Total Expenditures (All Funds except Child Support Enforcement Trust Fund)

Cost of Property and Equipment

The Department’s Key Information Delivery System (KIDS), had numerous data integrity problems, which resulted in the Department’s inability to support the Child Support Enforcement accounts receivable balance at June 30, 1999.

During our tests of child support accounts we noted a number of problems including the following:

Due to the amount and nature of the errors noted, the Child Support Trust Funds were excluded from the Department's financial statements and the auditors issued a qualified opinion.

We recommended the Department continue its efforts in identifying and correcting all data integrity problems in the KIDS system.

Department officials accepted the recommendation and stated that 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.

The Department did not initiate income withholding procedures within fifteen days of locating the non-custodial parent’s employer.

In 10 of 80 child support cases tested, we noted the non-custodial parent’s employer had been located and the Department did not serve income withholding orders within the time frame required by federal regulations. Withholding procedures were not performed for 3 of the 10 cases, and, for the remaining 7 cases, the Department took from 26 days to in excess of 3 years to initiate withholding procedures. (Finding 6, page 32)

We recommended the Department establish and implement policies and procedures to ensure that once a non-custodial parent’s employer is located, income withholding procedures are initiated immediately.

Department officials accepted the recommendation and stated, in part, that by April 1, 2000 it will identify and implement a quality control process which will require supervisory staff to selectively review and verify that Income Withholding Notices were initiated within the 15 day time frame.

The Department did not initiate paternity and support order establishment procedures within 90 days of application by the custodial parent as required by federal regulations. This condition was noted in 3 of 80 cases tested.

We recommended the Department establish and follow procedures to ensure that paternity and support orders are timely established in all cases or thoroughly document unsuccessful attempts to serve orders. (Finding 7, pages 33-34)

Department officials accepted our recommendation and noted it would have received an acceptable performance rating under federal guidelines. The Department further responded it has implemented a review process to ensure compliance with federal guidelines.

The Department did not submit child support cases for federal and state income tax offset as required by federal regulations. We noted 7 of 80 (8.75%) cases tested which should have been submitted for federal and state income tax offset were not submitted as required by federal regulations.

According to Department personnel, the cases were not submitted for offset because the cases had not been converted from the former child support system to the new system (KIDS) and only cases on the new system were submitted for offset. (Finding 8, pages 35-36)

We recommended the Department submit child support cases for federal and state income tax offsets as required by federal regulations.

Department officials did not accept our finding and recommendation and noted at the time of income tax offset processing, all but 48,775 (5%) cases had been converted to KIDS. These 48,775 remaining cases were primarily problem cases, such as credit balance cases, that were for the most part ineligible for offset processing. Further, during the time period, federal collections from income tax offset had increased by $1,420,967, and state offsets increased by $132,494 from the prior year’s offset submittal. The Department’s response also included statistics of dollars collected and total cases for the past three fiscal years. These statistics note that child support cases increased by 8% between FY98 and FY99.

In an auditor’s comment, we noted that regardless of whether overall collections have increased, the Department’s admitted failure to submit a portion of child support cases with delinquent balances to offset constitutes noncompliance with federal regulations and results in lost revenues.

The Department did not submit child support cases to private collection agencies for collection procedures. In our sample of 80 cases, 9 cases (11.25%) were not submitted to private collection agencies for collection procedures as required by Department policies and procedures.

According to Department personnel, the Department did not have any private collection agencies under contract for the 1999 fiscal year; therefore, no cases were submitted for collection. (Finding 9, page 37)

We recommended the Department maintain contracts with private collection agencies and submit cases as required by Department policies and procedures.

Department officials accepted our recommendation and stated it has had 15 private collection agency contracts in place since July 1, 1999. Further, all cases which meet referral criteria are being referred for collection services.

The Department did not ensure charges for child support were appropriate after the child reached the age of emancipation. We noted in 7 of 80 child support cases tested, the child had passed the age of emancipation and the Department was still charging current support charges to the account.

Generally, support payments are not required after the child turns 18 or graduates from high school, whichever is later. However, there are conditions in judgement orders which may require child support to be paid after the child turns 18.

The Department’s policy requires the caseworker to contact the custodial parent on or around the child’s 17^th birthday to determine the date payments are no longer due. For the 7 cases noted in the finding, the Department could not provide documentation that caseworkers had contacted involved parties to determine support order end dates. The Department estimated that overall this condition has resulted in approximately a $36 million overstatement of the total accounts receivable balance. (Finding 10, pages 38-39)

We recommended the Department make system changes to the Key Information Delivery System (KIDS) that would automatically send out correspondence to the involved parties to ensure the correct end dates are input into KIDS.

Department officials accepted our recommendation and stated it would end charging child support at age 18 unless stipulated by the courts. A Department policy decision was also made to require prior notification of the custodial parents to identify any extenuating circumstances that would require extension of the emancipation date. Also, the Department has initiated a clean-up process for prior emancipations.

The Department’s State Case Registry did not contain all information required by statute. During our testing of ten cases we noted the following:

The Public Aid Code (305 ILCS 5/10-27) requires the Department to maintain an automated State Case Registry for all IV-D cases and non-IV-D cases entered into or modified after October 1, 1998. The Code defines specific information to be maintained including the driver’s license number for each parent and name, address, and telephone number of each parent’s employer. (Finding 17, pages 53-54)

We recommended the Department continue its efforts to obtain all information for the State Case Registry as required by the Illinois Public Aid Code.

According to Department officials our recommendation has been implemented and the Department does include all information received from various sources provided the information is available for the State Case Registry.

The Department did not have documentation that a formalized plan had been established to ensure that an internal control review, risk analysis, and systems security review was conducted in compliance with federal regulations for the Medical Management Information System (MMIS).

According to federal regulation, the Department should develop a program for an Automated Data Processing (ADP) review. At a minimum the ADP review should be conducted on a biannual basis and should contain the following: 1) a security plan, 2) a program for conducting periodic risk analysis, and 3) written reports of the ADP systems security reviews.

The Department relies on the MMIS to process approximately 24 million transactions per year. Lack of reviews on this critical system could result in incorrect payments made to providers of medical services being undetected. (Finding 4, page 28)

We recommended the Department establish and implement a program of ADP reviews in accordance with federal regulations for the Medical Assistance Program.

Department officials accepted our recommendation and stated it was in the process of hiring a full-time data security manager. The security manager will implement a program for the required reviews.

The Department did not have sufficient internal controls to safeguard against overpayments to Long Term Care (LTC) facilities.

The Department has implemented two additional controls designed to reduce the time between the date of an overpayment and the date of reconciliation of the overpayment to the Long Term Care providers account. However, the Department did not develop a system which detects overpayments in advance.

The Department has an appropriation to contract with certified public accounting firms to conduct audits of LTC facilities. The results of the audits conducted during the fiscal year disclosed that a total of $8,646,544 of overpayments were made to LTC facilities. (Finding 5, pages 29-31)

We recommended the Department take appropriate action to significantly reduce overpayments to LTC facilities. Such action should include improved documentation of payments and changes in patient status and legal sanctions for facilities not complying with procedures.

Department officials accepted our recommendation and agreed to continue monitoring and considering corrective actions to reduce the time frame between overpayment and recovery. Action will be considered requiring better documentation by facilities regarding notification to the State of changes affecting payments. The Department noted in a recent study led by the Office of the Inspector General, it was found that "the lion’s share of the responsibility for late notices was with the nursing homes." The Department’s response also included possible corrective actions and processes the Department is implementing or considering in order to improve controls over payments.

The Department did not process refunds in an efficient manner, which led to excess interest charges owed to the federal government. The Department receives refunds of federal grant money from medical providers. The State is required to pay the federal government interest on each refund transaction which equals or exceeds $10,000. During our review of Departmental records, we noted the Department took between 3 and 414 days to correctly process these refunds and end the interest charges. The total amount of interest owed for refunds in FY99 was $95,309. (Finding 16, pages 50-52)

We recommended the Department develop procedures to reduce the time delays associated with this process in order to reduce the interest liability owed to the federal government.

Department officials did not accept our recommendation. The Department responded in order to implement our recommendation the Department would need to hire an additional staff person that would cost an additional $56,400 per year. The annual interest savings the staff person would provide by reducing the draw from a weekly basis to a daily basis was estimated by the Department to be $15,500. The Department concluded in its response that it believed implementing the recommendation would not be cost beneficial to the State.

The Department did not appear to have an adequate procurement process. During FY99, the Department filed 28 emergency purchase affidavits with the Office of the Auditor General for total costs of $3,546,542. We made additional inquiries regarding the emergency nature of 16 purchases and we noted 8 instances in which it appeared an emergency could have been avoided. (Finding 11, pages 40-41)

We recommended the Department develop and implement an adequate procurement process requiring Bureaus to identify possible goods and services needed to meet implementation deadlines for projects to avoid the need for emergency purchases.

The Department did not accept our finding and recommendation noting that it does have an adequate procurement process and does work with the procuring Bureaus to identify possible goods and services to meet current needs. The Department also responded the emergency procurements in question were made in accordance with the required policy and procedure, as well as the Procurement Code and procurement rules.

In an auditor’s comment, we noted that we had not questioned whether the Department followed the emergency purchase process correctly. We questioned whether Department personnel engaged in adequate and timely management planning to enable them to competitively procure key contracts and thus avoid using non-competitive emergency procedures.

During our tests of time and attendance records for 25 employees we noted 8 exceptions to various Department polices regarding time and attendance. The following were among the more significant exceptions noted:

We recommended the Department improve controls over employees’ attendance to ensure review of all documents related to the proper procedures for daily time and attendance and absence requests. (Finding 20, pages 59-61)

Department officials noted our recommendation was implemented during FY2000.

The Department did not adequately monitor the development and implementation of the Key Information Delivery System (KIDS), which resulted in major cost overruns, failure to meet critical deadlines, and errors in KIDS data.

The Department contracted for the development of KIDS in December, 1991 with an original contract completion date of May, 1993. The actual implementation date for KIDS was August, 1998. Between the original contract date and implementation date the following occurred:

In May of 1999 the Department determined KIDS was not functioning statewide and could not be used as the mechanism for county clerks to interface with the State Disbursement Unit (SDU). A contract, effective October 1998, between the Department and the Office of the Clerk of the Circuit Court of DuPage County to perform duties as the SDU originally required the SDU to develop a computer system to operate interactively with KIDS. (Finding 24, page 67-68)

We recommended the Department thoroughly plan future large system development projects to ensure that contractual provisions are met and that operational systems are implemented in a timely manner. In addition, the Department should apply the necessary resources to ensure the KIDS is finalized and meets federal requirements and the needs of the State.

According to Department officials, the recommendation was implemented and the KIDS system is certified as meeting federal requirements. In addition, the Department noted staff will continue to be dedicated to maintain and operate the KIDS system to satisfy any needs of the State. Lastly, the Department noted 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.

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

Mr. John Cain, Chief Internal Auditor for the Department, provided written responses to our findings and recommendations on February 24, 2000.

Our auditors stated the Department’s financial statements as of and for the year ended June 30, 1999 were fairly presented in all material respects except for the effect of the omissions of Child Support Enforcement Trust Funds #957 and #1957. The Child Support Enforcement Trust Funds should be included in order to conform with generally accepted accounting principles.

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WILLIAM G. HOLLAND, Auditor General

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Pandolfi, Topolski, Weiss & Co., LTD. were our special assistant auditors for this audit.