REPORT DIGEST

 

ILLINOIS LIQUOR CONTROL COMMISSION

(Final Audit)

COMPLIANCE AUDIT

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                      2

Total last audit                      2

Repeated from last audit       1

 

Release Date:

March 2, 2004

 

 

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 TDD (217) 524-4646

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

SYNOPSIS

 

  • The Commissionís property control records did not accurately reflect property and equipment.
     
  • The Commission did not properly perform monthly reconciliations of their receipts to the Office of the State Comptroller reports. As a result, the receipts per the Commissionís records were understated by $42,546.

 

 

 

 

 

 

 

 

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

ILLINOIS LIQUOR CONTROL COMMISSION

COMPLIANCE AUDIT

For The Year Ended June 30, 2003

EXPENDITURE STATISTICS

FY 2003

FY 2002

  • Total Expenditures (All Appropriated Funds)

OPERATIONS TOTAL

          % of Total Expenditures

General Office:

     Personal Services

          ; ; % of Operations Expenditures

          ; ; Average No. of Employees

 

     Other Payroll Costs (FICA, Retirement)

          % of Operations Expenditures

 

     Contractual Services

          % of Operations Expenditures

 

     All Other Items

          % of Operations Expenditures

 

     Shipment Regulation

          % of Operations Expenditures

 

     Tobacco Study

          #9; % of Operations Expenditures

 

     B.A.S.S.E.T./Under 21

          % of Operations Expenditures

 

     Other Programs

          % of Operations Expenditures

  • Cost of Property and Equipment

$5,972,539

 

$5,972,539

100%

 

$2,322,408

38.88%

57

 

$914,145

15.31%

 

$327,268

5.48%

 

$340,352

5.70%

 

$0

0%

 

$262,775

4.40%

 

$394,170

6.60%

 

$1,411,421

23.63%

 

$675,560

$6,315,066

 

$6,315,066

100%

 

$2,314,103

36.65%

60

 

$927,062

14.68%

 

$285,349

4.52%

 

$369,399

5.85%

 

$0

0%

 

$257,045

4.07%

 

$600,156

9.50%

 

$1,561,952

24.73%

 

$738,321

SELECTED ACTIVITY MEASURES (Unaudited)

FY 2003

FY 2002

  • Number of Licenses Issued

  • Investigations/Inspections Performed

  • Citations for Violations

  • Monetary Fines

  • Recovered Taxes

24,606

19,972

6,021

$515,766

$7,692,101

25,817

27,400

4,017

$475,000

$3,974,763

AGENCY DIRECTOR(S)

During Audit Period: Mark Bishop (7/1/02 to 4/1/03)

Current: Vacant

 

 

 

 

 

 

 

 

 

 

 

 

 

Records did not accurately reflect property and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

Receipts were understated by $42,546 for the fiscal year ended June 30, 2003

 

 

 

 

 

 

 

 

INTRODUCTION

The Illinois Liquor Control Commission (Commission) was created and authorized under the Liquor Control Act of 1934 (235 ILCS 5/3-1). The Commission's function is to license and regulate the alcoholic beverage sales of retailers, distributors (operating inside and outside the State), wholesalers, manufacturers, and other liquor concerns. As mandated by the State statute, the Commission developed and distributed formal Rules and Regulations to which liquor licensees must adhere. Effective June 1, 2003, Executive Order Number 9 (2003) transferred all the powers, duties, rights, and responsibilities vested in the Commission to the Illinois Department of Revenue. As a means of easing the transition of the Commission into the Department of Revenue, management decided to report activity of the Commission through the fiscal year ended June 30, 2003.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER EQUIPMENT

The Commissionís property control records did not accurately reflect property and equipment.

Several different types of exceptions were noted during our testing of property including problems with recording, reporting, tagging, and the valuation of the equipment.

Inaccurate property control records result in incorrect accounting information and could cause unnecessary equipment expenditures and inaccurate financial reporting. Equipment not properly tagged could lead to improper use of Commission assets. (Finding 1, pages 8-9)

We recommended that the Commission adhere to its procedures to ensure that the property and equipment records are properly maintained.

Commission officials agreed with the finding and recommendation and stated that the successor agency (Department of Revenue) will manage property control and fixed asset reporting.

 

IMPROPER RECONCILIATION OF RECEIPTS

The Commission did not perform monthly reconciliations of its receipts reported to the Office of the State Comptroller. As a result, Commission receipts were understated by $42,546 for the fiscal year ended June 30, 2003.

Statewide Accounting Management System (SAMS) procedure 25.40.20 requires monthly reconciliations of receipts to State Comptroller reports (Finding 2, page 10). This finding has been repeated since 2000.

We recommended the Commission prepare monthly reconciliations as required by SAMS. The process should include the reconciliation of the Commissionís accounting information and information on its licensing computer system with amounts reported to the Office of the State Comptroller. (For previous Commission responses, see Digest Footnote.)

Commission officials agreed with our finding and recommendation and stated they will be implementing the policies and procedures of the successor agency (Department of Revenue) relating to financial control and monthly reconciliation.

 

AUDITORSí OPINION

We conducted a compliance audit of the Illinois Liquor Control Commission for the year ended June 30, 2003 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:TLK:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were Duffner & Company, P.C.

 

DIGEST FOOTNOTE

IMPROPER RECONCILIATION OF RECEIPTS Ė Previous Agency Responses

2002: Accepted and Resolved. The Commission agrees that it improperly reported and underreported receipts in both fiscal year 2001 and fiscal year 2002. The cause of the problem was in the way the Commission reconciled its monthly receipts, especially direct deposit and in-transit items. The Commission was operating under a procedure which incorrectly reported certain deferred license revenues and omitted direct deposit items. The Commission has taken steps to correct this matter. The Commission has developed a Microsoft Access database to track and report daily deposits to reconcile to the Commission's Licensing computer system, to the Receipts Deposit Transmittal, and to the Comptrollerís Monthly Revenue Report, in accordance with SAMS procedure 25.40.20.

2000: The Commission agrees that it under reported receipts in both fiscal year 1999 and 2000. The cause of the problem lies in the way the Commission reconciles its year-end receipts, especially in-transit items. The Commission was operating under a procedure, which incorrectly reported certain deferred license revenues. In addition, the Commission received a late payment via electronic funds transfer (EFT) in fiscal year-1999 for reimbursement for Food and Drug Administration contract expenses that should have been reported as in-transit versus actual year. The program was new and the Commission was unfamiliar with the technicalities of EFT. The Commission has taken steps to develop a written procedure on the recording and reconciling of receipts each month and at the close of the fiscal year.