REPORT DIGEST

DEPARTMENT OF CENTRAL MANAGEMENT SERVICES

FINANCIAL AND COMPLIANCE AUDIT
For the Two Years Ended:
June 30, 1996

Summary of Findings:

Release Date:

April 10, 1997

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

SYNOPSIS

• All invoice vouchers were not approved by Department personnel within 30 days of physical receipt as required by the Illinois Administrative Code.

• All invoice vouchers did not have adequate supporting documentation.

• All applicable Department employees did not file Statements of Economic Interest with the Board of Ethics on time and some filings were incomplete.

• The Department did not provide performance evaluations to all employees on a timely basis.

• The Department has not fully implemented the Forms Management Program.

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

FY 1996

FY 1995

FY 1994

Total Expenditures

• Average No. of Employees

• Cost of Property and Equipment

$413,067,258
56,990,537
576,775,544
92,544,917

83,513,068
72,730,743
59,977,891
55,870,817
31,776,103
28,695,223
8,265,445
168,301
1,997,508
3,270,930

$1,485,644,285

1,294

$490,021,000

$441,827,702
60,154,377
670,438,435
97,841,587

72,052,942
-
55,664,063
51,319,452
33,837,324
28,945,870
6,942,018
2,569,422
1,844,966
4,257,764

$1,527,695,922

1,296

$504,244,000

$480,565,107
56,468,371
558,043,942
91,338,032

72,609,501
-
51,863,113
46,936,176
33,430,269
28,269,723
5,408,380
2,695,650
1,698,348
4,942,455

$1,434,269,067

1,258

$507,690,000

FY 1996

FY 1995

FY 1994

Total Receipts

$625,360,620
97,725,507

84,621,338
56,894,937
52,045,796
36,631,887
27,798,641
14,302,528

$995,381,254

$620,621,285
94,708,378

73,583,834
56,157,897
55,488,993
36,309,573
29,562,182
19,004,785

$985,436,927

$591,166,506
98,538,034

74,002,878
56,816,532
51,984,966
37,242,969
30,063,107
13,949,553

$953,764,545

AGENCY DIRECTOR

During Audit Period: Michael Schwartz
Currently: Michael Schwartz

Vouchers not approved within 30 days

Vouchers need support attached

Employees' disclosure statements not adequate

Complete statements must be filed by each April 30

Annual employee evaluation is recommended

Comply with Forms Management Act or have it revised

Sale of office supplies privatized

New program for teachers health insurance

INTRODUCTION

Our audit of the Department of Central Management Services is issued in two reports. The Compliance Audit Report contains the audit findings. The Financial Audit Report contains the opinion on the financial statements and the supplementary financial information.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INVOICE VOUCHERS NOT APPROVED PROMPTLY

During the two-year audit period, we noted that all invoice vouchers were not approved by authorized personnel within 30 days of physical receipt as required by the Illinois Administrative Code. Our sample of 215 invoice vouchers included 34 vouchers that were not approved within 30 days. This resulted from the lack of appropriate review procedures. Management took measures to improve in this area by implementing a new computer system in fiscal year 1996. This system reduced the amount of time for approval of vouchers from 1995, but further improvements must be initiated in order to comply with the Illinois Administrative Code. (Finding 1, page 10 in Compliance Audit Report)

Department officials concurred with our recommendation. They stated the CMS Accounting Information System is now fully operational and procedures have been implemented to facilitate the timely processing of vouchers.

INVOICE VOUCHERS LACKED SUPPORTING DOCUMENTATION

During the two-year audit period, we noted that all invoice vouchers did not have adequate supporting documentation. In a sample of 90 State invoice vouchers tested, it was noted that 18 did not have copies of vendor invoices attached. Additionally, no vendor invoices were attached to the invoice vouchers maintained at the Comptroller's Office. Good business practice dictates that vendor invoices be attached to the State invoice voucher to allow for follow-up procedures and to verify the adequacy of purchases. The lack of supporting documentation may result in duplicate payments being made. (Finding 5, page 14 in Compliance Audit Report)

Department officials agreed to maintain adequate documentation to support all expenditures. In addition, they agreed to submit supporting documentation to the Comptroller's Office as required by the Comptroller.

STATEMENTS OF ECONOMIC INTEREST NOT PROPERLY FILED

All applicable Department employees did not file Statements of Economic Interest with the Board of Ethics on a timely basis or did not properly complete the form submitted. In a sample of 25 employees, three did not file a Statement of Economic Interest on a timely basis. In addition, one employee did not date his form, and seven employees submitted incomplete forms. Department officials indicated that filing the Statements of Economic Interest is done by employees and the Department has no control over how or when they are completed.

According to Executive Order #3, all specified persons must file a completed Statement of Economic Interest between April 15 and April 30 of each year. Personal economic disclosure is required of those in critical government positions to demonstrate that public decision making is free from both actual conflict of interest and the appearance of possible conflict. If the statements are not completed and filed on a timely basis, the Board of Ethics cannot assess conflicts of interest in an efficient manner. Executive Order #3 states that the willful making of a false, misleading or incomplete statement can be grounds for disciplinary action, including dismissal. (Finding 8, page 18 in Compliance Audit Report)

We recommended the Department emphasize to employees the importance of properly completing the Statement of Economic Interest and filing it on a timely basis.

Department officials responded they are finalizing a plan that increases the Department's involvement in ensuring timely and accurate filing of Statements of Economic Interest.

PERFORMANCE EVALUATIONS NOT COMPLETED ON TIME

The Department did not provide performance evaluations on a timely basis to all employees. We examined 40 personnel files and noted that 9 employee performance evaluations were either completed late or were for a period greater than 12 months. According to the DCMS Policy Manual, employee evaluations should take place every 12 months. In addition, supervisors are encouraged to utilize the evaluation process more frequently to reflect outstanding employee performance. Good business practice dictates that performance evaluations be completed on an annual basis to encourage proper work habits and to give timely feedback on the employee's strengths and areas needing improvement. As a result of untimely evaluations, the Department could be retaining employees whose job performance is below acceptable standards. In addition, the Department may not be promoting qualified employees if the annual performance evaluations are not completed in time to be useful. (Finding 12, page 26 in Compliance Audit Report)

Department officials concurred with our recommendation to implement procedures to ensure that all employees receive annual performance evaluations on a timely basis.

FORMS MANAGEMENT PROGRAM NOT COMPLETELY IMPLEMENTED

The Department has not fully implemented the Forms Management Program. This program was intended to standardize forms among State agencies and to consolidate forms in order to minimize costs. According to the Forms Management Program Act (20 ILCS 435/4), the Department is to provide for the coordination, orderly design, implementation, and maintenance of the Program. The Department has failed to comply with several of the requirements of this Act. For example, the Department did not submit a report on its evaluation of the effectiveness of the Program required to be filed with the General Assembly by September 30 each year. As a result of budget cuts in 1991 and 1992, the employee responsible for overseeing the Program was laid off and a report evaluating the effectiveness of the Program has not been submitted to the General Assembly since 1991. Failure to regularly file this report hinders the General Assembly's ability to evaluate the cost effectiveness and achievements of the Forms Management Program. (Finding 11, page 24 in Compliance Audit Report)

We recommended the Department allocate the resources necessary to fully operationalize the program or seek legislation to revise the statutes.

Department officials responded they will work with the Legislative Audit Commission to revise the forms management statute.

OTHER FINDINGS

The remaining findings and recommendations are less significant and have been given appropriate attention by the Department. We will review progress toward the implementation of our recommendations in our next audit.

Mr. Michael Schwartz, Director, provided the Department's responses.

CHANGES IN OPERATIONS

During September 1995, the Department discontinued the services provided by the Office Supplies Revolving Fund. The services provided by this fund were privatized and outsourced to third party vendors.

Beginning January 1, 1996, the Department became the administrator of the Teacher Health Insurance Security Fund. The fund provides health insurance for the Illinois Teachers' Retirement System benefit recipients and dependent beneficiaries.

AUDITORS' OPINION

Our auditors stated the financial statements of the non-shared funds of the Department at June 30, 1996 are fairly presented.

___________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:KMA:pp

SPECIAL ASSISTANT AUDITORS

Clifton Gunderson L.L.C. were our special assistant auditors for this audit.