REPORT DIGEST

ILLINOIS DEPARTMENT OF PUBLIC AID
FINANCIAL AUDIT

For the Year Ended:
June 30, 2002

AND
COMPLIANCE AUDIT

For the Two Years Ended:
June 30, 2002

Summary of Findings:

Total this audit 3
Total last audit 8
Repeated from last audit 1

Release Date:
June 12, 2003

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

 

 

 

 

 

 

SYNOPSIS

 

 
  • The Department's Key Information Delivery System did not reflect accurate child support accounts receivable balances.
  • The Department did not comply with a provision of the State Finance Act regarding the State's Medicaid Program.

 

DEPARTMENT OF PUBLIC AID
FINANCIAL AND COMPLIANCE AUDIT
For The Period Ended June 30, 2002
EXPENDITURE STATISTICS (in thousands)

FY 2002

FY 2001

FY 2000

Total Expenditures

$7,907,076

$7,428,291

$6,778,491
OPERATIONS TOTAL
% of Total Expenditures

$515,055
6.51%

$423,243
5.70%

$471,288
6.95%
Personal Services
% of Operations Expenditures
Average No. of Employees (whole numbers)

$115,749
22.47%
2,855

$112,272
26.53%
2,905

$106,834
22.67%
2,853
Other Payroll Costs (FICA, Retirement, Group Insurance)
% of Operations Expenditures

$35,219
6.84%

$32,373
7.65%

$29,371
6.23%
Contractual Services
% of Operations Expenditures

$107,811
20.93%

$99,622
23.54%

$101,774
21.59%
All Other Operations Items
% of Operations Expenditures

$256,276
49.76%

$178,976
42.29%

$233,309
49.50%
AWARDS AND GRANTS
% of Total Expenditures

$7,392,021
93.49%

$7,005,048
94.30%

$6,307,203
93.05%

Cost of Property and Equipment

$21,281

$22,293

$49,685
SELECTED ACTIVITY MEASURES

FY 2002

FY 2001

FY 2000
Adjudication Processing Time
In Calendar Days (General Fund)

29.9 Days

22.1 Days

15.6 Days
Accounts Payable and Accrued Liabilities (General Fund) (in thousands)

$1,309,067

$1,064,898

$1,050,131
AGENCY DIRECTOR(S)
During Audit Period: Ms. Ann Patla (through 2-28-01), Ms. Jackie Garner (effective 3-1-01), Mr. George Hovanec, Interim (effective 11-15-02)
Currently: Mr. Barry S. Maram

 

 

 

 

Errors in 11 of 55 receivable balances tested

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual report lacked required information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CHILD SUPPORT ACCOUNTS RECEIVABLE BALANCES

The Department’s Key Information Delivery System (KIDS) did not reflect accurate accounts receivable balances.

We reviewed 55 child support cases (25 cases as of June 30, 2001 and 30 cases as of June 30, 2002) in order to verify the accuracy of the accounts receivable balance. We noted errors in 11 of the 55 (20%) receivable balances tested. The errors noted were both overstatements and understatements of account balances. The errors were attributed to the following:
  • Inaccurate court order information in KIDS;
  • Posting of charges after adoption of the child or emancipation; and
  • Untimely updates to KIDS.

Based on the results of our tests the Department adjusted the accounts receivable balances at June 30, 2002 for the projected potential overstatement in the Child Support Enforcement Trust Funds, #957 and #1957, by a net of approximately $1 million and $6 million, respectively, which is reported net of an allowance for doubtful accounts for external financial reporting. This finding has been repeated since 1998.

The Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires State agencies to maintain systems of internal control necessary to properly record, account for, report and maintain accountability over the State’s resources. In addition, good internal controls dictate the Department maintain sufficient records and financial reports to properly account for assets when the governmental unit is functioning as an agent for another party. (Finding 1, pages 10-12)

We recommended the Department continue with its efforts to identify and correct data integrity problems in KIDS. We further recommended the Department continue to apply the necessary resources to strengthen its control over financial reporting of child support activity in order to reduce to a low risk that misstatements in amounts material to the financial statements will not be detected within a timely period by employees in the normal course of performing their assigned functions.

Department officials accepted our recommendation and stated they will continue their efforts in identifying and correcting all data integrity problems in the KIDS system. Public Aid officials further stated that data integrity improvement is a continual process in all systems and that IDPA has made significant strides in accounts receivable reporting as evidenced by the removal of the qualification of the Department's financial statements by the external auditors. (For previous Department responses, see Digest Footnote 1)

Noncompliance with a Provision of the State Finance Act

The Department did not comply with a provision of the State Finance Act regarding the State’s Medicaid Program. The Department did not include in its fiscal year 2001 and 2002 annual report the following required information:
  • Expenditures from the most recently completed fiscal year used to pay for services for which claims were received in prior fiscal years;
  • Explanations of the exact causes of the variance between the previous year’s estimated and actual liabilities; and
  • Factors affecting the Department of Public Aid’s liabilities, including but not limited to numbers of aid recipients, levels of medical service utilization by aid recipients and inflation in the cost of medical services.

The State Finance Act (30 ILCS 105/25(e) and (g)) requires the Department to submit the above information in an annual report to the General Assembly and the Office of the Comptroller in addition to other detailed information regarding the Medicaid Program. (Finding 2, pages 13-14).

We recommend the Department develop policies and procedures and assign formal responsibility within the Department to ensure complete and timely compliance with this statutory requirement.

The Department accepted the recommendation. The Department officials responded further that they included information regarding services for which claims were received in the prior fiscal year within both the 2001 and 2002 annual reports; however, the information did not meet the requirements as interpreted by the Office of the Auditor General. Procedures and defined responsibilities have been reviewed and revised to ensure all requirements within 30 ILCS 105/25 are included in the annual report to the General Assembly and Office of the Comptroller.

OTHER FINDING

The remaining finding is reportedly being given attention by the Department. We will review the progress towards the implementation of our recommendations in our next compliance audit.

Responses to the recommendations were provided by the Department in correspondence dated May 21, 2003.

AUDITORS’ OPINION

Our auditors state the June 30, 2002 financial statements are fairly presented in all material respects.

___________________________________

WILLIAM G. HOLLAND, Auditor General

SPECIAL ASSISTANT AUDITORS

FPT&W were our special assistant auditors.

DIGEST FOOTNOTES

 

#1 INADEQUATE CHILD SUPPORT ACCOUNTS RECEIVABLE BALANCES - Previous Agency Responses

2001: "The Department is fully committed to continue all of the data base integrity efforts currently in place in order to ensure that accurate account balances are maintained. The resources necessary to accomplish this goal have been and will continue to be in place. To ensure accurate balances, the allocation of resources is a top priority for the Department, within the realm of overall budget constraints."

2000: "IDPA does not concur with the references made to data integrity problems in this finding. Based on the Department of Health and Human Services (DHHS) FSA 88 certification follow-up in Chicago on August 19, 1999, IDPA and the State of Illinois demonstrated to DHHS' satisfaction that conditions associated with data integrity were fully satisfied. For reasons unknown to DHHS, IDPA was never officially informed until April 2001 that data integrity conditions were fully satisfied. In light of this information, which has been shared with OAG and PTW, IDPA believes that KIDS is fully certified in compliance with FSA 88.

IDPA is continuing its efforts in identifying and correcting all data integrity problems. This does not represent an acknowledgement that data integrity issues are severe and that a statement in this finding is warranted. Data integrity improvement is a continual process in all systems. DPA is also applying all necessary resources to ensure KIDS meets the additional federal requirements for Federal Welfare Reform and the needs of the State, within the constraints of available state and federal appropriations and cash resources.

IDPA has made great strides in accounts receivable reporting during the last two years. The Department is able to support its account receivable balances with case level detail."

1999: "ACCEPTED - As of October 1, 1999, the Division of Child Support Enforcement (DCSE) has implemented the Data Base Cleanup Project to cleanse data currently in the KIDS system. Additionally, by April 1, 2000, the DCSE will establish a quality control process which will require supervisory staff to randomly select cases and review balances for accuracy. By March 1, 2000, the DCSE will be contracting with a third party to provide additional data clean up services for the KIDS system."

"IMPLEMENTED - The KIDS system is certified as meeting Federal requirements. Staff will continue to be dedicated to maintain and operate the KIDS system to satisfy any needs of the State. It is the intent of the Department to thoroughly plan future large system development projects to ensure that contractual provisions are met and the operational systems are implemented in a timely manner."

1998: "Accepted. The lack of accounts receivable documentation is being addressed by the establishment of an internal financial accountability workgroup. This workgroup has the responsibility to ensure that reporting requirements are met and that supporting documentation for these financial records are maintained in accordance with federal record retention requirements."