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FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
LACK OF DETECTION CONTROLS FOR IMPROPER TRANSPONDER USE
The Illinois State
Toll Highway Authority did not have the proper internal controls in place to
classify all I-PASS transactions properly in some of the lanes.
Some of the lanes are equipped with vedet loops that are
embedded in the ground. Vedet loops
count masses of metal as they pass through the lane. The lane equipment is able to read the
I-PASS transponder and collects the revenue based on the classification of
the transponder as it was originally issued.
The number of axles determines the classification of the vehicle. The toll collection and I-Pass system
reports the transaction by the original transponder class.
A violation is only recorded in the lanes affected if there
is no transponder to read or if a transponder read was identified as
insufficient, invalid, lost or stolen.
A violation would not be recorded if a vehicle passed through the lane
with a transponder that does not correlate to the class of the vehicle.
Good internal controls require that all lanes contain
equipment to identify the classification of vehicles in order to collect the
correct toll revenue. (Finding 3,
Page 14) This finding was first reported in 2002.
Tollway officials agreed with our recommendation to implement
controls to identify any violations resulting from improper transponder usage
and stated that by the end of 2005, the automatic vehicle classification
system will be operational in 109 out of 161 lanes, with completion of the
remainder in 2006. (For the previous Tollway response, see Digest Footnote #
1.)
LACK OF DETAILED RECONCILIATION FOR SERVICE ORGANIZATION ACTIVITIES
The Toll Highway Authority did not have a
detailed reconciliation process related to service organization activities.
During our audit we noted
that the Tollway did not have an adequate reconciliation process in place to detect
irregularities in transactions performed by the service organization. The service organization performs I-PASS
transactions and customer service activities.
Monthly bank reconciliations
performed at the Tollway did not detect inappropriate credit card
transactions processed by an employee at the service organization. The transactions did not appear to be
properly investigated by the Tollway while performing the bank
reconciliations.
A service organization
employee was able to divert $45,984 over a period of several months. The unusual activity was discovered by the
Tollway’s credit card processor. The
Tollway has been reimbursed all the funds from the service organization.
(Finding 4, Pages 15-16)
We recommended the Tollway
perform detailed reconciliations on a timely basis and review the internal
controls associated with the service organization. We further recommended that the Tollway should review the
feasibility of obtaining SAS 70 reports from its service organizations.
Tollway officials concurred
with our recommendation and stated that they have already implemented
procedures to prevent this type of irregularity from occurring and that they
will examine the feasibility of obtaining SAS 70 reports from their service
organizations.
VIOLATION RECEIVABLE NOT RECONCILED
The Toll Highway Authority did not
reconcile the violation receivable recorded in the general ledger, which is
the basis for the financial statements, to an accurate subsidiary ledger on a
monthly basis.
During our audit we noted that the
Tollway’s subsidiary ledger for recording receivables pertaining to
violations was not reconciled to the general ledger on a monthly basis. The subsidiary ledger was only reconciled
to the general ledger at year-end.
The subsidiary ledger should
be the basis for the amount reported in the financial statements. Adjustments
were required to the vendor’s subsidiary ledger of violators. An adjustment for $2,609,497 was necessary
due to an error made by the vendor within the subsidiary ledger as well as an
adjustment for $161,536 due to non-sufficient fund checks posting twice.
In addition, there is an unapplied category of cash receipts
totaling $985,545. This amount
represents cash received by the Tollway over a 2 year period but not applied
to individual accounts due to insufficient information supplied by violators
when sending payment. As a result,
credits to the proper account may be delayed.
We recommended that the
Tollway reconcile the general ledger to a subsidiary ledger that accurately
identifies the actual dollar amount of the violation receivable on a monthly
basis. (Finding 5, Pages 17-18)
This finding was first reported in 2003.
Tollway officials concurred
with our recommendation and stated that their vendor has implemented a
programming change to eliminate the problem from future reports. Tollway officials stated that they hope to
have the problem corrected by December 31, 2005. (For the previous
Tollway response, see Digest Footnote 2.)
BANK RECONCILIATIONS NOT COMPLETED TIMELY AND CASH REPORT NOT
RECONCILED
The Toll Highway Authority did not
complete bank reconciliations in a timely manner and the cash balance was not
reconciled with the Comptroller’s SB05 cash report.
During our testing we noted
that 32 of 82 (39%) bank reconciliations were not completed within 30 days of
the month's end.
Additionally, the Tollway
did not reconcile the ending cash balances with the available cash as
reported in the Comptroller’s SB05 report. (Finding 6, Pages 19-20) This finding was first reported in 2003.
We recommended the Tollway
follow established procedures to ensure all bank accounts are reconciled in a
timely manner.
Tollway officials concurred
with our recommendation but stated that due to system limitations, they could
not accomplish this within the 30 days in the first quarter of the year. (For
the previous Tollway response, see Digest Footnote 3.)
SICK AND VACATION ACCRUAL NOT PROPERLY RECORDED
The Toll Highway
Authority did not accurately input the sick and vacation payroll records used
to document absences for salaried and hourly employees into the system to
produce an accurate subsidiary ledger.
During our audit we noted that the
Tollway’s subsidiary ledger for accrued sick and vacation leave contained
errors in the amount of time used by salaried and hourly employees. (Finding
7, Pages 21-22) This finding has been
repeated since 2001.
Tollway officials
concurred with our recommendation to input all absences accurately to produce
an accurate subsidiary ledger and stated that they are testing an automated
timekeeping system that will eliminate the need for manual input of leave
time utilized. (For the previous
Tollway response, see Digest Footnote 4.)
OTHER FINDINGS
Other
findings are reportedly being addressed by Tollway management. We will review progress toward
implementation of all our recommendations during the next audit.
Responses to the recommendations were provided by Patricia
Pearn, Enterprise Control & Compliance Unit.
AUDITORS’ OPINION
Our
auditors stated the Illinois State Toll Highway Authority’s financial
statements as of December 31, 2004 and for the year then ended were presented
fairly in all material respects.
____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:TLK:pp
SPECIAL ASSISTANT AUDITORS
Our
special assistant auditors for this audit were Crowe Chizek and Company LLC.
DIGEST FOOTNOTE
1.
LACK OF DETECTION CONTROLS FOR IMPROPER TRANSPONDER USE – (Previous
Tollway Response)
2003: We concur with the recommendation, and have begun implementing
a solution for this matter.
2.
VIOLATION RECEIVABLE NOT RECONCILED – (Previous Tollway Response)
2003: We concur and are working with the outside contractor to
make modifications
to the reports used as the violation receivable subsidiary ledger to ensure a
higher level of accuracy.
3.
BANK RECONCILIATIONS NOT COMPLETED TIMELY AND SB05 REPORT NOT
RECONCILED – (Previous Tollway Response)
2003: Tollway management concurs, and is now completing bank reconciliations
in a more timely fashion. The finance
staff is now
done processing the large volume of funds that came in after the implementation of
the violation enforcement program and
payment plan offer and has resolved this matter.
4.
SICK AND VACATION ACCRUAL NOT PROPERLY RECORDED – (Previous Tollway
Response)
2003: Tollway management concurs with the recommendation but notes that
improvements were made toward rectifying this finding during 2003. The current paper-based system is only applicable
to salaried employees as the hourly employee timekeeping
was automated through the ITIME system.
Salaried employee wages
account for approximately one third of total
payroll expenses. The Tollway has
negotiated a contract with
an outside vendor to implement automated time and attendance authority
wide, and intends to proceed with the contract
pending approval by the Department of Central Management
Services. As an interim solution, the
Tollway has made
modifications to the internal payroll accrual reports so that large variances may be
identified more easily. Lastly, the impact of the accruals is
limited to financial statement reporting only;
the Payroll Division gathers and recalculates benefit time
prior to payout of terminated employees to ensure no
overpayment
is made.
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