INTRODUCTION
The Department of Military Affairs was established by the Military Code of
Illinois (20 ILCS 1805 et seq.). The Department acts as the channel of
communication between the federal government and the State of Illinois on all matters
pertaining to the State Military. The Adjutant General prepares and executes plans for
organizing, supplying, equipping, and mobilizing the Organized Militia for use in national
defense, State defense, and emergencies.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INACCURATE ACCOUNTS RECEIVABLE REPORTING
The Department incorrectly calculated its accounts receivable for financial
reporting purposes and did not maintain appropriate accounts receivable records.
During our review of the Generally Accepted Accounting Principles (GAAP) form packages
submitted to the State Comptroller and detailed Department records, we noted the accounts
receivable for both the General Revenue Fund and the Federal Support Agreement Revolving
Fund were inaccurate. The Department did not maintain adequate records of amounts billed
and the corresponding collections in order to compile an accurate record of accounts
receivable. Instead, the Department reported only the amounts received in the month after
the end of the quarter as receivable.
Statewide Accounting Management System (SAMS) Procedures state that accounts receivable
should be recognized when the State's claim for future cash is reasonably estimable and
the amount due becomes measurable.
The FY99 ending balances in the GAAP packages were understated by approximately
$550,000 for the General Revenue Fund and by $535,000 for the Federal Support Agreement
Revolving Fund. The FY00 ending balances in the GAAP packages were understated by
approximately $560,000 for the General Revenue Fund and by $555,000 for the Federal
Support Agreement Revolving Fund. (Finding 1, page 12)
Department personnel concurred with our recommendation to follow SAMS criteria
regarding revenue recognition and agreed to keep more detailed records for accounts
receivable.
INAPPROPRIATE ACCOUNTING FOR TRANSACTIONS RELATED TO FEDERAL REIMBURSEMENTS AND
EXPENDITURES
The Department did not appropriately account for transactions within the Federal
Support Agreement Revolving Fund.
During our reconciliation of the fund by program, we noted the Department paid a total
of $306,364 out of the wrong appropriation code. Lincoln's Challenge Program payroll
expenditures totaling $297,932 and Joint Armed Forces Reserve Center expenditures totaling
$8,432 were paid from the Cooperative Funding Agreement appropriation.
We also noted during our reconciliation that federal reimbursements were deposited into
the wrong account. Two Army/Air deposits totaling $122,139 were recorded using the
Cooperative Funding Agreement account code.
In all cases where exceptions were noted, the Department did not adhere to the
procedures outlined in the Statewide Accounting Management Systems (SAMS) Manual regarding
the classification of expenditures and receipts by appropriation code or type.
Furthermore, by not assigning the correct appropriation code to all expenditures, the
Department did not expend its funds for the intended purposes specified by the General
Assembly in the Department's appropriation. (Finding 2, pages 13 - 14)
The Department agreed with our recommendation to strengthen controls over federal
reimbursements and expenditures. Department personnel stated they have developed a
detailed accounting procedure to track federal expenditures and receipts for each of the
four Federal Reimbursable Funding Agreement accounts to ensure compliance with the
appropriation authorization.
OTHER FINDINGS
The remaining findings are considered less significant and corrective action is in
process. We will review progress towards the implementation of our recommendations in our
next audit.
Responses were provided by the Department’s Adjutant General, David Harris.
AUDITOR’S OPINION
Our auditors state that the Department’s fiscal year
2000 and 1999 financial statements for nonshared funds are fairly presented in all
material respects.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
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AUDITORS ASSIGNED
This audit was performed by the Auditor General's staff.
