REPORT DIGEST

OFFICE OF THE STATE FIRE MARSHAL

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2018

Release Date:  December 18, 2019

FINDINGS THIS AUDIT:  12

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  3 -- 0 -- 3
Category 2:  7 -- 2 -- 9
Category 3:  0 -- 0 -- 0
TOTAL:  10 -- 2 -- 12

FINDINGS LAST AUDIT: 5

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

• (18-001) The Office did not perform all
inspections of public schools or always
report identified violations to the regional
superintendents.
• (18-002) The Office did not exercise
adequate control over its collection and
revenue recognition of fees.
• (18-003) The Office did not exercise
adequate control over the accuracy,
completeness, and timeliness of its State
property records and related reporting.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FAILURE TO PERFORM INSPECTIONS OR REPORT
VIOLATIONS

The Office of the State Fire Marshal
(Office) did not perform all inspections of
public schools or always report identified
violations to the regional superintendents.

During testing, we noted the following:

• The Office did not perform annual fire
safety inspections of each public school. We
noted 1,138 of 3,427 (33%) and 1,490 of
3,470 (43%) schools were not inspected
during Fiscal Year 2017 and Fiscal Year
2018, respectively.

•We reviewed the Office’s records for 60
inspected public schools during the
examination period. Of these 60 schools, 46
(77%) had violations noted by the inspector.
We noted the following:

– 20 of 46 (43%) reports with violations did
not have evidence the report was submitted
to the regional superintendent
(superintendent).

– 4 of 46 (9%) reports with violations were
reported to the superintendent between 1 and
20 days late. (Finding 1, pages 12-14)

We recommended the Office work with the
Governor and the General Assembly to ensure
sufficient resources exist to timely conduct
public school building inspections. Further,
the Office should enhance its internal
controls to provide assurance violation
reports are timely sent to the school’s
applicable superintendent.

The Office agreed with the recommendation.

INADEQUATE CONTROL OVER FEES

The Office did not exercise adequate control
over its collection and revenue recognition
of fees.

During testing, we noted the following:

• During our review of the Office’s process
for collecting inspection fees for boilers
and pressure vessels, we noted the Office
lacked an adequate process for identifying
the party responsible for paying the fee.

• During our review of the Inspection
Certificate process, we noted the Office had
a revenue recognition process not recognized
by Generally Accepted Accounting Principles
(GAAP).

• The Office did not refer any of its
accounts receivable related to underground
storage tanks to the Department of Revenue’s
Debt Collection Bureau (Bureau). (Finding 2,
pages 15-18)

We recommended the Office implement controls
to obtain sufficient information about
responsible parties to enable the collection
of accounts receivable, or seek a
legislative remedy to require up-front
payment for an inspection at the time when
an inspection is scheduled. Further, we
recommended the Office refer qualifying debt
to the Bureau for external collection
efforts and review all of its revenue
sources to ensure the appropriate
application of GAAP.

The Office agreed with the recommendation.

INADEQUATE CONTROL OVER STATE PROPERTY

The Office did not exercise adequate control
over the accuracy, completeness, and
timeliness of its State property records and
related reporting.

During testing, we were unable to agree the
listing of additions provided by the Office
to the activity reported in its quarterly
Agency Report of State Property (Form C-15)
reports submitted to the Office of the State
Comptroller (Comptroller) for Fiscal Year
2017 Quarter 1, Quarter 2, and Quarter 3.
The net difference totaled $21,334.

Due to this condition, we were unable to
conclude whether the Office’s population
records were sufficiently precise and
detailed under the Attestation Standards
promulgated by the American Institute of
Certified Public Accountants (AT-C § 205.35)
to test the Office’s equipment.  In
addition, due to these limitations, auditors
were unable to conclude the Office’s
Schedule of Changes in State Property on
page 56 of the report was complete and
appropriately reported.

We also noted other deficiencies such as:
items were untimely added to the Office’s
property listing; freight charges were not
added to the value of equipment; items were
unable to be located; items were found in a
different location than reported; obsolete
items not sent to surplus; Form C-15s were
filed late; and the Office did not file a
Form SCO-560 with the Comptroller.

We recommended the Office strengthen its
internal controls over State property by:
1. Reviewing the Office’s property listing,
including recent equipment transactions, to
ensure it is complete and accurate;
2. Timely recording equipment transactions;
3. Maintaining documentation to support the
completeness and accuracy of property
additions; ensuring Form C-15s submitted to
the State Comptroller are accurate; and
properly reporting all leases with a fair
market value in excess of $5,000 to the
State Comptroller.

The Office agreed with the recommendation.

OTHER FINDINGS

The remaining finding pertains to inadequate
controls over State vehicles, receipts,
grant agreements, monthly reconciliations,
and performance evaluations, weaknesses with
payment card industry data security
standards, failure to establish and maintain
a Statewide arsonist database, failure to
timely implement statutory changes, and
untimely inspection of boilers and pressure
vessels.  We will review the Office’s
progress towards the implementation of our
recommendations in our next compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Office for the two years
ended June 30, 2018, as required by the
Illinois State Auditing Act.  The
accountants qualified their report on State
compliance for Findings 2018-001 through
2018-003.  Except for the noncompliance
described in these findings, the accountants
stated the Office complied, in all material
respects, with the requirements described in
the report.

This compliance examination was conducted by
the Office of the Auditor General’s staff.

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:SJS