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REPORT DIGEST DEPARTMENT OF MILITARY AFFAIRS COMPLIANCE
EXAMINATION For the Two Years Ended: June 30, 2006 Summary of Findings: Total this audit 10 Total last audit 11 Repeated from last audit 6 Release Date: May 8, 2007
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 are also available on the worldwide web at http://www.auditor.illinois.gov |
SYNOPSIS ¨
The
Department did not maintain sufficient controls over the accuracy and
reporting of its property. ¨
The
Department did not maintain adequate documentation for an interagency
agreement. ¨
The
Department did not have adequate controls in place to monitor Illinois
Military Family Relief grants. ¨
The
Department did not maintain adequate segregation of duties over historical
artifacts. ¨
The
Department did not publish
contracts awarded or its intent to award sole source contracts in the
Procurement Bulletin. ¨
The
Department had inadequate
segregation of duties in the area of receipt processing. {Expenditures and Activity
Measures are summarized on the next page.} |
ILLINOIS
DEPARTMENT OF MILITARY AFFAIRS
COMPLIANCE
EXAMINATION
For The Two Years Ended June 30, 2006
|
EXPENDITURE STATISTICS |
FY 2006 |
FY 2005 |
FY 2004 |
|
Total Expenditures (All Funds)........................... |
$28,550,894 |
$30,859,804 |
$29,038,491 |
|
OPERATIONS TOTAL.................................... % of TOTAL Expenditures............................... |
$27,105,719
94.9% |
$28,271,158
91.6% |
$27,109,031
93.3% |
|
Personal Services, including reimbursable positions........................................................... % of Operations Total Expenditures............ Average No. of Employees........................ |
$12,153,813
44.8%
240 |
$12,063,298
42.6%
243 |
$11,547,580
42.6%
244 |
|
Other Payroll Costs (FICA, Retirement)............... % of Operations Total Expenditures............ |
$887,109
3.3% |
$1,296,516
4.6% |
$1,060,049
3.9% |
|
Contractual Services........................................... % of Operations Total Expenditures............ |
$1,950,066
7.2% |
$1,884,993
6.7%
|
$2,025,474
7.5% |
|
Lincoln’s Challenge............................................. % of Operations Total Expenditures............ |
$7,606,390
28.1% |
$8,471,866
30.0% |
$8,706,487
32.1% |
|
Facilities Operations and Maintenance.................. % of Operations Total Expenditures................. |
$4,305,333
15.9% |
$4,364,236
15.4% |
$3,535,856
13.0% |
|
All Other Items................................................... % of Operations Total Expenditures................. |
$203,008
0.7% |
$190,249
0.7% |
$233,585
0.9% |
|
CAPITAL PROJECTS...................................... % of TOTAL Expenditures............................... |
$51,966
0.2% |
$83,817
0.3% |
$107,230
0.4% |
|
AWARDS AND GRANTS TOTAL................... % of TOTAL Expenditures............................... |
$1,277,148
4.5% |
$2,324,424
7.5% |
$1,507,864
5.2% |
|
NON-APPROPRIATED
FUNDS Armory Rental Fund (416).................................. % of TOTAL Expenditures............................... |
$116,061
0.4% |
$180,405 0.6% |
$314,366
1.1% |
|
Cost of Property and
Equipment (See Finding 06-1)…………………………… |
$167,830,935 |
$161,444,583 |
$150,316,343 |
|
CASH RECEIPTS |
FY 2006 |
FY 2005 |
FY 2004 |
|
Federal Reimbursements......................................... |
$15,934,811 |
$16,234,658 |
$14,132,803 |
|
Rent........................................................................ |
334,059 |
253,766 |
265,339 |
|
Sales of Property..................................................... |
0 |
0 |
62,000 |
|
Other...................................................................... |
767,126 |
282,736 |
102,217 |
|
Total................................................................. |
$17,035,996 |
$16,771,160 |
$14,562,359 |
|
AGENCY DIRECTOR |
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During Audit Period: Adjutant General Randal E. Thomas
Currently: Adjutant General Randal E. Thomas |
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|
Department had multi-million dollar
differences between property records
Auditors could not
reconcile expenditure information to property records Department
lacked support for a $15,000 interagency agreement
Department disagrees
Auditors’ comment
$4,500 in overpayments
$2,000 in duplicate payments
Failure to meet
qualification status results in $1,500 overpayment Missing records
Internal control weaknesses
Notice of award not
published in Procurement Bulletin
Notice of intent to
enter into sole source contracts not published
Internal control weaknesses |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE
RECONCILIATION AND REPORTING OF
STATE PROPERTY The Department did not maintain
sufficient controls over the accuracy and reporting of its property. We noted the following: § Eight of 8 (100%) Agency Reports of State Property (C-15) tested did not agree to the support provided and did not properly report transfers-in from the Capital Development Board (CDB). In addition, the 4th quarter C-15 reported $690,636 of CDB transfers as Construction in Progress when it should have been reported as Transfers-in from CDB. § The Department
reported approximate differences of $7.7 million and $9.4 million in FY06 and
FY05, respectively, between the C-15 and the Capital Assets Summary form
(SCO-538) in the SAMS GAAP Reconciliation-Capital Assets Form (SCO-537)
submitted to the Comptroller. § The Department did
not adequately reconcile its Common Inventory System (CIS) property listing
to the Agency Report of State Property (C-15) filed with the
Comptroller. The FY05 and FY06
June 30 amounts reported on the C-15 reports did not agree to Department
property records as of June 30 of FY05 or FY06. The differences amounted to $1.7 million in FY05 and $1.8
million in FY06. §
The
Department did not submit their C-15 reports to the State Comptroller by the
required reporting deadlines.
§ Auditors were unable to reconcile Department
property and equipment expenditures processed by the Illinois Office of
Comptroller (IOC) to either the additions recorded on the property listing or
the Quarterly C-15 reports. (Finding 1, pages 9–11) This
finding was first reported in 2002.
We recommended that the Department establish a corrective action plan to address controls to ensure an accurate property listing and capital asset reporting for the Department. Further, the Department should file their Quarterly Fixed Asset Reports by the reporting deadlines, properly report transfers-in and maintain adequate documentation for the property reports as required by SAMS. The Department should also reconcile its property reports and records to the C-15’s and IOC expenditures for property on a quarterly basis to ensure completeness and accuracy of its property records. Lastly, the Department should work with the IOC to correct or adjust the discrepancies noted in their annual reporting to the IOC.
Department
officials agreed with the finding and stated that they will establish a
corrective action plan. In addition,
Department officials stated that they will work with the IOC to resolve any discrepancies noted in the annual reporting. (For the previous Department
response, see Digest Footnote #1) LACK OF ADEQUATE
SUPPORT FOR INTERAGENCY AGREEMENT The
Department did not have adequate support for an Interagency agreement with
the Governor’s Office of Management and Budget (GOMB) detailing the
methodology for determining the allocation to be paid by the Department for
the billing of shared services. GOMB
entered into a contract for $650,000 with a consultant to assist GOMB and
other State agencies in establishing a statewide shared services plan, which
was later outlined in Executive Order 6 (2006). The contract between GOMB and the consultant was amended for an
additional $250,000 for implementation of the shared services plan. Of the $250,000, $104,000 was to be for a
detailed cluster pilot roll-out plan.
The Department, along with 8 other agencies, entered into an
Interagency Agreement with GOMB for the payment of an allocable share of the
cost of the pilot roll-out plan. The
Department’s allocable share was determined to be $15,000, of which the
Department paid the entire portion. The Department was not provided
documentation to support how the $15,000 was determined. (Finding 3, page
13-14) We recommended the Department
require and maintain sufficient documentation to ensure contracted services
have been provided and that the expenditures are reasonable and necessary. Department officials did not agree with the
finding and stated that they had
sufficient justification and documentation to pay a portion of the costs for
the contracted services. In our Auditors’
comment, we noted that the Department did have a signed interagency
agreement; however the agreement did not provide a methodology for determining the allocable share to be paid
by the Department for the billing of shared services. The Department did not request additional
information from GOMB and paid $15,000 without documentation supporting how
this amount was determined. The
Department should not make payments under any contract or agreement without
adequate supporting documentation.
Without the proper documentation, the Department could not make a
proper determination as to whether the cost allocated to the Department and
related expenditure was reasonable and necessary as required by SAMS and good
internal control standards. INADEQUATE CONTROLS OVER GRANT MONITORING The Department did not have
adequate controls in place to monitor Illinois Military Family Relief
grants. The following problems were
noted. §
Nine of 50 (18%) applicants tested in our sample received more than one
status-based grant per fiscal year, totaling $4,500 in overpayments. §
Four of 50 (8%) applicants tested in our sample received duplicate
payments for the same active duty order, totaling $2,000 in duplicate
payments. §
Four of 50 (8%) applicants did not have Defense Enrollment Eligibility
Reporting System (DEERS) information filled out on their applications because
Department personnel entered the social security number incorrectly. §
One of 50 (2%) applicants
was awarded a need-based grant but did not qualify for the grant because
their military salary was not 30% lower than their civilian salary, resulting
in an overpayment of $1,500. §
Three of 50 (6%)
applications could not be located. (Finding 4, pages 15-16) This finding was first reported in
2004. We recommended
the Department implement adequate controls to ensure that applicants do not
receive duplicate grants and that applications are complete and in accordance
with adopted rules.
Department
officials agreed with the finding and stated that an internal review of all applications is
currently in process (approximately 50% completed) and several new internal
control systems have been implemented to address the finding and eliminate the
possibility of duplicate and/or erroneous payments. (For the
previous Department response, see Digest Footnote #2)
INADEQUATE
SEGREGATION OF DUTIES OVER
HISTORICAL ARTIFACTS. The Department did not maintain
adequate segregation of duties regarding historical artifacts at the Illinois
Military Museum. The Museum Curator has stewardship responsibilities for the historical artifacts and the equipment located at the Illinois Military Museum. The Curator is responsible for requesting, purchasing, and maintaining the equipment at the museum. The Curator is also the receiving officer for historical artifacts including input, change and deletion capabilities regarding the historical artifacts inventory. We also noted the Curator was on active duty from 4/4/05 to 9/30/05 and in his absence, the museum was run by three volunteers and no one was assigned the Curator’s responsibilities while on active duty. (Finding 5, page 17) This finding was first reported in 2004. We recommended that the Department, in conjunction with the Illinois Military Museum, ensure that there is proper segregation of duties or appropriate compensating controls. We also recommended another employee be assigned the management and oversight responsibilities of the Curator in the event of another extended absence. Department officials agreed with the finding
and stated they have assigned
the additional accountability responsibility to an appropriately qualified
staff member. (For the previous Department
response, see Digest Footnote #3) NONCOMPLIANCE WITH PROVISIONS OF THE ILLINOIS PROCUREMENT CODE The Department did not publish contracts awarded or its intent to award sole source contracts in the Procurement Bulletin as required by the Illinois Procurement Code. During our testing of 25 contracts, we noted the following: ·
The Department
failed to publish a notice of award in the Illinois Procurement Bulletin for
8 (32%) contracts totaling $320,615. ·
The Department
failed to publish its notice of intent to enter into sole source contracts in
the Illinois Procurement Bulletin for 3 (12%) contracts totaling
$101,712. (Finding 6, page
18) This finding was first reported in 2004. We recommended the Department
implement and maintain procedures to ensure that the requirements of the
Illinois Procurement Code relating to the publishing of contracts and sole
source contracts are adhered to. Department officials agreed with
the finding and stated that the position responsible for procurement was
vacant and the Department has since filled
the position. (For the previous
Department response, see Digest Footnote #4) INADEQUATE SEGREGATION OF DUTIES
OVER RECEIPT PROCESSING The Department had inadequate segregation of duties in the area of receipt processing. During review of the Department’s receipt process, we noted that one person prepares the check log, prepares the receipt ledger, prepares the Receipt Deposit Transmittal Form and the same employee performs the monthly receipt reconciliations to State Comptroller records. We recommended the Department maintain effective internal controls over the record keeping and accounting duties concerned with receipt processing. Department officials agreed with our finding and stated that current
controls will be reviewed for opportunities for improvement. OTHER FINDINGS The remaining findings are reportedly being addressed by the Department. We will review the Department’s progress towards the implementation of our recommendations in our next engagement. AUDITOR’S OPINION
We conducted a compliance
examination of the Department 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:CML AUDITORS ASSIGNED
This examination was performed by the staff of the Office of the Auditor General. DIGEST FOOTNOTES
#1 – INADEQUATE RECONCILIATION AND
REPORTING OF FIXED ASSETS – Previous Agency Responses 2004: The Department agreed with the
finding. The Department will
establish a corrective action plan.
The Department is in the process of obtaining an appropriately
qualified staff resource to handle these responsibilities. Every effort will be made to accurately
complete required reports and file them by their due dates. The C-15 will be prepared based upon the
fixed asset records. #2 – INADEQUATE CONTROLS OVER GRANT
MONITORING – Previous Agency Response 2004: The Department agreed with the
finding. Internal controls have been
implemented so duplicate grants are not issued. The Department is pursuing collection of the overpayments. #3 –
INADEQUATE SEGREGATION OF DUTIES OVER HISTORICAL ARTIFACTS – Previous Agency
Response 2004: The Department agreed with the
finding. Available resources will be
reviewed to determine a corrective action that addresses the finding. #4 –
NONCOMPLIANCE WITH PROVISIONS OF THE ILLINOIS PROCUREMENT CODE – Previous
Agency Response 2004: The Department agreed with the
finding. The employee responsible for
procurement for the audit period is no longer employed by the Department. The Department is in the process of
obtaining an appropriately qualified staff resource to handle these
responsibilities. This resource will
be notified of the Illinois Procurement Code requirements. |