REPORT DIGEST
DEPARTMENT OF NATURAL RESOURCES
FINANCIAL AUDIT OF CAPITAL ASSET ACCOUNT
For the Year Ended: June 30, 2010
COMPLIANCE EXAMINATION
For the Two Years Ended June 30, 2010
Summary of Findings:
Total this audit: 17
Total last audit: 13
Repeated from last audit: 6
Release Date: May 19, 2011
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 www.auditor.illinois.gov
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SYNOPSIS
• The Department did not have adequate policies or
procedures to ensure all assets categorized as Construction in Progress were
properly recorded.
• The Department did not implement adequate procedures to
comply with the Illinois and Michigan Canal Protection Act and the Rivers,
Lakes and Streams Act.
• The Department failed to adopt and impose a plan to ensure
that required daily and quarterly inspections of self-contained self-rescuer
devices are performed.
• The Department did not follow-up on outstanding tickets
with the Circuit Clerk.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE CONTROLS OVER CAPITAL ASSETS
The Department does not have adequate policies or procedures
to ensure that assets categorized as Construction in Progress (CIP) were
properly recorded.
During our review, we noted the Department did not have a
policy to ensure CIP assets were properly recorded. As a result, the auditors requested the
Department to perform an overall review of the site improvements, and building
and building improvements to determine whether assets should have been
reported. As a result of the
Department’s review, eight assets were identified as CIP, totaling $1,012,131,
which should have been classified as CIP at June 30, 2010. However, due to the immateriality of the
misclassification, a correcting adjustment was not made to the financial
statements. (Finding 10-1, page 14)
Department personnel stated the Department did not have
policies and procedures to ensure assets were properly classified.
We recommend the Department establish policies and
procedures to ensure assets are properly classified.
The Department agreed with our recommendation and stated
they have developed policies and procedures to ensure assets are properly
classified.
INADEQUATE CONTROLS OVER ENCROACHMENTS
The Department did not implement adequate procedures to
comply with the Illinois and Michigan Canal Protection Act and the Rivers,
Lakes and Streams Act.
During our testing of the Illinois and Michigan Canal
Protection Act we noted the Department had not developed policies or procedures
to ensure compliance.
On April 20, 2009, the Department submitted a letter to a
business regarding an encroachment identified by the Department. However, we noted the Department had taken no
further action.
In addition, during our testing of the Rivers, Lakes and
Streams Act we noted the Department had not developed policies or procedures to
ensure compliance.
During our testing of two encroachments, we noted:
• The Department submitted a letter of encroachment on April
17, 2006 to a business. However, as of
June 30, 2010 the encroachment still remained.
• On November 13, 2009, the Department submitted a letter
indicating a deck structure was not permissible and should have been removed.
Based on our inquiries with Departmental staff, we were unable to determine the
status of the encroachment. (Finding 10-8, pages 29-30)
Department personnel stated the Department does not have
written policies and procedures to document that the Department followed up on
encroachments.
We recommend the Department develop policies and procedures
to ensure compliance with the Acts. Additionally, the Department should follow
up on encroachments to ensure they comply with the Acts.
The Department agreed with our recommendations and stated
they would develop written policies and procedures to document compliance with
the Illinois and Michigan Canal Protection Act and the Rivers, Lakes and
Streams Act.
FAILURE TO ENSURE COMPLIANCE WITH REQUIRED INSPECTIONS
The Department failed to adopt and impose a plan to ensure
that required daily and quarterly inspections of self-contained self-rescuer
devices (SCSR) are performed.
During our testing we noted the Department had not
established written policies and procedures that described how a plan is
adopted and imposed to ensure the daily and quarterly inspections are performed
as required by statute.
The Department requires mine operators to develop and submit
emergency response plans (ERP) for review. The ERPs are to outline the daily
and quarterly inspections conducted by the operators. The Department completes an evaluation of the
ERP which is returned to the mine operator for corrective actions. In addition,
the Department performs monthly inspections of each underground mine.
The Department documents its monthly inspections in a report
for each inspection. These reports include only exceptions noted by the State
mine inspector. Based on discussions with Department personnel, the required
daily inspections of SCSRs are performed by the actual persons who are
underground using such devices. We reviewed a sample of five inspection reports
as well as a sample of ERP.
Based on our review of ERPs, we noted no language that
documents the miner’s plan for the daily and quarterly inspections of
applicable SCSRs. Based on our review of the five monthly inspection reports,
the Department did not adequately document these exceptions to the
requirements.
In addition, the Department did not adequately document the
decision to follow the requirements of all federal Mine Safety and Health
Administration requirements. (Finding
10-13, pages 36-37)
Department personnel stated the U.S. Mine Safety and Health
Agency (MSHA) require all mine operators to submit Emergency Response Plans
(ERPs) for approval. ERPs must
satisfactorily document compliance with requirements of Federal laws, after
which our Statutes have been modeled.
We recommend the Department implement policies and
procedures to ensure compliance with the plan to ensure daily and quarterly
inspections of self-contained self-rescuer devices.
The Department agreed with our recommendation and stated
they would implement policies and procedures to ensure mine operators comply
with requirements for daily and quarterly inspections of self-contained
self-rescuer devices.
FAILURE TO FOLLOW UP ON OUTSTANDING TICKEST WITH THE CIRCUIT
CLERK
The Department did not follow up on outstanding tickets with
the Circuit Clerk.
The Department did not request nor receive a monthly aging
report from the Illinois State Police that includes all tickets written for all
Department offenses and consequently, did not discuss outstanding ticket
amounts owed to the Department with appropriate Circuit Clerks.
Supreme Court Rule 552, effective since September 30, 2002,
while requiring clerk(s) to issue a Disposition Report, does not preclude the
Department’s responsibility to determine if violators are prosecuted in a
timely manner and to follow up on outstanding tickets with the appropriate
clerk. Failure to follow up on
outstanding tickets could result in lost revenue to the State.
Department personnel stated the Department has determined
that the cost of following up on outstanding tickets outweighs the benefit
because the potential recovery of fines is minimal. Also, the Illinois State Police is no longer
making the paper disposition report available to other Agencies. (Finding 10-15, pages 40-41)
We recommend the Department obtain outstanding ticket
reports from the Illinois State Police, review the reports, and follow up on
outstanding tickets with the Circuit Clerks.
The Department disagrees with the finding and
recommendation. The Department stated
the Supreme Court Rule 552 does not require the Department to follow up on
outstanding tickets. Additionally, the
Illinois State Police is no longer making the paper disposition report
available to other Agencies. Once the
Automated Disposition Reporting System is implemented, the Department will be
able to follow up on outstanding tickets in a non-cost prohibitive manner.
In an auditor’s comment, we noted the Supreme Court Rule 552
states “Upon final disposition of each case, the clerk shall execute the
“Disposition Report” and promptly forward it to the law enforcement agency that
issued the ticket.” It is the issuing law enforcement agency’s responsibility
to establish and maintain controls to effectively utilize the Disposition
Reports.
OTHER FINDINGS
With regards to the other findings noted in our report,
Department management indicated they are being given attention. We will review the progress towards the
implementation of our recommendations during our next engagement.
AUDITOR’S OPINION
Our auditors stated at June 30, 2010 the Department of
Natural Resource’s Schedules of Capital Assets and Intangible Assets are fairly
presented.
WILLIAM G. HOLLAND
Auditor General
WGH:MKL:pp
AUDITORS ASSIGNED
Washington, Pittman &
McKeever, LLC were our special assistant auditors for this audit.