REPORT
DIGEST DEPARTMENT OF EMPLOYMENT SECURITY Summary of Findings:
Release Date: WILLIAM G. HOLLAND Iles Park Plaza |
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ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1997
EXPENDITURE STATISTICS | FY 1997 |
FY 1996 |
FY 1995 |
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$169,104,996 |
$168,420,564 |
$171,809,359 |
SELECTED ACTIVITY MEASURES | FY 1997 |
FY 1996 |
FY 1995 |
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4.69%
|
5.28% |
5.17% |
AGENCY DIRECTOR | |
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Only 7 of the Department's 10 major internal control systems were tested
Only 12 of the 33 audits in the two year audit plan
were completed Three petty cash disbursements were identified as part of multiple payments to vendors, stringing purchases, this appeared to be done to circumvent the $50 petty cash limit. |
INTRODUCTION Our 1997 audit of the Department is presented in two parts. The compliance part, for the two years ended June 30, 1997, with our findings and recommendations, as well as federal Single Audit disclosures is presented in one document. The financial part, which is for the year ended June 30, 1997, contains the opinion on the Department's financial statements and is presented in a separate document. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NONCOMPLIANCE WITH FISCAL CONTROL AND INTERNAL AUDITING ACT The Fiscal Control and Internal Auditing Act requires the Department's internal audit department to develop a two-year program which sets forth a schedule of planned audits. The audit plan is to be developed so that audits of all major systems of internal accounting and administrative controls are performed at least once every two years. For fiscal year 1996 and 1997 the Department considered ten of its processing systems as "major". The fiscal year 1996 and 1997 audit plan included examinations of activities within each of these systems. The actual audits conducted during the audit period covered only 7 of the 10 major systems. The two-year audit plan included 33 scheduled reviews, however, only 12 were completed. The lack of sufficient resources in the internal audit department appears to be the primary cause for the Department's failure to fully execute its audit plan. The Department's noncompliance with the Act is a violation of State law and increases the possibility of improprieties or irregularities in the Department's "major" processing systems going undetected. (Finding 1, page 15) We recommended the Department revisit its 1998-1999 audit plan while considering the resources necessary for its execution. The Department concurred with the recommendation and indicated the current audit plan covers all the major systems and its primary focus will be on completing audits of the major systems. PETTY CASH STRINGING OF PURCHASES Of 50 petty cash disbursements examined, three represented only a portion of a total payment made to a single vendor on a particular day. The total payments made to the respective vendors on these three separate occasions ranged from $98 to $283. The items purchased were rung up separately thereby generating individual receipts less than $50. These receipts were then submitted to and reimbursed by petty cash through the issuance of multiple checks (three to six), all in sequence, and payable to the same individual. This situation appears to represent an intentional circumvention of Department policies and procedures and CUSAS procedures. CUSAS procedure 09.10.40, page 6 states "payments for individual orders for goods or services amounting to $50 or more are not to be made from petty cash funds and that stringing' payments to the same vendor (individually less than $50 but exceeding $50 in an individual order) is not an approved use of petty cash funds." The Department's failure to comply with petty cash rules could result in inappropriate arrangements in the procurement of small purchases. (Finding 4, page 18) We recommended the Department review the State-wide petty cash policies and procedures with personnel and regularly review and investigate any unusual activity. The Department concurred with the recommendation. The Department indicated they will inform managers of the prohibition against "stringing of purchases", and will retrain petty cash fund managers to monitor the funds for unusual activity. OTHER FINDINGS The remaining findings were less significant and have been given appropriate attention by the Department. We will review the Department's progress toward the implementation of our recommendations in our next audit. Mr. Wess Butler, Inspector General, Department of Employment Security, provided the responses to our findings and recommendations. AUDITORS' OPINION Our auditors state the Department's general purpose financial statements at June 30, 1997 are fairly presented. _____________________________________ WGH:RPU:pp SPECIAL ASSISTANT AUDITORS Our special assistant auditors for this audit were KPMG Peat Marwick LLP. |