REPORT DIGEST

DEPARTMENT OF CENTRAL MANAGEMENT
SERVICES

COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  June 9, 2022

FINDINGS THIS AUDIT:  16

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  1 -- 2 -- 3
Category 2:  5 -- 8 -- 13
Category 3:  0 -- 0 -- 0
TOTAL:  6 -- 10 -- 16

FINDINGS LAST AUDIT: 13

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

This digest covers the Department of
Central Management Services’
(Department) compliance examination
for the two years ended June 30, 2021.
A separate financial audit of the
Department, as of and for the year
ended June 30, 2021, will be issued in
a separate report.  In total, this
report contains 16 findings, three of
which were reported within the
Department’s financial audit.

SYNOPSIS

• (21-4) The Department entered into
interagency agreements that failed to
adhere to the provisions of the Fiscal
Control and Internal Auditing Act.

• (21-5) The Department did not
exercise adequate controls over its
emergency purchases and real property
leases.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

FAILURE TO ADHERE TO THE PROVISIONS OF
THE FISCAL CONTROL AND INTERNAL
AUDITING ACT

The Department of Central Management
Services (Department) entered into
interagency agreements that failed to
adhere to the provisions of the Fiscal
Control and Internal Auditing Act
(Act).

During the engagement period, the
Department was a party to interagency
agreements with the following
designated State agencies to provide
internal audit services:
• Illinois Department of Agriculture
• Illinois Department of Corrections
• Illinois Department of Financial and
Professional Regulation
• Illinois Department of Human Rights
• Illinois Department of Labor
• Illinois Department of Insurance
• Illinois Finance Authority

We noted the following issues with
these interagency agreements:

• The Illinois Department of
Agriculture, the Illinois Department
of Financial and Professional
Regulation, the Illinois Department of
Human Rights and the Illinois Finance
Authority did not have a Chief
Internal Auditor during the engagement
period and strictly relied on the
Department to provide internal audit
services. The interagency agreements
ultimately resulted in these four
agencies not maintaining their own
full-time internal audit function.
Further, these interagency agreements
resulted in the Department’s Chief
Internal Auditor not working full time
with the Department’s own internal
audit function.  The Illinois
Department of Corrections, the
Illinois Department of Labor and the
Illinois Department of Insurance
utilized internal audit services of
the Department during the engagement
period, but did appoint their own
Chief Internal Auditor. The agreements
with the Illinois Department of Labor
and the Illinois Department of
Insurance were terminated during
Fiscal Year 2021.

• The Department did not obtain the
Governor’s approval for the Department
to provide professional internal
auditing services to these State
agencies.

• The Department inconsistently
established reimbursement arrangements
for these agreements and did not
follow any of the reimbursement
arrangements in the interagency
agreements.  (Finding 4, pages 18-22)

We recommended the Department not
enter into interagency agreements
which result in agencies and the
Department not maintaining their own
full-time internal audit function.
Additionally, we recommended any other
services provided to agencies be done
only with the approval of the
Governor. Further, we recommended the
Department consistently establish and
enforce reimbursement arrangements for
its interagency agreements.

The Department accepted the finding
and recommendation and stated they are
in the process of addressing the
identified billing issues, which will
allow the necessary changes to the
provisions of the intergovernmental
agreements and become compliant.  The
Department also stated that as for the
issue identified about the Chief
Internal Auditor at Central Management
Services providing support for other
designated state agencies, the Bureau
has now trained multiple staff that
are close to being qualified to
becoming Chief Internal Auditors and,
as such, are committed to exploring
options that will entice them to
consider these positions.

WEAKNESSES IN EMERGENCY PURCHASES AND
REAL PROPERTY LEASE ADMINISTRATION

The Department did not exercise
adequate controls over its emergency
purchases and real property leases.

During our testing of the Department’s
emergency procurement contracts during
the engagement period, we noted the
following issues:

• One of 29 (3%) emergency purchases
was not published in the online
electronic bulletin within five
calendar days. The emergency purchase
was published four calendar days late.
The untimely publication in the online
electronic bulletin also resulted in
the Chief Procurement Office (CPO) not
filing a statement with the
Procurement Policy Board and the
Auditor General within 10 calendar
days after the procurement. The
statement was filed six calendar days
late.

• One of 29 (3%) emergency purchases
for a real property lease, totaling
$45,478, was not filed with the Office
of Comptroller (Comptroller) via a
Contract Obligation Document (Form
C-23).

• The Department continued to make
payments to a vendor after one
emergency purchase for a real property
lease and subsequent three-month
extension expired without being
granted additional approval through
another extension hearing. These
payments were not obligated with the
Comptroller. Monthly lease payments
totaled $20,830; however the
Department split the monthly payments,
keeping individual payments under
$20,000. The lease payments totaled
$128,517.

• Twelve of 29 (41%) emergency
purchases were for month to month
payments for real property leases that
expired before and/or after an
emergency contract was in place, with
no contract obligated with the
Comptroller. By continuing to make
month-to-month payments without a
current obligation number, the
Department effectively extended the
month-to-month lease payments beyond
the statutorily allowed duration of
time. The leases with month-to-month
payments without an obligation filed
with the Comptroller had payments
totaling $643,704. Additionally, for
one of these leases, monthly lease
payments totaled $35,280; however, the
Department split the monthly payments
keeping individual payments under
$20,000. These lease payments totaled
$105,839.

During our analysis of payments
without contract numbers, we noted
four real property leases with month-
to-month payments totaling $236,953
that did not have obligations filed
with the Comptroller. By continuing to
make month-to-month payments without
an obligation number, the Department
effectively extended the month-to-
month lease payments beyond the
statutorily allowed duration of time
instead of making an emergency
purchase.  (Finding 5, pages 23-25)

We recommended the Department ensure
all emergency purchases are timely
published in the online electronic
bulletin. Additionally, we recommended
the Department take steps to ensure
all real property leases are filed
with the Comptroller and payments on
these leases are properly obligated in
accordance with SAMS. Lastly, we
recommended the Department implement
procedures to monitor real property
lease terms to avoid exhausting the
six month statutorily allowed holdover
period without a new lease agreement
in place.

The Department accepted the finding
and recommendation and stated they
will continue to make every effort to
ensure compliance with the
recommendations and best practices put
forth from the Comptroller by
utilizing the SAMS manual when
completing invoice processing and
leasing payments. The Department also
stated maintaining a high level of
knowledge and expertise with invoicing
procedures and payment submissions is
critical and with this is mind, new
training modules are being developed
to ensure understanding and compliance
with established procedures. Further,
The Department stated Standard
Operating Procedures have been drafted
outlining the invoice and leases
processes and regularly scheduled
meetings have been established to
enhance the internal control systems,
enforce policies, and keep lines of
communication open between fiscal
staff and the Deputy Director’s
office, ensuring that the Department
is compliant with all fiscal policies
and procedures.

OTHER FINDINGS

The remaining findings are reportedly
being given attention by Department
personnel. We will review the
Department’s progress towards the
implementation of our recommendations
in our next audit/examination.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Department as of and
for the year ended June 30, 2021 are
fairly stated in all material
respects.

ACCOUNTANT’S OPINION

The accountants conducted a State
compliance examination of the
Department for the two years ended
June 30, 2021, as required by the
Illinois State Auditing Act.  The
accountants qualified their report on
State compliance for Findings
2021-001, 2021-004, and 2021-005.
Except for the noncompliance described
in these findings, the accountants
stated the Agency complied, in all
material respects, with the
requirements described in the report.

This State compliance examination was
conducted by Sikich 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

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