REPORT DIGEST

DEPARTMENT OF FINANCIAL AND
PROFESSIONAL REGULATIONS

STATE COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2022

Release Date:  April 18, 2023

FINDINGS THIS AUDIT: 15

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 2 -- 4
Category 2:  4 -- 7 -- 11
Category 3:  0 -- 0 -- 0
TOTAL:  6 -- 9 -- 15

FINDINGS LAST AUDIT: 14

Category 1: Findings that are material
weaknesses in internal control and/or
a qualification on compliance with
State laws and regulations (material
noncompliance).
Category 2: Findings that are
significant deficiencies in internal
control and noncompliance with State
laws and regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the
Auditor General
FRANK J. MAUTINO, 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
www.auditor.illinois.gov

SYNOPSIS

• (22-01) The Department failed to
adhere to provisions of the Fiscal
Control and Internal Auditing Act.
• (22-07) The Department’s internal
controls over its voucher processing
function were not operating
effectively during the examination
period.
• (22-14) The Department did not have
change management policies and
procedures.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE INTERNAL AUDIT FUNCTION

The Department failed to adhere to
provisions of the Fiscal Control and
Internal Auditing Act (Act).

On April 1, 2018, the Department and
the Department of Central Management
Services (CMS) entered into an
intergovernmental agreement for CMS to
provide all internal audit functions
for the Department.

On August 9, 2019, the Attorney
General issued an opinion stating
multiple State agencies may not
appoint the same individual as their
chief internal auditor through an
intergovernmental agreement. Should
designated State agencies desire to
consolidate or combine their internal
audit functions, they must either seek
authorizing legislation from the
General Assembly or follow the process
for reassigning functions among or
reorganizing executive agencies which
are directly responsible to the
Governor as established by article V,
section 11, of the Illinois
Constitution of 1970, and the
Executive Reorganization
Implementation Act.

During testing, we noted the
following:

• The Department’s Secretary had not
appointed an individual to fill the
Department’s chief internal auditor
position or posted the vacant
position.  This position was vacated
on July 1, 2016, 2,190 days prior to
the end of the examination period on
June 30, 2022.
• The Department and CMS did not
obtain the Governor’s approval for CMS
to provide professional internal
auditing services to the Department.
(Finding 1, pages 12-14)  This finding
has been reported since 2018.

We recommended the Department’s
Secretary post the vacant position and
appoint a chief internal auditor to
ensure a full-time program of internal
auditing is in place and functioning
at the Department.  We also
recommended, if another agency is to
be relied upon to supplement internal
audit functions at the Department, the
Department should obtain written
approval of the Governor for these
services and ensure such services are
provided in accordance with the Act’s
requirements.

The Department accepted the finding.

VOUCHER PROCESSING INTERNAL CONTROLS
NOT OPERATING EFFECTIVELY

The Department’s internal controls
over its voucher processing function
were not operating effectively during
the examination period.

In order to determine the operating
effectiveness of the Department’s
internal controls related to voucher
processing and subsequent payment of
interest, we selected a sample of key
attributes (attributes) to determine
if the attributes were properly
entered into the State’s ERP System
based on supporting documentation.
The attributes tested were 1) vendor
information, 2) expenditure amount, 3)
object(s) of expenditure, and 4) the
later of the receipt date of the
proper bill or the receipt date of the
goods and/or services.

Our testing noted 8 of 140 (6%)
attributes were not properly entered
into the ERP System.  Therefore, the
Department’s internal controls over
voucher processing were not operating
effectively.

Due to this condition, we qualified
our opinion because we determined the
Department had not complied, in all
material respects, with applicable
laws and regulations, including the
State uniform accounting system, in
its financial and fiscal operations.

Even give the limitations noted above,
we conducted an analysis of the
Department’s expenditures data for
fiscal years 2021 and 2022.  Our
testing noted:

• The Department owed one vendor
interest totaling $341 in Fiscal Years
2021 and 2022; however, the Department
had not approved this voucher for
payment to the vendor.
• The Department did not timely
approve 1,213 of 11,436 (11%) vouchers
processed during the examination
period, totaling $8,652,049.  We noted
these late vouchers were approved
between 31 and 414 days late. (Finding
7, pages 26-27)

We recommended the Department design
and maintain internal controls to
provide assurance its data entry of
key attributes into ERP is complete
and accurate.  Further, we recommended
the Department approve proper bills
within 30 days of receipt and approve
vouchers for payment of interest due
to vendors.

The Department accepted the finding.

WEAKNESSES IN CHANGE MANAGEMENT OF
COMPUTER SYSTEMS

The Department did not have change
management policies and procedures.

During our examination, we noted the
Department had not established change
management policies and procedures to
control changes to their applications
and data.  In addition, the Department
could not provide a listing of those
with access to the production
environment and the ability to
implement changes thereto. (Finding
14, page 39)

We recommended the Department develop
and implement change management
policies and procedures.  In addition,
we recommended the Department
strengthen its controls in determining
who can make changes to their
applications and data, to ensure
proper segregation of duties.

The Department accepted the finding.

OTHER FINDINGS

The remaining findings pertain to
boards and committees staffing,
reporting, performance evaluations,
census data, general Information
Technology controls, travel, refunds,
accounts receivable, and
cybersecurity.  We will review the
Department’s progress towards the
implementation of our recommendations
in our next State compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Department for the
two years ended June 30, 2022, as
required by the Illinois State
Auditing Act.   The accountants
qualified their report on State
compliance for Findings 2022-001,
2022-007, 2022-010, and 2022-014.
Except for the noncompliance described
in these findings, the accountants
stated the Department complied, in all
material respects, with the
requirements described in the report.

This State compliance examination was
conducted by Sikich, LLP.

JANE CLARK
Division Director

This report is transmitted in
accordance with Section 3-14 of the
Illinois State Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM: mkl