FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
LACK OF
CONTROLS OVER FIREFIGHTERS MEMORIAL FUND DISTRIBUTIONS
The Office of the State Fire Marshal (Office) did not exercise proper
control over the contract and monitoring of the monies paid from the
Firefighters Memorial Fund. We noted
the following:
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The Office had not determined the Foundation’s
plans for over $300,000 of unspent State funds received in prior years,
nor did the Office request or recoup any overpayments from the
Foundation. Further, the
Foundation’s $65,208 bill included $1,595 for inappropriate
expenditures, such as alcohol, lunches, and limousine services. Although the Office only paid the
Foundation the $50,000 FY05 contract maximum, it appears the
Foundation’s inappropriate expenditures were paid with the unspent State
funds, which constituted the majority of the Foundation’s cash balance.
Management stated they verbally requested that
the Foundation have an external audit. Further, management stated
that reimbursements were not provided in FY06, and unspent State funds will
be offset against Foundation expenditures.
-
The Office did not use competitive procurement; nor
did the Office demonstrate that services could only be economically and
feasibly provided by the Foundation as required by the Illinois
Procurement Code. Additionally,
the Office failed to publish notices in the Illinois Procurement
Bulletin as required for sole source procurement.
-
The Contract between the Office and the Foundation
was signed 164 days after the beginning of services. In addition, the Contract Obligation
Document (COD) included the incorrect contract start date. (Finding 1,
pages 11-13)
We recommended the Office establish internal controls to ensure
distributions from the Firefighters Memorial Fund are adequately
monitored. Specifically, we
recommended the following:
·
The Office continue
efforts to decrease the balance of unspent State funds held by the
Foundation, seek a formal commitment regarding the Foundation’s future plans
for the unspent funds, and actively work to recoup prior overpayments to the
Foundation.
·
The Office should
comply with the competitive procurement provisions of the Illinois
Procurement Code or publish notices and document compliance with statutory
provisions for sole source procurements.
·
The Office should
approve contracts prior to the performance of services and ensure that
all documents regarding contracts are completed accurately.
Office
officials agreed with the finding and stated the Office noted these
deficiencies internally before the audit engagement, and has worked with IOIA
to clarify the weaknesses and help make a stronger case for the need for
correction. Officials further stated
that the Foundation is cooperating with the Office on corrective action.
LACK OF
DOCUMENTATION FOR INTERAGENCY AGREEMENT
The
Office did not have adequate support for an Interagency agreement with the
Governor’s Office of Management and Budget (GOMB) detailing the methodology
for determining the allocation to be paid by the Office for the billing of
shared services.
The
Office, along with 8 other agencies, entered into an Interagency Agreement
with GOMB for the payment of an allocable share of the $104,000 cost of a
pilot roll-out plan. The Office’s
allocable share was determined to be $15,000; however, the Office was not
provided documentation to support how the $15,000 was determined.
Office personnel stated they signed the agreement not to obtain
services, but solely to share the cost of services performed. Office personnel further stated that the
Interagency Agreement outlined the portion to be paid and no additional
documentation was requested or provided. (Finding
2, page 14)
We recommended the Office require
and maintain sufficient documentation to ensure contracted services have been
provided and that the expenditures are reasonable and necessary.
Office officials agreed
with the finding and stated the Office will request both the backup
and the allocation plan if shared payment of contracts occur again in the
future.
INADEQUATE
CONTROLS OVER CONTRACTUAL AGREEMENTS
The Office did not competitively
procure services, timely approve contractual and grant agreements, or prepare
and file written contracts as required.
During
our testing, we noted the following:
·
Five of 6 (83%) grant agreements tested, totaling $5,122,800,
were signed from 215 to 357 days after the beginning of the grant
period. Further, two of 12 (17%)
contractual agreements tested, totaling $38,110, were approved and
subsequently submitted to the State Comptroller’s Office 34 and 53 days after
services began.
·
The Office did not seek competitive sealed bids for equipment rental
procured from one vendor in each fiscal year. Expenditures totaled $27,575 in FY05 and $27,261 during
FY06.
·
The Office did not reduce to writing and file with the Comptroller
liabilities with 2 vendors, totaling $44,075, during FY05 and 3 vendors,
totaling $57,494, during FY06.
Expenditures to each vendor exceeded $10,000 during a fiscal
year. Further, the Office did not
file two contracts, totaling $22,940, with the Comptroller. (Finding 3, pages
15-16)
We recommended the Office
strengthen controls to ensure contractual and grant agreements are approved
prior to the effective date and all required procurements are subjected to
the competitive bidding process.
Further, contracts should be reduced to writing and filed with the
State Comptroller’s Office in a timely manner.
Office officials agreed with
our finding and stated each of the instances in question involved extenuating
circumstances that were difficult, if not impossible, for the Office to avoid
or control. Officials further stated
that the Office will continue to improve its procurement methods up to the
time that procurement becomes a Shared Services function.
INADEQUATE CONTROLS OVER EMPLOYEES
The Office did not maintain
adequate controls over employees designated to work from their home office or
the Office’s various locations. As of
June 30, 2006, the Office employed 145 employees, including 76 field
employees. We noted the following:
·
There was no method to determine that employees worked
during reported hours;
·
There was insufficient timekeeping documentation for
State employees;
·
There was no method to track where employees should
be at any point in time;
·
Office personnel did not perform spot checks on
employees;
·
The Office did not appear to have adequate oversight
over employees assigned to all locations; and
·
There was an apparent lack of supervision over field
employees.
Management
stated that in May 2005, the Office implemented new internal controls over
field staff, including timesheets, travel logs, itineraries, spot checks on
employees, additional supervision, and reporting to management. Further, management stated they were
finalizing updates to policies and procedures, and have plans for updated
inspection tracking and electronic reporting for inspectors in the Division
of Fire Prevention. (Finding 4, pages 17-18)
We recommended the Office enforce formal
administrative controls over its employees, which include employee tracking,
timekeeping, and spot checks of all employees.
Office
officials agreed with our finding and stated the Office has been able to
implement most of the planned internal controls mentioned in May 2005.
INADEQUATE COLLECTION AND ACCOUNTING FOR
ACCOUNTS RECEIVABLE
The Office
did not sufficiently monitor and pursue collections on delinquent accounts
receivable. We noted the following:
·
The Office’s
accounts receivable collection procedures were not adequate to ensure the
proper collection of fees due each fund.
·
Four of 26 (15%)
Underground Storage Tank (UST) accounts totaling $7,800 reported as an
accounts receivable at June 30, 2006 were greater than 5 years past due, yet
the Office had not requested the Attorney General to certify any of them as
uncollectible.
·
As of June 30,
2006, we noted 10 of 26 (38%) UST accounts
over $1,000 (totaling $18,600) that were 247 to 2,467 days past due. The Office had not referred any of these
accounts to the Comptroller’s Offset System
or outside collection agency. (Finding 7, pages 22-24) This
finding was first reported in 1990.
We
recommended the Office strengthen procedures to monitor and pursue
collections on delinquent accounts receivable. Specifically, the Office
should send regular billings for all accounts, refer delinquent accounts to
the Comptroller’s Offset System and pursue other collection methods.
Office officials agreed
with our finding and stated the Office was able to do substantial work
toward compliance with both the existing and the new requirements for
collection of old debt during the audit period. (For the previous office response, see Digest footnote #1.)
INADEQUATE
CONTROLS OVER THE PURCHASE AND USE OF VEHICLES
The Office did not adequately utilize its State vehicles, request approval for
lesser usage, justify all vehicle assignments, or have established criteria
or documentation for vehicle replacement decisions. The Office maintained a fleet of approximately 86 and 111
vehicles during FY05 and FY06, respectively.
We noted the following:
·
Forty-four (51%)
vehicles during FY05 and 67 (60%) vehicles during FY06 were not sufficiently
utilized to justify the need for the vehicles according to the Department of
Central Management Services (DCMS) criteria of 1,500 miles per month. These
vehicles were driven from 0 to 1,463 miles on average per month. Further, the Office did not submit any
explanations of operational need resulting in lesser usage for DCMS
approval. Eighteen of the vehicles
were purchased during the examination period. Management stated the vehicles were necessary as most agency
vehicles were driven by field staff who work from home offices located
throughout the State.
·
The Office replaced 36 vehicles during the period,
expending $1,013,882, but had no formal agency guidelines for determining
when it was most economical to replace vehicles. It was unclear whether these purchases were necessary, as the
Office could not provide documentation for replacement decisions and many of
its vehicles did not meet current minimum utilization standards. Management
stated they do not have the ability or resources to establish internal guidelines for determining when
it is most economical to replace vehicles and DCMS rules were considered
sufficient due to the small size of the Office. (Finding 10, pages 28-29)
We recommended the Office comply
with DCMS rules by ensuring that vehicles purchased are necessary and
adequately utilized, transferring underutilized and unnecessary vehicles to
surplus, and submitting an explanation of
operational needs resulting in lesser vehicle usage for DCMS approval. Further, the Office should establish
internal guidelines to ensure cost effectiveness of vehicle replacement and
document the basis for purchase decisions.
Office officials agreed
with our finding and stated that in May 2007, the Office provided the
Director of CMS an explanation of operational needs to resolve our low
mileage vehicle concerns.
UNREASONABLE REIMBURSEMENTS
The Office did not adequately monitor and document meal reimbursements. We noted the following:
·
Two of 7 (29%)
reimbursements tested included meal expenses for State employees totaling
$538.
·
Six of 7 (86%)
reimbursements included meal expenses of $725 for non-State employees at
rates higher than allowed in travel regulations. Further, when 30% of the meals were purchased, the State
employee reimbursed was not on travel status as required.
·
Two of 7 (29%)
reimbursements tested included reimbursement for tips, totaling $98.
·
Five of 7 (71%)
reimbursements did not specify why the expenditures were incurred in connection
with State business.
·
Two of 7 (29%)
reimbursements did not include the names of the individuals for whom the
meals were purchased. (Finding 13, pages 33-34)
We recommended the Office strengthen controls to ensure reimbursements to
employees are reasonable, necessary, and properly documented in accordance
with the Governor’s Travel Control Board Guidelines.
Office
officials agreed with the finding and stated the Office corrected this issue
during the audit period.
BACKLOG OF BOILER AND
PRESSURE VESSEL INSPECTIONS
The Office had a high number of past due
inspections of Boiler and Pressure Vessels.
Thirty-five of fifty (70%) Boiler and Pressure Vessel inspections
tested were performed from 3 to 665 days late, with an average of 121 days
late. Of the approximately 37,500
boilers and pressure vessels required to be inspected by the Office, there
was an inspection backlog of 1,930 (5.1%) as of June 30, 2006. However, the percentage of past due
inspections decreased in the past 2 years.
Furthermore,
some of the required inspections were past due more than one year. The following chart illustrates the range
of days past due for the 1,930 past due inspections as of June 30, 2006:
Office management stated the inspection database only identifies an
inspection as due on or after the certificate expiration date. Personnel
also stated that no violation situations were included in the backlog, which
reduced safety risks. (Finding 21, pages 45-47) This finding was
first reported in 2002.
We recommended the Office continue working
to reduce the backlog of inspections and implement necessary controls to
identify and perform inspections in a timely manner.
Office officials agreed with the finding
and noted the Office currently has the lowest past due level in several
decades. Officials further stated
that no violations were included in the backlog. (For the previous office response, see Digest footnote #2)
NONCOMPLIANCE WITH PYROTECHNIC DISTRIBUTOR AND
OPERATOR LICENSING ACT
The Office did not comply with licensing and fee provisions of the Pyrotechnic Distributor and Operator
Licensing Act (Act). We noted
the following:
·
The Office did
not issue the appropriate pyrotechnic license showing the name, address, and the photograph of the licensee and the dates of
issuance and expiration as required by the Act. The Office notified operators and distributors, through
letters, that they had been authorized, “on a temporary basis during the processing
of applications, to conduct outdoor professional displays.” The letter, which served as a conditional
license, did not include the photograph of the licensee, issuance, and
expiration dates. The Office issued
546 conditional licenses between March 2006 and June 2006; however, no
permanent licenses were issued as of January 29, 2007.
·
The Office refunded pyrotechnic operators and distributors’ license
fees totaling $17,025, which are nonrefundable per the Act. The Office refunded $75 of the $100
operator’s licensing fee for 227 individuals who first took an explosive
licensing course between January 1 and June 30, 2006.
Office personnel stated they could not issue
permanent licenses until the administrative rules were approved by the Joint
Committee on Administrative Rules.
Management stated that licensing fees were partially refunded because
the original fee structure was based on misinformation, which led to dual
licensing requirements between the Office and the Department of Natural
Resources. Further, management stated
amendments to the administrative rules have been proposed to eliminate the
dual licensing fees. (Finding 22,
pages 48-49)
We recommended the Office comply with the Act by timely issuing the
appropriate licenses showing the
name, address, and the photograph of the licensee and the dates of issuance
and expiration. Furthermore, the
Office should comply with the Act, which specifically states refunds are not
authorized.
Office
officials agreed with the finding and stated that after the legislation was
passed, the Office was unable to roll out a viable program by the effective
date. Officials further stated the
finding reflects their attempts at a contingency that allowed the maximum
compliance achievable in the short term.
FAILURE TO ADOPT RULES FOR THE ADMINISTRATION
AND ENFORCEMENT OF ELEVATOR SAFETY AND INSTALLATION LAWS
The Office did
not adopt rules for the administration and enforcement of elevator safety and
installation standards during the examination period. The Elevator Safety Division was created
in January 2003 to oversee the enforcement of elevator safety standards. We noted the following:
·
The Office did
not adopt rules during the examination period for the administration and
enforcement of the Elevator Installation Act (Act). The Act sets forth specific requirements for the
installation and operation of all hospital elevators over 55 feet high and
elevators over 80 feet high in offices, hotels, factory buildings and
residential buildings. The Office
estimates that between 20,000 and 25,000 elevators in Illinois meet the
criteria of the Act.
·
The Office did
not adopt rules for the administration and enforcement of the Elevator Safety
and Regulation Act (Act) This Act
covers the design, construction, operation, inspection, testing, maintenance,
alteration, and repair of elevators, escalators and other lifting mechanisms.
Office management stated that draft rules had been submitted
to the Joint Committee on Administrative Rules on January 21, 2005, but were
rejected on June 14, 2005 due to inconsistencies with the Acts. Emergency rules were developed and became
effective July 21, 2006; however, they expired on December 18, 2006. (Finding 23, page 50) This finding was
first reported in 2002.
We recommended the Office work with
the Joint Committee on Administrative Rules to adopt rules consistent with
the Elevator Safety and Regulation Act and the Elevator Installation Act to
facilitate proper enforcement and administration of these Acts.
Office officials agreed
with the finding and stated the rules and the legislation were found to be
weak, and the Office did not attempt to roll out a program with inherent
weaknesses. Officials further stated
that once final rules were adopted (April 24, 2007), the Office was ready and
able to operate the program. (For
previous office response, see Digest Footnote #3.)
OTHER FINDINGS
The remaining findings are reportedly
being given attention by the Office. We will review progress toward
implementing those recommendations in our next examination.
AUDITOR’S OPINION
We conducted a compliance examination of
the Office as required by the Illinois State Auditing Act. We have not audited any financial
statements of the Office for the purpose of
expressing an opinion because
the Office does not, nor is it required to, prepare financial statements.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:LKW:jmo
AUDITORS ASSIGNED
This examination was performed by the
staff of the Office of the Auditor General.
DIGEST FOOTNOTE
#1 INADEQUATE COLLECTION AND ACCOUNTING FOR
ACCOUNTS RECEIVABLE - Previous Office Response
2004: The Office acknowledges the finding and
accepts the recommendations. In
addition, the Office will investigate the use of the Comptroller and/or Attorney
General for collections.
#2 BACKLOG OF BOILER AND PRESSURE VESSEL
INSPECTIONS – Previous Office Response
2004: The Office accepts the finding and is
in the process of hiring additional inspectors and has requested to fill all
of its vacancies in the FY06 budget request in order to comply with the
recommendations.
#3 FAILURE TO ADOPT RULES FOR THE ADMINISTRATION
AND ENFORCEMENT OF ELEVATOR SAFETY AND INSTALLATION LAWS – Previous Office
response
2004:
The Office acknowledges the finding and the Division of the Elevator Safety
will enforce the Act at such time as their administrative rules are approved
by the Joint Committee of Administrative Rules and the inspection staff is
hired.
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