HISTORIC PRESERVATION AGENCY
For the Year Ended June 30, 2010
Release Date: July 14, 2011
Summary of Findings:
Total this audit: 17
Total last audit: 15
Repeated from last audit: 11
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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• The Agency did not exercise adequate controls over its administration of State grants.
• The Agency did not have adequate controls over donations received at its historic sites.
• The Agency did not maintain adequate controls over artifacts and its concession leases.
• The Agency did not exercise adequate controls over contractual and interagency agreements.
• The Agency did not complete and file its internal control certifications as required.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
NEED TO IMPROVE CONTROLS OVER GRANTS
The Agency did not exercise adequate controls over its administration of State grants.
We noted the following:
• Six of 8 (75%) grant agreements tested, totaling $322,500, did not contain a provision requiring all funds unexpended at the end of the grant agreement period to be returned to the State within 45 days.
• Seven of 8 (88%) grant agreements tested, totaling $334,166, did not include detailed financial budgets or other detailed information regarding the use of the grant funds.
• The Agency paid both the State and local share totaling $9,672 for a grant to a county for educational brochures related to the county’s historic preservation program. Although the original State grant amount and obligation document totaled $14,000 with a local match totaling $6,000, documentation showed the Agency notified the county that the award was reduced to $7,000 due to limited State funding. However, the Agency then paid the entire project costs totaling $9,672, resulting in an overpayment of $2,672.
• Three of 8 (38%) grant agreements tested, totaling $297,500, did not contain a provision requiring the filing of quarterly reports describing the progress of the program, project, or use and the expenditure of grant funds.
• For 3 of 8 (38%) grants agreements tested, totaling $33,666, the grantees failed to submit required monthly and completion reports. Two of the grantees failed to provide 6 of their monthly reports, and one of the grantees did not provide any monthly reports. In addition, no completion reports were provided by the grantees. (Finding 1, pages 12-13) This finding was first reported in 2008.
We recommended the Agency implement controls to ensure grant agreements contain provisions necessary to properly administer State grant funds, including, at a minimum, those required by the Illinois Grant Funds Recovery Act. In addition, we recommended the Agency implement controls to ensure Agency grant monitors require grantees to submit required reports timely to ensure grant funds are being expended as intended. We also recommended the Agency obtain reimbursement for the overpayment noted.
Agency officials concurred with our recommendation and stated they will insure all necessary provisions are included in the Agency’s grant agreements and they will stress to grantees the importance of submitting accurate and timely reports. (For the previous Agency responses, see Digest footnote # 1).
NEED TO IMPROVE CONTROLS OVER DONATIONS
The Agency did not have adequate controls over donations received at its historic sites.
According to Agency records, 23 State historic sites maintain locked boxes designated for visitors to make donations. Each site maintains a local bank account for depositing the donated funds.
According to Agency records, the donation boxes collections totaled $491,503 and $429,313 in FY10 and FY09, respectively. We reviewed donation procedures at 4 sites throughout the State.
During testing, we noted the following:
• One of 4 (25%) historic sites tested had employees that were not aware of the donation procedures required by the Agency and several deficiencies were noted:
- Two employees had keys to the donation box, and one of the employees kept their key in a drawer at the front desk of the visitor’s center so the seasonal employee could open the box to make change when necessary. The Agency’s procedures require keys to be kept in a secured lock box at all times.
- We scanned donation records for two months and noted three instances where deposits were not made when donations totaled over $500. We noted weekly deposits were made for 3 weeks that totaled $1,343, $1,763, and $2,229.
• Two of 4 (50%) historical sites tested did not maintain an adequate segregation of duties. At both sites that employed more than one person, the same employee counted the cash donations, prepared the deposit, and received and reconciled the bank statement. In addition, at one site, the same employee also delivered the deposit and prepared the check for deposit into the State Treasury.
• One of 4 (25%) historic sites tested did not remove the donations from the donation boxes daily and record them as required. The staff generally collected, counted, and recorded the donation box receipts every few days or once a week. We noted 12 instances where weekly instead of daily totals totaling from $728 to $3,664 were recorded on the weekly donation form.
• One of 4 (25%) historic sites tested did not make weekly deposits as required. The site manager generally made only monthly deposits as there were no instances when donations recorded exceeded $500.
We recommended the Agency ensure all historic sites are following the Act’s and Agency’s requirements for donations and maintain a separation of duties when possible. (Finding 2, page 14-15)
We recommended the Agency ensure all historic sites are following the Act’s and Agency’s requirements for donations and maintain a separation of duties when possible
Agency officials partially concurred with our recommendation and stated they agree that the keys at the site noted should be better secured and that they need to adequately segregate duties; however, it is only suggested, not required, to remove donations daily as per their procedures, and by law funds must only be forwarded to the Agency weekly on Monday once they exceed $500.
In an auditors’ comment, we noted the Agency’s written procedures for donations state “Money should be counted daily or, if receipts are small, at least weekly, and corresponding records are to be maintained.” The instances we noted where daily records were not maintained included cash totals from $728 to $3,664 which we did not consider small. We agree the Act requires transmitting funds to the Agency for deposit in the State Treasurer on Monday of each week if the amount to be deposited exceeds $500. However, the Agency’s written procedures require deposits to be made at least weekly to the local bank accounts. The site noted was generally only making monthly deposits.
NEED TO IMPROVE CONTROLS OVER ARTIFACTS AND CONCESSION LEASES
The Agency did not maintain adequate controls over artifacts and its concession leases.
During site visit testing, we noted the following:
• Six of 30 (20%) artifacts tested from the artifact inventory listing could not be located during testing.
• Two of 4 (50%) historical sites tested had lease agreements with the Foundations for the sites’ concessions operations that had been expired for 6 months and 22 months as of June 30, 2010.
• One of 4 (25%) historical sites tested was unable to provide documentation required by the concession lease. The quarterly donation reports and a copy of the insurance binder were not provided to the auditors for review. (Finding 3, pages 16-17)
We recommended the Agency implement controls to ensure its artifact inventory records are accurate. We also recommended the Agency ensure all concession leases are current and ensure documentation is maintained of all required reports and insurance.
Agency officials concurred with our recommendation and stated they will reinforce procedures related to artifact inventories and they will bring all of their lease agreements current as soon as possible.
NEED TO IMPROVE CONTROLS OVER CONTRACTUAL AGREEMENTS
The Agency did not exercise adequate controls over contractual and interagency agreements.
During testing, we noted the following:
• Seven of 10 (70%) contracts tested did not contain the ethical certifications regarding compliance with the Environmental Protection Act and the required registration with the State Board of Elections.
• The associated Contract Obligation Documents (CODs) for 3 of 10 (30%) contracts tested contained incorrect award code information. Two CODs were coded as small purchases and one COD was coded as a sole source procurement when the contracts were competitively bid. In addition, the beginning date for services on one of the CODs did not agree to the contract execution date.
• The Agency failed to ensure accurate contract award notice information was posted on the Illinois Procurement Bulletin (IPB). For 4 of 10 (40%) contracts we tested, we noted the following:
- Contract inception dates published in the IPB did not agree to the inception dates on the corresponding contracts for 3 of 10 (30%) contracts tested totaling $256,150. The differences noted were from 1 to 35 days.
- The contract termination date published in the IPB did not agree to the termination date on the corresponding contract for a contract totaling $500,000.
- The total amount of an awarded contract published in the IPB was overstated by
• Two of 5 (40%) interagency agreements tested were not signed by all parties prior to the performance of services under the associated contract. Signatures were obtained from 13 to 29 days after the inception of the associated contract. (Finding 9, page 26-27)
We recommended the Agency strengthen controls to ensure contractual agreements contain all required disclosures and certifications. We also recommended the Agency ensure CODs are correctly completed and accurate contract information is published in the Illinois Procurement Bulletin. Further, we recommended the Agency ensure all interagency agreements are timely signed.
Agency officials concurred with our recommendation and stated they will insure contract certifications are updated and that COD’s are accurate and complete. They also stated they will seek to have all interagency agreements signed in a timely manner.
FAILURE TO TIMELY FILE INTERNAL CONTROL CERTIFICATIONS
The Agency did not complete and file its internal control certifications as required.
We noted the Agency did not complete an evaluation of internal controls or file a certification in FY09. In addition, the FY10 certification was filed 46 days late. (Finding 12, page 31)
We recommended the Agency complete the internal control evaluations and timely file the certifications as required.
Agency officials concurred with the recommendation and stated they will try to meet required filing deadlines.
The remaining findings are reportedly being given attention by the Agency. We will review the Agency’s progress towards the implementation of our recommendations in our next engagement.
We conducted a compliance examination of the Historic Preservation Agency as required by the Illinois State Auditing Act. We have not audited any financial statements of the Agency for the purpose of expressing an opinion because the Agency does not, nor is required to, prepare financial statements.
WILLIAM G. HOLLAND
The compliance examination was performed by the Office of the Auditor General’s staff.
# 1 INADEQUATE CONTROL OVER GRANT MONITORING
2008: We concur. The omitted provision in the agreement pertaining to unspent funds was an oversight. In addition, the Agency will reinforce the various reporting requirements with grantees and stress with staff the importance of closely monitoring the grants.