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Four findings included in the report were considered material weaknesses in internal control Lack of cooperation
during engagement 51 requests for
audit documentation were received 31-120 days after due date Failure to
adequately respond to auditor requests Department noted
timing constraints and competing priorities caused the problems in providing
auditors with information
Department was
unable to provide auditors with capital asset information Unable to perform
reconciliation between capital asset reports and property system Departments
property records commingled with those of DOC Capital asset
reports filed late with the Comptroller Department
indicated limitations with the current system created recordkeeping
difficulties Youth Centers not
able to reconcile benefit fund activity to bank account Two Youth Centers
could not access online banking website Receipts could not
be traced to source documents
Exceptions were
noted as being the result of the timing of the creation of the Department
The Department
failed to hire front line staff based on funds appropriated for that purpose Youth Centers
reported 117 front line staff left employment with the Department during
fiscal years 2007 and 2008 Additional personal
services costs were incurred due to the overtime as a result of the reduction
in staffing levels
Five Centers
utilize the same vendor for commissary / concession service but do not have a
formalized contract Contract used by
one Center did not provide complete information Contract was not
approved by Department Director
Required contract
information was not publicized in the Illinois Procurement Bulletin
Identical items
priced differently at 3 Center within close proximity to each other Prices charged
Youth include a 25% mark-up Department
indicated exceptions were due to oversight
Exceptions noted at
Youth Centers in administration of benefit funds
Resident benefit
fund committees did not meet at five Youth Centers
Required minutes of
committee activity not maintained at two Youth Centers
Department does not
have an administrative directive relating to the use, reporting and
safeguarding of gift / purchase cards
Department
indicated staffing limitations and errors were the reason for the exceptions
Need to fully
automate payroll timekeeping system Timekeeping data
for Department employees is manually tabulated and then entered into the
payroll system Department
attributes problem to lack of funds
The Department did
not comply in all material respects with State compliance determinations
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INTRODUCTION Effective June 1, 2006, Public Act
94-0696 established the Department of Juvenile Justice (Department). This Act transferred certain rights,
powers, duties, and functions that were exercised by the Juvenile Division of
the Department of Corrections (DOC).
Effective July 1, 2006, DOC’s school district was transferred to the
Department.
The
report presents our compliance attestation examination of the Department’s
General Office operations for the two years ended June 30, 2008. This is the first compliance examination of the
Department. During the two years ended June 30, 2008 the
Department administered 8 youth centers. The auditors
identified 4 findings involving internal control that they considered to be
material weaknesses. A material
weakness is a significant deficiency in the internal control that results in
more than a remote likelihood that material noncompliance will not be
prevented or detected by the Department’s internal control. The material weaknesses are described in
the Schedule of Findings on pages 12 to 22 of the report. Following is a summary of some of the
findings included in the Department report. FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS REQUESTED DOCUMENTATION TO PERFORM TESTING NOT PROVIDED TIMELY OR AT ALL The Department
did not provide all the requested documentation to the auditors in a timely
manner and generally demonstrated a lack of cooperation during the
engagement. As a result of the Department’s auditor request protocol a number of requested documents to perform the compliance examination testing were not provided timely. Documents related to 135 requests were provided after the due date they were requested to be provided. Further, 51 of the requests were received 31 to over 120 days late, with 10 being over 120 days late. In addition to providing requested documentation late, the Department did not adequately respond to all auditor requests. Specifically they failed to provide the auditors with all the requested documents. As a result, for those requests where documents were partially provided, auditors could not complete the associated testing and considered the missing items to be exceptions. There were also 8 requests for documentation that the Department failed to complete and had to be considered exceptions during the testing. These are included as part of other findings in the report. Department management stated they were unable to provide the requested information timely because of timing constraints and competing priorities. (Finding 1, pages 12 - 14) We recommended the Department reevaluate and restructure its external audit process to ensure requested documentation is provided in a timely manner as required by the Illinois State Auditing Act. Department
officials accepted our recommendation and responded they are in the process
of reviewing their operations and plan a restructuring of the audit liaison
function. INACCURATE AND INADEQUATE EQUIPMENT AND
CAPITAL ASSET RECORDKEEPING The Department utilizes the DOC Automated Property Control System (APCS). The auditors identified the following inadequacies in the Department’s property/fixed asset recordkeeping process: · The Department was unable to provide auditors with detailed equipment and capital assets information. The auditors were unable to test the composition of the transactions reported on the Agency Report of State Property Forms (C-15) in fiscal year 2008. In addition, the Department did not provide the auditors with the supporting summary worksheets for any of the quarterly fiscal year 2007 Form C-15 submissions. · Due to the lack of transaction detail noted above, a reconciliation of the Department’s Form C-15 submissions for fiscal year 2008 to the property listings generated by the APCS at the end of each month could not be performed. · The Department could not provide the auditors with monthly detailed property transaction reports for the examination period because the Department’s property records are commingled with those of the DOC and Department personnel could not extract Department-only data from APCS related to transactions. · The Department did not adequately document the date 3 of the 8 required quarterly Form C-15s were prepared and submitted to the Office of the Comptroller. Four of the 8 quarterly C-15s were filed late, ranging from 90 to 286 days late. The Form C-15 reports filed for fiscal year 2008 were revised and submitted subsequent to year end. Failure to maintain adequate fixed asset records results in noncompliance with State statutes and Comptroller requirements and increases the risk of equipment theft or loss occurring without detection, and has resulted in inaccurate property/fixed asset reporting. Department management stated limitations with the current system created difficulties in the recordkeeping. (Finding 3, pages 18 - 20) We recommended the Department strengthen its procedures over property and equipment to ensure accurate recordkeeping and accountability for all State assets. Department
officials indicated the recommendation is partially implemented and responded
procedures are in place to ensure timely and accurate reporting to the best
of the ability of the agency. Inadequate administration of the locally held
residents benefit fund During the examination period, the Department’s locally held funds were managed independently at each Illinois Youth Center (IYC) with the exception of the resident’s portion of the Juvenile Justice Benefit Fund. The DOC General Office has assumed responsibility for the administration of the bank account of the resident’s portion of the Benefit Fund. The auditors noted the following weaknesses during the testing of the resident’s portion of the Juvenile Justice Benefit Fund for the two years ended June 30, 2008: · The sub-account from which disbursements are made includes transactions from all of the facilities (juvenile, adult, and ATC). The level of detail provided online makes it difficult to determine to whom the transaction belonged. As a result, very few IYCs perform a reconciliation of their activity to that which is recorded in the bank account. · During testing at the IYCs it was found that 2 of 8 (25%) could not access the online banking website. · Testing could not be performed on receipts in the Department’s resident’s portion of the Benefit Fund. Receipts could not be traced to source documentation, as the source documents are not maintained by DOC’s General Office. In addition, receipts could not be traced into the bank statements because the Department did not provide the requested bank statements. Failure to adequately administer its locally held fund
could lead to fraud, theft, or the use of unavailable monies in the fund
causing overdraft charges. Inadequate
administration also represents noncompliance with State statutes. Department management stated the exceptions
were directly related to the timing of the creation of the Department. (Finding 4, pages 21 - 22) We recommended the Department work with the IYC personnel to ensure current and relevant financial information is available to them via the online banking site and within the accounting system. We also recommended sufficient source documentation should be maintained to support the receipts deposited. Department
officials indicated the recommendation has been implemented and responded the
funds of the two Departments were split in fiscal year 2009. Failure to Expend PERSONAL SERVICE
APPROPRIATIONS IN COMPLIANCE WITH LEGISLATIVE INTENT The Department failed to satisfy the legislative intent of its appropriation authority during fiscal years 2007 and 2008 by not expending funds that the legislature appropriated to hire new front line staff. Public Act 94-798 authorized the Department to expend $1,250,000 from the General Revenue Fund for expenses related to hiring front line staff in fiscal year 2007. The Department spent $153,235 from that appropriation. In addition, Public Act 95-0348 authorized the Department to expend $1,606,900 from the General Revenue Fund for hiring 50 additional front line staff in fiscal year 2008. The Department spent $0 from that appropriation. Based on the information provided by the Youth Centers, no new front line staff were added during fiscal year 2007 or 2008. The lack of utilizing the amounts appropriated by the legislature in fiscal year 2007 and 2008 for new front line staff added to the short staffing at the Youth Centers. Based on the information gathered during testing, the Youth Centers reported 117 front line staff left employment with the Department during fiscal years 2007 and 2008. Required and volunteer overtime is being used to cover staffing shortages. Not using the authorized appropriation authority violates the
intent of the General Assembly for the hiring of additional frontline staff
to alleviate the staffing concerns and the significant use of overtime at the
Department’s Youth Centers. Department
management stated new educational requirements for front line staff required
a new job classification to be established, which took two years to
complete. In addition, Department
management indicated reserves on spending during fiscal year 2008 also
prevented them from hiring front line staff.
(Finding 5, pages 23 - 24) We recommended the Department take steps necessary to meet the intent of the General Assembly when utilizing its appropriation authority. Department officials indicated they were
constrained from hiring new front line staff by conditions outside of their
control.
NONCOMPLIANCE WITH STATUTORY
REQUIREMENTS IN PROVIDING COMMISSARY/
The Department’s The following exceptions were noted with the commissary / concession services contract and operations: · The contract entered into with the vendor was not prepared in a standard contract format and did not provide complete information. The contract was prepared by piecing together a request for proposal from the vendor to which the contract was awarded. In addition, the witness area, description of contractual purpose, date an invitation for bid was issued and description of contractual needs being addressed on the signature page were not completed.
·
The contract was not approved by the
Department Director, which at the time would have been the Director of the
Department of Corrections. The
Assistant Warden of Operations signed the contract both on behalf of the · Neither the solicitation for the commissary / concession service nor the subsequent notice of contract award was publicized in the Illinois Procurement Bulletin. Documentation was provided that proposals were received from three companies, but it was unclear sufficient publication and distribution of the request for proposal had been made. In addition, the contract file did not contain information indicating the basis on which the award was made or that the contract was awarded to the company with the most advantageous proposal to the State.
·
It was also noted at June 30, 2008, the vendor
price lists being used at three Youth Centers (Warrenville,
·
The prices charged the residents include a
mark-up on the item to provide a 25% profit to be retained in the Utilizing a vendor without a formal contract is
non-compliance with the Illinois Procurement Code. In addition, neither party has any document
to bind them to specific terms regarding the services to be provided or
compensation to be paid. Department
management stated the exceptions noted were due to an oversight. (Finding 7, pages 27 - 29)
We recommended the Department comply with the statutory and Illinois Administrative Code requirements for selecting, awarding and contracting for commissary / concession service to the Youth Centers. In addition, we recommend the Department review the process for pricing goods sold to residents to ensure equitable pricing between Youth Centers that are in close proximity as well as determining a reasonable amount to collect as commission on the commissary / concession sales. Department officials accepted our
recommendation and indicated they will work to properly bid and award a
contract for the services. Inadequate administration of the benefit funds at
the youth centers Auditors noted numerous exceptions regarding the administration and operation of the benefit funds at the Department’s Youth Centers. As a result of testing performed at the Youth Centers the following exceptions were identified:
·
Five Youth Centers were identified ( · Two Youth Centers were identified (Murphysboro and Kewanee) where the inmate benefit fund committee did not keep required minutes of the actions taken when they met during the examination period.
·
Testing of the inmate and employee benefit
fund expenditures identified 4 Youth Centers (Pere Marquette, The lack of following the prescribed formal administrative directive results in a breakdown of the authorization process and documentation of decisions and could lead to inappropriate expenditures not being prevented. Department management stated the exceptions were due to staffing limitations and errors at the Centers. (Finding 8, pages 30 - 31) We recommended the Department remind Department officials accepted
our recommendation and indicated they will make every effort to ensure
compliance. PAYROLL TIMEKEEPING SYSTEM
NOT AUTOMATED
The Department-wide payroll timekeeping system is not fully
automated. During the current
engagement period the Department’s human resources responsibilities
were consolidated with a number of other State agencies as part of the Public
Safety Shared Services Center (PSSSC).
The PSSSC was scheduled to create / implement an automated timekeeping
system, but it was not created. As noted in the previous audits of DOC, in
which the Department’s current operations were included, each youth center as
well as other functions of the current Department continue to maintain a
manual timekeeping system for approximately 1,100 employees. Most employees sign in and out, sign-in
sheets are sent to a timekeeping clerk.
Other information, including notification of absence and call-in
reports, are also forwarded to the timekeepers. No automation is involved except for the
processing of payroll warrants. Department officials indicated the
automated payroll system project was delayed due to various issues that arose
during the creation of the PSSSC. They
stated a project began in August 2008, but ceased in January 2009 due to lack
of funding. Prudent business practices
suggest that controls available through an automated timekeeping system can
provide greater efficiency and reduce the potential for costly errors or
employee abuse. (Finding 11, page 36)
We recommended the
Department implement an automated timekeeping system. Department officials accepted
our recommendation and noted at this time they do not have the resources to
purchase a new timekeeping system. OTHER
FINDINGS The
remaining findings are reportedly being given attention by the Department. We will review the Department’s progress
toward the implementation of our recommendations in our next engagement. AUDITORS’ OPINIONS The Independent
Accountants Report on State Compliance on Internal Control Over Compliance
and on Supplementary Information for State Compliance Purposes noted the
Department did not comply in all material respects with the requirements
regarding:
·
Applicable laws and regulations, including the State
uniform accounting system, in its financial and fiscal operations, and;
·
Requirements regarding money or negotiable securities
or similar assets handled by the Department on behalf of the State or held in
trust by the Department regarding properly and legally administering,
accounting and accurate recordkeeping thereto in accordance with law. _____________________________________ WILLIAM G. HOLLAND,
Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS Sikich LLP were our special assistant auditors for this engagement. |
