REPORT DIGEST

OFFICE OF THE GOVERNOR

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2019

Release Date:  April 15, 2020

FINDINGS THIS AUDIT:  13

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  3 -- 6 -- 9
Category 2:  3 -- 1 -- 4
Category 3:  0 -- 0 -- 0
TOTAL:  6 -- 7 -- 13

FINDINGS LAST AUDIT: 7

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

INTRODUCTION

Because of the significance and pervasiveness
of the findings described within the report,
we expressed an adverse opinion on the Office
of the Governor’s compliance with the
assertions which comprise a State Compliance
Examination.  The Codification of Statements
on Standards for Attestation Engagements (AT-C
§ 205.72) states a practitioner “should
express an adverse opinion when the
practitioner, having obtained sufficient
appropriate evidence, concludes that
misstatements, individually or in the
aggregate, are both material and pervasive to
the subject matter.”

SYNOPSIS

• (19-01) The Office lacked adequate controls
over the Illinois Governor’s Mansion property
and receipts.
• (19-02) The Office did not maintain adequate
controls over the recording and reporting of
State property.
• (19-03) The Office failed to maintain
controls over personal services functions.
• (19-06) The Office did not maintain adequate
controls over receipts processing.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER THE ILLINOIS
GOVERNOR’S MANSION PROPERTY AND RECEIPTS

The Office of the Governor (Office) lacked
adequate controls over the Illinois Governor’s
Mansion (Mansion) property and receipts.  We
noted the following:

• During the examination period, the Mansion
underwent extensive renovations, which were
contracted, overseen, and funded by the
Illinois Governor’s Mansion Association
(Association), a not-for-profit tax exempt
501(c)(3) organization. The Office lacked a
formal agreement with the Association for the
services and renovations funded by the
Association. In addition, the Office lacked
supporting documentation on renovations
recorded to fixed assets records and did not
perform a reconciliation between the
Association’s renovation expenditures and the
Office’s additions recorded in the property
records or reported on the Office’s quarterly
Agency Report of State Property (Form C-15).
Specifically, we noted:

— For the quarters ended September 30, 2017,
June 30, 2018, and December 31, 2018, the
Office reported additions, totaling
$10,956,735, to buildings and building
improvements for the capital improvements.
However, the Office did not maintain
documentation to support $9,059,543 of
additions reported.

— The Office reported additions to building
and building improvements, totaling
$34,147,807, during the examination period on
the quarterly Form C-15’s; however, only
$17,077,265 of building and building
improvement additions were recorded in the
Office property records.

As such, we were unable to determine the total
amount of renovations completed on the
Mansion, which were to be recorded in the
Office’s property records and on Form C-15’s.

• During Fiscal Year 2019, following the
completion of extensive renovations, various
events were held at the Mansion which were
coordinated by the Association. The Office
lacked controls over the charge and collection
of fees for usage of the facility. During
testing of the Office’s receipts from these
events, we noted:

— The Office failed to properly monitor the
events held at the Mansion and the associated
fees collected by the Association on behalf of
the Office. No agreement was in place and the
Office lacked procedures to ensure all fees
collected by the Association were remitted to
the Office.

— The Office reported $5,375 in Governor’s
Mansion fees collected during Fiscal Year 2019
on its Agency Fee Imposition Report (Report).
However, with the lack of controls mentioned
above, we were unable to determine if the fees
reported were accurate and included all fees
charged.

Even given the population limitations noted
above, which hindered our ability to conclude
whether selected samples were representative
of the population as a whole, we performed
tests of the Office’s property and receipts
and noted the matters described in Findings
2019-002 and 2019-006.  (Finding 1, pages
10-12)

We recommended the Office:

• Evaluate the procedures and strengthen the
controls over property and equipment purchased
by the Association and then donated to the
State, to ensure accurate record keeping and
reporting of all State assets;

• Ensure balances reported on the Form C-15
accurately reflect Office records;

• Maintain adequate records and documentation
of Office property activities;

• Implement controls to ensure all fees
collected by the Association on behalf of the
Office are remitted; and,

• Strengthen communication with the
Association through a formal agreement to
clarify activities performed on behalf of the
Office by the Association.

The Office agreed with the finding and stated
they had taken and continue to take steps to
ensure all issues raised in the
recommendations are addressed.

INADEQUATE CONTROLS OVER STATE PROPERTY

The Office did not maintain adequate controls
over the recording and reporting of State
property.

Due to the following process and control
deficiencies identified below and as noted in
Finding 2019-001, we were unable to conclude
whether the Office’s population records were
sufficiently precise and detailed under the
Attestation standards promulgated by the
American institute of Certified Public
Accountants (AT-C § 205.35) to test the
Office’s controls over State property and
equipment. In addition, due to these
limitations, we were unable to conclude the
Office’s Schedule of Changes in State Property
on page 59 was complete and accurate.

Even given the population limitations noted
above, which hindered our ability to conclude
whether selected samples were representative
of the population as a whole, we performed
tests on various controls over property and
noted the following:

REPORTING DEFICIENCIES

During our testing of the Office’s quarterly
Agency Report of State Property (Form C-15) we
noted inaccurate, unsupported balances, and
reporting deficiencies.

We also performed a reconciliation between the
additions reported on the Office’s quarterly
Form C-15 and the Office of the Comptroller’s
Object Expense/Expenditures by Quarter (SA02)
report, noting an un-reconcilable difference
of $32,062, by which the Form C-15s were
overstated. The Office was unable to reconcile
the difference, as the Office did not maintain
documentation from the Statewide Enterprise
Resource Planning system (ERP) to support the
Form C-15s.

RECORDING DEFICIENCIES

The Office maintains their asset records in
the ERP.  However, we noted the Office did not
record all additions and deletions of
equipment, historical treasures, arts, and
site improvements.  As a result, the ERP fixed
asset report at June 30, 2019, did not agree
to the ending balance of fixed assets reported
at June 30, 2019 on the Form C-15.

The Office failed to adjust its property
records for discrepancies noted in the Annual
Certification of Inventory. The Office
reported the same two computers as missing in
both Fiscal Year 2018 and Fiscal Year 2019.
The Office determined the computers were sent
to surplus in 2013 and 2014. In addition, the
Office’s Annual Certification of Inventory for
Fiscal Years 2018 and 2019 were not supported
with an accurate report of fixed assets from
the ERP.

PROPERTY OBSERVATION

The Office did not ensure physical locations
of property items were accurate based on the
Office’s property listing.  Specifically,
during our inspection of 60 property items
sampled, we noted items could not be located,
were not tagged, and could not be traced to
the property listing.

In addition, the Office did not maintain
documentation for unused, damaged, obsolete,
or transferrable property. We observed the
Office’s storage location, noting items could
not be traced to the property listing, items
were not tagged and items that appeared to be
obsolete or damaged but were considered to be
transferable.

PROPERTY LEASES

The Office failed to maintain adequate
controls over equipment leases. We tested
monthly lease payments for a sample of three
agreements entered into during the examination
period, noting three monthly lease payments
were not made and one lease payment lacked a
supporting invoice.  (Finding 2, pages 14-18)
This finding has been repeated since 2011.

We recommended the Office:

• Properly review and monitor the submission
of the Form C-15 to the Office of the
Comptroller to ensure compliance with the
requirements of SAMS.

• File revised Form C-15 with the Office of
the Comptroller to reflect corrected balances.

• Evaluate the procedures and strengthen the
controls over property and equipment to ensure
proper safekeeping and accurate recordkeeping
of all assets.

• Keep adequate records and proper
documentation of the Office capital asset
activities.

The Office agreed with the finding.

FAULURE TO MAINTAIN CONTROLS OVER PERSONAL
SERVICES FUNCTIONS

The Office failed to maintain controls over
personal services functions.  A few of the
items we noted are as follows:

We tested employee personnel files for
Employment Eligibility Verification (Form I-9)
forms for a sample of 25 employees, noting all
personnel files did not have a completed Form
I-9 on file or the Form I-9 lacked a signature
of the employee or the employer.

We also noted one employee was paid in excess
of the employee’s contractual agreement,
personnel records did not have sufficient
documentation of the employee’s rate of pay or
net pay, and employees were allowed to
transfer in vacation time earned at another
State agency in excess of the amount allowed
by Office policy.

During our testing of a sample of 25
employee’s payroll withholdings, we noted a
lack of documentation supporting federal
income tax, State income tax, and retirement
contributions withheld.

During our testing of employee attendance
records, we noted employees lacked
documentation supporting their accrued
balances and time used. Therefore, we were
unable to recalculate accrued balances to
determine if accruals and usage were in
accordance with the Office’s rules and
policies.  In addition, we noted employee
absences lacked documentation the absences
were requested and approved in advance,
timesheets were not completed and submitted
timely, timesheets were not approved by the
employee’s supervisor and timesheets that
could not be located.

We also tested training records for a sample
of employees, noting all employees did not
complete the annual cybersecurity training and
employees with access to Social Security
numbers in the course of performing their job
duties were not trained to protect the
confidentiality of social security numbers.
(Finding 3, pages 19-23)

We recommended the Office establish and
maintain fiscal and administrative internal
controls over its personal services functions,
including:

• Maintaining complete and accurate personnel
files, including completed Form I-9, hiring
agreements, and authorizations for payroll
deductions;

• Maintaining complete, accurate, and detailed
documentation of payroll and employees’
accrued balances;

• Ensuring documentation of employees’
requests and prior approval of time off is
completed and maintained;

• Ensuring employees submit and also their
supervisor approves employees’ timesheets
timely;

• Maintaining adequate policies requiring
personal time be requested and approved prior
to being taken;

• Ensuring all employees timely undergo
training on cybersecurity on an annual basis;

• Ensuring all employees with access to Social
Security numbers in the course of performing
their job duties are trained to protect the
confidentiality of Social Security numbers;
and,

• Maintaining complete and accurate
documentation of information reported on the
Agency Workforce Reports.

Additionally, we recommended the Office
determine if the recoupment of the payroll
overpayments is appropriate.

The Office agreed with the finding.
INADEQUATE CONTROLS OVER RECEIPTS PROCESSING

The Office did not maintain adequate controls
over receipts processing.

Due to the following process and control
deficiencies identified below and as noted in
Finding 2019-001, we were unable to conclude
whether the Office’s population records were
sufficiently precise and detailed under the
Attestation standards promulgated by the
American Institute of Certified Public
Accountants (AT-C § 205.35) to test the
Office’s control over receipts.  In addition,
due to these limitations, we were unable to
conclude the Office’s Comparative Schedule of
Cash Receipts and Reconciliation Schedule of
Cash Receipts to Deposits Remitted to the
State Comptroller on page 58 was complete and
accurate.

Even given the population limitations noted
above which hindered our ability to conclude
whether selected samples were representative
of the population as a whole, we performed
tests on select controls over receipts and
noted the following:

• The Office did not maintain a detailed
itemized account of all moneys received during
Fiscal Years 2018 and 2019; specifically, the
account omitted the dates of receipt and payor
information. The Office receipt records
indicated total receipts of $36 and $13,171
for Fiscal Year 2018 and 2019, respectively.

• Five of 5 (100%) receipts, totaling $5,409,
did not have adequate documentation to
demonstrate monies received were deposited
timely.

• One State Treasurer’s draft, totaling
$7,796, was remitted to the State Comptroller
via a Form C-64 249 days after the Office
received the State Treasurer’s draft. (Finding
6, pages 31-32)

We recommended the Office maintain detailed
itemized records of its receipts and
supporting documentation. We also recommended
the Office deposit receipts timely in
accordance with the State Officers and
Employees Money Disposition Act and SAMS.

The Office agreed with the finding and stated
they had hired a new Director of Fiscal
Operations to ensure compliance with the
recommendations.

OTHER FINDINGS

The remaining findings pertain to
appointments, mandated responsibilities,
expenditures, reconciliations, voucher
processing, interagency agreements, and the
provisions of the Identity Protection Act.  We
will review the Office’s progress towards the
implementation of our recommendations in our
next compliance examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Office for the two years
ended June 30, 2019, as required by the
Illinois State Auditing Act.  Because of the
effect of noncompliance described in Findings
2019-001 through 2019-009, the accountants
stated the Office did not materially comply
with the requirements described in the report.

This compliance examination was conducted by
West & Company, LLC.

JANE CLARK
Division Director

This report is transmitted in accordance with
Section 3-14 of the Illinois State Auditing
Act.

FRANK J. MAUTINO
Auditor General

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