also recommended the Department ensure all the required members are on the selection committee.

 

      Department officials partially agreed with the finding.  They stated all the selection committee members were in attendance, and the Consultant Unit prepares the preliminary ranking on the Preselection Worksheet which includes the initials of who prepared and reviewed the analyses and not an individual, and unfortunately they did not effectively and timely communicate and share the processes with the auditors during their review. 

 

      They also stated that the need to save every statement of interest would not have provided additional support regarding the documentation of the selection process with respect to the final decision and ranking of the three top firms.  They stated the prequalification process requires all firms to submit a Statement of Experience and Financial Condition (SEFC) which includes substantially all of the information which would be included in a statement of interest by which a firm is evaluated and the statements of interest have little additional information that the Department already does not have.   Further, they stated the safeguarding every detailed statement of interest in the past would have been an unnecessary and costly administrative burden; however, with the electronic submittals, they are now keeping all of the statements. 

 

      The Department also stated they will share the results of the finding, with regards to submitting the need and scope of work to the appropriate Director before the project is published in the bulletin, with those districts and bureaus to impress upon them of the need to be mindful of this requirement. 

 

      In an auditors’ comment, we noted we were not provided documentation that the Director of Finance and Administration was the Deputy Director of the Division of Highways’ designee.   We reviewed the Department’s Directory and noted three individuals with the title of Deputy Director under the Division of Highways; however, we did not receive documentation that any of them assigned the Director of the Office of Finance and Administration as their designee.

 

The Department did not provide us with sufficient documentation to substantiate its selection of contracted architect and engineer consultants.   They stated it was too burdensome in the past to maintain all statements of interest and the prequalification process requires all firms to submit a Statement of Experience and Financial Condition (SEFC) which includes substantially all of the information which would be included in a statement of interest by which a firm is evaluated.  We were also not provided the SEFCs to review during the testing, so we were unable to evaluate that information provided by the contractors.  

 

   Regarding the Consultant Unit, the only documentation provided to the auditors for the selection process was a selection committee agenda and a final committee report on a spreadsheet with no clear documentation of the preparer(s), dates of decisions, and approvals.  The Department noted in their response that they did not effectively and timely communicate and share their processes during testing to allow a proper analysis of the A-E selection process and decisions.

 

 

FAILED TO MAINTAIN ADEQUATE DOCUMENTATION TO SUBSTANTIATE THE AWARDING OF CONTRACTS FOR LAND ACQUISITION SERVICES

 

      The Department failed to maintain adequate documentation to substantiate the awarding of contracts for land acquisition services related to highway construction projects. 

 

      According to Comptroller data, the Department expended $8,646,814 for land acquisition appraisal activities.  We tested 10 Department procurements including 2 awarded for appraisal and review appraisal services to be performed during FY08 and noted the following:

 

·        The District Engineers did not submit a memorandum justifying the need for such services to the Director of Highways for the request for proposal (RFP) before 1 of 2 (50%) RFPs were issued to perform appraisals and review existing appraisals.

 

·        The Director of Highways did not approve all members of the Selection Committee.  In addition, the Selection Committee’s recording secretary was the Bureau Chief of the Bureau of Land Acquisition instead of the District Engineer as required.  

 

·        Although six vendors submitted proposals for 1 of 2 (50%) RFPs tested, only the two winning vendors’ proposals and bids were maintained and available for review.

·        The Department did not give the appropriate notification to a vendor not considered responsive in 1 of 2 (50%) procurements tested.    The Bureau of Land Acquisition determines which vendors are responsive.  (Finding 5, pages 23-24)

 

      We recommended the Department ensure it follows all the appropriate, required procedures for the procurement and selection of its land acquisition appraisal services, and also ensure it maintains adequate documentation to substantiate its procurement activities and decisions.

 

      Department officials agreed with the finding and stated that the Departmental Order which applies to the finding is out of date and they are in the process of updating the Order.

 

 

FAILURE TO TIMELY PERFORM BRIDGE INSPECTIONS

 

      The Department and local agencies were delinquent in performing bridge inspections during FY08.  In addition, the Department should continue to improve the quality of the bridge inspection data.

 

Bridge Inspections

      Federal regulations generally require an inspection of every bridge greater than 20 feet in length at least every 24 months.  Although the federal regulations generally require an inspection once every 24 months, the regulations allow for longer inspection intervals depending on the condition of the bridge.  The Department has set inspection intervals at greater intervals for some bridges.  For bridges over 20 feet which had an inspection interval listed, approximately 40 percent of those bridges had an inspection interval of 48 months or greater during FY08 compared to 42 percent during the previous examination.    Approximately 3 percent of bridges have a 12-month inspection interval which remains unchanged from the previous examination.  However, we noted there were 180 bridges that were changed during FY08 to a 36 month inspection interval; 4 of these did not meet the federally approved methodology because of the condition of the deck, super structure, or sub structure.

 

      Although the Department has improved its timeliness of bridge inspections since the last examination, local and other agency inspection timeliness continues to be problematic.  Using the intervals established by the Department, we determined that as of March 31, 2008 a total of 1,674 (6.5%) bridges had not received an inspection by the anniversary date on which it was due.   These potentially delinquent bridges included 78 bridges for which the Department was responsible and 1,596 that were the responsibility of local and other agencies.   

     

Taking into account the Department’s allowances for data entry, a total of 307 bridges were delinquent in receiving an inspection.  The Department was delinquent in conducting 6 bridge inspections in FY08.  Of these 6 bridges, 2 were rated structurally deficient.  Four bridges (4.9%) were more than six months delinquent.   Local Agencies were delinquent in conducting 301 bridge inspections in FY08.  Of these 301 bridges, 33 were rated structurally deficient.  Of the 301 bridges, 98 (33%) were more than one year delinquent.

 

Bridge Data Reliability

        The Department has taken steps to improve bridge data since our FY07 examination; however, incorrect data still has to be identified manually.  According to Department officials, there are not enough Bureau of Information Processing contractors to change and update parameters within the database to automatically update fields to reflect changes in bridge conditions.  As a result, the Department tracks data manually, conducts data sorts to look for problems, and manually monitors changes in the data that would affect the inspection interval.  Department officials also noted that districts can now update incorrect information, which improves the accuracy of the data.  (Finding 6, pages 25-27)

 

        We recommended the Department continue to work toward ensuring that all bridge inspections are conducted within allowable intervals established by federal regulations and the Department.  We also recommended the Department continue to review intervals being used and the accuracy of information in its data system for bridges. 

 

        Department officials agreed with the finding and stated they will continue to try to minimize instances where staffing issues, equipment breakdowns, weather, or other circumstances will cause minor delays and also stated they will continue to take every opportunity to educate local bridge owners on the importance of timely bridge inspections.  The Department further stated the National Bridge Inspection Standards (NBIS) regulations requirement will bring needed emphasis for timely inspections and should help to reduce the number of delinquent bridge inspections in the future.

 

 The Department also stated they must continue to identify data errors through manual checks until resources are allocated for computer programming issues and will be developing a training class for staff responsible for the entry of all bridge inventory data in order to minimize recurring data deficiencies.

 

Lack of support for a relocation payment and evaluation of consultants

 

        The Department did not maintain adequate documentation of timely evaluation of land acquisition consultants and architect and engineer (A-E) consultants, and did not maintain adequate supporting documentation for a relocation payment.

 

·        The Department acquired property occupied by a business and paid $124,584 to the business owner for relocation expenses.    Of the amount paid to the vendor, $96,000 for the relocation of 26 mobile homes and $356 in advertising expenses could not be substantiated due to a lack of detailed support.

 

·        Three of 6 (50%) land acquisition consultant contracts tested did not contain support for the submission date of the Department’s performance evaluations completed for FY08 work.  In addition, 1 of 6 (17%) contracts tested contained a performance evaluation that did not include the evaluation period. 

 

·        The Department did not perform the required performance evaluations during FY08 for 5 of 10 (50%) A-E consultants’ contracts tested.   (Finding 7, pages 28-30 in the Compliance Report)

 

      We recommended the Department ensure payments for relocation services are adequately supported, document the date performance evaluations of land acquisition consultants were submitted to the Central Bureau of Land Acquisition and ensure the evaluation period is included, and perform the required performance evaluations for A-E consultants. 

 

Department officials partially agreed with the finding.  They stated the land acquisition consultants evaluation submittal date and other such information are entered by the Districts directly into the LACE system and the requirement for submittal of interim evaluations was changed in the evaluation Guide (revised 2006) and the Departmental Order (Revised 2009), and the six month intervals have been omitted.  The Department stated, for the lack of detailed support for the relocation of the mobile home business, the invoice submitted did include advertising invoices, invoices for labor, storage, and especially all of the mobile home moving sheets documenting the vast majority of the costs including which mobile homes were moved, VIN numbers (26 units), date, location moved from/to, etc.  They further stated the amount charged per move was negotiated and agreed by IDOT and the vendor/ business being moved and the amounts varied based on mobile home size, type, foundation, double-wide, roof line, cost to re-assemble, etc.  They also stated department personnel were also present during the moves and approved and reviewed all billings. 

 

      In an auditors’ comment, we noted the Department did provide us with printout from the LACE system, but the dates were inconsistent.  Some dates noted were before the evaluation period end dates and some dates were after the evaluation period; therefore, we could not rely on the data.  Furthermore, the District did not provide us with any other documentation of the date of submission.  We also noted the Evaluation Guide was never provided to us and the Departmental Order was revised after our testing was performed. 

 

In addition, the invoice and information provided to us for the advertising cost did not agree to the amount paid to the vendor.  Further, the only documentation provided to us regarding movement of the mobile homes were sheets completed by the vendor stating what was moved and the cost and the costs in the invoice provided to us were not adequately detailed with information such as the criteria (type, foundation, etc) used to determine the cost and did not contain information the amounts paid to the vendor were negotiated and agreed upon by the Department.  We requested additional support for the amounts paid numerous times but none was provided to us.

 

NEED TO ENHANCE CONTROLS OVER THE ADMINISTRATION OF STATE VEHICLES

 

      The Department did not have adequate controls over tracking the costs and usage of State vehicles, the assignment of State vehicles to employees, and its reporting of vehicle accidents to the Department of Central Management Services (DCMS).

 

Tracking Costs and Usage

      According to the State of Illinois Fleet Efficiency Review Final Report (Report) released in December 2004, the Department maintains the State’s largest fleet comprising approximately 37 percent of the State’s total fleet.  The Report noted the Department was either unable or unwilling to provide the costs of its fleet related services and recommended the Department replace its Maintenance Management Information (MMI) system with different software, and use the software for all fleet and related equipment transactions.   The Department is still using the same MMI fleet tracking system which tracks cost data for fuel, oil, and repair work, but does not track all the costs associated with the fleet or related equipment transactions.

 

      The Department did not maintain a written record of usage and approvals for 6 of 25 (24%) pool vehicles tested.   The Department also failed to obtain employee signatures for 4 of the 25 (16%) pool vehicles tested.

 

Vehicle Assignments

      The Department reported 704 assigned take home vehicles to DCMS during FY08.   The FY08 report to DCMS was only missing information for the date of vehicle assignment (86%).  

 

      The Department did not maintain a formal system to track the usage of assigned take home vehicles.  However, the Department did provide a copy of the MMI report detailing fuel and oil purchases per vehicle and the accompanying gas receipts.  We could not determine if 3 of 15 (20%) employees tested were following the policy and parking their State vehicles at the end of the work day due to repetitive gas purchases near the employees’ homes.

 

Vehicle Reporting

      Eight of 25 (32%) vehicle accidents tested were reported to DCMS from 19 to 125 days late.  

 

      We noted three of 25 (12%) employees tested were assigned to a new vehicle during FY08 and the vehicle changes were not timely reported to DCMS.  (Finding 8, pages 31-33 in the Compliance Report)

 

      We recommended the Department implement the recommendations in the Report and ensure its tracking system for vehicles is adequate.  We further recommended the Department implement controls to ensure it tracks personally assigned vehicles and monitors adherence to current Department polices regarding take home vehicles.   We also recommended all changes in vehicle assignments and vehicle accidents are reported to DCMS as required and adequate documentation of vehicle usage is maintained for all vehicles including pool vehicles. 

 

      Department officials agreed with the finding and stated they recognized the need to improve its management of its vehicle fleet and correct the issues noted in the finding.  They also stated they are currently exploring the need to procure or develop a system to automate and track the data more accurately and completely.  They further stated employees will be reminded of the recordkeeping requirements and responsibilities when using fleet vehicles.  They also stated many of the accident reports in question are not reported to DCMS within seven days of occurrence because they are the result of damages from snow throws or debris from snow plows which are often not discovered for several days after occurrence and will work at changing the reporting rule to require the reporting of the accident seven days after discovery and not occurrence. 

 

Lack of supporting documentation for payments from the Comprehensive Regional Planning Fund

 

      The Department did not maintain supporting documentation for payments made to recipients from the Comprehensive Regional Planning Fund (Fund).

 

      The State Finance Act (Act) (30 ILCS 105/6z-69) was amended effective October 11, 2007,  to  require the Department to make lump sum distributions, subject to appropriation,  from the Fund as soon as possible after each July 1 to certain planning organizations and agencies in the amounts and percentages specified in the Act.   The Act requires recipients to use the money for comprehensive regional planning purposes.  During FY08, the Department was appropriated and expended $5 million as stipulated in the Act.  We were unable to determine if the funds were used appropriately for planning purposes as no documentation of the use of funds was available for review.   (Finding 9, pages 34-35 in the Compliance Report)

 

      We recommended the Department maintain proper supporting documentation and properly monitor payments made to recipients to ensure that payments are used for comprehensive regional planning purposes.

 

      Department agreed with the recommendation and stated that costs should be reviewed to see that they are properly incurred.  They further stated the fund is reviewed during the federal single audit for strict compliance to federal regulations and any issues involving such violations would be investigated by the Department.

 

      Inadequate control over procurement       activities and failure to receive   required reports

 

      The Department did not maintain adequate documentation in its procurement file, failed to post the appropriate notification on the Illinois Procurement Bulletin, and did not timely receive reports required by the contract. 

 

      During testing of the RFP and related contract, we noted the following:

 

·     The Department did not maintain a copy of the sealed utilization plans submitted by the four losing bidders.  Section 3.7 of the RFP required submission of a separate utilization section. 

 

·     The Department did not provide the required notification on the Illinois Procurement Bulletin that the contract, totaling $1,370,000, was awarded to the vendor without the lowest bid. 

 

·     The contractor had submitted only 5 of 12 (42%) required monthly reports as of June 30, 2008 and these reports were received by the Department from 47 to 178 days late.   In addition, only 1 of 4 (25%) required quarterly reports was received and it was 139 days late.   (Finding 11, pages 38-41 in the Compliance Report)

 

We recommended the Department ensure all required notifications are made in the Illinois Procurement Bulletin and its procurement files contain proper documentation.  We also recommended the Department implement controls to ensure required reports are received timely by contractors.

 

      The Department agreed with the finding and stated CMS now requires all offers to submit one sealed original Utilization Plan and one copy with their proposal, which becomes part of the procurement file with IDOT.  The Department also stated the award notice will also include the reason for selecting the winning vendor.  The Department further stated that because of the vendor’s habitual lateness and failure to submit their monthly and quarterly invoices and reports over the 2007/2008 contract year, they amended their 2008/2009 management and technical contracts effective September 19, 2008.  They also stated that if the amendment provisions do not correct the vendor’s lateness and/or failure to submit their invoices and reports in a timely manner, the Department will notify them that the contract will be terminated for cause under 5.8.2.1.

 

 

OTHER FINDINGS

 

      The remaining findings are reportedly being given attention by the Department.  We will review the Department’s progress toward implementation of our recommendations in our next examination.

 

 

 

AUDITORS’ OPINION

 

      Our auditors state the basic financial statements of the Department as of and for the year ended June 30, 2008 were fairly presented in all material respects.

 

 

STATE COMPLIANCE EXAMINATION – ACCOUNTANT’S REPORT

 

      The auditors qualified their report on State Compliance for findings 08-2 and 08-4 through 08-9.  Except for the noncompliance described in these findings, the auditors state the Department complied, in all material respects, with the requirement described in the report.

 

 

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:GR:pp

 

AUDITORS ASSIGNED

 

      The compliance examination was performed by the Auditor General’s staff.    BKD, LLP were our special assistant auditors for the financial audit.

 

DIGEST FOOTNOTES

 

#1 – INACCURATE COMMODITIES INVENTORY RECORDS

 

2007:  The Department agreed with the recommendation and acknowledged that discrepancies were noted between the audit test counts and Department’s physical inventory counts.   Where auditor test accounts were provided, the districts and facilities did review and adjust MMI data accordingly.   The one gross error that was encountered was addressed via an adjusting journal entry.   The Department has reiterated, through email, memos, and training, the process for completing the annual inventory.   In addition, the Department has added additional information to the Property Control and Inventory Procedures Manual regarding commodities inventory.   The Department will continue to train employees and improve inventory process and procedures.   The Department also has enlisted the assistance of a consulting firm that is reviewing current policies and procedures in order to make recommendations to improve the accountability of the inventory process.