INTRODUCTION
Our 2000 audit of the Comptroller's Fiscal Officer Responsibilities is
presented in two parts. The compliance part, with our findings and recommendations, is
presented in one document. The financial part, with our opinion on the budgetary financial
statements, is presented in the State Comptroller's "Illinois Traditional Budgetary
Financial Report." Our opinion on the Statewide general-purpose financial statements
prepared in accordance with generally accepted accounting principles is contained in the
separately issued Comprehensive Annual Financial Report.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INACCURATE REPORTING OF 1099 TAX INFORMATION
The Office of the Comptroller (Office) did not report $7,573,603 of medical service
payments to the Internal Revenue Service.
Payments made by the Department of Central Management Services (DCMS) should have been
charged to object code 4422, but were instead charged to object code 4421. The
Office’s 1099 reporting system is dependent on using the proper object codes. Because
the proper code was not used, the miscoded medical service provider payments initiated by
DCMS were omitted from the 1099 reporting to the Internal Revenue Service for calendar
year 1999. This condition continued in the year 2000.
Although State agencies have principal responsibility for the pre-audit of their
expenditures, statutes also require the Comptroller to apply pre-audit procedures. The
Office’s current pre-audit system did not identify the miscoding. Although various
manual and system edit checks are applied to all transactions, a pre-audit of the
propriety of the expenditure object codes utilized is performed only on a random basis for
this class of expenditure. The Office’s random system of testing did not identify the
recurring miscoding of medical service payments made by DCMS. (Finding 1, pages 11-12)
We recommended the Office’s current pre-audit function be reviewed and procedures
modified as necessary to ensure proper coding of vouchers and thereby facilitate accurate
information reporting to the Internal Revenue Service. We also recommended the necessary
corrections to the 2000 calendar year transactions be made to ensure accurate reporting on
Internal Revenue Service form 1099.
The Comptroller’s office concurred with our recommendation and indicated that DCMS
corrected their accounting system to properly code the payments prior to the end of
calendar year 2000. In addition, the procedures for post-audit review of this class of
voucher were revised by incorporating additional steps to the process.
INADEQUATE CONTROLS OVER BONDED INDEBTEDNESS
The State Comptroller’s Act and the Statewide Accounting and Management System
(SAMS) manual require the Office of the Comptroller (Office) to receive bond issue and
monthly payment information within 15 days of the issue and voucher payment date, and to
maintain current records indicating the outstanding bonded indebtedness of the State and
of all State agencies. Some of the items identified in testing the bond area included the
following:
