REPORT DIGEST DEPARTMENT OF CORRECTIONS STATEVILLE CORRECTIONAL CENTER LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this audit 7 Total last audit 9 Repeated from last audit 5 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 lacked adequate controls over its commodities inventory. ¨ The Center lacked adequate controls over its equipment and related records. ¨ The Center did not maintain adequate segregation of duties in the areas of receipt processing and check signing authority for its locally held funds. ¨ The Center employees lacked required training hours. ¨ The Center did not exercise adequate control over its locally held funds. {Financial Information is summarized on the reverse page.}

ILLINOIS DEPARTMENT OF CORRECTIONS

STATEVILLE CORRECTIONAL CENTER

LIMITED SCOPE COMPLIANCE ATTESTATION EXAMINATION

For The Years Ended June 30, 2008

EXPENDITURE STATISTICS	FY 2008	FY 2007	FY 2006
· Total Expenditures (All Appropriated Funds)..... Personal Services..................................................... % of Total Expenditures..................................... Average No. of Employees................................ Average Salary Per Employee............................ Student, Member and Inmate Compensation............. % of Total Expenditures..................................... Other Payroll Costs (FICA, Retirement)................... % of Total Expenditures........................................... Contractual Services............................................ % of Total Expenditures..................................... All Other Items........................................................ % of Total Expenditures..................................... · Cost of Property and Equipment..........................	$109,751,661 $70,590,315 64.3% 980 $72,031 $239,047 0.2% $17,006,321 15.5% $15,140,042 13.8% $6,775,936 6.2% $189,769,775	$97,262,179 $63,339,686 65.1% 1,053 $60,152 $245,270 0.2% $12,057,634 12.4% $14,949,817 15.4% $6,669,772 6.9% $187,634,812	$93,344,874 $60,506,858 64.8% 1,100 $55,006 $243,834 0.3% $10,040,556 10.8% $16,512,032 17.7% $6,041,594 6.4% $188,242,972
SELECTED ACTIVITY MEASURES (Not Examined)	FY 2008	FY 2007	FY 2006
· Average Number of Inmates.................................... · Ratio of Correctional Officers to Inmates.................. · Cost Per Year Per Inmate........................................ · Rated Inmate Capacity............................................. · Approximate Square Feet Per Inmate.......................	3,342 1 / 4.4 $32,838 3,162 44	3,358 1 / 4.1 $28,961 3,162 46	3,301 1 / 3.9 $28,269 3,187 44
CENTER WARDENS
During Audit Period and Currently: Ms. Deirdre Battaglia (3/16/05-10/31/06) Mr. Terry McCann (11/1/06 to 2/28/09) Mr. Frank Shaw, Acting (3/1/09 to present)

Auditors unable to report on inventory balances Commodity counts did not agree to accounting records Excess inventory of $367,856 Supporting documentation was not maintained Missing equipment totaling $13,180 Center’s property listing included obsolete and unused property Several receipts tested were entered into the system by the cashier who also received the physical checks Noncompliance with annual training requirements The general ledger was not properly adjusted Bank reconciliations were not performed Accounts payable were not properly supported Disbursements were not properly supported

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROL OVER COMMODITIES The Center did not exercise adequate control over its commodities inventory. As a result of the Center’s inadequate recordkeeping and the weaknesses noted in the internal controls over commodities inventory, we were unable to report on the inventory balances at June 30, 2007 and June 30, 2008. Center management stated the commodities inventory balances at June 30, 2007 and June 30, 2008, were $1,427,030 and $1,490,430, respectively. Some of the exceptions that we noted follow: Fifty-four of 75 (72%) commodity counts tested did not agree to the Center’s perpetual records. After receiving the final inventory we noted 11 of the 54 (20%) original test count discrepancies were not adjusted in the Center’s inventory system. The overall net error was a $25,137 understatement of final inventory. The Center maintained commodity inventory in excess of a historically computed 12-month supply. Eleven of 25 (44%) items tested were in supply in excess of 12 months resulting in overstocked inventory of $367,856. Center personnel were unable to provide the supporting documentation for Item Status Report as of 6/30/07 for Commodity Inventory that reported yearly activity. (Finding 1, Pages 11-13) We recommended the Center apply proper year-end inventory procedures to reflect actual quantities on hand at the end of the fiscal year. Further, the Center should devote adequate resources to ensure that commodity records are maintained and updated timely and ensure that commodities are stored in an organized manner to help easily identify amounts on hand in excess of a 12-month supply. Additionally, supporting documentation should be maintained to support the expenditures made for the Center’s commodity inventory. Department officials accepted our recommendation and stated the Center will make every effort to ensure compliance with Departmental policies and statutes on inventory. INADEQUATE CONTROL OVER EQUIPMENT AND RELATED RECORDS The Center did not maintain adequate control over equipment and related records. Some of the exceptions that we noted follow: Nine of 50 (18%) equipment items tested, totaling $13,180, could not be located. Six of 50 (12%) property items tested, totaling $46,595, were obsolete and not properly removed from the property records. Three of 50 (6%) property items tested, totaling $176,979, were not currently in use. Three of 50 (6%) equipment items tested, totaling $25,510, did not contain proper State identification tags. Property balances were incorrectly reported to Central Office in all eight quarters during FY07 and FY08. (Finding 2, Pages 14-16) We recommended the Center adequately safeguard State equipment and adhere to its procedures to ensure that property and equipment records are properly maintained. In addition, the Center should properly dispose of and remove from its records any assets that are obsolete, damaged or no longer used in operations. Department officials accepted our recommendation and stated that the Center will make every effort to ensure compliance with property control procedures and policies. INADEQUATE SEGREGATION OF DUTIES The Center lacked adequate segregation of duties in the areas of receipt processing and check signing authority for its locally held funds. We noted that 23 of 75 (31%) receipts tested, totaling $24,999 and $28,343 for fiscal years 2007 and 2008, respectively, were entered into the Fund Accounting and Commissary Trading System (FACTS) by the cashier who also received the physical checks. The Illinois Fiscal Control and Internal Auditing Act (Act) (30 ILCS 10/3001) requires each State agency to establish and maintain a system of internal and administrative controls, which includes maintaining an adequate segregation of duties over locally held funds. (Finding 3, Pages 17) This finding was first reported in 2004. We recommended the Center properly segregate duties in order to maintain an effective internal control over the recordkeeping and accounting function. Department officials stated that the Center had implemented our recommendation by reassigning duties. (For the previous agency response, see Digest footnote #1.) REQUIRED EMPLOYEE TRAINING NOT PERFORMED Stateville Correctional Center’s employees lacked required training hours. Nineteen of 26 (73%) employees tested in fiscal year 2007 and fiscal year 2008 did not receive the required training hours. Employees were deficient anywhere form 8 to 40 hours of training in fiscal year 2007 and fiscal year 2008. The Center could not locate the training file for 1 of 26 (4%) employees for each fiscal year 2007 and 2008. In addition, the Center did not appear to have a required training program in place in FY08. Available training was reduced from 5 eight-hour days to 3 eight-hour days. Accordingly, only 24 hours were required for formal training. The Center did not follow procedures to coordinate the remaining 16 hours of required training for employees requiring 40 hours of training annually. Lack of employee training could result in work inefficiencies, safety and security problems and failure to improve the quality of the workforce and the working environment. (Finding 5, Page 20) This finding was first reported in 2004. We recommend Center management ensure employees receive the required training every fiscal year. Department officials accepted our recommendation and stated the Center will ensure employees receive the required training every fiscal year. (For the previous agency response, see Digest footnote #2.) INADEQUATE CONTROLS OVER LOCALLY HELD FUNDS The Center did not exercise adequate control over its locally held funds. During our testing, we noted the following: · The ending cash balance of the Inmate Trust Fund checking account per the bank statement reconciliation as of June 30, 2007 and 2008 was $211 and $1,226 higher than the Center’s general ledger balance as of June 30, 2007 and 2008, respectively. In addition, the Center did not perform bank reconciliations for the Employee Benefit Fund and Inmate Trust Fund savings accounts. · Nine of 10 (90%) accounts payable tested, totaling $20,357 and $289,366 for fiscal years 2007 and 2008, respectively, did not have adequate supporting documentation. In addition, two of 25 (8%) disbursements tested were not properly reported as payables at June 30, 2008. The disbursements were made from the Employee Benefit Fund, totaling $9,930, and the Inmate Commissary Fund, totaling $6,863. · Two of 75 (3%) disbursements tested, totaling $12,100, did not have the proper support. The disbursements were made from the Employee Benefit Fund. (Finding 6, Page 21-22) We recommended the Center perform proper bank reconciliations at month-end, investigate all reconciling items, and make adjustment to the general ledgers when needed. In addition, the Center should obtain sufficient documentation prior to payment of disbursements. Further, the Center should comply with the Illinois State Records Act and ensure they maintain an adequate system of recordkeeping. Department officials accepted our recommendation and stated the Center will make every effort to ensure the locally held funds are maintained as required. OTHER FINDINGS The remaining findings are reportedly being given attention by the Department. We will review the Center’s progress toward the implementation of our recommendations in our next limited scope compliance examination. AUDITORS' OPINION We conducted a 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:JGR:PP AUDITORS ASSIGNED This limited scope compliance examination was conducted by the Auditor General’s staff. DIGEST FOOTNOTES #1 Inadequate segregation of duties – Previous Department Response Recommendation implemented. The cashier will not input the cash receipts into the automated system. The check signing authority has been removed for the employee that performs bank reconciliations. #2 Inadequate employee training – Previous Department Response Recommendation accepted. The Center will make every effort to ensure the employees attend training as required by Departmental Directives.