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The Department did not maintain an audit trail for $1.4 billion of property and
equipment
The Property Control System (PCS) was unable to provide an audit trail of
accumulated depreciation
Documentation to support accumulated depreciation beginning balances could not be
provided
$23 thousand of law books were not tagged as Department property or recorded in the PCS
Department indicated exceptions were the result of inadequacies in the PCS
During FY 2002 an average of $3.34 per inmate was reimbursed to the Department for
the cost of incarceration
During FY 2002 Adult Transition Center inmates reimbursed the Department $1,967,649
During FY 2002 inmates remitted $243,953 in medical treatment co-payments to the
Department
During FY 2002 $95,307 was collected from the saving accounts of four inmates
The Department has no procedures to identify assets or income maintained by an
inmate outside of their Department trust funds.
The Department noted their new intake and receiving facility will improve asset
identification
The Unified Code of Corrections was amended to grant the Department authority to gather
asset information
The Department has not determined a fair market value of the housing benefits
provided to 310 Department employees
The Department may be in violation of Internal Revenue Regulations
The Department indicated housing is provided to fulfill operational needs
Records were not properly maintained at adult transition centers
The Department indicated exceptions were the result of performance deficiencies and
lack of training
The Department needs to develop an automated payroll timekeeping system
The Department was unable to provide documentation that an individual working at
Agriculture and paid by the Department of Corrections devoted any time to Correction
issues
An Intergovernmental Agreement was entered into which allowed the individual to remain
on the Department’s payroll while working at Agriculture
The Department did not notify the State’s Attorney, Sheriff and other required
parties when a juvenile was released from the Department
The Department did not notify the required parties when juveniles escaped from the
Department
The Department indicated the required notifications were not performed as a result of a
misinterpretation of legal terminology
Updated addresses for seven discharged sex offenders were not entered into the Offender
Tracking System (OTS) and copies of required sex offender registration forms not sent to
State Police
The Department does not update OTS for an inmate's indicated address upon discharge
since the Department does not verify the given address is correct
The Department is required to obtain and forward the address and copies of the required
form of discharged sex offenders to the State Police
The Department indicated they were following procedures set forth by the State Police
One weapon was unassigned on PCS and not in the vaults
Sixteen weapons were unassigned on PCS and not in the vaults
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INTRODUCTION
This report presents our financial audit for the whole Department and
compliance audit of the Department’s General Office operations. During the audit
period the Department administered 37 correctional centers, which were comprised of 28
adult centers and 9 juvenile centers. In addition, the Department had 12 adult transition
centers.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT RECORDS
Effective July 1, 2001, the State adopted Governmental Accounting Standards Board
(GASB) Statements 34, 37 and 38. As part of the adoption of these new accounting
standards, governmental entities are now required to capitalize and depreciate property
and equipment. In auditing the Department’s accounting records and reports provided
to the Office of the Comptroller we noted the following exceptions:
- The Department did not maintain an audit trail for property and equipment, totaling
approximately $1.4 billion, or accumulated depreciation, totaling approximately $779
million, that was reported to the Office of the Comptroller. The Department subsequently
was able to recreate financial data to support the amounts reported to the Office of the
Comptroller and determined it had understated property and equipment by approximately $28
million and overstated accumulated depreciation by approximately $337 million.
- During our review of reports and discussions with Department personnel, the Property
Control System (PCS) was unable to provide an audit trail of accumulated depreciation
reclassifications and other corrections. As a result we were unable to test the additions
to accumulated depreciation for July 1, 2001, which was reported to the Office of the
Comptroller.
- The Department was unable to provide detailed documentation to support the beginning
balances for accumulated depreciation for reporting in accordance with GASB Statement 34
due to deficiencies noted in the Property Control System.
- The Department did not tag or record in the PCS $23 thousand of law books it had
purchased. In addition, 15 items noted as being unlocated since 1999 were still included
on the PCS.
Failure to maintain accurate property and equipment records leads to inaccurate
financial reporting and resulted in a qualification of the opinion of the
Department’s financial statements for the year ended June 30, 2002.
Department personnel stated the lack of documentation to support the amounts in the
financial statements and reported to the Office of the Comptroller were due to
inadequacies in the Property Control System. (Finding 1, pages 11-13)
We recommended the Department investigate modifications to its Property Control System
or a different system to maintain information consistent with Government Accounting
Standards. We also recommended the Department comply with the State Property Control Act
to ensure property records are complete and accurate.
Department officials accepted the recommendation and indicated the Property Control
System is over 25 years old and was not designed to calculate depreciation and keep
depreciation history. A request to purchase a fully compliant property module in
conjunction with an accounting system is currently on hold at the Department of Central
Management Services. It was also noted that only 5 of the Department’s law library
collections have not been valued and added to the property control inventory at the time
of this response and the 15 missing items on the property listing were removed as of
January 2003.
COSTS OF INCARCERATION NOT BEING COLLECTED FROM INMATES
During fiscal year 2002, the direct cost of incarcerating inmates at Juvenile and
Adult facilities totaled almost $1.03 billion. Reimbursements from inmates incarcerated at
these institutions, excluding fees collected from Adult Transition Centers (ATC),
Electronic Detention (ED) and inmate medical co-payments, totaled only $148,501; an
average of $3.34 per inmate per year and .01% of the direct cost of incarceration.
The Department collected reimbursements for the cost of incarceration from five sources
during the audit period, four of the sources were "inside" the Department:
- Inmates working for Correctional Industries at adult institutions reimburse the
Department 3% of their monthly wages in excess of $25 per month. During fiscal year 2002
the Department received $53,194 from inmates working for Correctional Industries.
- Inmates at ATC’s are required to remit 20% of their earnings from private employers
as "maintenance fees." These fees totaled $1,967,649 in fiscal year 2002.
- Inmates on ED are required to remit 20% of their earnings from private employers as
"maintenance fees." These fees totaled $37,694 in fiscal year 2002.
- Inmates are required to contribute $2 per visit as co-payments for medical treatment.
These fees totaled $243,953 in fiscal year 2002.
- During fiscal year 2002, the Department collected a total of $95,307 from four inmates
that was in their savings accounts.
The Unified Code of Corrections states: "Convicted persons committed to Department
correctional institutions or facilities shall be responsible to reimburse the Department
for the expenses incurred by their incarceration at a rate to be determined by the
Department."
The Department has procedures to recover costs from inmate assets on deposit in
Department held trust funds in excess of $2,000; however, inmates are aware of Department
procedures and rarely keep more than $2,000 in their trust funds. Presently, the
Department has no formal procedures to identify assets or income maintained by an inmate
outside of their Department trust fund. We noted the following:
- There are no procedures at the time of inmate intake to identify assets, no survey or
analysis of assets is performed, no financial analysis is conducted, no credit check is
obtained, and there is no identification of potential responsible parties performed.
- There are no formal procedures for billing inmates or responsible parties.
- The Department does not always look beyond the inmate’s trust fund for money that
can be used as reimbursement.
Department officials stated the new intake and receiving center that is being
constructed at Stateville will have "newer technology" that should be able to
let them "find out more" about an inmate's accounts. Department officials
indicated the new intake and receiving center is expected to be operational in fiscal year
2004.
The Unified Code of Corrections was amended during the audit period to allow the
Department to obtain information from all persons committed to the Department regarding
assets of those persons. The amendment became effective on January 1, 2003. This
finding has been repeated since 1999. (Finding 2, pages 14-15)
We recommended the Department pursue efforts to recover as much money as possible for
the cost of incarceration in compliance with the State statute.
Department officials accepted the recommendation and indicated they are working closely
with the Attorney General’s Office to establish new procedures for revenue collection
techniques to increase recovery. In addition, a new Administrative Directive was published
in relation to the statute change. The Department indicated they have been aggressively
collecting costs of incarceration from offenders in fiscal year 2003. (For previous
Department responses, see Digest footnote #1.)
STATE HOUSING BENEFITS NOT PROPRELY REPORTED AS INCOME
The Department has approximately 281 employees living in State-owned dormitory
rooms and 29 employees living in houses located on Department property. The Department
charges up to $120 per month for employee houses and $27 per month for guard dormitory
rooms and pays all utility costs. The Department could not provide a fair market value for
this housing.
Although the practice of renting housing to employees below market value appears
proper, the Department failed to report the value of the housing that was not paid for by
the employee as income to those employees, as required by Internal Revenue Service
regulations. As a result the Department may be in violation of Internal Revenue
Regulations.
It was also noted the Department had not developed a policy on housing for State
employees as required by the State Employee Housing Act.
Department officials stated housing is provided to many of its guards and wardens to
fulfill operational needs of the Department, and they do not feel they should have to
report the value as income. This finding has been repeated since 1999. (Finding 3,
pages 16-17)
We recommended the Department determine the fair market value of the housing benefits
provided and report the excess value of State housing benefits to employees as required by
Internal Revenue Service regulations. In addition, we recommended the Department develop
policies and procedures on housing for State employees consistent with the State Employee
Housing Act.
Department officials accepted our recommendation and responded that the Department is
reviewing revisions to the agency’s State housing directive that will be consistent
with Internal Revenue Regulations. (For previous Department responses, see Digest footnote
#2.)
EXCEPTIONS AT ADULT TRANSITION CENTERS
In addition to 37 correctional centers, the Department operates a work release
program for approximately 1,632 inmates who are housed in 12 adult transition centers.
During our audit fieldwork at the transition centers we noted numerous exceptions. Some
of the exceptions noted are as follows:
- Financial information sent to the General Office to compile Department-wide financial
statements did not agree to accounting records maintained at the transition centers.
- Year-end cash balances were misstated.
- Errors were made relating to the calculation of maintenance fees on residents'
paychecks.
- Deposits of receipts were not made in a timely manner into the Residents’ Benefit
Fund, Employees’ Benefit Fund and Residents’ Trust Fund.
- Resident financial folders did not contain all required documents.
Department personnel stated these exceptions result from a combination of
performance deficiencies and lack of training on pertinent Administrative Directives. This
finding has been repeated since 1994. (Finding 5, pages 20-22)
We recommended the Department improve controls over accounting functions and resident
files at adult transition centers.
Department officials accepted our recommendation and stated four of the adult
transition centers with deficiencies have recently been closed. Those centers are Metro,
Winnebago, Urbana and Joliet. For the remaining centers, specific guidance in the above
areas will be given. Fiscal Services has a field employee dealing with the adult
transition center operations on a full-time basis. (For previous Department responses, see
Digest footnote #3.)
OUTDATED MANUAL PAYROLL SYSTEM
The Department-wide payroll timekeeping system is not automated. Each of the
correctional centers employs several hundred employees, and the related timekeeping system
is maintained manually. Facility employees sign in and out, and the sign-in sheets are
sent to the timekeeping clerk. Other information, including notification of absence and
call-in reports, is also forwarded to the timekeepers. No automation is involved except
for the processing of payroll warrants. Officials indicate there are insufficient funds
available to develop a Department-wide system to replace the outdated manual system used
for over 16,000 employees.
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 8, page 25) This finding was first reported in 1998.
We recommended the Department implement an automated timekeeping system.
The Department accepted our recommendation and noted a Request for Proposal (RFP) was
completed during fiscal year 2002 and submitted to the Department of Central Management
Services (DCMS) for a comprehensive accounting system, which includes an automated payroll
and timekeeping system. This RFP is on hold due to the budget crisis. In the meantime, the
Department is in discussion with DCMS to allow the Department to use the Department of
Human Services timekeeping system (For previous Department responses, see Digest footnote
#4.)
INDIVIDUAL ON DEPARTMENT OF CORRECTIONS’ PAYROLL BUT WORKING FOR THE DEPARTMENT
OF AGRICULTURE
During our testing of personal service expenditures, we identified an individual on
the Department of Corrections payroll who was working in a management position for the
Department of Agriculture. The Department of Corrections was unable to provide any
documentation demonstrating that the individual devoted any time to Correction’s
issues during the time period of the audit. The individual’s working time appears to
be largely, if not wholly, devoted to management duties at the Department of Agriculture.
Effective May 1, 2001, the Departments of Corrections and Agriculture and the Office of
the Governor entered into an Intergovernmental Agreement under which the Department of
Agriculture agreed that Corrections would "be able to utilize the services and unique
expertise" of its former employee. In exchange, the Intergovernmental Agreement
provided for the former Corrections employee to remain on Corrections payroll and for
Agriculture to reimburse Corrections for the individual’s salary and benefits. From
March 2001 through June 2002, the individual was paid $136,562 by the Department of
Corrections. During the audit period, we noted that Agriculture had reimbursed Corrections
$102,954 for salary and $27,055 for employer-paid benefits.
Payment of an individual’s salary and benefits from appropriations to an agency
for which the individual’s work cannot be documented distorts the appropriation
process and appears to be a violation of the State Finance Act. The State Finance Act
requires every State payroll voucher to be certified by the Chief Executive Officer of the
department or his or her designee. The certification notes for employees that,
"substantially all of their working time is directly related to the objectives,
functions, goals, and policies of the organizational unit for which the appropriation is
made…" (Finding 11, page 28)
We recommended the Department of Corrections develop procedures to track the working
time of individuals subject to a Intergovernmental Agreement and only pay costs associated
with time spent in the service of the Department.
The Department accepted our recommendation and noted the individual in question was
transferred to the Department of Agriculture in December 2002. If Intergovernmental
Agreements are used in the future, the Department indicated it will develop a method to
track the individual’s working time.
FAILURE TO PROVIDE NOTIFICATION OF RELEASE OR ESCAPE FROM THE DEPARTMENT’S
JUVENILE DIVISION
The Department did not provide written notification of the release or escape of
persons from the Department’s Juvenile Division as required by the Unified Code of
Corrections.
During our testing of individuals released from the Juvenile Division we noted:
- The Department did not notify the State’s Attorney of the county from which the
offender was convicted for 4 out of 20 individuals tested.
- The Department did not notify the Sheriff of the county from which the offender was
convicted for 5 out of 20 individuals tested.
- The Department did not notify the State’s Attorney of the county into which the
individual was to be paroled or released for 8 out of 20 individuals tested.
- The Department did not notify the Sheriff of the county into which the individual was to
be paroled or released for 8 out of 20 individuals tested.
- The Department did not notify the municipal law enforcement agency where the
individual’s arrest occurred, individual had resided or commission of offense took
place for 10 out of 20 individuals tested.
- The Department did not notify the public housing agency where the individual has
resided, or will reside upon release for 10 out of 20 individuals tested.
During our testing of the files of escaped juveniles, we noted:
- In the two juvenile escapes noted during the audit period, the Department did not notify
the persons or agencies required.
- The Department’s Administrative Directives did not include procedures for
notification to the persons and agencies required by statute.
The Unified Code of Corrections requires the Department to establish procedures to
provide written notification of the release and/or escape of any person from the Juvenile
Division to certain individuals. Department personnel indicated the notifications were not
sent due to a misinterpretation of legal terminology that changed with the Juvenile
Justice Reform Provisions of 1998. (Finding 12, pages 29-30)
We recommended the Department follow the mandated reporting requirements and provide
written notification of the release and/or escape of any person from the Juvenile Division
to persons and agencies specified by the Unified Code of Corrections.
The Department accepted our recommendation and noted the Juvenile Division has revised
the "Notice of Release/Discharge from Juvenile Facilities" form to include
juvenile delinquent paroles, juvenile felon mandatory releases, escapes and runaways. The
required notification list, pursuant to 730 ILCS 5/3-14-1, has been added at the bottom of
the form. The Department’s Juvenile Division shall ensure compliance with the
required notifications as mandated in the Statute.
ADDRESS OF SEX OFFENDERS NOT UPDATED AND REQUIRED FORMS NOT SENT TO THE STATE POLICE
During our testing we noted the Department did not update the addresses in the
Offender Tracking System (OTS) for 7 of 20 sex offender registration act notification
forms (form) completed upon a sex offender’s discharge from the Department. In
addition, the Department did not send two copies of the form as required to the State
Police for any of the 20 forms tested.
When a sex offender is released from the Department to mandatory supervised release or
parole, the address the person gives on the form is verified by the Field Services
Division. Upon verification of the address it is entered into the OTS. Department
officials indicated in order to maintain the integrity of the data in OTS, the Department
only enters the address after it has been verified. Sex offender information is then
transmitted electronically from the OTS to the State Police.
In the 7 exceptions noted above, the individuals violated their mandatory supervised
release or parole and were recommitted to a correctional center to finish serving the rest
of their sentence. Upon completion of their sentence the individuals were discharged from
the Department. Upon discharge the Department did not update the OTS with the address
where the person was going to be living, because Department employees could not verify the
address where the person was going to be living, since they have no responsibility over
the inmate after discharge of their sentence. Therefore the address in OTS was where the
person had indicated they were going to be living when they had originally been released
on parole or on supervised release.
The Sex Offender Registration Act states the Department facility shall obtain the
address where the person expects to reside upon his or her discharge, parole or release
and shall report the address to the State Police. In addition, the Act notes the
Department facility is to have the person sign a sex offender registration act
notification form that the duty to register as a sex offender has been explained to them
and that they understand. One copy of the form is to be given to the person and two copies
of the form are to be forwarded to the State Police.
Department officials indicated they were instructed by the State Police to retain the
original sex offender registration act notification form and share with the State Police
within 24 hours, electronic data files, including photographs of all sex offenders being
released from the Department. (Finding 14, pages 32-33)
We recommend the Department provide the State Police with the address a sex offender
gives at their time of discharge from the Department. In addition we also recommended the
Department forward all required copies of the sex offender registration act notification
form to the State Police as required by the Sex Offender Registration Act, or seek
legislative relief from this responsibility if the required information is being provided
electronically.
The Department accepted our recommendation and acknowledged the issues raised. The
Department indicated they are in full compliance with the procedures established by the
State Police to implement the requirements of the Statute. However, as pointed out in the
Audit, the language needs to reflect the efficiencies of electronic transmittal of data
and documentation. The Department will work with the State Police to address this issue.
MISSING WEAPON AND RECORDS NOT PROPERLY MAINTAINED
During our testing we noted one weapon was listed on the Department’s Property
Control System (PCS) as unassigned, however this weapon could not be verified as being in
the vaults during the physical review. The Department was unable to provide documentation
that identified the movement, assignment or location of the weapon.
In addition, we noted five weapons in the vaults that were listed on the PCS as being
assigned to personnel, and sixteen weapons that were listed as unassigned on the PCS and
should have been in the vaults, but were not. The Department was able to provide
documentation for the discrepancies noted that reflected the movement of the weapons.
The State Property Control Act requires the Department to be accountable for the
supervision, control and inventory of all property under its jurisdiction. In addition,
the Department’s Administrative Directive’s require a signed receipt any time a
weapon or other equipment is removed from the armory or storage area.
Failure to account for all weapons of the Department increases the risk that an
unauthorized individual could gain access to a firearm and leave the Department and State
exposed to a risk of liability. Department personnel stated that multiple units were
responsible for weapons during the audit period. The Department was aware of the missing
weapon, which has been investigated. (Finding 17, page 38)
We recommended the Department maintain proper records to identify the location of all
weapons. We further recommend the Department adhere to Department Directives requiring a
signed receipt when a weapon or other equipment is removed from the armory or storage
area.
The Department accepted our recommendation and indicated the issues addressed in the
finding were being investigated internally when it was brought to their attention by the
auditors. The Department’s investigation determined the management of the weapons was
too decentralized. New procedures were developed to correct deficiencies found in the
review and specific procedures are now in place to ensure proper control of weapons.
OTHER FINDINGS
The remaining findings are less significant and are reportedly being given
attention by the Department. We will review the Department’s progress toward the
implementation of our recommendations in our next audit.
Ms. Deanna Marvin, Internal Audit Supervisor of the Department of Corrections, provided
the agency’s responses.
NEW FACILITIES OPENED AND FACILITIES CLOSED
In November 2001 the Department opened Lawrence Correctional Center
which is a medium security men’s facility and the Illinois Youth Center - Kewanee.
During the audit period, or shortly after, two Correctional Centers were closed, as was
one Youth Center. Joliet Correctional Center, a maximum security men’s facility was
closed February 2002; Sheridan Correctional Center a medium security men’s facility
was closed in August 2002. In addition, Illinois Youth Center – Valley View was
closed in July 2002. On September 30, 2002 the Department closed the following other
facilities: Joliet Adult Transition Center, Metro Adult Transition Center, Urbana Adult
Transition Center, Winnebago Adult Transition Center, Green County Boot Camp, Hanna City
Work Camp and the Paris Work Camp.
AUDITORS’ OPINION
Our auditors stated the Department’s financial statements as of and for
the year ended June 30, 2002 were fairly presented in all material respects.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
FPT & W Ltd. were our special assistant auditors
DIGEST FOOTNOTES
#1 COSTS OF INCARCERATION NOT
BEING COLLECTED FROM INMATES – Previous Department Responses
2000: Recommendation accepted: Senior staff is reviewing 730 ILCS 5/3-7-6 to
determine the Department’s specific responsibilities in the overall recovery process.
The Department did indicate at last year’s LAC hearing that screening for inmate
assets would likely be incorporated into the intake process when the new reception and
classification center at Stateville became operational (expected opening is March 2002).
The Department continues to notify the Attorney General when it becomes aware of any
inmate having substantial assets, whether or not appearing in the inmate’s trust fund
account.
1999: Recommendation partially accepted: The Department believes it is complying with
the intent of the reimbursement statute by monitoring inmate trust fund balances. In
addition, the Department would notify the Attorney General if it became aware of any
inmate having substantial assets. The Department does not feel that the legislation was
intended to direct the Department to investigate routinely the financial status of
admitted inmates.
#2 STATE HOUSING BENEFITS
NOT PROPRELY REPORTED AS INCOME – Previous Department Responses
2000: Recommendation accepted: The Department is reviewing revisions to the
agency’s State housing directive that will be consistent with Internal Revenue
Regulations.
1999: Recommendation accepted: The Department provides housing to certain employees for
the convenience of the Department. Housing provided on prison property does not have a
fair market value. The directive on the use of State-owned housing is being revised
pursuant to Internal Revenue Regulation 1.119-1(b).
#3 EXCEPTIONS AT ADULT TRANSITION CENTERS – Previous Department Responses
2000: Recommendation accepted: Specific training on the proper preparation of C-17
reports and the GAAP package will be given to ATC personnel. Last year’s plan to
place adult transition centers under the supervision of nearby correctional centers was
subsequently changed. Fiscal Services, however, now has a field employee dealing with ATC
contacts and operations on a full-time basis. This coupled with the filling of vacancies
should result in improved record keeping at these locations.
1999: Recommendation partially accepted: A comparison of this year’s finding at
the community correctional centers with those of prior years will show that substantial
improvements have been made. Currently reported deficiencies are isolated to performance
weaknesses at one or two centers and do not represent a lack of training. Under the
Department’s reorganization, the community correctional centers will be reclassified
as adult transition centers and will be satellites of correctional centers. This
organizational structure will provide more resources for oversight of the business
operations of the centers and will also provide for more effective back-up coverage for
vacancies or extended absences.
1998: Recommendations accepted: The Department has established a central business
office for the Community Services Division (CSD). The CSD business administrator will
implement monitoring and follow-up procedures to ensure better performance and greater
accountability by field accounting personnel. In addition, the Department will ensure that
financial folders are maintained for each resident and that proper documents are
maintained in the residents’ financial folders.
1996: Recommendations accepted: The Department indicated that corrective action had
been addressed relating to many of the exceptions identified in the findings.
1994: Recommendations accepted: The Department indicated that corrective action had
been addressed relating to many of the exceptions identified in the findings.
#4 PAYROLL TIMEKEEPING SYSTEM NOT AUTOMATED –Previous Department Responses
2000: Recommendation accepted: Department-wide automated timekeeping is a required
function of a new accounting and financial reporting system that the Department is trying
to acquire.
1999: Recommendation accepted: Funding for the automation of department-wide
timekeeping has been included in the fiscal year 2001 budget request.
1998: Recommendation accepted: The Department will continue to pursue an automated
timekeeping system as resources become available subsequent to completion of the Year 2000
projects.
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