REPORT DIGEST

DEPARTMENT OF LABOR

FINANCIAL AND

COMPLIANCE AUDIT

For the Two Years Ended:

June 30, 2001

Summary of Findings:

Total this audit 2
Total last audit 3
Repeated from last audit 2

Release Date:
February 21, 2002

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State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

  

 

 

 

 

 

 

 

SYNOPSIS

 

 

 
  • The review of the Department's internal controls over expenditures revealed inadequate segregation of duties and a lack of compensating controls.
  • The Department did not always conduct arbitration proceedings within 25 days of arbitrator assignment.

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the reverse page.}

 


DEPARTMENT OF LABOR
COMPLIANCE AUDIT
For The Two Years Ended June 30, 2001

EXPENDITURE STATISTICS

FY 2001

FY 2000

FY 1999

Total Expenditures (All Appropriated Funds)

$6,564,843

$6,189,449

$5,731,704

OPERATIONS TOTAL
% of Total Expenditures

$5,717,719
87%

$5,405,864
87%

$4,946,150
86%

Personal Services
% of Operations Expenditures
Average No. of Employees

$3,598,472
63%
103

$3,383,134
63%
99

$3,089,886
63%
97
Other Payroll Costs (FICA, Retirement)

% of Operations Expenditures

$765,726

13%

$713,432

13%

$644,069

13%

Contractual Services
% of Operations Expenditures

$288,807
5%

$328,476
6%

$304,501

6%

All Other Operations Items
% of Operations Expenditures

$1,064,714
19%

$980,822
18%

$907,694

18%

GRANTS TOTAL
% of Total Expenditures

$847,124
13%

$783,585
13%

$785,554
14%

Cost of Property and Equipment

$735,918

$712,009

$598,686
SELECTED ACTIVITY MEASURES

FY 2001

FY 2000

FY 1999

Child Labor Violations Cited

7,121

8,589

10,751

Carnival Rides Inspected

1,859

1,906

1,807

Wage Claims Filed

8,326

9,829

8,596

Wage Claims Processed

16,851

17,863

15,656

Minimum Wage and Overtime Violations

17,567

40,794

9,373
AGENCY DIRECTOR
During Audit Period: Robert M. Healey
Currently: Robert M. Healey
 

 

 

 

There is inadequate segregation of duties over expenditures and a lack of compensating controls

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arbitration hearings were not conducted within 25 days of arbitrator assignment

 

 

 

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE SEGREGATION OF DUTIES

The review of internal controls over expenditures revealed inadequate segregation of duties and a lack of compensating controls. The following items were noted during our testing:
  • The fiscal officer prepares and approves all journal entries, reconciles detail records to Comptroller reports, and approves vouchers for payment
  • The fiscal officer is involved in processing vouchers and is also responsible for reporting and recording property transactions.

Good business practices require adequate segregation of duties in order to help ensure the safeguarding of assets, prevent improper expenditures, ensure the accuracy and reliability of accounting data, and promote operational efficiency.

We noted no instances of assets that were lost due to the lack of internal control procedures, however the potential exists. (Finding 1, pages 13-14)

We recommended the Department continue to make efforts to properly segregate duties in order to maintain effective internal control over the recordkeeping and accounting duties concerned with asset custody and physical control over expenditures, or establish appropriate compensating controls.

Department officials concurred with the finding and noted affirmative steps have been implemented to improve the internal control over disbursements and property transactions.

NEED TO IMPROVE COMPLIANCE WITH ARBITRATION RULES

The Department did not conduct arbitration proceedings within 25 days of arbitrator assignment in accordance with Agency-established rules instituted to facilitate the fulfillment of the Uniform Arbitration Act (710 ILCS 5).

Eight of 16 (50%) cases tested did not adequately document that arbitration hearings were conducted in accordance with Agency rules. Specifically, the case files lacked sufficient documentation of arbitrators' efforts and procedures regarding the scheduling of hearing dates to ensure that the parties were given the opportunity for the case to be heard within 25 days of assignment. In the aforementioned cases, the hearings were held 45 to 88 days after arbitrator assignment. (Finding 2, pages 15-16)

We recommended the Department: 1) adhere to adopted rules in conjunction with the Uniform Arbitration Act in order to provide services in a timely manner; 2) monitor case progress and establish more specific procedures for arbitrators to follow in case proceedings with regard to the scheduling of hearings; and 3) require arbitrators to document the correspondence to parties and take corrective action if procedures are not followed.

Department officials concurred with our recommendations and noted affirmative steps have been implemented to improve the meeting of required time frames.

 

AUDITORS' OPINION

Our auditors state the Department's financial statements as of June 30, 2001 and June 30, 2000 and for the years then ended are fairly stated in all material respects.

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:DCK:pp

SPECIAL ASSISTANT AUDITORS

West & Company, LLC were our Special Assistant Auditors.