REPORT DIGEST

DEPARTMENT OF CENTRAL MANAGEMENT
SERVICES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  June 9, 2022

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: 2

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) Financial Audit as of and
for the year ended June 30, 2021. The
Department’s State Compliance
Examination will be issued in a
separate report.

SYNOPSIS

• (21-02) The Department did not
adequately monitor billings for the
Professional Services Fund and the
Health Insurance Reserve Fund.

• (21-03) The Department did not have
a reconciliation process to provide
assurance census data submitted to its
pension and other postemployment
benefits plans was complete and
accurate.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE MONITORING OF INTERNAL
SERVICE FUND BILLINGS

The Department did not adequately
monitor billings for the Professional
Services Fund and the Health Insurance
Reserve Fund.

During testing of internal service
fund billings, amounts due from other
agencies, and amounts due from
component units we noted the
following:

• Several State employees are
collectively represented by the
Downstate Teamsters, Cook County
Teamsters Local No. 700, Fox Valley
Teamsters Local No. 330, and Teamsters
Local No. 916 at the:
— Department;
— Department of Corrections (DOC);
— Department of Innovation and
Technology (DoIT);
— Department of Human Services (DHS);
— Department of Transportation (DOT);
— Illinois State Police (ISP), which
are paid for by the ISP, Illinois
Gaming Board (IGB), Illinois State
Toll Highway Authority (ISTHA), and
DOT;
— Department of Natural Resources
(DNR); and,
— Department of Employment Security
(covered position currently vacant).

Pursuant to the various agreements,
these employees covered by these
agreements can choose to opt-out of
the State Employee Group Insurance
Program (SEGIP)’s healthcare benefits
and receive their employee healthcare
through the union’s plan. Those
employees who opt-out will participate
in SEGIP for vision, dental, and life
insurance benefits as an employee and
then transition to SEGIP for all of
their Other Postemployment Benefits
(OPEB), including healthcare benefits,
at retirement. In order to pay the
unions for these employees’ healthcare
costs, SEGIP initially pays the union
and the Department then prepares
supplemental billings for SEGIP to
recover these costs and collect the
associated retiree portion of group
insurance contributions for SEGIP from
each employee’s employer. These
payments are made to the Health
Insurance Reserve Fund.

As of June 30, 2021, $6,522,614 in
supplemental billings were due to the
Department. We noted the Department
did not actively monitor its amounts
due from multiple State agencies and
ISTHA to ensure amounts due were
timely collected. As such, we noted
six of nine (67%) agencies made no
payments or payments significantly
lower than what was due since 2018.
After these issues were brought to the
attention of the Department,
$3,735,687 was collected for these
billings by December 2021.

• The Department develops charges for
professional services to be paid into
the Professional Services Fund by
using the last full fiscal year’s
expenditures, devising a percentage of
the total expenditures, and then
prorating the amounts to the agencies
by fund and dollar amount that receive
professional services from the
Department. This percentage is then
multiplied by the professional
services annual budget to determine
the amount billed to each agency.
During testing we noted agencies
receiving professional services from
the Department were billed based on
the percentages established for Fiscal
Year 2020 instead of Fiscal Year 2021.
This resulted in 41 of 45 (91%)
agencies receiving professional
services from the Department being
billed for the incorrect amount. The
amounts under billed to agencies
ranged from $200 to $269,200, and the
amounts overbilled to agencies ranged
from $200 to $704,900.  (Finding 2,
pages 67-69)

We recommended the Department ensure
internal service fund billings are
properly calculated and that the
Department timely follows up on
outstanding billings.

The Department accepted the finding
and recommendation. The Department
stated they have implemented processes
and procedures to complete timely
monitoring and follow up on internal
service fund billings to ensure
agencies are paying these billings in
the fiscal year where the liability is
incurred. Regarding the professional
services billing, the Department
stated that it has updated its
procedures and review processes to
help ensure billings are properly
calculated.

LACK OF CENSUS DATA RECONCILIATIONS

The Department did not have a
reconciliation process to provide
assurance census data submitted to its
pension and other postemployment
benefits (OPEB) plans was complete and
accurate.

During testing, we noted the
Department had not performed an
initial complete reconciliation of its
census data recorded by both the State
Employees’ Retirement System of
Illinois (SERS) and the Bureau of
Benefits within the State of Illinois,
Department of Central Management
Services (Bureau) to the personnel
records of the Department’s employees
to establish a base year of complete
and accurate census data.

After establishing a base year, the
Department had not developed a process
to annually obtain from SERS and CMS
the incremental changes recorded by
SERS and CMS in their census data
records and reconcile these changes
back to the Department’s internal
supporting records.  (Finding 3, pages
70-72)

We recommended the Department work
with both SERS and its Bureau to
develop an annual reconciliation
process of its active members’ census
data from the Department’s underlying
personnel records to a report from
each plan of census data submitted to
the plan’s actuary.  After completing
an initial full reconciliation, the
Department may limit the annual
reconciliation to focus on the
incremental changes to the census data
file from the prior actuarial
valuation, provided no risks are
identified that incomplete or
inaccurate reporting of census data
may have occurred during prior
periods.

The Department accepted the finding
and recommendation and stated the
Bureau of Personnel (BoP) has
completed the initial reconciliation
of census data. BoP is prepared to
ensure annual reconciliations are
completed in conjunction with SERS.

OTHER FINDING

The remaining finding pertains to the
failure to determine premiums that
allow for establishment of an
actuarial sound reserve for the
Community College Health Insurance
Program.  We will review the
Department’s progress towards the
implementation of our recommendation
in our next financial audit.

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.

This financial audit 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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