REPORT DIGEST LINCOLN CORRECTIONAL CENTER LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this audit 3 Total last audit 3 Repeated from last audit 1 Release Date: August 6, 2009 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 Center did not maintain a proper segregation of duties over locally held funds. ¨ The Center did not exercise adequate controls over voucher processing. ¨ The Center failed to properly transfer unclaimed inmate account balances to the General Revenue Fund. {Expenditures and Activity Measures are summarized on the reverse page.}

ILLINOIS DEPARTMENT OF CORRECTIONS

LINCOLN CORRECTIONAL CENTER

LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION

For The Two Years Ended June 30, 2008

EXPENDITURE STATISTICS	FY 2008	FY 2007	FY 2006
· Total Expenditures (All Appropriated Funds)....	$22,666,544	$20,669,426	$20,032,819
Personal Services...................................................... % of Total Expenditures.................................... Average No. of Employees............................... Average Salary Per Employee........................... Inmate Compensation..................................................... % of Total Expenditures.............................................	$13,441,612 59.3% 200 $67,208 $213,722 1.0%	$12,451,548 60.2% 223 $55,837 $218,907 1.0%	$12,097,258 60.4% 230 $52,597 $219,271 1.1%
Other Payroll Costs (FICA, Retirement)..................... % of Total Expenditures....................................	$3,226,182 14.2%	$2,360,906 11.4%	$1,992,749 10.0%
Contractual Services.................................................. % of Total Expenditures....................................	$4,665,300 20.6%	$4,648,204 22.5%	$4,734,486 23.6%
Commodities………………………………………. % of Total Expenditures…………………….....	$823,697 3.6%	$795,335 3.9%	$806,384 4.0%
All Other Items......................................................... % of Total Expenditures....................................	$296,031 1.3%	$194,526 1.0%	$182,671 0.9%
· Cost of Property and Equipment.........................	$18,996,495	$17,964,232	$18,033,566

SELECTED ACTIVITY MEASURES (Not Examined)	FY 2008	FY 2007	FY 2006
· Average Number of Inmates...................................	972	972	961
· Ratio of Correctional Officers to Inmates.................	1 / 6.7	1 / 5.6	1 / 5.4
· Cost Per Year Per Inmate......................................	$23,229	$21,264	$20,825
· Rated Inmate Capacity................................................	500	500	500
· Approximate Square Feet Per Inmate...........................	27	27	27

CENTER WARDEN(S)

During Audit Period: Carolyn (Robertson) Trancoso (7/1/06 – 12/31/08)

Melody Hulett, Acting (1/1/09 – Current)

Currently: Melody Hulett, Acting

Internal control weakness Employee performing incompatible duties Department agrees with auditors Vouchers approved late Interest not paid to vendor Department agrees with auditors Noncompliance with State law Unclaimed balances were not transferred to the General Revenue Fund Department does not accept finding and recommendation Auditor comment

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF PROPER SEGREGATION OF DUTIES OVER LOCALLY HELD FUNDS The Center continued to allow employees to perform functions that do not provide an adequate segregation of duties. We noted that an employee responsible for recording transactions for locally held funds continues to be responsible for performing reconciliations and the disbursement functions of invoice processing, check preparation and custodian of blank checks. This employee also receives or opens mail receipts and records cash receipts. In addition, in the absence of the imprest fund custodian, the same employee acts as the custodian of the fund. The Department of Corrections Administrative Directive 02.40.101 states that the Business Administrator shall reconcile locally held funds or may delegate this responsibility to an individual who has no related record keeping functions. Also, the Business Administrator shall designate an individual to write checks or sign checks. Any exception to the separation of duties as outlined in this Directive shall be stated in writing by the Chief Administrative Officer and approved by the Deputy Director of the Division of Finance. In addition, good internal control requires adequate segregation of duties to ensure that effective checks and balances are in place to minimize the risk of loss. (Finding 1, pages 11-12) We recommended the Center review Business Office staff workload and assign the more critical functions to different individuals to achieve an adequate segregation of duties. Center officials report they have implemented our recommendation and have reassigned the mailing of checks to an employee separate from the other locally held fund functions. INADEQUATE CONTROLS OVER VOUCHER PROCESSING The Center did not exercise adequate controls over voucher processing. We noted 6 of 95 (9%) vouchers tested, totaling $991,325, were approved for payment 2 to 110 days late. The Illinois Administrative Code (74 Ill. Adm. Code 900.70), State Prompt Payment Act (30 ILCS 540/3-2), and Administrative Directive 02.35.120 require the Department to review each vendor’s invoice and either deny the voucher in whole or in part; ask for more information necessary to review the bill; or approve the voucher in whole or in part, within 30 days after the receipt of the bill. We also noted the Center did not pay a vendor interest charges totaling $479 for 1 of 65 (2%) vouchers tested. The State Prompt Payment Act (30 ILCS 540/3-2) requires State agencies to determine whether interest is due and automatically pay interest penalties amounting to $50 or more to the appropriate vendor when payment is not issued within 60 days after receipt of a proper bill. (Finding 2, page 13) We recommended the Center strengthen its controls over voucher processing to ensure timely approval and payment of vouchers. Center officials accepted our recommendation and stated they will make every effort to ensure vouchers are approved in accordance with the Prompt Payment Act. FAILURE TO PROPERLY TRANSFER UNCLAIMED INMATE ACCOUNT BALANCES The Center did not take appropriate action to ensure that individual dormant account balances were properly transferred to the General Revenue Fund (GRF). The Unified Code of Corrections (Code) requires the Department to establish accounting records with individual accounts for each inmate (730 ILCS 5/3-4-3(a)). In addition, the Code (730 ILCS 5/3-4-3(b)) requires any money held in accounts of an inmate which are unclaimed one year after release to be transferred to the GRF. The Center improperly offset the total positive cash balances of unclaimed inmate accounts against negative account balances. The majority of negative balances did not involve cash distributions from the Inmate Trust Fund, but represented amounts the Center paid from the GRF or other funds which can only be recouped if cash is available in the individual inmate’s account. Individual dormant account balances totaling $363 and $189 as of June 30, 2008 and 2007, respectively, were not transferred to the GRF. (Finding 3, pages 14-15) We recommended the Center take appropriate action to ensure dormant cash balances are timely transferred to the GRF. Department officials did not accept our finding and recommendation. Officials responded that they had implemented policies and procedures they felt were appropriate, and noted the statute is silent on the Department’s ability to offset negative and positive account balances. In an auditor’s comment, we noted that the Center did not transfer dormant accounts totaling $552 to the GRF as required by the Unified Code of Corrections. The net negative balances are caused by the improper off-setting of one inmate’s positive cash balance against another inmate’s negative balance in the Inmate Trust Fund. Further, our auditor’s comment noted that the Center has a fiduciary responsibility for the inmate accounts and should be evaluating each account within the Inmate Trust Fund individually for potential transfer to the GRF. AUDITORS’ OPINION We conducted a limited scope compliance attestation examination of the Center as required by the Illinois State Auditing Act. Financial statements for the entire Department will be presented in the Central Office report. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:CD SPECIAL ASSISTANT AUDITORS Our special assistant auditors for this audit were E.C. Ortiz & Co., LLP.