REPORT DIGEST

 

DEPARTMENT OF PUBLIC HEALTH

 

COMPLIANCE AUDIT

For the Two Years Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                       8

Total last audit                       7

Repeated from last audit        2

 

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 Departmentís internal audit program did not comply with provisions of the Fiscal Control and Internal Auditing Act.
  • The Department did not obtain proper renewal applications or issue license renewals upon expiration as required by the Youth Camp Act.
  • The Department did not inspect migrant labor camps and issue corresponding licenses as required by the Illinois Migrant Labor Camp Law.
  • The Department did not follow prescribed accounting procedures for the recognition of revenue of its non-federal accounts receivable.
  • The Department did not comply with requirements of the Innovations in Long-term Care Quality Grants Act.

 

 

 

 

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

DEPARTMENT OF PUBLIC HEALTH

COMPLIANCE AUDIT

For The Two Years Ended June 30, 2003

EXPENDITURE STATISTICS

FY 2003

FY 2002

FY 2001

! Total Expenditures (All Funds)

$247,683,935

$272,039,847

$229,328,373

OPERATIONS TOTAL

% of Total Expenditures

$188,907,448

76%

$188,722,181

69%

$171,920,302

75%

Personal Services

     % of Operations Expenditures

     Average No. of Employees

$48,791,063

26%

1,187

$51,201,582

27%

1,294

$50,762,583

30%

1,319

Other Payroll Costs (FICA, Retirement)

     % of Operations Expenditures

$12,153,392

6%

$12,771,881

7%

$12,363,440

7%

Contractual Services

     % of Operations Expenditures

Lump Sum

     #9; % of Operations Expenditures

$12,257,966

7%

$110,098,821

58%

$9,242,810

4%

$104,951,440

56%

$9,208,344

5%

$92,388,932

54%

All Other Operations Items

     % of Operations Expenditures

 

$5,606,206

3%

$10,554,468

6%

$7,197,003

4%

GRANTS TOTAL

% of Total Expenditures

$58,776,487

24%

$83,317,666

31%

$57,408,071

25%

! Cost of Property and Equipment

$29,370,000

$28,259,000

$28,177,000

SELECTED ACTIVITY MEASURES (unaudited)

FY 2003

FY 2002

! Number of Licensed LTC Beds

120,531

121,880

! Number of LTC Facility Annual Inspections

1,112

1,211

! Newborns Screening Tests Performed

1,507,748

1,328,649

! Vision and Hearing Screenings Performed

2,555,000

2,537,597

! Number of Requests to Womenís Health Helpline

2,461

1,263

AGENCY DIRECTOR

During Audit Period: John R. Lumpkin, M.D. (until 3-31-03),
Eric E. Whitaker, M.D. (effective 4-1-03)

Currently: Eric E. Whitaker, M.D.

 

 

 

 

 

All major systems were not reviewed in a two year period and new electronic data processing systems were not reviewed prior to installation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewal license not issued for 9 of 50 camps

 

 

 

 

 

 

 

 

 

 

 

 

19 of 21 Migrant Labor Camps not inspected prior to camp commencement

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department overstated revenues by $7.4 million in FY03 and $7.5 in FY02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department did not establish a long-term care grant program and deposited $1.1 million into the wrong fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

INTERNAL AUDIT REQUIREMENTS

The Department's internal audit program did not meet statutory requirements of the Fiscal Control and Internal Auditing Act (30 ILCS 10/1001 et seq.). During our audit we noted the following:

  • Six major system audits were not performed at least once within a two year period.
  • The design of two major new electronic data processing systems were not reviewed prior to their installation.

Department officials stated a lack of sufficient staff resources led to the inability to complete audits as scheduled and to review designs of major new electronic data processing systems. In addition, the IT auditor separated from the Department in August 2002. (Finding 1, page 8) This finding has been repeated since 1987.

We recommended the Department implement controls necessary to ensure compliance with the Act.

Department officials concurred with our recommendation and stated the consolidation of the Departmentís Division of Internal Audit into the Department of Central Management Systems as well as the preparation of an audit risk assessment plan will ensure compliance with the Act. (For previous Department responses see digest footnote number 1.)

YOUTH CAMP RENEWAL APPLICATIONS NOT OBTAINED AND LICENSES NOT ISSUED

The Department did not obtain the proper renewal application or issue license renewals upon expiration of previous licenses as required by the Youth Camp Act. We noted the Department did not issue a renewal license upon expiration of the previous license at December 31 for 9 of 50 camps tested. In addition, the Department issued a license without obtaining the proper application from a youth camp for 1 out of 50 camps tested.

Department officials stated the renewal period is at the end of the calendar year when most camps are not in operation. Renewals are sent to the camps, when several of them are closed and no forwarding address is available. (Finding 4, page 12)

We recommended the Department comply with the requirements of the Youth Camp Act or seek legislative change to assist with compliance with statutory mandate.

Department officials concurred with our recommendation and stated the Department sends renewal notices in sufficient time to receive a renewal application back from most of the "regular" youth camps.

In addition, there is sufficient time to license those camps that operate during the summer prior to operation.

 

NO INSPECTIONS OR LICENSES ISSUED ON MIGRANT LABOR CAMPS

The Department did not inspect migrant labor camps 30 days prior to camp commencement and licenses were not issued 15 days prior to camp commencement as required by the Illinois Migrant Labor Camp Law. We noted in 19 of 21 camps tested that although the Department inspected the camps it did not inspect them timely nor issue licenses timely.

Department officials stated that inspections and issuance of licenses were not performed timely because migrant labor camps operate based on available housing, crop growth and the location of the work and as these factors change from year to year. Since these factors change on a yearly basis and the Department is not always notified timely, the Department cannot perform the inspections and issue licenses as required. (Finding 5, page 13)

We recommended the Department comply with the requirements of the Illinois Migrant Labor Camp Law to inspect camps or seek legislative changes to assist with compliance of this statutory requirement.

Department officials concurred with our recommendation and stated the Department inspects the migrant labor camps as soon as possible upon notification from the migrant camps. In addition, Department officials stated the nature and type of migrant labor camps have changed extensively since this Act was passed and the Department will determine what changes to this Act are most appropriate.

FINANCIAL REPORTING IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

The Department did not follow prescribed accounting procedures for the recognition of its non-federal accounts receivable. The Department incorrectly recognized revenue in its GAAP packages sent to the Office of the State Comptroller resulting in an overstatement of revenues of $7.4 million and $7.5 million in FY03 and FY02, respectively.

Department officials stated they were unaware of the requirement to report non-federal receivables as deferred revenues, if not received within the availability period. (Finding 6, page 14)

We recommended the Department prepare GAAP Form reporting packages in accordance with proper Statewide Accounting Management System procedures and Governmental Accounting Standards Board (GASB) requirements.

Department officials concurred with our recommendation and stated they overlooked the classification of non-federal revenue from fines and penalties that were not available during the accounting period. However, they did communicate this information to the Comptrollerís Office and will take all necessary steps in the future to report deferred revenue as required by GASB Statement No. 33.

 

DEPARTMENT DID NOT COMPLY WITH INNOVATIONS IN LONG-TERM CARE QUALITY GRANTS ACT

The Department did not comply with the Innovations in Long-term Care Quality Grants Act (Act). We noted the following:

  • The Department did not establish a long-term care grant program and did not provide grants to long-term care facilities to fund programs that demonstrate creativity in service provisions through the scope of their programs or services as required by the Act.
  • The Department deposited approximately $1.1 million of federal civil monetary penalties collected into the Public Health Services Fund. However, these funds should have been deposited into the Long Term Care Monitor/Receiver Fund as required by the Act.

Department officials stated the program was not established and grants were not provided, as the Act has only been effective since August 2002. The Department is currently determining what action is necessary to implement the requirements of the Act. In addition, Department officials stated the funds were not deposited into the Long Term Care Monitor/Receiver Fund as this fund is for State funds and the moneys received were federal. (Finding 7, page 15)

We recommended the Department comply with the Innovations in Long-term Care Quality Grants Act or seek legislative remedy.

Department officials concurred with our recommendation and will work towards implementing the requirements of the Act. The Department will also seek a legislative change to the Act that correctly clarifies the deposit of funds.

 

OTHER FINDINGS

The remaining findings were less significant and Department officials have responded that corrective action is in progress. We will review progress toward implementation of our recommendations during our next audit.

Mr. Gary Robinson, Deputy Director of the Office of Finance and Administration, provided the Department's responses to our findings and recommendations.

AUDITORS' OPINION

We conducted a compliance audit of the Department of Public Health as required by the Illinois State Auditing Act. We have not audited any financial statements of the Department for the purpose of expressing an opinion because the Department does not, nor is it required to, prepare financial statements.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JSC:pp

 

 

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were PTW & Co.

 

DIGEST FOOTNOTES

#1 INTERNAL AUDIT REQUIREMENTS -Previous Department Responses.

  1. "The Department concurs with the finding and recommendation. The Division of Internal Audits will devote available resources to ensure audits of major systems are performed once every two years as required and, reviews, as needed of major new IT application systems to ensure the systems provide adequate audit trails and accountability.

Both IT and User Systems Development Methodology documentation indicates the requirements of the Division of Internal Auditís signed approval before a system is placed into production along with Security and Management approvals. IT has already taken steps to ensure that their communication, from IT development staff to the Division of Internal Audits, will improve. The Division of Internal Audits will be notified of appropriate development phase meetings via GroupWise email invitations."

1999. "The Department concurs with this finding and recommendation. The Division of Internal Audits has made progress in meeting the goals and objectives established in the two year audit plan. However, due to lack of adequate resources, all of the requirements of the Fiscal Control and Internal Auditing Act have not been met. The Division will continue to strive to meet the statutory mandates and as additional funding is made available further improvements can be expected."

1997: "The Department concurs with this finding and recommendation. The Division of Audits has made progress in meeting the goals and objectives established in the two year audit plan. However, due to lack of adequate resources, all of the requirements of the Fiscal Control and Internal Auditing Act have not been met. The Division will continue to strive to meet the statutory mandates and as additional funding is made available further improvements can be expected."

1995: "The Department concurs with the finding and recommendation. The Division of Audits has made progress in meeting the goals and objectives established in the two year audit plan. However, due to lack of adequate resources, all of the requirements of the Fiscal Control and Internal Auditing Act have not been met. The Division will continue to strive to meet the statutory mandates and as additional funding is made available further improvements can be expected. In regard to the lack of required audit work relative to the EDP systems, the Department has hired an Information Systems Auditor."

"The Department will examine the feasibility of reassigning the program monitoring function within its current organizational pattern."

1993: "The Department concurs with the finding and recommendation. The Division of audits has made progress in meeting the goals and objectives established in the two-year audit plan. However, due to lack of adequate resources, all of the requirements of the Fiscal Control and Internal Auditing Act have not been met. The Division will continue to strive to meet the statutory mandates and as additional funding is made available further improvements can be accomplished."

"The Department will examine the feasibility of reassigning the program monitoring function within its current organizational pattern."

1991: "The Department concurs with the finding and recommendation. The Division's inability to meet all of the requirements of the Fiscal Control and Internal Auditing Act are attributable to the factors mentioned below and key vacancies within the Division during a major portion of the audit period. "

"With the filling of two key positions, the Division of Audits anticipates that additional progress will be achieved in meeting the goals and objectives established in the Divisionís two year audit plan."

"While the Department acknowledges that the internal audit function did not fully meet the requirements of the Fiscal Control and Internal Auditing Act, several notable accomplishments were realized during the current audit period. Foremost among these, was the successful, yet time-consuming, implementation of the certification requirement of Article 3 of the Fiscal Control and Internal Auditing Act. The Division of Audits assumed the responsibility for implementing and coordinating this effort." (Response continues outlining areas in which the internal audit functions has improved).

1989: "The Department concurs in the finding and recommendation. The finding correctly states that the emphasis during the audit period has been on developing the foundation for an effective program of internal auditing. The groundwork has now been laid with the development of a two year audit plan and an audit procedures manual. We have also pursued an aggressive program of staff professional development. The division has experienced significant staff variances that have inhibited the quality and quantity of work necessary to meet the statutory requirements of the Internal Auditing Act." (Response continues with an explanation concerning changes that are anticipated to be made in the Internal Audit area).

1987: "The Department concurs in the finding and recommendation. Several changes have occurred within Audit Operations which address some of the concerns and recommendations cited." (Response continues with an explanation concerning changes made in Audit Operations).