FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
UNEMPLOYMENT BENEFIT PAYMENTS MAY BE REDUCED
The Department employs full-time temporary Highway Maintainers for six months
during the winter to assist in snow removal. When these temporary workers are laid-off,
the Department is responsible for paying their unemployment benefits, which totaled an
estimated $1.1 million paid from the Road Fund in FY98. The Department does not have
controls in place to minimize the unemployment costs paid by the State for these workers.
The Department hired 491 full-time temporary Highway Maintainers to assist with snow
removal during the winter months in FY98. These employees were on the payroll 8 hours per
day regardless of weather, from mid-October through mid-April. Once their employment ended
in April, they became eligible for unemployment benefits which were charged to the State.
These 491 positions were in addition to the 1,792 full-time year round highway maintenance
staff.
During testing of monitoring unemployment benefits by the Department, we randomly
sampled 65 unemployment benefit cases from FY98 and found that 49 percent (32 of 65) were
full-time temporary Highway Maintainers. These 32 individuals received over $411,000 in
wages during FY98 and an additional $126,000 in unemployment benefits.
The Department has not established controls which could help minimize the State's
unemployment costs for these seasonal workers. For example, the Department hires workers
for summer day labor construction projects throughout the State. If the snow removal
seasonal workers worked over the summer months, the State would not incur the unemployment
benefits. (Finding 98-7, pages 23-24)
We recommended the Department examine ways to reduce unemployment costs related to laid
off full-time temporary Highway Maintainers.
The Department agreed with the finding and stated it will survey temporary highway
maintainers as to their union affiliations (laborer, heavy equipment operator, iron
worker, etc.) in order that they may be rehired if the Department has a need for such a
position after these individuals have been laid off.
LACK OF CONTROLS IN MONITORING UNEMPLOYMENT COMPENSATION
The Department lacks sufficient controls over the review of unemployment benefit
claims and payments, including documentation to support decisions regarding the use of
State funds. During FY98, 558 former/current employees of the Department received
$1,687,969.50 paid from the Road Fund in unemployment benefits paid by the State. We
selected a random sample of 65 of the 558 benefit recipients. We examined the
documentation supporting the unemployment benefits paid, as well as the appropriateness of
the benefit payments.
The Department does not have formal policies and procedures to review unemployment
claims and quarterly charges.
- Lack of Documentation: In 95 percent (62 of 65) of the cases sampled, we found
that the Department lacked documentation to provide for adequate review of unemployment
benefits paid out and charged to the State.
- Failure to Protest Questionable Unemployment Claims: In 12 percent (8 of 65) of
the cases sampled, the Department failed to protest potentially ineligible unemployment
claims resulting in questionable benefits being paid.
- Failure to Report Simultaneous Work: In 3 percent (2 of 65) the cases reviewed,
benefit recipients were working at the Department while they were also receiving
unemployment benefits resulting in questionable benefits being paid. (Finding 98-8, pages
25-26)
We recommended the Department develop adequate policies and procedures for the review
of unemployment benefit claims and charges that include retention of records by those
individuals responsible for the reviews and address protesting claims for which there is
questionable eligibility for the claimant.
The Department agreed with the finding. The Department stated it will develop formal
procedures for reviewing unemployment benefit claims and charges associated with past and
present Department employees. The Department stated it will work with the Department of
Employment Security to establish a system that will provide the Department the necessary
information and documentation needed to effectively review unemployment claims.
DELAY IN REIMBURSEMENT BILLINGS
The Department did not submit invoices related to certain highway projects to the
Federal Highway Administration (FHWA) for reimbursement on a timely basis.
The Department receives its funding under the Highway and Construction Program through
a reimbursement process. This means that the Department does not receive funds from the
federal government until it submits billings to the FHWA for processing and payment.
During our test work we noted that 13 out of 200 expenditures tested, totaling
$8,221,822.09, were not submitted for reimbursement to FHWA until 40 to 290 days after the
Department received the invoice from the outside contractor. (Finding 98-1, page 13)
We recommended the Department determine the reason for the internal processing delays.
We also recommended the Department take steps to improve its review, approval, and
processing of invoices.
The Department explained the delays in 7 instances and acknowledged that six
reimbursement requests should have been handled more expeditiously.
The Department stated that it is taking the necessary action to prevent a recurrence of
billing delays.
LACK OF COMPLIANCE WITH STATUTE
The Department's Chief of Audits does not report to the Secretary of Transportation
as required by the Fiscal Control and Internal Auditing Act, but instead reports to the
Bureau Chief of Accounting and Auditing. The Act (30 ILCS 10/2002) requires the chief
internal auditor to report directly to the chief executive officer and have direct
communication with the chief executive officer and the governing board, if one exists, in
exercising audit activities. This finding has been repeated since 1990.
As set forth by Departmental Order 7-1, the Chief of Audits has access and may
communicate directly to the Secretary of Transportation on any Departmental matter.
Although the Department believes that the existing relationship between the Chief of
Audits and the Secretary complies with the intent of the Statute, sound internal controls
dictate internal audit functions should exist outside organization's primary operational
structures and should regularly report to the organizations' executive management (the
Secretary). The Department's existing reporting structure, as it relates to the internal
audit function, does not appear to fully promote exclusive communication by the Chief of
Audits and the Secretary of the Department. (Finding 98-6, page 22)
We recommended the Chief of Audits reports directly to the Secretary of Transportation
to comply with the Fiscal Control and Internal Auditing Act. The Department does not agree
and believes that the current reporting relationship between the Chief of Audits and the
Secretary has worked well and meets the needs of the Department and the intent of the
Statute. (For previous agency responses, see Digest Footnote 1.)
OTHER FINDINGS
The remaining findings are less significant and are being given appropriate
attention by the Department. We will review progress toward implementing these
recommendations in our next compliance audit. Responses to the recommendations were
provided by Mr. David G. Campbell, Bureau Chief of Accounting and Auditing.
AUDITORS' OPINION
Our auditors state the June 30, 1998 combined financial statements of the
Department are fairly presented.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KMM:pp
SPECIAL ASSISTANT AUDITORS
KPMG Peat Marwick, LLP were our special assistant auditors for this audit.
DIGEST FOOTNOTES
#1 INTERNAL AUDIT NONCOMPLIANCE - Previous Agency
Responses
1996: "The Chief of Audits, in accordance with IDOT
Departmental Order 7-1, has access and may report directly to the Secretary of
Transportation on any audit matter. Each internal audit report is addressed directly to
the Secretary. The Chief of Audits meets directly with the Secretary at his discretion to
discuss the annual audit work plan, results of specific audits, and concerns of the
Secretary. We believe that the current reporting relationship between the Chief of Audits
and the Secretary has worked well and meets the needs of the Department and the intent of
the Statute."
1994: (Same response as 1996.)
1992: (Same response as 1996.)
1990: (Same response as 1996.)
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