REPORT DIGEST OFFICE OF THE SECRETARY OF STATE Financial Audit for the Year Ended June 30, 2015 and Compliance Examination for the Two Years Ended June 30, 2015 Release Date: March 24, 2016 FINDINGS THIS AUDIT: 6 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 0 -- 6 -- 6 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 6 -- 6 FINDINGS LAST AUDIT: 08 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 FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROL OF CASH AT DRIVERS LICENSE FACILITIES The Office permitted multiple employees to have access to the same cash drawers at the Drivers License Facilities (facilities). During testing, we visited 6 of the Office’s 137 facilities. At 3 of the facilities visited, we noted that multiple employees could access the same cash drawer. (Finding 1, pages 13-14) This finding has been repeated since 2005. We recommended the Office continue to develop procedures to ensure that each employee utilizes an individual cash drawer and not be permitted to access the drawer of other employees at the Drivers License Facilities. Office officials accepted our recommendation and stated the Office continues to assess its facility operations to ensure funds are safeguarded against loss, unauthorized use, and misappropriation and improvements are made whenever fiscally and operationally feasible. (For the previous Office response, see Digest Footnote #1.) NEED TO IMPROVE CONTROLS OVER CHANGE FUNDS The Office did not maintain adequate records of the custodians of change funds and did not keep change fund information in a compartment that was locked at all times. During testing we noted the following: •The Office did not maintain adequate records of the custodians of change funds. For 1 of 18 (6%) change funds tested, the Office did not obtain the proper signatures from the former custodian on the Change of Custodian or Location Petty Cash or Change Fund form(C-85) filed with the Office of the Comptroller. •We visited 6 of the Offices 137 Drivers License Facilities (facilities). At 1 of the 6 (17%) facilities tested, we noted the daily work and important records were kept in a filing cabinet that did not have a locking mechanism. (Finding 2, pages 15-16) This finding has been repeated since 2011. We recommended the Office implement procedures to ensure timely and accurate reporting of information concerning the custodians of change funds and that all important change fund records be maintained in a locked compartment at all times. Office officials accepted our recommendation and stated the Office has developed procedures for earlier identification of changes to change fund custodians in order to ensure proper signatures are obtained for documentation sent to the Office of the Comptroller. The Office also stated they will continue to train appropriate personnel regarding the security of important records related to change funds. (For the previous Office response, see Digest Footnote #2.) OTHER FINDINGS The remaining findings pertain to 1) Excess Balances in Division of Corporations Limited Liability Partnership Fund, 2)PCI Compliance Weaknesses 3) Lack of Independent Review of Internal Control of Outsourced Information Systems or Operations, 4) Inadequate Procedures for Disposal of Confidential Information, and are reportedly being given attention by the Office of the Secretary of State. We will review progress toward implementing all recommendations in our next compliance examination. AUDITOR’S OPINION Our auditors stated the financial statement of the Office of the Secretary of State as of June 30, 2015, and for the year then ended are fairly presented in all material respects. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Office of the Secretary of State for the two years ended June 30, 2015, as required by the Illinois State Auditing Act. The auditors stated the Office of the Secretary of State complied, in all material respects, with the requirements described in the report. FRANK J. MAUTINO Auditor General FJM:SW SPECIAL ASSISTANT AUDITORS Our Special Assistant Auditors for this audit were Kerber, Eck, and Braeckel, LLP. DIGEST FOOTNOTES #1 INADEQUATE CONTROL OF CASH AT DRIVERS LICENSE FACILITIES – Previous Office Response 2013: The Office accepts this finding. The Office is in the process of centralizing the issuance of individual drivers’ licenses. The Office will be redesigning the physical layout of all facilities to accommodate this change. The Office will address the above recommendation where multiple employees have access to an individual cash drawer as the facilities are updated. #2 NEED TO IMPROVE CONTROLS OVER CHANGE FUNDS – Previous Office Response 2013: The Office accepts this finding and the recommendation has been partially implemented. Procedures have been implemented to ensure the timely and accurate reporting of changes in the custodians of change funds. Procedures exist that require safes to be locked at all times. The Office will retrain employees in our facilities to ensure that safes should be locked when not in use.