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
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
To obtain a copy of the
Report contact: Office of the Auditor
General
(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
{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
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
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 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. |