REPORT DIGEST

ENVIRONMENTAL PROTECTION AGENCY

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2018

Release Date:  July 2, 2019

FINDINGS THIS AUDIT:  10

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 0 -- 0
Category 2:  6 -- 4 -- 10
Category 3:  0 -- 0 -- 0
TOTAL:  6 -- 4 -- 10

FINDINGS LAST AUDIT: 6

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

• (18-01) The Agency did not exercise
adequate internal control over automobiles.
• (18-02) The Agency did not maintain
adequate controls over equipment.
• (18-03) The Agency did not have adequate
controls over the administration of its
accounts receivable.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER STATE VEHICLES

The Environmental Protection Agency
(Agency) did not exercise adequate internal
control over automobiles.  As of June 30,
2018, the Agency had 152 vehicles.

During testing, auditors noted the
following:

• The Agency has not performed an analysis
of its automobiles to determine whether
maintaining each vehicle can be justified
as the most cost effective solution for the
specific operational needs of the Agency.
The auditors analyzed the total activity of
the Agency’s 152 vehicles used during
Fiscal Years 2017 and 2018.  The Agency’s
vehicles traveled between 85 and 33,809
miles during Fiscal Year 2017 and 16 and
30,750 miles during Fiscal Year 2018, with
the following chart showing the average
monthly vehicle utilization during the
period:  (Please see pdf version of digest
to view pie graphs.)

Further, the auditors noted the following
apparently underutilized vehicles during
the eighteen-month period ending Fiscal
Years 2017 and 2018:

Fiscal Year 2017
Year  –  Make  –  Odometer on 6/30/17  –
FY17 Total Usage  –  FY17 Average Monthly
Usage
2002  –  CHEVY   –  99,508  –  1,182  –  99
2003  –  FORD  –  107,179  –  859  –  72
1998  –  FORD  –  110,416  –  85  –  7
1998  –  FORD  –  73,952  –  253  –  21
2001  –  FORD  –  63,658  –  413  –  34
2008  –  CHEVY   –  176,683  –  396  –  33
2007  –  TOYOTA  –  165,329  –  1,103  –
92
2007  –  FORD  –  27,082  –  1,665  –  139
2010  –  FORD  –  27,865  –  1,664  –  139

Fiscal Year 2018
Year  –  Make  –  Odometer on 6/30/18  –
FY18 Total Usage  –  FY18 Average Monthly
Usage
2002  –  CHEVY  –  100,587  –  1,079  –  90
2002  –  CHEVY  –  161,212  –  1,474  –
123
2002  –  FORD  –  102,555  –  1,498  –  125
1998  –  FORD  –  110,433  –  17  –  1
1998  –  FORD  –  74,940  –  988  –  82
2001  –  DODGE  –  127,336  –  1,678  –
140
2001  –  DODGE  –  122,895  –  224  –  19
2001  –  FORD  –  63,674  –  16  –  1
2006  –  FORD  –  82,239  –  1,690  –  141
2007  –  DODGE  –  148,157  –  789  –  66
2007  –  FORD  –  28,589  –  1,507  –  126
2008  –  FORD  –  99,183  –  1,673  –  139
2008  –  DODGE  –  82,085  –  1,626  –  136
2011  –  CHEVY  –  24,303  –  1,785  –  149


• The Agency did not ensure its vehicles
were properly maintained during the
examination period.  The auditors reviewed
the maintenance records for 16 vehicles,
noting the following:

– Eight (50%) vehicles tested did not have
routine oil changes performed on a timely
basis, and

– Eight (50%) vehicles tested did not
receive tire rotations at the required
interval.

• The Agency did not exercise adequate
control over annual certifications of
licensure and automobile liability
insurance coverage (certifications). The
auditors noted the following:

– Ten of 25 (40%) employees tested did not
have the Fiscal Year 2017 certifications on
file at the Agency.

– Thirteen of 25 (52%) employees tested
submitted the certifications late. During
Fiscal Year 2017, two certifications were
submitted 9 and 32 days late, and 11
certifications were submitted from 281 to
302 days late in Fiscal Year 2018.

• The Agency did not ensure that commuting
miles reported by the employees were
properly reported in the payroll. For six
of seven (86%) employees tested, commuting
miles did not agree with the fringe benefit
values reported in the payroll, resulting
in understatements of reported fringe
benefits for tax purposes totaling $129 and
$12 in Fiscal Years 2017 and 2018,
respectively, and overstatements totaling
$41 and $2 in Fiscal Years 2017 and 2018.
(Finding 1, pages 10-14)  This finding was
first reported in 2014.

We recommended the Agency perform an
analysis of its automobiles to determine
whether each vehicle can be justified as
the most effective solution for the
Agency’s specific operational needs.
Further, the Agency should review its
internal controls over monitoring its fleet
to ensure vehicles receive timely
maintenance.  Finally, we recommended the
Agency timely obtain the annual
certification of licensure and automobile
liability insurance coverage and ensure
fringe benefits are accurately reported on
the payroll to comply with laws and
regulations.

Agency officials agreed with the
recommendation and stated they will create
a procedure to analyze and document the
need for vehicles which are needed but
underutilized and continue to improve
monitoring automobile maintenance.  Agency
officials also stated they have implemented
new policies to have all employees submit
annual certification for Fiscal Year 2020
and that new procedures are being
implemented to capture all information for
reporting fringe benefits.  (For the
previous Agency response, see Digest
Footnote #1.)

INADEQUATE CONTROLS OVER EQUIPMENT

The Agency did not maintain adequate
controls over equipment. Additionally, the
Agency did not accurately report
depreciation expense.

During testing, the auditors noted the
following:

• Six of 40 (15%) equipment additions
tested, totaling $66,747, were recorded on
the Agency’s property control records from
21 to 254 days late.  In addition, three of
40 (8%) equipment deletions tested,
totaling $2,589, were removed from the
Agency’s property control records from 528
to 1,101 days late.

• Three of 80 (4%) equipment items tested,
totaling $7,532, appeared to be obsolete.

• One of 80 (1%) equipment items, totaling
$5,797, selected from the Agency’s property
listing was unable to be physically
located.  Additionally, two of 15 (13%)
laptops tested could not be located.

• For one of 80 (1%) equipment items
tested, totaling $66,606, the property
records were not updated to reflect the
current location.

• One (1%) item observed, totaling $13,639,
did not have a property tag.

• For one of 23 (4%) State property
vouchers tested, totaling $8,921, the
Agency failed to include the equipment
item, in the Agency property control
records.  The item was purchased on January
2017 but was not entered into the Agency
property listings as of June 30, 2018.

• For 19 of 42 (45%) new capital asset
additions during Fiscal Year 2018,
depreciation start dates were inaccurately
recorded in the Enterprise Resource
Planning (ERP) Asset Accounting System.
The inaccuracies resulted in an
understatement of depreciation at June 30,
2018, of $15,035. (Finding 2, pages 15-17)
This finding was first reported in 2014.

We recommended the Agency implement
procedures to strengthen controls over
equipment and ensure accurate recordkeeping
and accountability for all State property.

Agency officials agreed with the
recommendation and stated they will
continue to work on accurately and timely
reporting equipment by strengthening
policies and procedures.  Agency officials
also stated the Agency created a position
to assist in the process to help review and
ensure items are recorded accurately and
timely. (For the previous Agency response,
see Digest Footnote #2.)

INADEQUATE CONTROLS OVER ACCOUNTS
RECEIVABLE

The Agency did not have adequate controls
over the administration of its accounts
receivable.
Excluding receivables from the Water
Revolving Fund and the Environmental Trust
Fund Commission Fund, the Agency reported
$40.9 million in accounts receivable, of
which $11.5 million was over one year past
due, as of June 30, 2018, and $54 million,
of which $22.3 million was over one year
past due, as of June 30, 2017.

During testing, auditors noted the
following:

• Nineteen of 40 (48%) accounts receivable
tested, totaling $5,220,800, were over 90
days past due and had not been referred to
the Office of Comptroller's (Comptroller)
Offset System or the Department of
Revenue's Debt Collection Bureau (Bureau).

• Sixteen of 40 (40%) accounts receivable
tested, had balances totaling $5,189,324
that were over one year old and were not
referred to the Attorney General for write
off.  In addition, the Agency did not make
active collection efforts on 11 of 40 (28%)
accounts receivable tested, totaling
$5,123,225, that were over one year old.
(Finding 3, pages 18-19)  This finding was
first reported in 2014.

We recommended the Agency pursue all
reasonable and appropriate procedures to
collect on outstanding debts as required by
State laws and regulations.

Agency officials agreed with the
recommendation and stated staff continues
to improve collections with the focus on
current billings. Agency officials also
stated they will work with Department of
Revenue on referring qualifying debt to the
Bureau of Debt Collection and they are
working on obtaining necessary information
to place old debt in the Comptroller’s
Offset System or process write-offs with
the Attorney General’s Office.  (For the
previous Agency response, see Digest
Footnote #3.)

OTHER FINDINGS

The remaining findings pertain to
inadequate controls over personal services,
awards and grants, monthly reconciliations,
contracts and voucher processing,
noncompliance with statutory requirements
in providing public notices and inadequate
change management procedures.   We will
review the Agency’s progress towards the
implementation of our recommendations in
our next compliance examination.

AUDITOR’S OPINION

The financial audit of the Agency’s Water
Revolving Fund as of and for the year ended
June 30, 2018 was previously released.  The
auditors stated the financial statements of
the Agency’s Water Revolving Fund as of and
for the year ended June 30, 2018, were
fairly stated in all material respects.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Agency for the two years
ended June 30, 2018, as required by the
Illinois State Auditing Act.  The
accountants stated the Agency complied, in
all material respects, with the
requirements described in the report.

This compliance examination was conducted
by E.C. Ortiz & Co. 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:PH