REPORT DIGEST

 

DEPARTMENT OF

PUBLIC HEALTH

 

COMPLIANCE EXAMINATION

 

For the Two Years Ended:

June 30, 2007

 

Summary of Findings:

Total this report†††††††††††††††††††† 25

Total last report†††††††††††††††††††† 16

Repeated from last report††††† 12

 

Release Date:

March 25, 2008

 

 

 

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 TTY (888) 261-2887

 

This Report Digest and Full Report is also available on

the worldwide web at

www.auditor.illinois.gov

 

 

SYNOPSIS

 

 

 

®      The Department did not adequately document its procedures and monitoring of awards and grants.The Department expended $159,321,862 for awards and grants.

 

®      The Department did not have adequate support for amounts paid for legal services pursuant to an interagency agreement with the Office of the Governor.

 

®      The Department did not follow prescribed accounting procedures for the recognition of revenues and non-cash awards.Revenues were understated by $2,495,000 and expenditures were overstated by $948,000.

 

®      The Department did not accurately report capital asset information.†† Capital assets were overstated by $4,692,000.†† Further, depreciation was overstated by $5,911,000

 

®      The Department did not reconcile its cash receipts records as required.

 

®      The Department did not establish adequate controls for securing its computer resources.

 

 

 

 

 

 

 

 

 


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

 

 


DEPARTMENT OF PUBLIC HEALTH

COMPLIANCE EXAMINATION

For the Two Years Ended June 30, 2007

 

EXPENDITURE STATISTICS

FY 2007

FY 2006

FY 2005

†††† Total Expenditures (All Funds)...............

 

$333,310,088

$297,741,708

$296,378,918

†††† OPERATIONS TOTAL............................

†††††††† % of Total Expenditures.....................

$249,238,943

75%

$222,490,991

75%

$232,796,622

79%

 

†††††††† Personal Services................................

††††††††††† % of Operations Expenditures.......

††††††††††† Average No. of Employees...........

 

$47,279,854

19%

1,092

 

$45,618,568

21%

1,098

 

$46,024,036

20%

1,118

 

†††††††† Other Payroll Costs (FICA, Retirement)

††††††††††† % of Operations Expenditures.......

 

$11,480,128

5%

 

$9,821,671

4%

 

$13,170,241

6%

 

†††††††† Contractual Services..........................

††††††††††† % of Operations Expenditures........

 

††††††††† Lump Sum.....................................

†††††††††† % of Operations Expenditures.......

 

$10,607,401

4%

 

$174,480,702

70%

 

$10,771,534

5%

 

$151,319,826

68%

 

$5,566,810

2%

 

$162,823,781

70%

 

†††††††† All Other Operations Items...............

††††††††††† % of Operations Expenditures........

 

 

$5,390,858

2%

 

$4,959,392

2%

 

$5,211,754

2%

†††† GRANTS TOTAL..............................

†††††††† % of Total Expenditures.................

 

$84,071,145

25%

$75,250,717

25%

$63,582,296

21%

†††† Cost of Property and Equipment.....

$28,131,463

$29,957,836

$29,708,246

†††††††††††

SELECTED ACTIVITY MEASURES (not examined)

FY 2007

FY 2006

FY 2005

†††† Number of Licensed LTC Beds...........................

123,620

123,782

125,349

†††† Number of LTC Facility Annual Inspections..........

1,107

1,115

1,106

†††† Newborns Genetic/Metabolic Disorder Screening Performed.........................................................

181,000

182,003

179,845

†††† Vision and Hearing Screenings Performed............

2,100,000

1,901,256

1,799,125

†††† Number of Requests to Womenís Health Helpline.

5,561

2,386

1,603

 

AGENCY DIRECTOR

During Audit Period:Eric E. Whitaker, M.D.,M.P.H. (through 9/30/07),Damon T. Arnold, M.D., M.P.H. (10/1/07 Ė current)

Currently: Damon T. Arnold, M.D., M.P.H.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


No written procedures

 

 

 


No documentation of monitoring activities

 

 

 

 

 

 


Stem cell grantees were awarded amounts that exceeded the budgets by $862,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No supporting documentation for the amount paid for legal services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues were understated by $2.495 million in FY07

 

 

 

 


Expenditures were overstated by $948,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inaccurate capital asset reporting

 

 


Capital assets overstated by $4.692 million

 


Depreciation overstated by $5.911 million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Failure to reconcile on monthly basis

 

 

Receipt reconciliations were up to seven months in arrears

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inadequate controls for securing computer resources

 

 

 


Shared responsibility with DCMS over computer security

 

 

 

 

 

 

 

 

 

 


Security Weaknesses

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

WEAKNESSES IN THE DOCUMENTATION NOTED IN THE AWARDS AND GRANTS PROGRAMS

 

††††† The Department did not adequately document its procedures and monitoring of its awards and grants programs.

 

††††† The Department expended $159,321,862 or 25.2% of its $631,051,796 total expenditures for awards and grants.†† We tested grants from the Division of Health Protection, Division of Health Promotion and the Center for Minority Health and noted the following weaknesses:

 

        The Department did not have written procedures established to guide its administration of the awards and grants programs tested.

 

        The Department did not ensure it adequately monitored and reviewed programmatic and financial reports for 47 of 157 (29.9%) grants tested totaling $47,149,085.† †The Department did not follow up on missing reports, nor did the files contain documentation of any other monitoring activities.†† Auditors noted one grant where a $14,000 refund was due from the grantee but the Department did not seek collection.

 

        Seven of 12 (58.3%) stem cell research grantees were awarded a total of $7,298,299 which exceeded the grant budgets of $6,435,462 by a total of $862,837.†† The grant files did not contain documentation indicating the additional funds were approved.(Finding 1, pages 12-14)

 

††††† We recommended the Department develop a comprehensive grant administration program that includes the development and implementation of written procedures over the awarding of all of the Departmentís grant awards, reviewing the programmatic and financial reports of grant recipients, and scheduling, conducting, and documenting grantee site visits.†† In addition, we recommended the Department seek reimbursement of the $14,000 refund due to the Department.

 

††††† Department officials concurred with the finding and stated a Department wide grants monitoring protocol will be implemented across all impacted offices.The Department also stated it will seek recovery of the $14,000 refund.

 

LACK OF DOCUMENTATION FOR INTERAGENCY AGREEMENT

 

The Department did not have adequate support detailing the methodology for the allocation to be paid for legal services provided to the State in conjunction with the Stateís video-game lawsuit.††

 

The Department, along with four other agencies, entered into an interagency agreement with the Office of the Governor for an allocable share of the legal fees incurred effective June 20, 2006.†† There was no supporting documentation detailing the methodology used for determining the percent allocation of 14% which was to be paid by the Department.†† The Department then was instructed to and then paid $10,259 or 2% of the approximate judgment award of $511,000 in addition to the accrued interest on the attorneyís fee award which totaled $10,104.††† (Finding 3,page 17)

 

We recommended the Department require interagency agreements to include the methodology supporting the percent allocated and ensure the amounts allocated for related billings are in accordance with the agreement.

 

Department officials concurred with the finding and noted that although a detailed methodology was not available, the Department paid less than the contracted allowable amounts.

 

NEED TO IMPROVE FINANCIAL REPORTING

 

The Department did not correctly report financial information on the Grant/Contract Analysis (SCO-563) form to the Office of the State Comptroller.The Department prepares a separate SCO-563 form for five funds.We noted the following errors:

 

 

        The Department did not calculate (estimate) deferred revenues correctly for federal grants in two funds.††† The Department received an additional $2.495 million in revenues during the first 60 days of the next fiscal year, resulting in the Department overstating deferred revenues and understating revenues by $2.495 million.

 

        The Department inaccurately reported a non-cash award on the SCO-563 due to incorrect reports generated by the Departmentís immunization inventory database.†† The Department overstated expenditures by $948,000 and understated receipts by $113,000. (Finding 4, pages 18-19)

 

††††† We recommended the Department comply with the Statewide Accounting Management System and Governmental Accounting Standards Board requirements to ensure accurate financial information is submitted to the Office of the State Comptroller.Further, we recommended the Department review and revise as necessary its current system used to gather and document the financial information that will be reported in the Office of the State Comptroller.

 

††††† Department officials concurred with the finding and recommendation and stated they will change the process currently used to project the future cash draw downs to ensure accurate reporting of the deferred revenue.They also stated they will reconcile reports generated from the immunization database system to reports that manually calculate the doses of vaccine to ensure all doses received are accounted for and distributed accurately.

 

NEED TO IMPROVE REPORTING FOR CAPITAL ASSETS

 

†††† The Department did not accurately report capital asset information on the Capital Asset Summary (SCO-538) form to the Office of the State Comptroller.

 

†††† We noted the Departmentís ending capital asset balance and accumulated depreciation at June 30, 2007 did not agree to the property records maintained by the Department.Total capital assets were overstated by $4.692 million and total accumulated depreciation was overstated by $5.911 million due to the Department includingcommodity expenditures as capital assets.As a result, additions and deletions reported on the SCO-538 were also incorrect by undetermined amounts.†† (Finding 5, page 20-21)

 

†††† We recommended the Department report capital assets accurately and in accordance with the procedures outlined in the SAMS manual.†† We also recommended the Department correct and resubmit the capital asset forms to the Office of the State Comptroller.

 

†††† Department officials concurred with the finding and recommendation and stated they were working with the Office of the State Comptroller to correct the methodology and to correct the FY07 amount.

 

DEPARTMENT RECEIPTS NOT RECONCILED TO STATE COMPTROLLER RECORDS

 

††††† The Department did not reconcile its cash receipt records to the State Comptrollerís Monthly Revenue Status Report (SB04) as required.

 

††††† During the engagement period, the Department processed 155,350 receipts totaling $325,818,535.†† The Department did not reconcile cash receipts to the SB04 each month; rather, the Department normally reconciled the activity of two to three months at one time.At one point in the engagement period, the reconciliations were seven months in arrears.†† (Finding 8, page 25)

 

†††† We recommended the Department establish procedures to reconcile its cash receipt records to the SB04 on a monthly basis.

 

†† Department officials concurred with the finding and recommendation and stated significant staff losses have resulted in the necessity of prioritizing work and the ongoing priority is meeting the 24/48 hour deposit requirements.†† They further stated with additional staff hired which is in progress, the Department will be able to perform the necessary reconciliations.

 

 

INADEQUATE COMPUTER SECURITY CONTROLS

 

††††† The Department in conjunction with the Department of Management Services (DCMS) did not establish adequate controls for securing its computer resources.

 

†††† The Department had established computer systems throughout the State in order to meet its mission and mandate. The Department processes and maintains critical, confidential and sensitive information on computer systems.Many of the Departmentís IT functions were consolidated into DCMS, with a physical move of equipment in April 2007.As a result, the Department and DCMS have a shared responsibility over computer security.

 

††††† Although the Department had developed a security awareness program, it had not been fully implemented.

 

††††† In addition, during our testing of computer security, we noted:

 

  • Servers were not always updated with the current vendor recommended patch levels or security practices.

  • An excessive number of users had powerful security administration authority.

  • Password length and content requirements were lacking.

  • Accounts for terminated employees were still active after termination.

  • Access rights to Department applications and data were not routinely reviewed.

  • Security Access Request forms were not always completed or retained.(Finding 11,pages 30-31)

 

††††††††† We recommended the Department formally communicate to DCMS its security requirements, and establish and document guidelines that outline both the Departmentís and DCMS responsibilities.†† We also recommended the Department work with DCMS to strengthen its security parameters.In addition, we recommended the Department finalize and implement the security awareness program.

 

 

 

††††† Department officials concurred with the finding and recommendation.

 

OTHER FINDINGS

 

††††† The remaining findings are reportedly being given attention by the Department.We will review the Departmentís progress toward the implementation of our recommendations during our next examination.

 

†††††

ACCOUNTANTS REPORT

 

††††† We conducted a compliance examination of the Department as required by the Illinois State Auditing Act.The Accountantís report noted the Department did not comply in all material respects with the requirements regarding laws and regulations, including the State uniform accounting system, in its financial and fiscal operations.

 

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:PH:pp

 

 

 

SPECIAL ASSISTANT AUDITORS

 

††††† Sikich LLP were our special assistant auditors for this engagement.