FINDINGS,
CONCLUSIONS AND RECOMMENDATIONS
INSUFFICIENT RECONCILIATION PROCEDURES
The Illinois Commerce Commission has insufficient
reconciliation procedures in the Single State Insurance
Registration program. Also reconciliations of public
utility gross revenue tax returns to annual reports and
reconciliations of monthly receipts records were
inadequate.
- The Commission remitted too much money to other
states participating in the Single State
Registration program by approximately $5,700 for
fiscal year 1997 and $1,000 for fiscal year 1996.
During audit testing, we noted that more money
was remitted to almost all other states than was
collected for these states. The overpayments were
not detected because the Commission had no
reconciliation process in place to compare the
total receipts to the amounts to be remitted to
the various states. (Finding 1, page 18)
- The Commission requests public utilities to
provide gross revenue tax returns and annual
reports in accordance with the Public Utilities
Act (220 ILCS 5/5-109). The Commission then
reconciles the gross revenue as shown on the
annual report to that on the gross revenue tax
return. If the numbers do not agree, the utility
must provide a schedule showing the reconciling
items. We noted 11 of 49 gross revenue tax
returns where reconciling items could not be
agreed to the annual reports causing the amount
of revenue the Commission received to be
incorrect. (Finding 6, page 25)
- During audit testing, we noted an error in the
computer program used by the Commission to
perform monthly reconciliations. This resulted in
the incorrect year-to-date balance being brought
forward and, therefore, the prior month's
unreconciled difference would appear to correct
itself. We also noted federal receipts were
$107,528 less on the Commission's records than on
the Comptroller's records. There were also
unreconciled differences of $966.79 in the Public
Utilities Fund and $670.10 in the Transportation
Fund for fiscal year 1997. (Finding 7, page 27)
We recommended the Commission implement a
reconciliation process so the proper amount can be
remitted to the participating states in the Single State
Insurance Registration program. We also recommended the
Commission verify all annual reports reconcile to gross
revenue tax returns and all reconciling items have proper
support. In addition, we recommended the Commission
correct the error in the receipt reconciliation computer
program, keep all receipt information on the accounting
records, and agree the year-to-date accounting
information to the reconciliations.
Commission officials agreed with all our
recommendations and stated the Transportation Division
will work with fiscal and other staff to develop a
reconciliation process to assure the amounts collected
and remitted balance in the Single State Insurance
Registration program. They also stated the format of the
1998 and subsequent years annual reports will be amended
so that the revenues shown on the gross revenue tax
returns can be traced directly back to the revenues shown
in the annual reports. Commission officials also stated
the error in the reconciliation computer program has been
corrected and all receipts will now be input into the
accounting records. They further stated internal
paperwork has been completed to purchase a small
commercial general ledger package.
PROPERTY CONTROL
The Commission's property control records were not
maintained and prepared in a timely manner. An
unreconciled difference of approximately $115,000 existed
between the Commission's property control addition
records and the records submitted to the Comptroller's
office for the two years ended June 30, 1997. We also
noted instances where equipment was not tagged or posted
to the property control records, additions were not
posted in a timely manner, and deletions were not posted
in a timely manner. (Finding 3, page 20) This finding
has been repeated since 1995.
We recommended the Commission allocate sufficient
resources to the property control area and implement the
necessary controls to ensure the property records are
accurate and reconcile with the financial records.
Commission officials stated they have implemented
several new fiscal controls over the past year, as well
as hiring an employee who is responsible for property
control. They also stated they performed a complete
physical inventory as of June 30, 1997 and had
discrepancies less than the 2% tolerable limit required
by DCMS Property Control Management. (For the previous
Commission responses, see Digest footnote #1.)
INTERNAL AUDIT
The Commission's internal audit function did not meet
the requirements of the Fiscal Control and Internal
Auditing Act (30 ILCS 10/2003). Based upon our review of
the internal audit function, we found several major
systems of internal control had not been subjected to
audit during the audit period. (Finding 4, page 22) This
finding has been repeated since 1995.
We recommended the Commission comply with statutory
requirement concerning the internal audit function.
Commission officials responded the entire internal
audit function has been revamped by hiring an Information
Management Auditor in June 1997 and a new Chief Internal
Auditor in February 1998. (For the previous Commission
response, see Digest footnote #2.)
EXCESS FUND BALANCE
The fund balance of the Transportation Regulatory Fund
exceeded the fund balance permitted by the Illinois
Commercial Transportation Law (Law) (625 ILCS 5/18c-1503)
for both fiscal years 1997 and 1996. The Law states
"The Commission shall administer fees and taxes
under this Chapter in such a manner as to insure that any
surplus generated or accumulated in the Transportation
Regulatory Funds does not exceed the surplus accumulated
in the Motor Vehicle Fund during fiscal year 1984, and
shall adjust the level of such fees and taxes to insure
compliance with this provision".
The balance in the Transportation Regulatory Fund as
of June 30, 1997 and 1996 was $6,291,000 and $4,387,000,
respectively. The balance in the Motor Vehicle fund was
$2,898,185 as of June 30, 1984. The Commission has
reduced or waived its renewal fees and taxes for
Illinois-based carriers in accordance with statute.
(Finding 5, page 23)
We recommended the Commission continue to work to
reduce the fund balance in the Transportation Regulatory
Fund to a level that is in compliance with State law or
work with the legislature to change the current law.
Commission officials stated they agree the
Transportation Regulatory Fund has accumulated a large
surplus, and are planning to make a recommendation
concerning fees to the Commissioners by July of 1998.
They also stated the U.S. Department of Transportation is
planning to recommend Congress abolish the Single State
Registration program where $3 million of revenue for this
fund are generated annually. Therefore, the Commission
indicated the annual loss of $3 million of income will
reduce the fund balance.
OTHER FINDING
The remaining finding is less significant and is being
given appropriate attention by the Commission. We will
review progress toward implementation of the
recommendation during the Commission's next audit.
AUDITORS' OPINION
The auditors state the Commission's financial
statements for the two years ending June 30, 1997 are
fairly presented.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:BAR:pp
SPECIAL ASSISTANT AUDITORS
Doehring, Winders & Co., LLP were our special
assistant auditors for this audit.
DIGEST FOOTNOTES
#1 PROPERTY CONTROL - Previous
Commission Response
1995: "We concur with this
finding. The Commission notes that its property control
records indicated a higher amount of assets than the
Comptroller's records. Therefore, this discrepancy in
records should not be interpreted to indicate that the
Commission had lost or could not account for equipment.
The Commission is in the process of
filling a fiscal officer position in the Administrative
Services Division. The addition of this position will
redistribute a portion of the workload currently assigned
to the agency's Controller. This will allow sufficient
time for existing staff in the Controller's Office to
perform all inventory and property control reconciliation
activities in a timely and consistent manner."
#2 INTERNAL AUDIT - Previous
Commission Response
1995: "The Commission concurs with
the findings and recommendations and has or will take the
following steps:
1. The Internal Audit Department will
prepare a budget for continuing professional education
which will comply with the standards. The Chairman will
attempt to allocate the necessary resources to accomplish
this. In addition, both auditors in this department will
join the Institute of Internal Auditors through which a
portion of this training may be available. Membership in
this association will also provide the Internal Audit
staff an additional source for keeping abreast of current
standards and changes in the field. Whenever possible,
the internal audit staff will take advantage of training
made available through the State Office of the Auditor
General. One such course was offered and attended by the
Chief Internal Auditor during FY 96.
2. The department has already ordered
the current editions of the required standards.
3. The statistical auditing procedures
employed by the internal audit department will be
augmented to comply with the standards."
|
