REPORT DIGEST

FINANCIAL AND COMPLIANCE AUDITS
For the Year Ended:
December 31, 1997

Summary of Findings:

Release Date:
March 5, 1999

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

¨ Our testing of the Authority's automated Human Resources/Payroll software system indicated that extensive manual calculations and adjustments were required, and the system was highly dependent upon human intervention and control. This finding has been repeated since 1991.

¨ The Authority's Computer Disaster Recovery Plan continued to be incomplete and did not insure that its data processing functions could be reasonably performed if an emergency occurred that rendered its computer center inoperable. The Authority relies on its computer operations to perform accounting and public safety functions.

1997

1996

Operating Expenses
Depreciation and Amortization
Services and Toll Collection
Insurance and Employee Benefits
Engineering and Maintenance of Roadway and Structures
Traffic Control, Safety Patrol, and Radio Communications
Administrative
Total Operating Expenses

$317,979,697
4,386,576
1,090,143
$323,456,416


$125,724,621
50,319,415
31,600,316
26,223,950
12,594,238
9,810,964
$256,273,504

$308,567,206
3,575,804
198,404
$312,341,414


$121,702,953
49,230,279
27,845,207
25,403,333
11,925,970
8,054,288
$244,162,030

December 31, 1997

December 31, 1996

$321,318,207
$27,738,127
$7,398,538
$176,506,664
$1,724,808,729
$930,850,000

$312,676,923
$31,362,399
$8,606,728
$167,137,574
$1,703,701,313
$961,140,000

Computer Disaster Recovery Plan did not insure accounting and public safety functions could be performed

INTRODUCTION

These reports represent the results of our financial and compliance testing for the year ending December 31, 1997.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

LIMITED PAYROLL SYSTEM

 

Our testing of the Authority's automated Human Resources/Payroll software system indicated that extensive manual calculations and adjustments were required, and the system was highly dependent upon human intervention and control. The Authority purchased a new payroll system in FY94 for $336,000. The Authority brought this system on-line in December 1994. It was noted during our testing that the new system is still dependent on manual procedures to process data. For the biweekly payroll period ended September 21, 1997, we noted that incentive pay and other items required 120 manual calculations.

 

Manual errors in the gross pay computations of hourly employees have occurred because calculators and/or mental computations are used to determine the number of hours for which employees should be paid. Because the State Comptroller prepares the checks, payroll check stubs for hourly employees do not contain sufficient information for them to recompute gross pay. Thus, the Authority cannot rely on hourly employees to discover errors in their gross pay.

 

Recurring payroll computations for shift incentive pay, leave without pay, uniform cleaning, etc., were calculated and processed manually. The system used by the Authority was not designed to process multiple pay rate computations needed for multiple types of incentive pay, or to process specific information required to properly track garnishments or individual daily attendance records.

 

The Toll Highway Authority employs approximately 2,000 full or part-time employees with an annual payroll of approximately $76,500,000. (Finding 97-2, page 11)

 

We recommended the Toll Highway Authority implement cost-effective enhancements to its existing payroll system to eliminate the need for manual payroll calculations. We also recommended future systems be properly designed to meet the Authority's needs and objectives. This finding has been repeated since 1991.

 

The Authority responded that it is in agreement that it is important to reduce the amount of manual intervention regarding the payroll process. They said many items have been automated since the testing noted in the finding. (For previous Agency responses, see Digest Footnote 1.)

 

 

INCOMPLETE DISASTER CONTINGENCY PLAN

 

The Authority's Computer Disaster Recovery Plan (Plan) continued to be incomplete and did not insure that its data processing functions could be reasonably performed if an emergency occurred that rendered its computer center inoperable. The Authority relies on its computer operations to perform accounting and public safety functions.

 

The Authority contracted with a computer consulting firm to develop an updated disaster recovery plan. The Authority has received a draft of the updated disaster recovery plan. The draft plan identifies mission-critical systems, procedures for testing and maintenance, and responsibilities for key personnel. Once completed, the Authority stated it will test its recovery capabilities of both its local area networks and mainframe computer systems for all critical applications. Test procedures and results should be documented and updated on a periodic basis.

 

An adequate Plan should minimize the interruption of operations and loss of critical information in the event of a disaster. Without a detailed Plan, it would be difficult for the Authority to insure that it can perform the Authority's vital operations in the event of an emergency. (Finding 97-1, page 10)

 

We recommended the Authority management promptly complete the details of the Plan. Once the Plan is completed, responsibilities to test and update the Plan on a periodic basis should be assigned to Authority personnel to insure that the Plan is effective. An on-going commitment to test and update the Plan will be essential to its success.

 

The Authority responded that the Disaster Contingency Plan has been completed with the help of a consultant. The Authority also noted once it receives comments on the Plan, testing will begin.

OTHER FINDINGS

 

The remaining findings are of lesser significance and are being given attention by the Authority. We will review the Authority's progress toward implementation of our recommendations in our next audit.

 

Responses to our findings were provided by Nicholas W. Jannite, Chief of Finance.

AUDITORS' OPINION

Our auditors stated the Illinois State Toll Highway Authority's December 31, 1997 financial statements are fairly presented.

 

 

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:TEE:pp

 

SPECIAL ASSISTANT AUDITORS

Clifton Gunderson L.L.C. were our special assistant auditors for this engagement.

DIGEST FOOTNOTES

#1: LIMITED PAYROLL SYSTEM - Previous Agency Responses.

 

1996: "The Authority is in agreement that fully using the automated features of the new payroll system is to be preferred over the use of manual calculations. For this reason, the new payroll system is capable of fully automating all of the manual transactions which the auditors observed. The MIS Department is working in cooperation with the Payroll Department in an effort to assist them in the transition to full use of all of the available automated features. Some of the features not currently in use are awaiting changes in the policy of the Comptroller's office. Other automatic features are awaiting adaption of time card processing which is being evaluated as part of the Time and Attendance project. None of the manual transactions listed by the auditors are inherent deficiencies in the new payroll applications and software.

 

The MIS Department provided training to the Payroll Department prior to the implementation of the new payroll system, and has subsequently provided both training and support, as well as encouragement to begin using all of the automated features available.

 

The recommendation made by the auditors that the payroll system "be automated as much as possible" is a recommendation the Authority has been addressing in phases. The Authority has acquired the software and is completing the implementation of the Wide Area Network and will be proceeding with an automated time and attendance system. Fulfilling the potential of this automated system is a continuing process involving the joint efforts of the MIS and Payroll Departments."

 

1995: "The Authority agrees with the recommendation to automate the payroll recordkeeping and computation tasks. Evidence of the Authority's desire to accomplish this effort is reflected in the implementation of a new payroll/personnel software, as well as the development of a work plan for the time and attendance system, in 1995. As noted in the prior year finding, the Authority's payroll system was antiquated. The update of the payroll application is the initial step toward automating the existing manual tasks. In January 1996, the Authority will assemble a project team to pursue the automation of the time and attendance system. The team will identify the key objectives and scope the project by March 1996. After defining the scope, a review of existing applications and the technical environment will be performed in order to assess available systems applications and hardware in order to develop a proposed architecture. This will be completed by the late second quarter/early third quarter of 1996. The team will then identify operational impacts of the proposed solution and develop a needs analysis report to be presented to the MIS Steering Committee by October 1996. The Authority anticipates implementation to begin in 1997.

 

1994: "As of January 1, 1995, the Authority had implemented the parallel testing of a new payroll system, which has reduced the number of manual calculations required for the determination of an employee's pay. Although the Authority will be reviewing all manual tasks related to the payroll process, a blanket conversion of all manual tasks to an automated system may not be reasonable, practical, or cost effective. A work plan and schedule is being developed for the evaluation of automating the time cards and time keeping tasks."

 

1992: "The Authority agrees with the recommendation to perform an analysis of the Human Resources/Payroll system. The Authority's current computerized system has approached the end of its useful life-cycle. The Authority has initiated a review and analysis of the Payroll/Personnel system and is evaluating the functionality of three (3) payroll/personnel computer systems. In addition the Authority has scheduled the review of the capabilities of three (3) time and attendance system providers. This review will assist the Authority in addressing the use of technology for these functions and should provide for the evaluation of the cost/benefit of enhancing the automation of the timekeeping process."

 

1991: "The Authority agrees with the recommendation to perform an analysis of the Human Resources/Payroll system. The Authority's current computerized system has approached the end of its useful life-cycle. The Authority intends to initiate a review and analysis of the Payroll/Personnel system later this year. This review will assist the Authority in addressing the use of technology for these functions."