REPORT DIGEST

 

DEPARTMENT OF CENTRAL MANAGEMENT SERVICES

 

FINANCIAL AUDIT

For the Year Ended:

June 30, 2004

and

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2004

 

Summary of Findings:

Total this audit                        24

Total last audit                          6

Repeated from last audit           2

 

Release Date:

April 26, 2005

 

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

                    740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (217) 888-2887

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

SYNOPSIS

  • CMS paid efficiency initiative billings from improper line item appropriations.  During FY04, CMS paid eight billings totaling $24.8 million for efficiency initiatives.
  • CMS' contract files lacked individual scoring sheets for 6 of 9 efficiency initiative contracts we tested.  Eight of 9 contract files we tested lacked evidence of a written determination for contract award.  The 9 contracts totaled $69 million.
  • In 6 of 9 efficiency initiative procurements we reviewed, the winning vendor participated in the development of information for the RFP and/or was granted a waiver by CMS to propose on the procurement.  CMS did not post notices in the Procurement Bulletin stating that it was in the State's best interest to accept proposals from these vendors.
  • CMS evaluated vendor proposals using evaluation criteria that were not stated in the RFP. 
  • CMS allowed the Asset Management vendor (IPAM, LLC) to extensively revise its proposal during the best and final process after initial scoring evaluations were completed.  The Asset Management contract is valued at $24.9 million. 
  • CMS failed to post notices in the Procurement Bulletin when awarding contracts to other than the lowest priced vendor, as required by law and administrative rules.
  • CMS failed to include information about subcontractors utilized by the vendor in 4 of 9 contracts we reviewed. 
  • In 9 of 9 efficiency initiative contracts we reviewed, CMS allowed vendors to initiate work on the project without a formal written agreement in place. 
  • We questioned 77% ($546,650 of $708,715) of vendor expenses reimbursed by CMS in FY04: 

--   For 4 of the 7 contracts, there was no documentation attached to the billing invoices to substantiate that the expenses actually occurred. 

--   For 2 of the 7 contracts, reimbursement rates exceeded the amounts set forth in the contract.   

--   We questioned $43,615 of $177,501 in expenses paid to the Asset Management vendor (IPAM, LLC).  A list of questioned costs is included in this Report Digest.

  • CMS billed $137 million for efficiency initiatives to State agencies during FY04 without adequate determination of anticipated savings. 
  • CMS did not maintain adequate documentation to support the amount of savings it attributes to efficiency initiatives.  Also, savings goals stated in RFP's, vendor proposals and/or contracts were not always realized or documented.
  • CMS' Illinois Office of Internal Audit did not complete audits of major systems as required by the Fiscal Control and Internal Auditing Act.
  • CMS' Surplus Warehouse did not maintain an adequate inventory control system.
  • CMS did not file reports on reorganizations with the General Assembly as required by law.
  • CMS did not maintain time sheets for its employees as required by the State Officials and Employees Ethics Act.

 

 

 

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


 

STATE OF ILLINOIS

DEPARTMENT OF CENTRAL MANAGEMENT SERVICES

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For The Year(s) Ended June 30, 2004

 

STATEMENT OF ACTIVITIES INFORMATION (in thousands)

Governmental Activities

Business-Type Activities

 

PROGRAM REVENUES

Charges for Services.....................................................................

 

EXPENSES

General Government..........................................................................

Health and Social Services.................................................................

Interest.............................................................................................

Other................................................................................................

Total Expenses..................................................................................

 

NET (EXPENSE) REVENUES.......................................................

 

Total General Revenues and transfers.................................................

 

CHANGE IN NET ASSETS...........................................................

Net Assets July 1, 2003......................................................................

NET ASSETS, JUNE 30, 2004....................................................

 

 

$618,591

 

 

$1,812,107

550

1,341

                0

$1,813,998

 

$(1,195,407)

 

$1,221,219

 

$25,812

179,562

$205,374

 

 

 

$360,530

 

 

$0

0

0

335,476

$335,476

 

$25,054

 

$(4,166)

 

$20,888

34,119

$55,007

STATEMENT OF NET ASSETS INFORMATION (in thousands)

Governmental Activities

Business-Type Activities

Cash and cash equivalents..................................................................

$176,747

$91,201

Investments.......................................................................................

$4,366

$0

Capital Assets, net.............................................................................

$258,002

$0

Other Assets.....................................................................................

$135,467

$9,628

Total Assets....................................................................................

$574,582

$100,829

Accounts Payable..............................................................................

$251,047

$45,706

Long Term Obligations.......................................................................

$101,362

$116

Other Liabilities.................................................................................

$16,799

$0

Total Liabilities...............................................................................

$369,208

$45,822

Net Assets, invested in capital assets, net of debt.................................

$231,462

$0

Net Assets, restricted........................................................................

$16,102

$0

Net Assets, unrestricted.....................................................................

$(42,190)

$55,007

Total Net Assets.............................................................................

$205,374

$55,007

SELECTED ACTIVITY MEASURES (unaudited)

FY2004

FY2003

FY 2002

Number of flexible spending account participants...............

Number of network data circuits managed.........................

Number of equipment items transferred out of state
surplus ...........................................................................

Number of Deferred Compensation Plan participants.........

Number of facilities participating in I-cycle program...........

Number of daily motor pool rentals....................................

6,839

4,876

 

3,638

51,679

251

5,727

8,075

5,001

 

2,460

51,836

248

6,306

7,568

5,972

 

4,278

52,005

240

8,171

EXECUTIVE DIRECTOR

 

 

During Audit Period:  Mr. Michael M. Rumman (beginning in January 2003)

Currently:  Mr. Michael M. Rumman

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


During FY 04, the Department paid eight billings totaling $24,843,842 for savings from efficiency initiatives

 

 

 

 

 


Department officials noted that the Governor's Office of Management and Budget (GOMB) established the amounts that were billed to all State agencies in September 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 of 9 contract files did not have the individual evaluators' scoring sheets

 

 

 

 

 

 

 

Eight of 9 of the contract files we tested lacked evidence of a decision memorandum to the Director recommending the award of a contract to a specific vendor

 

 

 

 

 

 

 

 

 

 

 

 


In 6 of 9 of the contracts we reviewed, the winning vendor participated in the development of information for the RFP and/or was granted a waiver by the Department to propose on the procurement

 

 

INTRODUCTION

 

      Our audit of the Department of Central Management Services is issued in four documents: 1) the Financial Audit, 2) the Compliance Examination, 3) CMS Responses, Auditor General Comments and Auditors' Comments on the Compliance Examination, and 4) CMS Attachments to CMS Responses to the Compliance Examination.  The Financial Audit Report contains the Department’s financial statements and opinion on these statements.  The Compliance Examination document contains the audit findings and recommendations, as well as the supplementary financial information.  The Department’s responses to the findings, along with the Auditor General’s Comments and Auditors' Comments, are contained in a third document titled as such.  Finally, attachments to the Department’s responses, which were provided by CMS to the Office of the Auditor General, are contained in a fourth document titled as such.

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

PAYMENTS WERE MADE FOR EFFICIENCY INITIATIVE BILLINGS FROM IMPROPER LINE ITEMS; CMS DID NOT FULFILL ITS STATUTORY RESPONSIBILITY TO DETERMINE COST SAVINGS FOR EFFICIENCY INITIATIVE BILLINGS TO OTHER STATE AGENCIES

 

      The Department made payments for efficiency initiative billings from improper line item appropriations.  Further, the Department appears to have transferred responsibility for determining cost savings for efficiency initiatives to another agency when the responsibility is granted to the Department by State law.

 

      Public Act 93-0025, in part, outlines a program for efficiency initiatives to reorganize, restructure and reengineer the business processes of the State.  The State Finance Act details that the amount designated as savings from efficiency initiatives implemented by the Department of Central Management Services shall be paid into the Efficiency Initiatives Revolving Fund.  The Act further requires State agencies to pay these amounts from line item appropriations where cost savings are anticipated to occur.

 

      During FY04, the Department paid eight billings totaling $24,843,842 for savings from efficiency initiatives.  We found that the Department made payments for these billings not from line item appropriations where the cost savings were anticipated to have occurred, as provided for in the State Finance Act.  Rather, the Department made payments for the billings generally where it had flexibility in funding levels. 

 

        Further, although Public Act 93-0025 gave the Department the duty to "establish the amount of cost savings to be realized by State agencies from implementing the efficiency initiatives," Department officials noted that the Governor's Office of Management and Budget (GOMB), in fact, established the amounts that were billed to all State agencies - including the Department - in September 2003.  Department staff printed the amounts received from GOMB onto Department invoices.  These invoices were then returned to GOMB – which then decided which invoices would be sent to agencies for payment.  (Finding Code No. 04-1, page 12)

 

      We recommended that the Department only make payments for efficiency initiative billings from line item appropriations where savings would be anticipated to occur.  Further, we recommended the Department seek an explanation from the Governor’s Office of Management and Budget as to how savings levels were calculated, or otherwise arrived at, and how savings achieved or anticipated impact the Department’s budget.  Finally, we recommended the Department, as required by State statute, establish the amount of cost savings to be realized by State agencies from implementing efficiency initiatives or seek legislative changes to the law to assign that responsibility to the Governor’s Office of Management and Budget. 

 

      The Department disagreed with most of the finding and recommendation. 

     

LACK OF DOCUMENTATION IN CONTRACT FILES

 

      We selected nine contracts related to the Department’s major initiatives awarded in FY04, totaling a maximum award amount of $69 million, for which we reviewed the procurement and award files at the Department.  While the Department’s contract files contained summary scoring sheets for each procurement tested, 6 of 9 contract files (67 percent) did not have the individual evaluators’ scoring sheets.  Further, some summary sheets did not identify who the evaluators were and some summary scoring sheets did not show a breakdown of the scoring by evaluation category.  Lacking this detailed information, the accuracy of the summary sheet, and the integrity of the scoring process, could not be verified.

 

      Eight of 9 of the contract files we tested (89 percent) lacked evidence of a decision memorandum to the Director recommending the award of a contract to a specific vendor.  The Illinois Administrative Code requires written determinations to be filed in the solicitation or contract file to which it applies.  (Finding Code No. 04-2, page 16)

 

      We recommended that the Department develop a recommendation decision memorandum for director approval prior to allowing vendors to begin work on State projects.  We also recommended that the Department maintain individual scoring sheets completed by evaluators to properly support the award of taxpayer monies to contractors.

 

      The Department disagreed with the finding.

 

USE OF CONTRACTOR WORK IN DEVELOPING RFP SPECIFICATIONS

 

      The Department used vendors to develop specifications in Requests for Proposals (RFP) – including some vendors that eventually received awards for the procurement opportunities.  In 67 percent (6 of 9) of the contracts we reviewed, the winning vendor participated in the development of information for the RFP and/or was granted a waiver by the Department to propose on the procurement.  Three of the six winning vendors had information attributed to them in the RFP, as follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Department evaluated vendor proposals using evaluation criteria that was not stated in the Request for Proposals (RFP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department allowed a vendor to extensively revise its proposal during the best and final process after initial scoring evaluations were completed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


In 4 of 9 of the contracts we reviewed, the Department awarded the contract to a vendor that was not the lowest priced proposer and did not publish this in the Procurement Bulletin

 

 

 

 

 

 

 

 

 

In 4 of 9 of the contracts we reviewed, the Department failed to have information on subcontractors utilized by the selected vendor included in the contract

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


In 9 of 9 of the contracts we reviewed, the Department allowed vendors to initiate work on the project without a formal contract in place

 

 

 

 

 

      Our review of procurement files and interviews with Department staff found that:

 

§         The Department utilized McKinsey and Company, Inc. (McKinsey) to gather information on procurement spending by State agencies.  According to a Department official, this work was performed on a pro bono basis for the State.  McKinsey was listed as the source for much of the factual information in the Procurement Assessment RFP.

 

§         The Department utilized Accenture to perform a strategy study in the IT area.  Expenditure information in the IT Rationalization RFP was attributed to Accenture, LLP.

 

§         The Department utilized Team Services, LLC (Team Services), under a non-competitively bid contract, to provide contractual assistance to the Department in an extremely similar project to what was eventually awarded to Team Services as the Strategic Marketing Initiative.  The work performed on this no-bid contract overlapped with the issuance of the RFP for the Strategic Marketing Initiative. 

 

      The Department has adopted general guidelines that prohibit a person who prepared the specifications from submitting a bid or proposal unless the agency head determines in writing that accepting such a bid or proposal would be in the State's best interest (44 Ill.Adm.Code 1.2050 (i).  A notice to that effect must be published in the Procurement Bulletin.

 

      From our review of the procurement files for these contracts, we could not find evidence the Department determined in writing that there would be no substantial conflict of interest by allowing vendors to assist in specification development and bid on the procurement opportunity and that it was in the best interest of the State to accept bids from these vendors.  Notices also were not posted in the Procurement Bulletin – as required by the Illinois Administrative Code.

 

      We also noted that the Department had a non-State employee review the RFP for the Procurement Assessment prior to the release of the RFP.  This individual subsequently was named as partnering with the winning vendor, McKinsey, in its proposal.    (Finding Code No. 04-3, page 19)

 

      We recommended that the Department review its process for utilizing vendors to provide assistance in developing specifications and information to be included in Requests for Proposals so as to not prejudice the rights of other prospective bidders or offerors and the public.

 

            The Department disagreed with the auditor's findings.

 

CHANGES IN AWARD EVALUATION CRITERIA NOT COMMUNICATED TO PROPOSERS

 

      The Department evaluated vendor proposals using evaluation criteria that was not stated in the Request for Proposals (RFP).  Changes in scoring methodology were not communicated to proposing vendors or reflected in an addendum to the RFPs.  Additionally, in one of these instances, the Department awarded a contract to a vendor that had not received the highest scoring total based on evaluation criteria set out in the RFP. 

 

      The Illinois Administrative Code states that proposals shall be evaluated only on the basis of evaluation factors set forth in the RFP.  (44 Ill. Adm. Code 1.2035 (h)(2)).  However, we found in 44 percent (4 of 9) of the contracts we reviewed, the Department used different criteria when evaluating the price component of the proposals.  For instance, in the Risk Assessment, Server Consolidation, and Software Review contracts, the RFP's identified a single formula for evaluating pricing while, in practice, the Department used two pricing categories - one for fixed price and another for a blended rate.  However, we noted that this change in evaluation methodology - while not communicated to proposers - did not appear to affect the contract award.  A similar problem was noted with the Fleet Management contract.

 

      In the Telecom Rationalization Contract, we could not tell whether vendor proposals were evaluated based on RFP criteria due to a lack of individual scoring sheets and a scoring algorithm.  Additionally, we found that the Software Review contract was awarded to a vendor that did not receive the highest total points for technical merit and cost as outlined in the RFP.  After proposals were submitted, evaluated and scored, the Department made the decision to use a single vendor for both the Server Consolidation and Software Review contracts.  However, the desire to award both projects to a single vendor was not part of the RFP evaluation criteria and, according to Department staff, was not communicated to potential vendors.  (Finding Code No. 04-4, page 23)

 

      We recommended that the Department follow evaluation criteria stated in Requests for Proposals when evaluating and awarding State contracts.  Additionally, the Department should develop addendum to Request for Proposals when it determines there needs to be a change to the evaluation criteria so that all vendors are assured of a fair and open contracting process.

 

      The Department disagreed with the finding.

 

EXTENSIVE VENDOR REVISIONS TO PROPOSAL DURING BEST AND FINAL PROCESS

 

      The Department allowed a vendor to extensively revise its proposal during the best and final process after initial scoring evaluations were completed.  Several items deleted by the vendor during the best and final process eventually were added back into the agreement, in the form of contract amendments.  The amendments, potentially costing the State $5.75 million, were entered into after the award of the contract.

 

      Documentation contained in the procurement files for the Asset Management professional services procurement opportunity showed that only one proposing vendor, Illinois Property Asset Management, LLC (IPAM), was provided the opportunity to submit a best and final offer (BAFO).  The Department’s correspondence to IPAM states, “The purpose of this BAFO is to provide you with an opportunity to enhance the pricing and to improve any of the services offered within your original proposal.”  While the price decreased from $35.9 million to $24.9 million as a result of the best and final process, IPAM’s technical proposal also significantly changed.  Our review of the original proposal and BAFO submitted by IPAM noted the following:

 

      Revision of Joint Venture Composition:  IPAM did not exist as an entity at the time proposals were submitted, evaluations were conducted, or an award was made.  In its original proposal, IPAM was to be a joint venture of two established firms, Mesirow Stein Development Services and New Frontier Companies, and a “To be determined M/WBE (minority/women’s business enterprise)” that would represent 20 percent of the ownership.  Background and staffing qualifications were valued at 475 of 800 (59 percent) of the total evaluation points.   After the initial proposals had been scored for background and staffing, IPAM dropped New Frontier Companies as one of the joint venture partners.  Further, according to Department staff, no M/WBE firm had been named by IPAM as of December 14, 2004. 

 

      Revision of Performance Guarantee:  The performance guarantee was valued at 50 of 800 (6 percent) total evaluation points.  In its BAFO, IPAM revised the performance guarantee from 5 items in the original proposal down to 2 in the BAFO.  A Department official noted that IPAM did not hit its $14 million savings goal in FY04 but that the IPAM fee was not adjusted downward because the guarantee clauses in IPAM’s BAFO did not get incorporated into the final contract.

 

      Facility Condition Assessments:  In the original IPAM proposal, IPAM would perform all facility condition assessments on 50 million sq. ft. of State-owned buildings.  Within its BAFO, IPAM decreased its price but also proposed that facility managers (to be hired for the facility management consolidation process) and not IPAM would perform the condition assessments on the last 40 million square feet.  However, on February 4, 2005, the Department published in the Procurement Bulletin a sole source $2.25 million contract for IPAM to perform facility condition assessments.

 

      Lease Administration Services:  In the original IPAM proposal, IPAM proposed “…while not specifically requested by the State in the RFP, IPAM will offer to provide future lease administration services to the State on an ongoing basis once the new system is operational.”  The BAFO submitted by IPAM contained the exact language as the original proposal with the inclusion of “for an additional fee” at the end of the sentence quoted above.  When questioned on whether this “additional fee” was outside the purpose of the best and final process, Department officials indicated that the additional fee was not outside the process because the services were not part of the original RFP anyway.  On January 20, 2005, the Department amended the contract with IPAM to increase the contract amount by $3.5 million for lease transaction services.  (Finding Code No. 04-5, page 25)

 

      We recommended that the Department allow vendors to only revise sections of proposals as stated within the purpose for requesting a best and final offer. 

 

      The Department disagreed with the finding and recommendation.

 

FAILURE TO PUBLISH THAT CONTRACT WAS AWARDED TO OTHER THAN THE LOWEST PRICED VENDOR

 

      The Department failed to provide notification, in the Illinois Procurement Bulletin, that contracts were awarded to other than the lowest priced vendor.

 

      Procurement Code provisions applicable to professional and artistic contracts provide that "when the contract exceeds the $25,000 threshold and the lowest bidder is not selected, the chief procurement officer or the State purchasing officer shall forward together with the contract notice of who the low bidder was and a written decision as to why another was selected…[CMS] shall publish…notice of the chief procurement officer’s or State purchasing officer’s written decision.”  (30 ILCS 500/35-30 (f))  The Department's administrative rules similarly require, “If the price of the best qualified vendor exceeds $25,000, the Procurement Officer, but not a designee, must state why a vendor other than the low priced vendor was selected and that determination shall be published in the Bulletin.”  (44 Ill. Adm. Code 1.2035 (m)(3))

 

      In 44 percent (4 of 9) of the contracts we reviewed, the Department awarded the contract to a vendor that was not the lowest priced proposer and did not publish this in the Procurement Bulletin.  (Finding Code No. 04-6, page 28)

 

      We recommended that the Department follow the requirements set forth in the Illinois Procurement Code and administrative rules and publish instances where a vendor with the lowest price was not selected for the award of a contract. 

 

      The Department disagreed with the finding.

 

FAILURE TO INCLUDE SUBCONTRACTOR INFORMATION IN CONTRACTS

 

      The Department failed to ensure that subcontractor information required under the Procurement Code was included in contracts awarded by the Department.  In 44 percent (4 of 9) of the contracts we reviewed, the Department failed to have information on subcontractors utilized by the selected vendor included in the contract.  The Department estimated the value of these contracts to be approximately $53 million. 

 

      For professional and artistic contracts only, the contracts must state, “whether the services of a subcontractor will be used.  The contract shall include the names and addresses of all subcontractors and the expected amount of money each will receive under the contract.”  If a contractor adds or changes any subcontractors, CMS must receive the foregoing information in writing in a prompt manner.  (30 ILCS 500/35-40)

 

For instance:

 

§         Asset Management Contract:  The IPAM contract does not identify any of the subcontractors utilized by IPAM.  Four subcontractors were identified in the IPAM proposal it submitted to the Department.  However, the amount to be paid to these subcontractors was not disclosed.  Furthermore, during our review of expenses reimbursed by the State to IPAM, we found evidence that one of the IPAM subcontractors was utilizing subcontractors of their own to perform work.

§         IT Rationalization Contract:  The BearingPoint and Accenture contracts do not identify any of the subcontractors to be utilized during the IT Rationalization project.  The proposals do identify some subcontractors but not the amounts each would receive under the contract.  In the Accenture proposal, three subcontractors are identified.  However, after we inquired about the use of subcontractors and how much each received in compensation, a Department official collected information that shows Accenture used six subcontractors on this project and paid them a total of $2.6 million.  In the BearingPoint proposal, two subcontractors are identified.  A Department official collected information that shows BearingPoint subcontracted with eight firms on this project and paid them a total of $3.2 million for hourly fees plus expenses.

§         Telecom Rationalization:  The EKI contract did not contain information on the use of any subcontractors.  The proposal submitted by EKI did identify four subcontractors but with no expected value for compensation.  After we inquired about the use of subcontractors and how much each received in compensation, a Department official collected information that showed EKI used four subcontractors on this project – including three different subcontractors that had never been identified in any document we examined.  In documentation supplied by the Department in February 2005, one of these three subcontractors that had not been listed in either the contract or the proposal had received $3.2 million from EKI for subcontracting work.  The same documentation showed that EKI had made $1.3 million – or less than half of what the subcontractor had received.

§         Software Review:  In the contract between BearingPoint and the Department (in the section that allows subcontracting) BearingPoint does assert that it “is proposing to use an independent consultant to complete a portion of the required consulting services.”  The subcontractor is not identified in the contract.  Department officials did not provide us with information on a subcontractor or any amount paid by the primary contractor to a subcontractor.  (Finding Code No. 04-7, page 31)

 

      We recommended that the Department follow the direction of the Illinois Procurement Code and include information on subcontractors and the amounts to be paid to the subcontractors under the contracts.

 

      The Department disagreed with the finding.

 

NOT TIMELY IN EXECUTING CONTRACTS

 

      The Department was not timely in executing contracts with vendors for contracts awarded.  Additionally, the Department allowed vendors to initiate work on these projects without a written contract in place. 

 

      In 100 percent (9 of 9) of the contracts we reviewed, the Department allowed vendors to initiate work on the project without a formal written agreement in place.  These contracts were estimated by the Department to have a maximum contract value of $69 million with an FY04 financial commitment of $32 million.  On average, the length of time between the announcement of the award and the filing of a contract with the Comptroller was 149 days (with a range of 87 days to 248 days).  The average length of time between beginning work on the contract and the filing of the contract with the Comptroller was 125 days (with a range of 75 days to 234 days).  The table below provides a breakdown for all nine contracts reviewed:

 

 

 

 

 

 

 

 

 


Oversight and public accountability is compromised when large amounts of work are performed and costs incurred before the public is made aware of the specifics of a contract

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


We questioned 77 percent ($546,650 of $708,715) of the total expenses paid to these contractors during FY 04

      The Department did file Late Filing Affidavits for Professional and Artistic contracts for 7 of 9 contracts we reviewed. 

 

      While the Department states that vendors who initiate work prior to a written agreement do so at their own risk, allowing vendors to perform work without a written agreement has several adverse implications/effects for the State, for instance:  oversight and public accountability is compromised when large amounts of work are performed and costs incurred before the public is made aware of the specifics of a contract; vendors represent themselves as working for the State without a signed contract; state resources are utilized by vendors before a written agreement is reached; delays may increase the likelihood that proposed elements do not make it into the final agreement; and delays may limit the Department's ability to negotiate with the vendor.  (Finding Code No. 04-8, page 34)

 

      We recommended that the Department take the necessary steps to increase timeliness in reducing a contract to writing.  Additionally, we recommended the Department should review its practice of allowing vendors to initiate work on projects without a written agreement in place so as to protect State resources. 

 

      The Department disagreed with the finding.

 

CONTRACT MONITORING DEFICIENCIES

 

      Seven of 9 FY04 contracts we selected for review allowed the vendor to be reimbursed for expenses.  During FY04, the Department paid the seven contractors $708,715 in reimbursable expenses. 

 

      A lack of supporting documentation submitted by contractors and the Department’s lack of adequate review led us to question 77 percent ($546,650 of $708,715) of the total expenses paid to these contractors during FY04.  See the table below for a summary of the questioned payments. 

 

No documentation attached to the billing invoices from the vendors to substantiate that the expenses actually occurred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our review of the supporting detail for the expense reports submitted by IPAM found no evidence of Department review

 

      For the IT Rationalization, Telecom Rationalization, Server Consolidation and Software Review contracts, there was no documentation attached to the billing invoices from the vendors to substantiate that the expenses actually occurred. 

 

      Contracts with vendors for the Fleet Management and Strategic Marketing contracts restricted expenses to those amounts delineated in the State travel regulations.  Our review of expenses submitted for reimbursement under these contracts, and the detailed supporting documentation, showed instances of vendors being reimbursed over the travel regulation rates.  The Governor's Office monitored the billings submitted by the Strategic Marketing vendor.  After approval by the Governor’s Office, the FY04 billings were paid by the Department of Revenue under an interagency agreement with the Department of Central Management Services.  On January 11, 2005, the Governor’s Office asked for reimbursement of $1,707.33 for payments that were made to the vendor for expenses that exceeded State travel regulations. 

 

      For the Asset Management contract, in addition to the $25 million in service fees for the vendor under the contract, the Department reimbursed the vendor $177,501 for expenses incurred from January through June 2004 – even though the executed contract was not filed with the Comptroller until June 14, 2004.  All six months of expenses were submitted to the Department in early August 2004.  The payments were made to the vendor for these expenses on August 30, 2004.  Our review of the supporting detail for the expense reports found no evidence of Department review.  The vendor was reimbursed for all of the expenses submitted.  In our review we found:

 

--   A $495.05 reimbursement for a “Celebration Dinner” for six vendor staff on January 19, 2004 – 22 days after the contract award was announced by the Department;

--   Business meals where supporting documentation showed the reimbursement included Department officials who were on travel status.  These Department officials also claimed, and were paid, full per diem rates on travel vouchers for the days when the vendor paid for meals.  The Department officials were staff that monitor the work performed under the Asset Management contract;

--   Parking reimbursed for the United Center on February 17, 2004.  The Chicago Bulls had a home basketball game on that date.  The detailed support indicated two names on the parking receipt, a vendor employee and the Department official responsible for monitoring the contract;

--   A March 2004 reimbursement for a cellular telephone bill for a vendor employee in the amount of $114.68.  The statement shows the telephone is billed for the City of Chicago Department of Procurement Services.

 

      While not submitted for reimbursement, documentation showed a $103 business meal between a vendor official and a Department official on December 15, 2003 – 2 weeks prior to the Department announcing the award for the Asset Management project.  This Department official was a member of the selection committee for this procurement and is responsible for reviewing and approving payments to the vendor.

 

      Additional questioned uses of State funds to reimburse for expenses under the Asset Management contract are detailed in the following exhibit.

 




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


During FY 04 the Department billed State agencies $137 million for efficiency initiatives

 

 

      We recommended that the Department require contractors to submit supporting documentation for expenses that will be reimbursed with State taxpayer dollars.  Additionally, we recommended the Department take the necessary steps to increase monitoring of the expenses submitted by the contractors and request refunds in instances when the contractor is reimbursed over the allowable amounts stated in contracts.  Finally, we recommended that the Department not enter into contracts where the State is responsible for expenses that would be in the normal course of doing business.  (Finding Code No. 04-9, page 38)

 

      With one minor exception, the Department concurred with the finding.

 

 

INADEQUATE METHODOLOGY FOR CALCULATING SAVINGS AMOUNTS TO BILL AGENCIES FOR SAVINGS INITIATIVES

 

      The Department failed to adequately determine the amount of savings it expected State agencies to realize when billing for savings initiatives.  This resulted in a majority of State agencies being over billed – i.e., they were billed more for savings initiatives than Department documentation showed the agencies had realized in savings. 

 

      During FY04 the Department billed State agencies $137 million for efficiency initiatives for:  procurement, information technology, vehicle fleet management, facilities management consolidation, internal audit consolidation, and legal research consolidation.  The table below indicates, by initiative, the number of agencies billed and the total billed:

 

 

 

 

 

 

 

 

 


Department documentation showed that there were 4 "Winners" and 35 "Losers" from the efforts of the procurement efficiency initiative

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department did not maintain adequate documentation to support the validation of many of the savings which the Department attributes to its various efficiency initiatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Department provided two different summary spreadsheets showing amounts of validated savings for the procurement initiative

 

 

 

When savings previously validated are subsequently not considered as savings, it raises questions regarding other savings that were reportedly validated by the Department

 

 

      Not all agencies were billed for all initiatives.  According to Department officials, the Governor’s Office of Management and Budget (GOMB) was very involved in the billing process and GOMB made the decision as to what agencies were billed and what agencies were not billed.

 

      In November 2004, the Department provided documentation on the “Winners and Losers” from the procurement efficiency initiative.  For instance, CMS billed the Department of Transportation (IDOT) $17,061,200 during FY04 but CMS documentation showed that IDOT only saved $1,232,179 from the procurement efficiency initiative.  Likewise, the Department of Revenue (DOR) was billed $4,321,900 during FY04 but only saved $238,302 from the procurement efficiency initiative.  In total, Department documentation showed that there were 4 “Winners” and 35 “Losers” from the efforts of the procurement efficiency initiative.  (Finding Code No. 04-10, page 46)

 

      We recommended that the Department take the necessary steps to ensure that amounts billed to State agencies for savings initiatives are supported by sound methodologies so that agencies are not paying for savings that are not realized.

 

      The Department disagreed with the finding.

 

INADEQUATE DOCUMENTATION TO SUPPORT THE VALIDATION OF SAVINGS

 

      The Department did not maintain adequate documentation to support the validation of many of the savings which the Department attributes to its various efficiency initiatives.  Furthermore, savings goals stated in the Request for Proposals (RFP), vendor proposals, and/or contract were not always realized or documented.

 

      The Department awarded over $69 million during FY04 to outside vendors for contracts intended to achieve savings as part of the efficiency initiatives.  In some cases contracts were awarded based on the vendors’ ability to show they could meet savings goals stated in the RFP, vendor proposal and/or contract.  Where savings are a specific goal, the Department should ensure it has in place a valid and reliable system to track savings achieved by the vendors. 

 

Procurement Efficiency Initiatives

 

      The documentation used by the Department to support the validation in savings captured by McKinsey for procurement in FY04 raised concerns.  Agencies were billed $88.6 million in September 2003 for Procurement Efficiency Initiatives.  A goal stated in the Procurement Assessment RFP issued in May 2003 was that savings of approximately $109 million could be achieved during FY04 and $200 million in FY05.  The Performance Guarantee in the McKinsey contract states “McKinsey and CMS agree that CMS may, in the sole and absolute discretion of the Director, exercise the performance guarantee as provided herein.  CMS may withhold full or partial payment from an unapproved invoice if CMS determines that McKinsey has not satisfactorily completed services at least equal to the ratio that the percentage of payment bears to the percentage of services required for the successful completion of the contract as determined by CMS in its sole and absolute discretion….”

 

      The Department provided two summary spreadsheets showing amounts of validated savings.  The first summary spreadsheet was provided in August 2004 with $101,129,585 in FY04 savings validated.  In January 2005, the Department provided a second summary spreadsheet that listed  $108,249,175 in FY04 validated savings. 

 

      There were several differences between the first and second summary spreadsheets that raised questions concerning the claimed FY04 “validated” savings.  For instance, “validated” savings dollar amounts for several of the individual initiatives changed significantly between the first and second summaries.  Both spreadsheets were provided after the end of FY04, yet major changes were still being made.  When savings previously validated are subsequently not considered as savings, it raises questions regarding other savings that were reportedly validated by the Department. 

 

      Over 50 percent of the procurement initiatives savings, or $58.8 million, were related to six fee-for-service billings at DHS (such as submitting back claims, correcting and resubmitting rejected Medicaid claims, etc.).  According to DHS personnel, many of these activities had been initiated by DHS years ago; however, more intense efforts began in February of 2004 with the help of McKinsey consultants.  Based on information provided by DHS, a $2.5 million in “validated” FY04 savings for one of the six DHS initiatives (“Mental Health Error Correction”) was a future years’ savings and not savings collected in FY04.  Furthermore, on two of the other five DHS initiatives, over $2.8 million in “validated” FY04 savings were not actually collected in FY04.

 

      The table below illustrates the contracts we sampled that specified savings goals, by fiscal year, along with the dollar amounts.


 

 

 

 

 

 

 


Department personnel could not provide documentation and could not attribute savings to the Server Consolidation contract in FY 04

 

Department personnel could not provide documentation and could not attribute savings to the Software Review contract in FY 04

 


Department personnel stated savings could not be attributable to the IT Rationalization contract

 


Department personnel stated savings could not be attributable to the Telecommunications Services Rationalization contract

 

 

 

 

 

 

 

 

 

 

 

 

Department personnel stated that IPAM had not met the $14 million savings goal, but instead, had achieved approximately $7 million in savings

 


$6,000,000 in funded vacant headcount billed to agencies was the result of a survey of State agencies, in Spring 2003, not IPAM work on organizational structure

 

 

 

 

 

 

 

 


The Department was unable to provide any information or documentation to support the savings goal of $1 million in FY 04 for the Fleet Management Initiative

 

 

Information Technology Consolidation

 

      The Department also lacked documentation to support savings from the IT initiative.  Agencies were billed $32.3 million in September 2003 for Information Technology Consolidation initiatives.  The Department entered into four contracts with IT vendors totaling $28.4 million. 

--   Department documentation on Server Consolidation showed that Accenture estimated up to $7 million recurring savings.  However, on January 20, 2005, Department personnel could not provide documentation and could not attribute savings to this contract in FY04. 

--   Documentation on the Software Review project showed that Accenture estimated up to $1.5 million recurring savings.  Again on January 20, 2005, Department personnel could not provide documentation and could not attribute savings to this contract in FY04. 

--   IT Rationalization was to save $25 million in FY04.  Department personnel stated on February 2, 2005, savings could not be attributable to this contract. 

--   Telecommunications Services Rationalization was to save $5 million in FY04, with annualized savings of $30 million being attained by the third year.  Department personnel stated on February 2, 2005, savings could not be attributable to this contract.

 

      On April 6, 2005, after our exit conference, the Department provided a one-page document on information technology savings.  However, the information was not attributable to any individual contract and the information was noted as being subject to change. 

 

Facilities Management Consolidation

 

      The Department also failed to maintain adequate documentation to support that the savings goal was reached on the Facilities Management initiative.  Agencies were billed $8.7 million in May 2004 for Facilities Management Consolidation Initiatives.  A goal stated in the Asset Management RFP issued in September 2003 was to achieve a minimum of $14 million in budgetary savings during FY04 with an additional $30 million in FY05 through the consolidation effort. 

 

      In December 2004, Department personnel stated that IPAM (the vendor selected for this contract) had not met the $14 million savings goal, but instead, had achieved approximately $7 million in savings.  According to the Department, these savings can be attributed to:

 

--   $6,000,000 – Funded vacant headcount billed to agencies in May 2004.  However, the positions identified as vacant were the result of a survey of State agencies, in Spring 2003, not IPAM work on organizational structure.  All of these funded positions were vacant prior to IPAM receiving the Asset Management contract announced December 29, 2003;

--   $500,000 – resulting from an energy audit.  However, the energy audit was conducted by the University of Illinois at Chicago at the request of CMS and McKinsey, not IPAM; and

--   $500,000 – resulting from the cancellation of leases.  The Department provided a report of leases terminated between January 1, 2004 and June 30, 2004 totaling $401,397.  We could not determine from the information provided that CMS considered the offsetting costs of placing agencies in another location.  In February 2005, the Department provided documentation to show that only $185,159 had been saved in FY04 from terminated leases.

 

Fleet Management Initiative

 

      The Department was unable to provide any information or documentation to support the savings goal of $1 million in FY04 and $2.6 million in FY05. 

 

 

 

 

 

 

 


$96.2 million was paid out of or transferred from the Efficiency Initiative Revolving Fund in FY 04

Conclusion

 

      In FY04, agencies paid $129.7 million into the Efficiency Initiatives Revolving Fund for cost savings to be realized from the procurement, facilities management, fleet management, information technology and other initiatives.  While the Department reports this amount as "savings," $96.2 million was paid out of or transferred from the Fund in FY04 (see below).  Since the $96.2 million in disbursements made from the Efficiency Initiatives Revolving Fund in FY04 were actually spent to pay contractors and disbursements, or transferred to the General Revenue Fund where they were used to pay other expenses of the State, it is not clear how much of the saving claimed by the Department represents actual savings for the State.  Additionally, we could not find evidence to support that any of the vendor’s fees were affected by its failure to achieve and/or document its achievement of stated savings goals. (Finding Code No. 04-11 - page 51)

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department's Illinois Office of Internal Audit (IOIA) did not complete audits of all agencies' major systems of internal accounting and administrative control

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


IOIA did not have an effective process in place to identify and monitor agency computer system projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Surplus Warehouse did not maintain an adequate inventory control system.  A comprehensive list of available items was not maintained or disseminated to agencies

 

 

 

 


Lack of effective controls regarding the receipt and inventory of equipment increased the potential for theft of the State's surplused property

 

 

 

 

We also found compensation for sale of computer equipment was inadequate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Department has not submitted reports as required by the Executive Reorganization Implementation Act for any of its reorganizations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Department is not maintaining time sheets for its employees in compliance with the State Officials and Employees Ethics Act (Act)

 

 

 

 

 

 

 

      We recommended that the Department develop and maintain adequate supporting documentation to support the validation of savings billed to agencies and captured by vendors.

 

      The Department disagreed with the finding and recommendation.

 

 

NONCOMPLIANCE WITH THE FISCAL CONTROL AND INTERNAL AUDITING ACT

 

      The Department’s Illinois Office of Internal Audit (IOIA) did not complete audits of all agencies' major systems of internal accounting and administrative control.  Further, an effective process to identify new major computer systems or major modification of existing computer systems was not in place.

 

      The Fiscal Control and Internal Auditing Act (Act) (30 ILCS 10/2003) requires the internal auditing program include audits of major systems of internal accounting and administrative control be conducted on a periodic basis so that all major systems are reviewed at least once every two years.  Major systems, which were included in the two year audit plan but which were not audited, included:

·         Capital Development Board – Grants

·         Department of Corrections – Grants

·         Environmental Protection Agency – Property, Equipment, and Inventories, Agency Operations and Management, Administrative Support Services, and Purchasing Contracting and Leasing.

·         Department of Public Health – Revenues and Receivables, Property, Equipment and Inventories

      Additionally, IOIA did not have an effective process in place to identify and monitor agency computer system projects resulting in development activities not being reviewed at State agencies during the audit period.  By late in fiscal year 2004, IOIA began implementing a more comprehensive program to gather information from other State agencies regarding computer system development projects that are in progress or planned.

 

      Department officials acknowledged they did not comply fully with the Act.  (Finding Code No. 04-14 page 64)

 

      We recommended the Department comply with the Fiscal Control and Internal Auditing Act by ensuring that audits of all major systems of internal accounting and administrative control be conducted at least once every two years and that independent reviews of major new computer systems and major modifications to those computer systems are performed.

 

      The Department and the Illinois Office of Internal Audit disagreed with the auditor's conclusion.

 

SURPLUS PROPERTY MANAGEMENT PROCESS WEAKNESSES

 

      The Surplus Warehouse did not maintain an adequate inventory control system.  The lack of an adequate inventory control system hindered the ability of Surplus to offer equipment to State agencies.  A comprehensive list of available items was not maintained or disseminated to agencies.  However, agencies were permitted to send “want lists” and be notified of requested transferable equipment as it became available. 

 

      Additionally, the lack of effective controls regarding the receipt and inventory of equipment increased the potential for theft of the State’s surplused property.  Property would arrive at the Surplus Warehouse, often in large volumes, and Surplus personnel would do a spot check, comparing inventory listed on the delivery form with the inventory delivered, and then sign the form indicating property was received.  However, we identified instances where an agency would inadvertently not include equipment in a delivery to Surplus, the spot check by Surplus did not detect the missing equipment, and the form would be signed indicating property had been received by Surplus. 

 

      We also found compensation for sale of computer equipment was inadequate.  Desktop computer equipment was sold at live auctions in bulk for as little as $5 to $10 per computer, compared to being sold individually on the Illinois’ I-Bid Internet auction for $60 to $100 per computer.  Laptop computers generally sold for an average of $100 to $150 at the live auction, as compared to $350 to $390 on I-Bid. 

     

      Additionally, the Data Security on State Computers Act (20 ILCS 450) (Act) requires computer equipment be cleared of all data by overwriting previously stored data at least 10 times prior to being surplused.  We tested equipment onsite at the Surplus Warehouse and determined some equipment was allowed into Surplus that was not accompanied by confirmation of wiping; in these instances, such equipment tended to contain readable information.  (Finding Code No. 15, page 66)

 

      We recommended the State’s Surplus Warehouse implement an effective inventory control system.  An effective inventory control system would improve controls over the receipt and tracking of inventory, reduce the potential for theft, and enable Surplus to better serve the needs of State agencies.  We also recommended the Department should evaluate options to increase the compensation received for the sale of the State’s surplus property.  Further, we recommended the Department’s Surplus Warehouse should increase efforts to ensure compliance with the Data Security on State Computers Act. 

 

      The Department disagreed with both the finding and recommendation.

 

REPORTS OF REORGANIZATION NOT FILED AS REQUIRED

 

      The Executive Reorganization Implementation Act (15 ILCS 15/11) requires “Every agency created or assigned new functions pursuant to a reorganization shall report to the General Assembly not later than 6 months after the reorganization takes effect and annually thereafter for 3 years.  This report shall include data on the economies effected by the reorganization and an analysis of the effect of the reorganization on State government.  The report shall also include the agency’s recommendations for further legislation relating to reorganization.”

 

      During the audit period the Governor signed three Executive Orders that provided for the transfer of functions to the Department as follows:

 

·        Executive Order 2003-7, “Executive Order to Reorganize Agencies by the Abolishment of Certain Entities of the Executive Branch” abolished 12 entities and transferred functions to the Department of Central Management Services.  This Executive Order was generally effective April 28, 2003.  The initial report to the General Assembly was due by October 28, 2003.

 

·        Executive Order 2003-10, “Executive Order to Consolidate Facilities Management, Internal Auditing and Staff Legal Functions” provided that “The functions of facilities management, internal auditing, and staff legal functions for each agency, office, division, department, bureau, board and commission directly responsible to the Governor shall be consolidated under the jurisdiction of the Department of Central Management Services”.  This Executive Order was effective May 31, 2003.  The initial report to the General Assembly was due by November 30, 2003.

 

·        Executive Order 2004-2, “Executive Order to Reorganize Agencies by the Transfer of Certain Media Relations Functions to the Department of Central Management Services” provided that “Media relations functions for each agency, office, division, department, bureau, board and commission directly responsible to the Governor shall be consolidated under the jurisdiction of the Department of Central Management Services”.  This Executive Order was effective April 1, 2004.  The initial report to the General Assembly was due by October 1, 2004. 

     

      The Department has not submitted reports as required by the Executive Reorganization Implementation Act for any of its reorganizations noted above.  Department officials have represented that the reports have not been prepared and submitted as the reorganizations established by the Executive Orders have not been fully implemented.  (Finding Code No. 04-16 - page 68)

 

      We recommended the Department file the reports with the General Assembly within six months of a reorganization taking effect pursuant to the requirements of the Executive Reorganization Implementation Act.

 

      The Department disagreed with the finding.

 

 

 

TIMESHEETS NOT MAINTAINED IN COMPLIANCE WITH THE STATE OFFICIALS AND EMPLOYEES ETHICS ACT

 

      The Department is not maintaining time sheets for its employees in compliance with the State Officials and Employees Ethics Act (Act).  The Act (5 ILCS 430/5-5(c)) states, “The policies shall require State employees to periodically submit time sheets documenting the time spent each day on official State business to the nearest quarter hour.”

 

      We noted most of the Department’s employees did not maintain time sheets in compliance with the Act.  Employees’ time is generally tracked using the Central Management Services payroll system, which is a “negative” timekeeping system whereby the employee is assumed to be working unless noted otherwise.  No time sheets documenting the time spent each day on official State business to the nearest quarter hour are maintained for the majority of Department employees. 

 

      Department management stated they relied on advice from the Governor’s Office staff which initially stated that agencies using the Central Management Services payroll system would be in compliance with the Act.  (Finding Code No. 04-23, page 80)

 

      We recommended the Department amend its policies to require all employees to maintain time sheets in compliance with the Act.

 

      The Department disagreed with the finding.

 

 

OTHER FINDINGS AND RECOMMENDATIONS REPEATED FROM THE PRIOR ENGAGEMENT

 

 

INADEQUATE CONTROL OVER PROPERTY AND EQUIPMENT

 

            The Department did not provide adequate control over property and equipment.  We tested the physical inventory and location of equipment, equipment purchases, and equipment transfers and deletions, and noted deficiencies in each area.  (Finding Code No. 04-18, page 71)  This finding was first reported in 2002.

 

We recommended the Department implement adequate controls and procedures to ensure property and equipment is properly safeguarded and property records are complete and accurate. 

 

Department officials agreed with our recommendation and stated that all deficiencies noted in the finding had already been corrected.  (For previous department response, see Digest Footnote #1.)

 

 

MOTOR VEHICLE ACCIDENT REPORTS NOT SUBMITTED TIMELY

 

The Department did not ensure motor vehicle accident reports were submitted timely by its employees. (Finding Code No. 04-19, page 74)  This finding was first reported in 2002.

 

We recommended the Department implement procedures to make all State employees aware of the State of Illinois Vehicle Guide and all rules and regulations related to the use of a State or personal vehicle for business purposes.  We further recommended the Department establish procedures to ensure timely submission of motor vehicle accident reports.

 

The Department agreed in part with the finding and recommendation.  (For previous agency response, see Digest Footnote #2.)

 

AUDITORS’ OPINION

 

      Our auditors stated the financial statements of the Department’s financial statements as of and for the year ended June 30, 2004 are fairly presented in all material respects.

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KAL:pp

 

SPECIAL ASSISTANT AUDITORS

 

      Sikich Gardner & Co. LLP were our special assistant auditors for this audit.

 

 

 

DIGEST FOOTNOTES

 

#1 – INADEQUATE CONTROL OVER PROPERTY AND EQUIPMENT – Previous Department Response

 

2002: The Department made all necessary adjustments to the FY 2002 fixed asset records.  The fixed asset records include all property and equipment transferred from CDB and all real property titled in CMS’ name.  Procedures have been implemented to ensure that copies of all property transfer reports are forwarded to the Accounting Division to ensure that fixed asset information is properly recorded.

 

#2 – MOTOR VEHICLE ACCIDENT REPORTS NOT SUBMITTED TIMELY – Previous Department Response

 

2002: The Department issued a memo to all managers enforcing the requirement for prompt reporting of vehicle accidents.  Managers are to convey the procedures to all employees under their jurisdiction to make all employees more fully aware of the State of Illinois Vehicle Guide and all rules and regulations related to use of a State vehicle.  The Department is also enforcing the practice of ensuring the Vehicle Guide along with the SR-1 form is contained in all state owned vehicles.  The Agency Auto Liability Coordinator is required to track and monitor all accident reports, to work with Risk Management to ensure reporting compliance and to be involved in the notification and reporting process.