The Commission had unnecessary expenditures and
overpaid several vendors.
The Commission did not conform with Generally
Accepted Accounting Principles in establishing asset and
income/expense accounts.
Some expenses appeared to be unrelated to the Crime
Lab project.
Commission staff made partial transfers prior to
approval.
The Commission paid UIC $94,389 over a 2-year
period without a written contract.
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FINDINGS, CONCLUSIONS,
AND RECOMMENDATIONS
- INADEQUATE CONTROLS FOR EXPENDITURES MADE FROM
LOCALLY HELD FUNDS
- The Commission did not have adequate controls to
ensure that expenditures from locally held funds
were accurate and proper. The Fiscal Control and
Internal Auditing Act requires all State agencies
to establish and maintain a system of controls to
safeguard funds against loss, waste, unauthorized
use, and misappropriation. We identified certain
expenditures which should not have been made with
State funds. These included an expenditure of
$899.99 for a treadmill for employees' use and a
loan of $1,000 to a Commission employee.
Additionally, a lack of controls led to
overpayments and duplicate payments amounting to
$633.72. Further, we found instances in which
expenditures were greater than amounts on vendors
invoices or other available documentation. We
recommended the Commission improve its internal
controls over expenditures made from locally held
funds. In its response the Commission agreed to
take additional steps to improve the control of
expenditures from locally held funds. (Finding
96-1)
- INADEQUATE CONTROLS OVER ACCOUNTING RECORDS
FOR LOCALLY HELD FUNDS
- The Commission did not have adequate controls to
ensure accurate accounting records for locally
held fund financial activity. The Fiscal Control
and Internal Auditing Act requires all State
agencies to establish and maintain a system of
controls to ensure the proper recording and
accounting of revenues, expenditures, and
transfers of assets in order to maintain proper
accountability over State resources.
- Accounting records for Fiscal Year 1995 had
several errors. Accounts were not properly set up
at the beginning of the fiscal year. Accounting
records showed numerous incorrect postings of
expenditures. For example, a March 1995 check
ledger showed only 18 different check numbers for
36 separate expenditures. Commission staff stated
that duplicate check numbers were the result of
equipment failures and clerical errors. In
addition, transfers among locally held funds were
not adequately documented. One transfer was
recorded over two months after the actual
transfer took place.
- We recommended the Commission improve its
internal controls over its fiscal and accounting
activities in order to comply with the Fiscal
Control and Internal Auditing Act. The Commission
responded that most of the problems with
accounting controls occurred in Fiscal Year 1995
and the Commission has subsequently implemented
corrective procedures and practices in the FY
96-97 period. (Finding 96-2)
- LACK OF SUPPORT FOR ALLOCATION OF COSTS TO THE
ILLINOIS STATE POLICE CRIME LAB PROJECT
- The Commission did not have adequate
documentation to support its allocation of costs
to the Illinois State Police Crime Lab project.
An interagency agreement between the Commission,
the City of Chicago, the University of Illinois
at Chicago, and the Illinois State Police
required the Commission to provide support and
legal services to acquire land, provide
relocation services for affected residents,
demolish structures on the purchased property,
and address environmental and hazardous material
issues. However some expenses charged to the
project appear to be unrelated to the Crime Lab
project or the documentation was insufficient to
indicate proper allocation of costs. For example,
time sheets for employees whose time was charged
to the project show work on such activities as
lawn and landscaping, repairing a deck at the
Commission office, and glass cutting. Other time
sheets simply stated "work" as assigned
by a supervisor.
- In addition, the Commission included indirect
costs of $19,481 to the Crime Lab project.
Indirect costs consisted of 25 percent of the
total costs for utilities, security, ground
maintenance, building expenses, financial
services, and miscellaneous services associated
with the Commission building. However indirect
costs such as utilities, security etc. were not
specifically identified in the interagency
agreement or related budget documents.
- We recommended the Commission comply with its
agreements with other parties and properly
allocate expenses to projects and review its cost
allocations to existing projects. The Commission
disagreed that the allocation of costs was not
supported and commented that it was clearly
understood that the City of Chicago would
reimburse the Commission for administrative
support service costs. (Finding 96-3)
- QUESTIONABLE TRANSFERS AMONG LOCALLY HELD
FUNDS
- Commission employees transferred funds among
locally held funds although their authority to do
so was questionable. During the audit period, the
Commission approved five transfers which related
to loans or repayments. However, employees made
partial transfers prior to Commission approval
and made a transfer in an amount greater than the
Commission authorization. There were several
other transfers for which it was unclear whether
staff had authority to make the transfers without
Commission approval. Specifically, there were
three transfers totaling over $178,000 among the
locally held funds which were not addressed in
Commission resolutions. Currently the Commission
does not have documented policies and procedures
that address transfers among the locally held
funds.
- We recommended that Commission employees adhere
to directives of the Commission for transfers
related to loans and repayments. We also
recommended the Commission develop policies and
procedures which address the requirement for
Commission approval for various transfers among
locally held funds. The Commission commented that
it considers the transfer of funds among the
locally held funds as administrative in nature
and does not require the full Commission approval
in advance but that staff will keep the
Commission informed regarding transfers. (Finding
96-4)
- FAILURE TO OBTAIN A WRITTEN CONTRACT FOR
ADMINISTRATIVE SERVICES
- The Commission did not obtain a written contract
with the University of Illinois at Chicago (UIC)
for administrative services. In Fiscal Year 1995
the Commission paid UIC $63,216 as part of an
arrangement in which UIC issued paychecks to
several Commission employees. In Fiscal Year
1996, the Commission paid UIC $31,173 under the
same arrangement. However, the Commission did not
have a signed contract with UIC during this
period. The Illinois Purchasing Act requires
contracts for professional or artistic services
involving expenditures of more than $5,000 be
reduced to writing. Failure to obtain a written
contract could expose the Commission to liability
and unnecessary expenditures. This finding has
been repeated since 1992. The Commission
responded to our recommendation by noting that it
has since obtained signed contracts for Fiscal
Year 1997 and 1998. (For previous agency
responses, see Digest Footnote 1.) (Finding 92-3)
AUDITORS' OPINION
- Our auditors state that the June 30, 1995 and
1996 financial statements of the Commission are
fairly presented.
___________________________________
WILLIAM G. HOLLAND, Auditor General
- WGH:JAW:ak
SPECIAL ASSISTANT
AUDITORS
- Hoffman, Morrison & Fitzgerald, P.C. were our
special assistant auditors.
DIGEST
FOOTNOTE
- #1: LACK OF WRITTEN
CONTRACTS - Previous Agency Responses
- 1994: "The Commission has
always complied with Illinois Purchasing Act by
requiring a contract from its vendors before
making payments that exceed $5,000. The
Commission feels that the finding about late
signing of contracts is unfair. During early July
1994 the Commission's one part-time accountant
(only 2 days per week) was overwhelmed with
closing FY92, opening FY93 and responding to
FY91/92 audit requests. In fact, less than $5,000
was paid to three professionals based on the
continuation of their FY95 contract. All
contracts were signed by August 31, 1993 before
any individual contractor received more than
$5,000. At no time was a contractor paid more
than $5,000 without a fully executed and current
contract. The Commission currently has instituted
a policy to assure that the Administrative
Manager/Fiscal Officer obtains a signed, written
contract as required by the Illinois Purchasing
Act, prior to the commencement of services which
we estimate will exceed $5,000 in any one fiscal
year."
- 1992: "The Commission did
have a signed contract with Chicago Title and
Trust company for their services."
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