REPORT DIGEST OFFICE OF THE COMPTROLLER - NONFISCAL OFFICER RESPONSIBILITIES COMPLIANCE EXAMINATION FOR THE TWO YEARS ENDED: JUNE 30, 2016 Release Date: May 25, 2017 FINDINGS THIS AUDIT: 2 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 2 -- 0 -- 2 Category 3: 0 -- 0 -- 0 TOTAL: 2 -- 0 -- 2 FINDINGS LAST AUDIT: 0 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 • (16-01) The Office did not exercise adequate controls over its property and equipment. • (16-02) The Office made payments to employees in excess of the amount authorized by its written policies, personnel rules, and State statute. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NEED TO IMPROVE CONTROLS OVER PROPERTY AND EQUIPMENT The Illinois Office of the Comptroller (Office) did not exercise adequate controls over its property and equipment. During testing, the auditors noted the following: • Three of 50 (6%) items tested, totaling $39,443, selected from the property listing were unable to be located. Documentation later provided showed two items, totaling $39,330, were sent to the Department of Central Management Services as surplus property, but were still listed as assets on the property control system. • Two vouchers tested, consisting of four televisions totaling $1,396, and two chairs, two sofas, and three tables, totaling $2,000, were made without purchase requisitions. • For one of 7 (14%) asset deletions tested, totaling $1,290, the Office did not retain supporting documentation. (Finding 1, pages 9-10) We recommended the Office ensures its equipment records are accurately maintained and updated as required. We also recommended the Office ensures its employees follow the existing policies and procedures to ensure all required documentation is properly completed and maintained. Office officials agreed with the recommendation and stated in addition to exceptions cited in the auditor’s report, current management identified other circumstances from July 1, 2016 to December 5, 2016 where the prior administration had failed to follow existing policies and procedures and/or did not adhere to best business practices. Office officials further stated strong internal controls over the procurement process and property management are essential elements of effective utilization and administration of state resources. The office will reassess existing procedures with the objective of strengthening internal controls and ensure staff members employed by this administration are aware of the importance of adherence to existing, appropriate procurement procedures. PAYMENTS TO EMPLOYEES IN EXCESS OF AUTHORIZED AMOUNTS The Office made payments to employees in excess of the amount authorized by its written policies, personnel rules, and State statute. During our testing, we noted the following: • The Office extended offers to its employees to receive cash compensation on four separate occasions during the engagement period for unused benefit time (sick, vacation, personal, and compensatory): for up to three days in September 2014, up to five days in each of two separate instances in December 2014, and up to three days in June 2015. The amount paid totaled $436,118 for 148 employees. • During testing of lump sum payments for benefit time to employees who separated, we noted five employees tested were able to carry forward vacation amounts in excess of the amount allowed. The employees received cash payments totaling $55,977 for 881 hours of accrued vacation in excess of the established maximum carryover of two years. In addition, two of the employees retired and made contributions to establish service credit in excess of the maximum carryover allowed by 7 and 49 days, respectively. • During testing of lump sum payments to employees who separated, we noted the Office compensated one employee tested for 35 hours of personal time totaling $2,993. In addition, two employees were paid for 41 hours of compensatory time totaling $1,931. (Finding 2, pages 11-13) We recommended the Office ensure all its payments for personal services comply with the provisions of all laws, rules, and written policies and retain appropriate documentation of its personnel decisions. Office officials agreed with the recommendation and stated although the IOC does maintain the right to establish, within existing law, its own personnel management and compensation policies as an independent constitutional office, it does believe that the reimbursements in question were excessive and their justification inadequately documented. These actions did not reflect what the current administration believes is good public policy. As a part of reviewing the policies and procedures discussed above, the current administration has noted other instances from July 1, 2016 to December 5, 2016 related to the human resource function (e.g. job audits) where adequate management policies and procedures were not followed and appropriate controls were not exercised. Office officials further stated they are in the process of implementing stronger internal controls over the human resource function and establishing clear and consistent policies that will restrict and inhibit future payouts for compensatory, sick, and personal time. The current administration is committed to ensuring appropriate personnel management procedures are followed and payouts for vacation, compensatory, sick and personal time are limited to circumstances allowed by existing statute or administrative code and all personnel transactions are appropriately approved and documented. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Office for the two years ended June 30, 2016, as required by the Illinois State Auditing Act. The accountants stated the Office complied, in all material respects, with the requirements described in the report. This compliance examination was conducted by CliftonLarsonAllen 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 FJM:PH