REPORT DIGEST

ILLINOIS DEPARTMENT OF PUBLIC HEALTH

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2015

Release Date:  May 12, 2016

FINDINGS THIS AUDIT:  24

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 5 -- 5
Category 2:  8 -- 11 -- 19
Category 3:  0 -- 0 -- 0
TOTAL:  8 – 16 -- 24

FINDINGS LAST AUDIT: 19

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 are
also available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (15-01) The Department lacked adequate
administration and monitoring over awards
and grants programs.
• (15-02) The Department did not ensure
complete and accurate commodity inventory
balances.
• (15-03) The Department was unable to
locate 65 computers, some of which may
have contained confidential information.
• (15-06) Internal audits and a peer
review of internal audit responsibilities
were not completed.
• (15-18) Adequate controls were not
maintained over the administration of
State vehicles.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE ADMINISTRATION OF AWARDS AND
GRANTS PROGRAMS

The Department did not adequately
administer and monitor its awards and
grants programs.
The Department expended over $488 million
(56%) of its total expenditures for awards
and grants. We sampled thirty grant
programs from six offices and noted the
following weaknesses:

• The Department did not have written
procedures to uniformly guide the
administration of awards and grants.
• The Department had not established
administrative rules for grants.
• The Department had not developed a
standardized methodology, formal criteria,
or mandatory site visits for monitoring
grantees.
• Audited financial statements were not
submitted or reviewed for 77% of grantees
tested, which received over $40 million in
grants.
• The Department did not sufficiently
document its review and receipt of grant
reports. (Finding 1, pages 15-19) This
finding has been repeated since 2007.

We recommended the Department develop and
enforce a comprehensive grant
administration program that includes the
use of Government Accountability and
Transparency Act (GATA) rules for grants
and development and implementation of
written procedures over the awarding and
monitoring of all of the Department’s
grant awards; reviewing the programmatic
and financial reports of grant recipients;
developing a method to document grant
monitoring; use of grantee site visits;
and considering a risk-based methodology
for grantee monitoring, including on-site
reviews of higher risk grantees.

Department officials concurred with the
finding and responded that a grants manual
will be developed to support GATA
implementation. Officials further stated
they will evaluate the need for additional
rules, and ensure the grant administration
program includes risk assessment,
monitoring, report review, and site
visits. (For the previous Department
response, see digest footnote #1.)

WEAKNESSES IN CONTROLS OVER INVENTORY

The Department did not conduct complete
physical inventories and ensure the
accuracy of fiscal year-end commodities
inventory balances.

The Department understated media inventory
balances by $77,799 and overstated the
balances of other inventory supplies by
$161,880. In addition, year-end balances
omitted inventory from eleven programs or
divisions and 5% of commodities inspected,
and omitted cost data for 5% of
commodities tested. The dollar amount of
these understatements could not be
determined. The misstated balances were
reported to the Illinois Office of the
Comptroller in year-end financial
reporting packages. (Finding 2, pages
20-21)

We recommended the Department strengthen
internal controls over physical
inventories to ensure its fiscal year-end
inventory balances are accurate and
complete.

Department officials concurred with the
finding and stated large discrepancies
between current and prior year inventory
counts will be investigated and one
division is working on solutions to better
track laboratory inventories.

INADEQUATE CONTROLS OVER COMPUTER
INVENTORY

The Department was not able to locate 65
computers during fiscal years 2014 and
2015, some of which may have contained
confidential information.

The Department reported missing computer
inventory in fiscal year 2014 and 2015
totaling $76,435, which included 38
desktop and 27 laptop computers. The
Department did not perform a detailed
assessment to determine whether the
missing computers contained confidential
information. Further, the Department had
not protected all of its computers with
encryption software and had no internal
process to clear data from computers
before transfer, thus increasing the risk
that confidential or personal information
could be exposed.

Due to management changes and lack of
turnover of documents and communication,
it could not be determined if the
Department performed an assessment of
computer inventory in 2013 as indicated in
the prior finding response.

Department officials stated encryption
software was not installed on older
computers due to insufficient processing
power. (Finding 3, pages 22-25) This
finding has been repeated since 2011.

We recommended the Department immediately
perform a detailed inventory of computer
equipment and review current practices to
determine if enhancements can be
implemented to prevent the theft or loss
of computers. We also recommended the
Department establish procedures to
immediately assess and document if a
computer may have contained confidential
information whenever it is reported lost
or stolen.

Department officials concurred with the
finding and stated corrective actions will
be taken. (For the previous Department
response, see digest footnote #2.)

INTERNAL AUDITS AND PEER REVIEW NOT
CONDUCTED

The Department’s Internal Audit division
did not complete most planned audits, one
annual internal audit report, or a peer
review. We noted:

• 94% planned audits and reviews were not
completed.
• No audits were completed relating to
internal accounting and administrative
controls.
• No annual internal audit report was
submitted for Fiscal Year 2014.
• The Internal Audit Division did not
undergo a peer review within five years of
assuming audit responsibilities as
required by professional standards.
(Finding 6, pages 34-36)

We recommended the Department audit major
internal accounting and administrative
control systems at least biennially,
prepare annual internal audit reports, and
arrange for an external assessment of
internal audit activity.

Department officials concurred with the
finding and stated they will work to
complete planned audits, submit required
reports, and complete a peer review.

INADEQUATE CONTROLS OVER THE
ADMINISTRATION OF STATE VEHICLES

The Department did not have adequate
controls over reporting of vehicle
accidents, fringe benefits for personal
use of State vehicles, changes to vehicle
assignments, maintaining vehicle records,
or obtaining annual certifications of
license and vehicle liability coverage.
(Finding 18, pages 63-69) This finding has
been repeated since 2007.

We recommended the Department:

• Designate and train sufficient staff;
• Monitor submission of accident reports;
• Enforce vehicle maintenance schedules;
• Ensure proper reporting of fringe
benefits;
• Review and enforce procedures over
timely filing of annual license and
liability insurance certifications; and
• Remind staff and monitor to ensure
timely reporting.

Department officials concurred with the
finding and detailed changes they are
implementing as a result. (For the
previous Department response, see digest
footnote #3.)

OTHER FINDINGS

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

ACCOUNTANT’S REPORT

The accountants conducted a compliance
examination of the Department for the two
years ended June 30, 2015, as required by
the Illinois State Auditing Act. The
auditors qualified their report on State
Compliance for findings 2015-001,
2015-002, 2015-003, 2015-006 and 2015-018.
Except for the noncompliance described in
these findings, the auditors state the
Department complied, in all material
respects, with the requirements described
in the report.

FRANK J. MAUTINO
Auditor General

FJM:lkw

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for this
examination were E.C. Ortiz & Co., LLP.

DIGEST FOOTNOTES

#1 - Inadequate administration of awards
and grants programs - Previous Department
Response.

2013: The Department concurs in the
finding and recommendation. Prior to,
during, and since the audit compliance
period, the Department has been working to
address these areas of concern. Prior to
the audit period, the Department
successfully standardized its grant
request for applications forms (RFAs) and
corresponding agreements across all agency
programs into a more streamlined format.
Additionally, the Department established a
centralized Grants Review Committee (GRC),
and implemented a GRC Grant Program Review
Form to catalog and evaluate how the
process by which grant programs were
administered, i.e. competitive vs. non-
competitive, fee for service, directed
appropriation, etc. Finally, the
Department began the process of drafting
both an Agency wide Grants Review Manual
and Grant Administration Rules during the
compliance period, but was unable to
finalize/implement either of those
guidance documents.

During the Audit compliance review period,
the Department was able to procure and
begin implementing an agency wide
electronic Grants Administration and
Management System (eGrAMS), to manage,
monitor, and evaluate the entire life
cycle of the grants administration
process. To support the implementation and
ongoing management of this system across
all agency grant programs (approx 100
grant programs), the Department was also
able to establish a centralized Grants
Management Unit (GMU), within the Office
of Performance Management (OPM). This Unit
is currently comprised of a Division Chief
for Grants Management, 4 grants
administrators, and 3 grant monitors that
are all independent of any Office’s
program staff/reporting structure. The
grant administrators provide technical
assistance and guidance to program staff
for the publishing of any agency grant
RFAs, and the grant monitors provide an
extra layer of oversight into any
potential areas of concern related to
grant program funds throughout the agency.
Although the Department only had 1 grant
program go live through eGrAMS by the time
of the auditor’s assessment, the Grants
Management Unit has since successfully
published 38 grant RFAs through the new
system.

Due to turnover of key implementation
staff, several of the above efforts have
been delayed. Specifically, the Grants
Review Manual and corresponding Grants
Administration Rules have undergone
numerous revisions and iterations by staff
who were hired and subsequently left the
agency during the compliance period.
Additionally, the recent procurement and
implementation of eGrAMS has necessitated
the need to revise these documents to
accommodate for both its reference, as
well as the improved business processes
that have been made possible by utilizing
such technology. These two documents are
currently being updated but have not been
finalized and disseminated to all grant
program staff. Lastly, with the rapid
movement of HB 3820 through the
legislative process (Grants Accountability
and Transparency Act) it will also be
necessary to sync our grants review
process and procedures with any new
requirements mandated by this statewide
effort through the Governor’s Office of
Management and Budget.

#2 - Inadequate Controls over Computer
Inventory

2013: The Department concurs in the
finding and recommendation. As of December
of 2013, the Department completed an
assessment of computer equipment
inventory. This assessment documented what
computer equipment was assigned to which
employees. This assessment also documented
what operating system is installed on each
computer. With this new information, the
Department can determine if any lost or
stolen computers were protected with full
disk encryption. Processes will be put in
place and communication to employees on
how to properly report lost or stolen
computer equipment. Processes will also be
created to better track computer equipment
that is sent to surplus and transferred
between program areas within the
Department.

#3 - Inadequate Controls over the
Administration of Vehicles

2013: The Department concurs in the
finding and recommendation. To ensure full
compliance, all full and part-time
employees of the Department, public
members, whether salaried or unsalaried of
State Boards, Commissions, and Authorities
will complete a vehicle insurance
liability certification form.
Additionally, each new employee upon hire,
must sign a vehicle insurance
certification form as a part of a
condition of employment. Further, the form
has been redesigned to incorporate the
language found in Section 7-203 of the
Vehicle Code. The Agency Travel
Coordinator will periodically review the
Department’s documentation in comparison
with the new hires, board members, interns
and persons assigned vehicles to ensure
full compliance.