REPORT DIGEST OFFICE OF THE TREASURER - NONFISCAL OFFICER RESPONSIBILITIES COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2017 Release Date: April 19, 2018 FINDINGS THIS AUDIT: 3 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 2 -- 3 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 2 -- 3 FINDINGS LAST AUDIT: 3 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General FRANK J. MAUTINO, 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 Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION The independent accountant’s report on State compliance, on internal control over compliance and on supplementary information for State compliance purposes on the Illinois Office of the Treasurer for the two years ended June 30, 2017 includes a scope limitation. Accountants were unable to examine the unclaimed property division of the Illinois Office of the Treasurer at the request of law enforcement and investigatory authorities in order to avoid interference with an ongoing investigation and related legal proceedings. SYNOPSIS • (17-1) The Illinois Office of the Treasurer did not maintain adequate controls over monthly appropriation, cash receipt and cash balance reconciliations. • (17-2) The Illinois Office of the Treasurer did not consistently conduct employee performance appraisals as required by Office policies. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF CONTROLS OVER MONTHLY RECONCILIATIONS The Illinois Office of the Treasurer (Treasurer’s Office) did not maintain adequate controls over monthly appropriation, cash receipt, and cash balance reconciliations. The Treasurer’s Office expended $3.408 billion and $5.105 billion and receipted $334.189 million and $332.747 million in Fiscal Years 2016 and 2017, respectively. During our sample testing of Fiscal Year 2016 and 2017 reconciliations between Illinois Office of the Comptroller (IOC) records and Treasurer’s Office records, we noted the following: • Three of six (50%) Monthly Appropriation Status Report (SB01) reconciliations tested lacked documentation supporting separation of duties between the reconciliation preparer and reviewer, as no signature was documented for one or both parties. • Two of six (33%) Monthly Cash Report (SB05) reconciliations tested lacked documentation supporting separation of duties between the reconciliation preparer and reviewer, as no signature was documented for the individual reviewing the reconciliation. • One of six (17%) Monthly Revenue Status Report (SB04) reconciliations tested lacked documentation supporting separation of duties between the reconciliation preparer and reviewer, as no signature was documented for the individual reviewing the reconciliation. (Finding 1, pages 9-10) We recommended the Treasurer’s Office document the separation of duties over preparation and review of appropriation, cash receipt, and cash balance reconciliations. The Treasurer’s Office accepted our recommendation. NONCOMPLIANCE WITH TREASURER’S OFFICE PERSONNEL POLICIES AND PROCEDURES The Illinois Office of the Treasurer (Treasurer’s Office) did not consistently conduct employee performance appraisals as required by Office policies. During our State compliance examination of employee personnel files, we noted some of the following issues: • Five of nine (56%) employees eligible to receive a three and/or six month performance evaluation did not receive either evaluation. • Five of 25 (20%) annual performance evaluations tested were not signed timely after the evaluation end date, ranging from 30 to 97 days past the evaluation date. • Twelve of 25 (48%) annual performance evaluations tested were missing from the employee personnel file. (Finding 2, pages 11-12) This finding has been repeated since 2003. We recommended the Treasurer’s Office ensure performance appraisals are conducted in a timely manner and in accordance with the Treasurer’s Office’s rules and policies. The Treasurer’s Office accepted our recommendation and indicated they have implemented a new online electronic performance evaluation system to help streamline the process for supervisors. (For the previous Treasurer’s Office response, see Digest Footnote #1.) OTHER FINDING The remaining finding pertains to the Treasurer’s Office noncompliance with vehicle policies and procedures. We will review the Agency’s progress towards the implementation of our recommendations in our next compliance examination. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Treasurer’s Office for the two years ended June 30, 2017, as required by the Illinois State Auditing Act. The accountants qualified their report on State compliance due to a scope limitation. Accountants were unable to examine the unclaimed property division of the Treasurer’s Office at the request of law enforcement and investigatory authorities in order to avoid interference with an ongoing investigation and related legal proceedings. Except for the scope limitation described in the report on State compliance, the accountants stated the Treasurer’s Office complied, in all material respects, with the requirements described in the report. This compliance examination was conducted by Crowe Horwath LLP. JANE CLARK Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:JAF DIGEST FOOTNOTES #1 - NONCOMPLIANCE WITH TREASURER’S OFFICE PERSONNEL POLICIES AND PROCEDURES – prior year response 2015: The Treasurer accepts the finding and will continue to emphasize the importance of timely completion of annual performance evaluations. For the 6 missing evaluations, 1 employee is no longer with the office and the remaining 5 have since been completed.