REPORT DIGEST

 

DEPARTMENT OF AGRICULTURE

ILLINOIS STATE FAIR

 

COMPLIANCE AUDIT AND

SUPPLEMENTARY

FINANCIAL

INFORMATION

For the Two Years Ended:

September 30, 2003

 

Summary of Findings:

 

Total this audit                   10

Total last audit                     3

Repeated from last audit      2

 

Release Date:

April 20, 2004

 

 

 

 

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 TDD (217) 524-4646

 

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

SYNOPSIS
  • The Grandstand Ticket Office did not maintain adequate control of cash receipts.
  • There were several weaknesses in the timekeeping system for temporary employees of the Illinois State Fair.
  • Criminal background investigations were not performed before employees were hired for the Illinois State Fair.
  • Expenditures exceeded revenues by $3,248,308 and $4,864,020 for the years ending September 30, 2003 and 2002, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

{Revenues, expenditures and supplementary information are summarized on the reverse page.}

 

                                     ILLINOIS DEPARTMENT OF AGRICULTURE

                                                     ILLINOIS STATE FAIR

 

                                                      COMPLIANCE AUDIT

                                       For The Two Years Ended September 30, 2003

 

REVENUE AND EXPENDITURE STATISTICS

FY 2003

FY 2002

FY 2001

! Total Revenue

       Tickets

           % of Revenue

       Space Rental:  Fair

           % of Revenue

       Entry Fees

           % of Revenue

       Promotions

           % of Revenue

 

! Total Expenditures (All Funds)

       Personal Services

           % of Expenditures

       Other Payroll Costs (FICA, Retirement)

           % of Expenditures

       Contractual Services

           % of Expenditures

       Allocated Costs

           % of Expenditures

       Premiums and Awards

           % of Expenditures

       All Other Operations Items

           % of Expenditures

 

! (Deficiency) of Revenues Over Expenditures

$3,853,851

$2,185,714

56.7%

$1,146,213

29.7%

$241,326

6.3%

$280,598

7.3%

 

$7,102,159

$650,592

9.2%

$214,215

3.0%

$2,425,797

34.2%

$2,628,746

37.0%

$953,907

13.4%

$228,902

3.2%

 

$(3,248,308)

$3,633,450

$2,046,861

56.4%

$1,065,453

29.3%

$251,098

6.9%

$270,038

7.4%

 

$8,497,470

$702,103

8.3%

$216,833

2.6%

$3,044,244

35.8%

$2,865,063

33.7%

$1,276,513

15.0%

$392,714

4.6%

 

$(4,864,020)

$3,546,101

$2,080,798

58.7%

$961,786

27.1%

$243,058

6.9%

$260,459

7.3%

 

$8,450,201

$663,728

7.8%

$203,590

2.4%

$2,687,959

31.8%

$3,216,115

38.1%

$1,293,819

15.3%

$384,990

4.6%

 

$(4,904,100)

SUPPLEMENTARY INFORMATION

FY 2003

FY 2002

FY 2001

! Employment Statistics (Approximate)

          Full Time Employees

          September through May (Temporary)

          June (Temporary)

          July through August (Temporary)

! Selected Activity Measures

          Gate Admissions – Tickets Sold (Unaudited)

          Estimated Attendance (Unaudited)

          Grandstand Shows – Tickets Sold Unaudited)

          Grandstand Show Revenues

          Grandstand Show Expenditures

! Competitive Events

          Competitive Events Revenues

&          #9; Competitive Events Expenditures

! Pari-mutual Wagering

          Pari-mutual Wagering Receipts

          Pari-mutual Wagering Expenditures

 

9

13

36

116

 

252,201

725,000

40,850

$850,721

$1,299,124

 

$106,153

$858,509

 

$201,812

$279,683

 

9

5

46

177

 

258,236

1,264,750

42,292

$836,266

$1,022,799

 

$109,016

$1,191,312

 

$164,941

$253,666

 

10

10

44

158

 

257,104

1,130,000

38,978

$819,009

$1,190,950

 

$113,053

$1,530,561

 

$211,498

$285,821

AGENCY DIRECTOR

During Audit Period: Mr. Joseph Hampton (7/1/01 to 4/28/03); Mr. Charles A. Hartke (4/29/03 to Present)

Currently: Mr. Charles A. Hartke

 

 

 

 

 

 

 

Inadequate records maintained of cash deposits for a lessee of $112,073 and $107,768 for the 2003 and 2002 State Fair, respectively

 

 

 

 

Grandstand ticket sales and cash receipts were not reconciled

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time clocks printed wrong dates

 

 

138 employees were not required to use a time clock

 

 

 

Payroll personnel changed 52 daily time sheets with no notation of the reason for the change or of the approval for the change

 

 

 

 

 

 

 

 

 

 

 

 

 

49 new employees were fired once criminal background checks were performed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS

NEED TO IMPROVE CONTROLS OVER CASH RECEIPTS

The Grandstand Ticket Office (Office) did not maintain adequate control of cash receipts. During our audit testing we noted the following:
  • The Office failed to maintain adequate records for cash deposits made for a lessee of $112,073 and $107,768 for the 2003 and 2002 State Fairs, respectively. The Office collects ticket sales for a lessee and then deposits those proceeds directly into the bank account. The Office did not consistently retain bank deposit receipts for the cash directly deposited into the lessee’s bank account.
  • Although daily cash drawer reconciliations were performed and a cumulative cash receipts ledger was maintained, the total amount of box office ticket sales recorded in the ledger were not reconciled with the contractor’s sales reports and the total amount deposited.
  • The Office utilizes a contractor to make sales through outside locations and collects money for grandstand events. The remittances received from that contractor were not reviewed for accuracy or propriety. When we requested Office personnel reconcile the amount received, the amount received was not accurate. The contractor had also inappropriately offset the amount due the Office with two invoices owed by the Department of Agriculture to the contractor. The contractor had also erroneously deducted approximately $2,200 from that payment for an amount due from an unrelated party.

Adequate documentation and reconciliations are an integral part of good internal controls. Department personnel stated that the lack of procedures to retain bank deposit receipts for lessee’s deposits or to perform cumulative reconciliations of cash receipts for box office and outside ticket sales was due to an oversight by the grandstand summer help supervisor.

The Department implemented new procedures to address inadequate controls over cash payments to contractors noted in the prior audit finding. The Department also implemented some procedures to reconcile cash receipts noted in the prior finding, but a new reconciliation is required to reconcile Grandstand ticket sales. (Finding 1, pages 8-9)

We recommended the Grandstand Ticket Office establish internal controls documenting all deposits made on behalf of others and reconcile cash receipts to deposits and to contractor records.

Department officials accepted our recommendation and indicated in their response that they have taken steps to address the internal control weaknesses noted in the finding.

 

WEAKNESSES IN TIMEKEEPING NOTED

There were several weaknesses in the timekeeping system for temporary employees of the Illinois State Fair.

The Department of Agriculture employed 345 temporary employees for the 2003 Illinois State Fair (Fair). Temporary employees were paid $426,853 during the month of August, when the Fair was held. During the 2003 Fair, we noted the following conditions and weaknesses in time reporting for temporary employees:
    • 37 of 207 temporary employees used time clocks that printed the wrong date when the employee "punched in" or "punched out".
    • 138 temporary employees were not required to use a time clock. There was no written documentation of when those employees began and ended their workday. Nothing was submitted by the employees to substantiate how many hours that they worked. The supervisors for those areas kept track of the time for all such employees.
    • For the pay period of August 16 through August 31, 2003, we noted that payroll personnel made changes to 52 daily time sheets with no notation or documentation as to why the hours were changed or who approved such changes. The changes were both increases and decreases to the employees time worked.

The Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires all state agencies to establish and maintain a system, or systems, of fiscal and administrative controls.

Department personnel stated that time clocks were not tested prior to commencement of the Fair to determine they were in good working condition. They also noted that there were several new supervisory employees who were not familiar with procedures. (Finding 5, pages 13-14)

We recommended the Department review and develop procedures to strengthen controls over temporary employee payroll.

Department officials accepted our recommendation and indicated they were implementing procedures to strengthen controls over timekeeping.

CRIMINAL BACKGROUND INVESTIGATIONS NOT PERFORMED

Criminal background investigations were not performed before employees were hired for the Illinois State Fair.

During the 2003 Illinois State Fair, the Human Resource Department processed over 200 applicants. After the employees had started work, criminal background investigations for all applicants were requested from the State Police. In total, 49 of the new employees were fired once the criminal background investigation results were received.

Good internal control procedures would require that criminal background investigations be performed prior to employment.

Department personnel stated that the criminal background investigations were not performed timely due to the large volume of employment applications. Also, new personnel in the Human Resources Department thought that the Department of Central Management Services was handling this procedure because they do so for full time employees. (Finding 6, page 15)

We recommended that the Department develop procedures to perform criminal background investigations for all Illinois State Fair temporary employee applicants prior to employment.

Department officials accepted our recommendation and state they have taken steps to develop procedures to perform background checks before employees are hired.

OTHER FINDINGS

The remaining findings are reportedly being given attention by the Department. We will review progress toward implementing our recommendations in our next audit.

Mr. Thomas Jennings, Chief of Staff, provided the responses to our findings and recommendations.

FINANCIAL RESULTS OF THE FAIR

Fair expenditures exceed revenues by $3,248,308 and $4,864,020 for the years ended September 30, 2003 and 2002, respectively. (page 25)

 

AUDITORS’ OPINION

The supplementary financial information of the Illinois State Fair, except for the portion marked "unaudited", was subjected to auditing procedures applied in our special State financial related audit testing and internal control review. With respect to the items tested, our auditors stated no matters were noted that required adjustment to the accompanying supplementary information.

 

 

_______________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:JAF:pp

SPECIAL ASSISTANT AUDITORS

Our Special assistant auditors for this audit were Sleeper, Disbrow, Morrison, Tarro & Lively, LLC.