REPORT DIGEST

OFFICE OF THE COMPTROLLER

FISCAL OFFICER RESPONSIBILITIES

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:
June 30, 2000

Summary of Findings:

Total this audit 3
Total last audit 2
Repeated from last audit 1

Release Date:
May 8, 2001

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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
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703

(217)782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

  • The Office of the Comptroller did not report $7,573,603 of medical service payments to the Internal Revenue Service.
  • The Office of the Comptroller did not comply with the State Comptroller Act and the Statewide Accounting and Management System (SAMS) manual relating to recording and reporting bonded indebtedness of the State.

 

 

 

 

 

{Financial Information and Activity Measures are summarized on the next page.}

 

OFFICE OF THE COMPTROLLER - STATE OF ILLINOIS
FISCAL OFFICER RESPONSIBILITIES
FINANCIAL AND COMPLIANCE AUDIT
FOR THE YEAR ENDED JUNE 30, 2000

 

Fiscal Year 2000

Fiscal Year 1999

FUND BALANCE (Amounts in Thousands)

Cash Balance

Budgetary Balances*

Cash Balance

Budgetary Balance*

APPROPRIATED FUNDS
General Funds
Highway Funds
Income Funds
Special State Funds
Bond Financed Funds
Debt Service Funds
Federal Trust Funds
Revolving Funds
State Trust Funds

$1,516,653
1,014,193
0
2,296,954
568,922
457,857
137,210
59,598
286,237

$776,595
902,638
0
1,912,078
566,368
457,857
(36,133)
22,354
203,869

$1,350,636
943,711
228
2,027,616
521,153
461,819
128,122
84,387
214,634

$502,575
834,852
197
1,664,159
518,596
461,820
(121,354)
48,182
151,982

Sub-total

$6,337,624

$4,805,626

$5,732,306

$4,061,009

NON-APPROPRIATED FUNDS
Federal Trust Funds
State Trust Funds

$14,576
1,082,691

$14,334
1,065,737

$27,799 1,087,206

$27,610 1,004,856

Sub-total

$1,097,267

$1,080,071

$1,115,005

$1,032,466

GRAND TOTAL - ALL FUNDS

$7,434,891

$5,885,697

$6,847,311

$5,093,475

* Budgetary Balances represent the balances remaining after reduction of Cash Balances at June 30 by expenditures made during the lapse period.
 

FINANCIAL HIGHLIGHTS (Amounts in Thousands)

YEAR ENDED

JUNE 30, 2000

YEAR ENDED

JUNE 30, 1999

Total Receipts - All Funds

$62,055,140

$50,215,527

Total Expenditures - All Funds

$61,262,917

$49,200,518

Net Change In Budgetary Fund Balance - All Funds

$ 792,223

$ 1,015,009

STATE COMPTROLLER
During Audit Period: Honorable Daniel Hynes
Currently: Honorable Daniel Hynes
 

 

 

 

 

 

 

 

 

 

$7,573,603 not reported on IRS form 1099

 

 

Payments made by DCMS were not charged to the proper object code

 

 

 

Office’s current pre-audit system was inadequate to identify the miscoding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquency letter to Office of Auditor General not submitted

 

Required bond information not on file

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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:

  • The Office did not submit an annual delinquency letter to the Office of the Auditor General listing the State agencies not filing monthly bonded indebtedness documentation in a timely manner.
  • The Office did not have a prospectus on file for three out of fifteen revenue bonds tested.
  • In two out of fifteen revenue bond issues tested, the Office did not have a bond receipt date on the prospectus.
  • The Office was unable to provide records or the applicable dollar amount of revenue bonds outstanding throughout fiscal year 2000. Historically, records relating to revenue bonded indebtedness have not been available in a timely manner.

Office management noted agencies issuing bonds are not statutorily required to notify the Office of any new bond issues prior to their issuance. Furthermore, management indicated that agencies are not following current SAMS manual procedures which require them to send the bond prospectus within 30 days of issuance, and agencies are not reporting bond payments on a timely basis. (Finding 3, pages 14-15)

We recommended the Office devote sufficient resources to this area to ensure current records of outstanding bonded indebtedness are maintained.

State Comptroller officials concurred with our recommendation and stated they are currently reviewing the bond reporting policies and procedures and meeting with key agencies with bonding authority in an effort to resolve the reporting issues outlined in the finding. The Office is also reviewing staffing requirements in the Financial Reporting Department to ensure sufficient resources are allocated to the bond reporting area.

OTHER FINDING

The remaining finding is less significant and is being given attention by the Office. We will review the Office’s progress toward the implementation of our recommendation in our next audit.

Ms. Carol Kraus, Director of Internal Audit, provided the Office responses to our findings and recommendations.

AUDITORS’ OPINIONS

Our auditors state the traditional budgetary financial statements present fairly the fund balances and receipts and expenditures as of and for the year ended June 30, 2000, relating to the Fiscal Officer Responsibilities of the Comptroller.

In addition, the Comptroller has issued a separate Comprehensive Annual Financial Report that has additional details on the financial activities of State agencies and funds. Our auditors report the general-purpose financial statements in the Comprehensive Annual Financial Report as of and for the year ended June 30, 2000 are fairly presented in all material respects.

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WILLIAM G. HOLLAND, Auditor General

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SPECIAL ASSISTANT AUDITORS

The firm of Sleeper, Disbrow, Tarro, Morrison & Lively were our special assistant auditors.