REPORT DIGEST

 

ILLINOIS PETROLEUM RESOURCES BOARD

 

COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2006

 

 

Summary of Findings:

Total this audit                          5

Total last audit                          1

Repeated from last audit           1

 

 

Release Date:

April 3, 2007

 

 

 

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

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

 

This Report Digest and the Full Report are also available on the worldwide web at http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

·        The Board improperly utilized a locally held fund established in a prior fiscal year without a specific statutory authorization.

 

·        The Board made several expenditures during the examination period that did not appear to be reasonable and necessary to support mandated Board operations.

 

·        The Board did not maintain accurate property control records.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 


                                       ILLINOIS PETROLEUM RESOURCES BOARD

                                                     COMPLIANCE EXAMINATION

                                                     For the Year Ended June 30, 2006

 

 

EXPENDITURE STATISTICS

FY 2006

FY 2005

..... Total Appropriations .............................................................

 

$500,000

$625,000

..... Total Expenditures..................................................................

 

$490,000

$625,000

..... Cost of Property and Equipment.............................................

$92,278

$44,468

 

 

AGENCY DIRECTOR

During Audit Period:  Charles Williams

Currently:  Charles Williams



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Board utilized an unauthorized locally held fund

 

 

 

 

 

 

 

Excess monies of $29,090 and $34,255 in FY05 and FY06 not returned to Department

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Bank balances exceed FDIC coverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


$1,068 paid to the Executive Director for expenses not documented

 

 

 

 

 

 

$80 paid to Executive Director for breakfast and lunch expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets not added to inventory records in a timely manner

 

INTRODUCTION

 

The Illinois Petroleum Resources Board was created July 10, 1998 by the Illinois Petroleum Education and Marketing Act.  Its mission is to coordinate a program designed to demonstrate to the general public the importance of the Illinois oil exploration and production industry; to encourage the wise and efficient use of energy; to promote environmentally sound production methods and technologies; to develop existing supplies of State oil resources; and, to support research and education activities concerning the oil exploration and production industry.  The Board received an appropriation from the Illinois General Assembly through the Department of Natural Resources. 

 

LEGISLATION

 

      Public Act 94-1085, effective January 19, 2007 changed the repeal date of the Illinois Petroleum Education and Marketing Act from January 1, 2008 to January 1, 2016.  In addition, the Public Act removed the requirement for the Governor to appoint Board members and transferred the requirement to the qualified producer associations.  Public Act 94-1085 also allows the Board to receive and administer all assessments, donations, grants, contributions, and gifts received by the Board pursuant to the Act and to deposit them into accounts maintained by the Board.  All moneys and assets of the Petroleum Resources Revolving Fund are to be transferred to the Board and the fund is to be abolished.  Lastly, the Board will be responsible for selecting a certified public accountant to audit the Board annually.    

 

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

 

USE OF UNAUTHORIZED LOCALLY HELD FUND

 

      The Board utilized a locally held fund during Fiscal Year 2006 that was established in a prior fiscal year without specific statutory authorization.  We noted the following:

 

·        The Board utilized a locally held fund throughout FY06 even though the Board did not obtain proper statutory authorization to establish the locally held fund as required by the State Officers and Employees Money Disposition Act.  In addition, the Illinois Petroleum Education Marketing Act did not explicitly permit the Board to establish a locally held fund.

 

·        At the end of FY05, excess monies totaling $29,090 remained in the locally held account.  This amount would have been lapsed in the normal appropriation process, and the Board did not return the excess funding to the Department of Natural Resources (Department) to be deposited into the Petroleum Resources Revolving Fund.

 

·        The Board submitted six claims totaling $490,000 to the Department to draw down on their appropriation for subsequent deposit into the locally held fund in FY06.  In addition, the Board did not return $34,255 in excess funds remaining in the locally held account to the Department. 

 

·        The Board contracted with an accounting firm to perform bookkeeping functions on behalf of the Board and the partner of the accounting firm had signature authority over this account.

 

·        Month end bank balances exceeded the amount of Federal Deposit Insurance Coverage (FDIC) by $19,828 for 1 of 12 months in FY06. 

 

·        The Board prepared and submitted quarterly Reports of Receipts and Disbursements of Locally Held Funds for the last two quarters of fiscal year 2006 in response to a prior examination’s finding, however the reports were submitted 18 and 45 days late.  (Finding 1, pages 9-10)  This finding was first reported in 2004.

 

      We recommended the Board comply with provisions of the Illinois Petroleum Education and Marketing Act and the State Officers and Employees Money Disposition Act as it relates to the locally held fund.  In addition, we recommended the Board have signature authority for only personnel or Board members and ensure that accurate reports of receipts and disbursements are submitted to the Comptroller’s Office on a timely basis, as required by SAMS. 

 

      Board officials accepted our recommendation.  (For previous Agency response see Digest Footnote No. 1) 

 

 

UNREASONABLE EXPENDITURES

 

      The Board made several expenditures during the examination period that did not appear to be reasonable and necessary to support mandated Board operations.  We noted the following:

 

·        Four of 25 vouchers tested include payments, totaling $1,068 to the Executive Director for gasoline expenses incurred while driving a State owned vehicle.  According to expense vouchers submitted, the gasoline expenses were for travel to various restoration sites, school visits, miscellaneous and administrative travel.  However, no log was maintained documenting the miles driven or maintenance expenses incurred.

 

·        One voucher, totaling $553 was for 29 hats that were for public relation efforts.

 

·        Two vouchers, included payments to the Executive Director for reimbursement of breakfast and lunch expenses of approximately $80. 

 

·        One voucher, totaling $585 had mileage reimbursement rates in excess of the allowable rate, resulting in an $8 overpayment.  (Finding 2, pages 11-12)

 

We recommended the Board enhance its internal procedures and require a vehicle log book to record vehicle mileage and maintain sufficient documentation to support the vehicle log.  Further, the Board should only purchase those items necessary to support the Board’s mandated duties and check all travel vouchers to ensure compliance with the travel reimbursement rates set by the Travel Regulation Council

Board officials accepted our recommendation.  

 

 

INACCURATE PROPERTY CONTROL RECORDS

 

The Board did not maintain accurate property control records.  We noted the following:

 

·        Two equipment items purchased, totaling $46,453, were not timely added to the Board’s property control records.  A 2006 vehicle purchased in December 2005 and a 2006 cargo trailer purchased and received in June 2006 have not been added to the Board’s property records as of January 2007.  In addition, a cell phone purchased in July 2004 and noted in a prior year finding, has still not been tagged or recorded on the Board’s property control records.  The exclusion of these three items resulted in the inventory records being understated by $46,753.

 

·        The Board inaccurately recorded amounts for three separate items on its property control records resulting in an overstatement of $153.

 

·        The Board included software totaling $161 on its property control records resulting in the inventory records being overstated by $161.  (Finding 3, pages 13-14)

 

      We recommended the Board comply with the Illinois Administrative Code by ensuring all property under its jurisdiction is tagged and recorded timely on its property control records.  We further recommended the Board remove the software from its property control records.

 

      Board officials accepted our recommendation.  

     

OTHER FINDINGS

 

      The remaining two findings pertain to 1) the Board not using competitive sealed bidding for purchases exceeding $25,000 and failing to create a written contract for purchases exceeding $10,000 and 2) the Board not being comprised of twelve members as required by the Illinois Petroleum Education and Marketing Act.

 

AUDITORS’ OPINION

 

      We conducted a compliance examination of the Petroleum Resources Board as required by the Illinois State Auditing Act.  We have not audited any financial statements of the Board for the purpose of expressing an opinion because the Board does not, nor is it required to, prepare financial statements.

 

 

 

 

___________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JSC:pp

AUDITORS ASSIGNED

 

            This examination was performed by the Office of the Auditor General's staff.

 

DIGEST FOOTNOTES

 

#1 – Use of unauthorized locally held fund – Previous Agency Response

 

        2005:  IPRB is doing everything possible to provide a legislative remedy to the finding.  IPRB anticipates that the proposed legislation will pass during the current session.