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REPORT DIGEST
ENVIRONMENTAL PROTECTION
AGENCY
FINANCIAL AUDIT (Fund 270) For the year ended June 30, 2008 AND COMPLIANCE EXAMINATION For the two years ended June 30, 2008 Summary of Findings: Total this audit 9 Total last audit 6 Repeated from last audit 6 Release Date: March 5, 2009
State of
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL To obtain a copy of the
Report contact: Office of the Auditor
General
(217) 782-6046 or TTY (888)
261-2887 This Report Digest and the
Full Report are also available on the worldwide web at http://www.auditor.illinois.gov
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SYNOPSIS · The Agency did not identify errors in accounting reports (Generally Accepted Accounting Principles Reporting Packages) or the draft financial statements provided to the auditors. · The Agency did not have adequate controls over its bank reconciliation process. · The Agency did not conduct employee performance evaluations in a timely manner. · The Agency’s Director appointed an Industrial Hygiene Examining Board as required; however the board has been inactive since October 1994. · The Agency did not submit the 2007 Annual Illinois Water Quality Report as required by the Rivers, Lakes and Streams Act. {Expenditures and Activity Measures are summarized on the reverse page.} |
ENVIRONMENTAL
PROTECTION AGENCY
FINANCIAL AUDIT for the Year Ended June 30, 2008
AND COMPLIANCE EXAMINATION
for the Two Years Ended June 30, 2008
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EXPENDITURE STATISTICS |
FY 2008 |
FY 2007 |
FY 2006 |
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Total Expenditures (All Funds)........
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$403,312,555 |
$428,584,045 |
$388,533,502 |
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OPERATIONS TOTAL..................... % of Total Expenditures................ |
$164,624,501
40.8% |
$171,831,894
40.1% |
$180,514,788
46.5% |
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Personal Services..........................
% of
Operations Expenditures..
Average
No. of Employees...... |
$64,672,573
39.3%
1,016 |
$63,193,124
36.8%
1,112 |
$59,984,340
33.2%
1,070 |
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Other Payroll Costs (FICA,
Retirement)...................................
% of
Operations Expenditures.. |
$29,607,846
18.0% |
$25,897,354
15.1% |
$23,942,881
13.3% |
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Contractual Services......................
% of
Operations Expenditures.. |
$62,875,110
38.2% |
$66,716,172
38.8% |
$83,748,287
46.4% |
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All Other Operations Items............
% of
Operations Expenditures |
$7,468,972
4.5% |
$16,025,244
9.3% |
$12,839,280
7.1% |
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GRANTS
TOTAL..............................
% of
Total Expenditures
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$238,688,054
59.2% |
$256,752,151
59.9% |
$208,018,714
53.5% |
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Cost of Property and Equipment......
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$26,974,305 |
$26,662,030 |
$26,828,917 |
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SERVICE EFFORTS AND
ACCOMPLISHMENTS (Not Examined) |
FY 2008 |
FY 2007 |
FY 2006 |
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CLEAN AIR Title V permits issued ………………………
Facilities
inspected........................................
Vehicle
emission tests performed................... |
68
1,408
1,477,646 |
55
2,123
1,889,189 |
190
2,084
1,894,000 |
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CLEAN LAND Facility permits issued ………………………
Facilities
inspected........................................
Cleanup
programs: Superfund constructions completed............ State cleanup projects completed...............
Leaking
Underground Storage Tanks: Incidents reported.................................... Household Hazardous Waste Collections … |
854
4,959
3
3
525
20 |
864
4,860
0
4
532
21 |
740
4,721
1
6
503
30 |
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CLEAN
WATER Permits issued.............................................
Facilities inspected........................................
Financial assistance: Wastewater loans issued.......................... Drinking water loans issued...................... |
7,481
1,672
18
20 |
9,698
1,599
25
14 |
9,822
1,439
26
22 |
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AGENCY DIRECTOR(S) |
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During Audit Period: Douglas P. Scott Currently: Douglas P. Scott |
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Errors in
accounting reports and financial statements
Reclassification of
$2,855,000 required to Agency’s financial statements
Bank
reconciliations not performed timely and review not documented
Performance evaluations not performed timely
Board appointed but not active since October 1994
Agency to seek legislation to change State law
Failure to publish annual report on pollution
prevention |
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS OVERSIGHT
OF FINANCIAL REPORTING The Agency did not identify
errors in accounting reports (Generally Accepted Accounting Principles
Reporting Packages) or the draft financial statements provided to the
auditors. We noted the current portion
of restricted loans receivable of $5,686,000 and loans and notes receivable
of $21,830,000 were classified as noncurrent receivables and interest income
on pledged loans amounting to $1,493,000 were classified as interest income
on unpledged loans resulting in a reclassification of $2,855,000 from
restricted net assets for debt service to unrestricted net assets. In addition, accrued interest receivable
on pledged loans receivables and other receivables amounting to $173,000 and
$177,000 respectively were overstated.
The Agency subsequently adjusted the financial statements to properly
record the above transactions.
(Finding 1, pages 10-11) We recommended the Agency review
its current process for the preparation and review of the annual financial
statements and allocate the technical resources necessary to ensure a
thorough and timely review of the financial statements and disclosures. Agency officials accepted
our recommendation. INADEQUATE
CONTROLS OVER BANK RECONCILIATIONS The Agency did not have
adequate controls over its bank reconciliation process. The Agency uses an
accounting firm under contract to assist in the monthly preparation of bank
reconciliations and financial statements.
We noted bank reconciliations were prepared from 40 to 88 days from
the receipt of the bank statements and the reconciliations did not have
evidence of review and approval.
(Finding 2, page 12) We recommended the Agency
require bank reconciliations be prepared before the end of the following
month. In addition, we recommended a
person independent of the preparer should indicate the review and approval of
the bank reconciliations has occurred monthly to ensure accuracy and
timeliness of preparation. Lastly, we
recommended the Agency consider cross-training of staff for back-up in case
of vacation and/or absences. Agency officials stated they
accept and implemented our recommendation effective October of 2008. EMPLOYEE
PERFORMANCE EVALUATIONS WERE NOT CONDUCTED ON A TIMELY BASIS The Agency did not conduct employee performance evaluations in a timely manner. We noted 18 of 60 (30%) employees tested did not have
performance evaluation for the evaluation period tested. The time elapsed from the employee’s
previous performance reviews ranged from 13 to 88 months. In addition, 35 of 60 (58%) employee evaluations
were performed after the due date. The
time elapsed from the due date to the performance review approval date ranged
from 1 to 353 days. (Finding 3, page 14)
This finding was first reported in
1994. We recommended the Agency comply with internal procedures, Administrative Code rules and prudent business practices by performing annual evaluations for all employees in a timely manner. Agency officials accepted our recommendation and stated the Agency continues to strive for performance evaluations to be completed timely and the Office of Human Resources continues to track performance evaluations due dates and to ensure that the appropriate manager or supervisor is aware of the need to complete reviews timely. (For the previous Agency responses, see Digest footnote #1.) LACK OF
INDUSTRIAL HYGIENE EXAMINING BOARD The Agency’s Director
appointed an Industrial Hygiene Examining Board as required by the Industrial
Hygienists Licensure Act (Act) in October 1994; however, the board has been
inactive since then. The Act requires the
Director to appoint a board consisting of five persons to serve in an advisory
capacity. Four members shall be
certified or licensed industrial hygienists and one member shall be of the
public to represent consumer interests.
The Board is charged with recommending to the Director the adoption of
all policies, procedures, and rules which may be required or deemed advisable
in order to perform the duties and function conferred on the Board, the
Director, and the Agency to carry out the provisions of the Act. (Finding 4, page 15) This finding was first
reported in 2004. We recommended the Agency
comply with the Act or seek legislative remedy to the statutory requirement. Agency officials accepted our recommendation and stated the Agency will seek a legislative change to the Act to allow EPA to convene an ad hoc advisory committee to address specific issues and concerns as they arise. (For the previous Agency response, see Digest footnote #2.) NON-COMPLIANCE
WITH THE ANNUAL The Agency did not submit the 2007 Annual Illinois Water Quality Report as required by the Rivers, Lakes and Streams Act (Act). The Act requires the Agency to submit the Illinois Water
Quality Report to the Governor and General Assembly on an annual basis. (Finding 5, page 16) This finding was first reported in 2004.
We recommended the Agency ensure the Illinois Water Quality Report is submitted to the Governor and General Assembly on an annual basis or seek legislative remedy to the statutory requirement. Agency officials accepted our recommendation and stated future Illinois Water Quality Reports will be submitted annually. (For the previous Agency response, see Digest footnote #3.) OTHER FINDINGS The remaining findings pertain to 1) lack of Water Pollution Control and Public Water Supply committee meetings, 2) failure to update Illinois Administrative Code to reflect increase in fees, 3) noncompliance with the Site Remediation Program, and 4) failure to perform quarterly inspections on the release of radionuclides at nuclear power plants. We will review progress towards the implementation of our recommendations during the Agency’s next examination.
AUDITORS’ OPINION Our special assistant auditors stated the Water Revolving Fund of the Illinois Environmental Protection Agency as of and for the year ended June 30, 2008 is fairly stated in all material respects.
____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JSC:pp SPECIAL ASSISTANT AUDITORS E. C. Ortiz & Co., LLP were our special assistant auditors on this engagement. DIGEST FOOTNOTES#1 – EMPLOYEE PERFORMANCE EVALUATIONS NOT PERFORMED
ON A TIMELY BASIS – Previous Agency Response 2006:
Accepted. The Agency continues
to strive for performance evaluations to be completed timely. The Office of Human Resources has increased
its efforts to track performance evaluations due dates and to ensure that the
appropriate manager or supervisor is aware of the need to complete reviews in
a timely manner. As a result, the
majority of the evaluations for the period tested have been done or are in
the process of completion. #2 – LACK OF INDUSTRIAL HYGIENE EXAMINING BOARD –
Previous Agency Response 2006:
Accepted. The Agency will seek
legislation to repeal the Industrial Hygiene Licensure Act. This Act provides for a voluntary licensure
program, and only 230 industrial hygienists have requested license since the
program was implemented in 1984. In
fact, only 76 licensed industrial hygienists have renewed their license. The Agency believes the decline in
registration demonstrates that the program does not enhance a licensee’s
business opportunities. #3 – NONCOMPLIANCE WITH THE ANNUAL 2006: Accepted. The Agency will request that the Governor require the Illinois Water Quality Report be submitted biennially, which will parallel submissions under the federal Clean Water Act. |