REPORT DIGEST CAPITAL DEVELOPMENT BOARD Financial Audit For The Year Ended June 30, 2012, and Compliance Examination For the Two Years Ended June 30, 2012 Release Date: February 14, 2013 Summary of Findings: Total this audit: 9 Total last audit: 7 Repeated from last audit: 6 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 TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov INTRODUCTION The Capital Development Board (Board) serves as the non- road, construction management agency of the State of Illinois. This engagement encompassed a financial audit of the Board for the year ended June 30, 2012 and a compliance examination for the two years ended June 30, 2012. SYNOPSIS • The Board did not establish adequate controls over approval of contracts prior to the performance of services and resolution of outstanding procurement issues. • The Board did not have adequate controls over its revenue and receipts. • The Board did not fully comply with the Illinois Procurement Code’s provisions for publishing procurement information in the Illinois Procurement Bulletin. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NEED TO IMPROVE CONTRACT APPROVAL PROCESS The Board did not establish adequate controls over approval of contracts prior to the performance of services and resolution of outstanding procurement issues. Due to the lack of controls governing the interactions between the Board and the Chief Procurement Officer (CPO), we noted contract vouchers, totaling $855,879, represented improper payments for services performed prior to a properly executed contract. (Finding 12-1, pages 10-11) Finding was first reported in 2011. We recommended the Board continue working with the CPO to implement procedures to ensure all contracts are executed and approved prior to the start of the services. Board officials accepted our recommendation and stated they have developed and implemented procedures to ensure contracts are executed and approved prior to the start of services. INADEQUATE CONTROLS OVER REVENUE AND RECEIPTS The Board did not have adequate controls over its revenue and receipts. During our review of 60 receipts we noted the following: • Receipts for 12 contract administration fees (CAF) were more than 3% of contract amount and the excess totaled $519,849. • Supporting documentation for one CAF for $1,162,500 was not found. In addition, the Receipt Deposit Transmittal (RDT) forms were not properly completed and two receipts were deposited late. (Finding 12-2, pages 12-13) We recommended the Board strengthen its controls over revenue and cash receipts to ensure fees are collected and deposited in accordance with State statute. Deposits should also be made on a timely basis to maximize interest earned. Further, the Board should submit RDTs to the Office of the State Comptroller in accordance with Statewide Accounting Management System procedures. Board officials agreed with the finding and recommendation noting a bill has been introduced to reinstate the CAF. Further, the Board has strengthened controls over revenue and cash receipts. REQUIRED PROCUREMENT INFORMATION NOT PUBLISHED The Board did not fully comply with the Illinois Procurement Code’s (Code) provisions for publishing procurement information in the Illinois Procurement Bulletin (the Bulletin). Based on our review of procurement information on the Board’s website we noted the following: • Invitation for bids with revised bid dates and rebids did not include information about the responsible State purchasing officer, the method of source selection, and encouragement to prospective vendors to hire qualified veterans and Illinois residents discharged from any Illinois adult correctional center. • Contracts let or awarded did not include information about the location where offers were submitted. • Nineteen of 21 emergency purchases reviewed, totaling $5,366,780, were published in the Bulletin 175 to 782 days after the award date. Final cost totaling $4,929,232 for 18 emergency purchases were published 194 to 782 days after the determination of final cost. Further, one emergency purchase amounting to $59,948 and final cost of one emergency purchase amounting to $27,457 were not published in the Bulletin. • Four notices for hearing for emergency contract extension were not published in the Bulletin. (Finding 12-3, pages 14-16) This finding was first reported in 2008. We recommended the Board work with the Chief Procurement Officer in implementing procedures to ensure complete and consistent procurement information is published as required by the Code. Board officials agreed with our finding and recommendation noting: a) procedures have been reviewed, and b) processes have been implemented to ensure that complete and consistent procurement information is published as required. (For the previous Board response, see Digest Footnote #1.) OTHER FINDINGS The remaining findings are reportedly being given attention by the Board. We will review the Board’s progress toward implementation of our recommendations during our next examination. AUDITORS’ OPINION Our special assistant auditors stated the Capital Development Board’s financial statements as of and for the year ended June 30, 2012 are fairly presented in all material respects. WILLIAM G. HOLLAND Auditor General WGH:SKM SPECIAL ASSISTANCE AUDITORS E.C. Ortiz and Co., LLP were our special assistant auditors on this engagement. DIGEST FOOTNOTES #1 - REQUIRED PROCUREMENT INFORMATION NOT PUBLISHED - Previous Board Response 2010: Board agrees with recommendation. Board management will review current procurement information provisions and develop and enforce policies and procedures to ensure publishing of procurement information for all invitations for bids and rebids.