limitations, disclaimers, and other significant non-standard language regarding material findings of noncompliance that were disclosed by the special State compliance audit tests.

information section for FY2003 for the Special State Trust Fund and the Child Labor Enforcement Fund is not presented and considered unaudited because amounts could not be obtained from the agency due to lack of supporting documentation. The information cannot be relied upon because no support was available for agency amounts.

The Department lacked adequate documentation for financial amounts reported to the Office of the State Comptroller. Agencies are required to report accounting information in accordance with generally accepted accounting principles (GAAP) to the Office of the State Comptroller. The following weaknesses were noted during our testing of the Agency’s FY2003 and FY2002 GAAP Form packages:

Statewide Accounting Management System (SAMS) Procedure 27.10.10 requires careful examination of financial data in the preparation of the GAAP package. Additionally, the State Records Act (5 ILCS 160/8) requires the preservation of records containing adequate and proper documentation of information to protect the financial rights of those affected by agency activities.

Inaccurate reporting at agency levels distorts the State’s financial statements and results in inefficient management of State resources. (Finding 1, pages 10-11)

We recommended the Department comply with the State Records Act and applicable SAMS procedures to ensure complete and accurate reporting, including the strengthening of controls over recordkeeping and fiscal reporting functions.

Department officials concurred with the finding and noted the FY2004 GAAP packages will be prepared with Department records and reconciled to State Comptroller reports.

The Department failed to document expenditure reconciliations comparing Agency records with those of the State Comptroller and lacked adequate segregation of duties and compensating controls over the expenditure functions.

Reconciliations for expenditures had not been performed since October 2002. Agency records for FY2003 showed total expenditures of $7,284,673, which was $59,507 more than expenditures reflected by the Office of the State Comptroller. A review of internal controls revealed that the fiscal officer is primarily responsible for the preparation and approval of journal entries, the approval of vouchers for payment, as well as reconciliation of Agency records to Office of the State Comptroller reports.

SAMS Procedure 07.30.20 requires that agencies routinely ensure that their source documents have been properly recorded in SAMS and in the corresponding reports through reconciliation. Prudent business practice requires adequate segregation of duties in order to help ensure the safeguarding of assets through the prevention of improper expenditures. (Finding 2, pages 12-13)

We recommended the Department comply with established SAMS procedures regarding reconciliation of internal expenditure records with those of the Office of the State Comptroller to ensure the accuracy of information. The Agency should continue to make efforts to properly segregate duties in order to maintain effective internal control over the recordkeeping and accounting duties.

Department officials concurred with our recommendations and noted that reconciliations with adequate documentation are being prepared. Adequate segregation of duties is being achieved by having the Director sign all voucher requests greater than $1,000.

revenue reconciliations comparing Agency records with those of the State Comptroller’s office for FY 2003. In addition, the Department did not timely file receivable reports or maintain arbitration case files. The following exceptions were noted during the testing of revenues and receivables:

ensures the accuracy of data as it is submitted and processed. Failure to timely file reconciled reports and retain files increases the likelihood that financial reporting or other errors could occur and remain undetected in the normal course of business. (Finding 3, pages 14-15)

Department officials concurred with our recommendations and noted that reconciliations have been performed since July 1, 2003, records are being maintained effectively and efficiently, quarterly accounts receivable reports will be filed on a timely basis and adequate control over arbitration receipts has been implemented.

The Department lacked supporting documentation for the Special Trust Fund. The following exceptions were noted during the testing of the Special Trust Fund:

Good business practices require that adequate documentation be maintained to support financial data. The State Records Act (5 ILCS 160/8) requires the preservation of records containing adequate and proper documentation of information to protect the financial rights of those affected by agency activities.

Failure to properly maintain records increases the likelihood that inaccurate records and financial reporting could occur. (Finding 4, pages 16-17)

We recommend the Department implement procedures to ensure that agency records are complete and accurate.

procedures to monitor the timely submission of current toxic substances data sheets by public employers. Our review of case files revealed that 18 of 25 (72%) failed to contain a current listing of material safety data sheets.

(820 ILCS 255/5) requires that every manufacturer shall submit to the Director annually an alphabetized list of material safety data sheets for every product it produces, imports, or supplies. Further, every employer shall submit to the Director annually an alphabetized list of substances, compounds, and mixtures for which the employer has acquired material safety data sheets. Additionally, the Director is required to maintain the listings received from employers for a minimum of 5 years.

comprehensive listing of toxic substances could result in misinformation to employees regarding hazardous materials in the workplace. Lack of adequate information increases the potential for mishandling of these substances, which could result in employee injury. (Finding 5, pages 18-19)

           Department officials concurred with our recommendation and noted that they will increase their outreach to required filers. A requirement notice will be placed on the Department’s website. All complaints are investigated immediately upon receipt.

The remaining finding concerned inaccurate property reporting and is reportedly being given attention by the Department. We will review progress toward implementation of these recommendations during the Department’s next compliance audit.

We conducted a compliance audit of the Center as required by the Illinois State Auditing Act. There were no financial statements requiring a financial audit leading to an opinion.

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WILLIAM G. HOLLAND, Auditor General

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West & Company, LLC were our Special Assistant Auditors.