REPORT DIGEST CAPITAL DEVELOPMENT BOARD FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2016 COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED JUNE 30, 2016 Release Date: April 27, 2017 FINDINGS THIS AUDIT: 6 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 2 -- 4 -- 6 Category 3: 0 -- 0 -- 0 TOTAL: 2 -- 4 -- 6 FINDINGS LAST AUDIT: 7 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 SYNOPSIS • (16-1) The Board did not have adequate controls over its revenue and receipts. • (16-2) The Board did not fully comply with the Illinois Procurement Code’s provisions for publishing procurement information in the Illinois Procurement Bulletin. • (16-5) The Board processed inaccurate gross pay and did not have documentation to support notification of the error to the State Employees Retirement System. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER REVENUE AND RECEIPTS The Capital Development Board (Board) did not have adequate controls over its revenue and receipts. During our review of 80 receipts totaling $16,757,867, we noted the following: • Receipts for six contract administration fees (CAF) were more than 3% of the contract amount and the excess totaled $103,349. • Four (5%) receipts totaling $1,231,910 were deposited between one and three days late. During our review of 5 refunds totaling $281,427, we noted the following: • Two (40%) refunds totaling $88,660 were deposited between one and three days late. (Finding 1, pages 12-13) This finding has been repeated since 2012. We recommended the Board strengthen its controls over revenue and cash receipts to ensure fees are collected and deposited in accordance with State statutes. Deposits should also be made on a timely basis to maximize interest earned. The Board agreed with the finding and recommendation and stated they have changed the method for calculating the CAF to ensure compliance with the statutory limit and they will continue to ensure that deposits are made on a timely basis. (For the previous Department response, see Digest Footnote #1.) FAILURE TO PUBLISH REQUIRED PROCUREMENT INFORMATION TIMELY The Board did not fully comply with the Illinois Procurement Code’s 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 annual Business Enterprise Program reports were not posted on the online electronic Bulletin within 10 business days after submission of the report to the Business Enterprise Council for Minorities, Females and Persons with Disabilities during Fiscal Years 2016 and 2015. The reports were posted 71 to 107 days late. (Finding 2, pages 14-15) This finding has been repeated since 2008. We recommended the Board ensure required procurement information is published timely as required by the Illinois Procurement Code. The Board agreed with the finding and recommendation and stated they will develop a report suitable for posting to its website and post it to the electronic Bulletin within 10 calendar days of its submission to the Council. (For the previous Department response, see Digest Footnote #2.) INACCURATE GROSS PAY The Board processed inaccurate gross pay and did not have documentation to support notification of the error to the State Employees Retirement System (SERS) During testing, the auditors noted the following: • During our review of 40 employee personnel files, we noted two employees (5%) were not paid the correct gross pay. The employees were paid higher than the pay rate stated in the Gross Pay Rate Table for Fiscal Year 2015. These errors resulted in overpayments to the employees totaling $9,536. • In reviewing these two identified exceptions, the auditors noted the Board did not take appropriate corrective action. Specifically, the auditors noted only one of the two employees had entered into a repayment agreement in January 2016 so the Board could recoup the overpayment. Further, the auditors noted the Board did not maintain any documentation for and could not support that it had notified SERS about the overpayment so SERS could take appropriate action to correct the records. (Finding 5, pages 20-21) We recommended the Board process payroll accurately. In addition, we recommended the Board recoup all overpayments made to employees. Finally, we recommended the Board contact SERS so appropriate corrective action can be taken. Board officials accepted our recommendation and stated it has hired a new HR Administrator and is taking steps to address the issues noted above. OTHER FINDINGS The remaining findings pertain to vehicles not properly maintained, performance evaluations not completed, and untimely approval and payment of vouchers. We will review the Board’s progress towards the implementation of our recommendations in our next compliance examination. AUDITOR’S OPINION The auditors stated the financial statements of the Board as of and for the year ended June 30, 2016 are fairly stated in all material respects. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Board for the two years ended June 30, 2016, as required by the Illinois State Auditing Act. The accountants stated the Capital Development Board complied, in all material respects, with the requirements described in the report. This financial audit and compliance examination was conducted by Adelfia LLC. BRUCE L. BULLARD Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:MEG DIGEST FOOTNOTES #1 - INADEQUATE CONTROLS OVER REVENUE AND RECEIPTS - Previous Board Response 2014: The Capital Development Board agrees with the finding and recommendation. CDB has changed the method for calculating the CAF to ensure compliance with the statutory limit. Also, CDB continues to make every effort to ensure that deposits are made on a timely basis. #2 - FAILURE TO PUBLISH REQUIRED PROCUREMENT INFORMATION TIMELY - Previous Board Response 2014: The Capital Development Board agrees with the finding and recommendation. The BEP reports have been posted onto CDB’s electronic Bulletin. CDB will continue to work with the CPO to ensure the reports are posted as required.