INTRODUCTION
This report presents our financial statement
audit of the whole Department for the year ended June 30, 2006 and compliance
attestation examination of the Department’s General Office operations for the
two years ended June 30, 2006.
During the two years ended June 30, 2006 the Department
administered 35 correctional centers, which were comprised of 27 adult
centers and 8 youth centers. In
addition, the Department had 8 adult transition centers.
Effective June 1,
2006, Public Act 94-0696 established the Department of Juvenile Justice. This Act transferred certain rights,
powers, duties, and functions that were exercised by the Juvenile Division of
the Department of Corrections.
Effective July 1, 2006 the Department of Correction’s school district
was transferred to the Department of Juvenile Justice. For the ease of reporting and accounting,
information related to the Department of Juvenile Justice is included within
this report.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
Inadequate Procedures Regarding State
Vehicles
In performing
our testing of the Department, we identified several weaknesses regarding the
reporting of vehicle accidents, vehicle maintenance records, reporting the
value of the “personal use” of State vehicles and annual certifications of
license and vehicle liability coverage.
We identified the following:
·
During our
review of 25 reported accidents involving State owned vehicles, we found 14
instances in which accidents had not been reported to the Department of
Central Management Services (CMS) on a timely basis.
·
During fiscal
year 2006, we examined maintenance records for 25 vehicles and were unable to
determine that proper maintenance records were maintained for 21 of the
vehicles. Supporting documents that
contained the mileage associated with each oil change could not be
provided.
·
During our
testing of employees who were allowed the “personal use” of a State vehicle,
we identified the required form for 14 out of 18 employees tested was not on
file with the Department for the correct calendar year.
·
During our
testing, we found that 4 of 50 employees filed their required annual
certifications of license and vehicle liability after the July 31st
deadline. In addition, the Department
could not provide copies or support that 3 of 50 employees had filed the
required annual certification of license and vehicle liability coverage.
Department personnel stated all employees who travel are
required to follow the Department’s Administrative Directive regarding
vehicle accidents. Employees are
encouraged to submit vehicle accident reports in a timely manner. The maintenance of personally assigned
State vehicles is the responsibility of the employee to whom the vehicle is
assigned. Department personnel also
stated the oil changes are being performed; however the paperwork is not
reaching the responsible input operator.
Further, issues relating to reporting the “personal use” of State
vehicles and late or missing certifications was due to human error and oversight. (Finding
1, pages 14-17) This finding was first reported in 2000.
We recommended the Department: (1) Send
a formal notice to those employees whose jobs involve travel to remind them
of the requirement and importance of filing accident reports in a timely
manner. (2) Enforce vehicle
maintenance schedules to reduce future year expenditures for repairs and to
extend the useful lives of vehicles. (3) Establish controls to ensure
compliance with the Treasury Rule regarding the “personal use” of a State
vehicle. (4) Review procedures over timely filing of
the required annual certification of license and liability coverage.
Department officials
accepted our recommendation and responded management continues to work to
achieve the highest level of internal controls regarding assets and
vehicles. The Department’s response
went on to highlight some of the specific tasks management will perform to
address our recommendation. (For the
previous Department response, see Digest footnote #1.)
NEED TO IMPROVE RECORDS
AT Adult Transition Centers
Testing at the eight Adult Transition
Centers (Centers) for the two years ended June 30, 2006, produced exceptions
in the following areas:
·
Year end cash
balances were misstated at six Centers.
·
Deficiencies
were identified in the processing of Residents’ Trust Fund disbursements at
two Centers.
·
Weaknesses
were noted in one Center’s internal controls related to the Residents’ Trust
Fund.
·
Documents
related to resident loan files were not accurate and properly supported at
two Centers.
·
Inadequate
controls of property and equipment records were identified at three Centers.
·
Six resident
financial files at one Center were missing required documents.
We reported similar weaknesses at the Centers in the
previous seven audits. Department
personnel stated that the on-going issues are the result of human
errors. (Finding 2, pages 18-21) This
finding was first reported in 1994.
We made a number of specific recommendations to the Department to
improve accounting procedures and controls at the Centers.
Department
officials accepted our recommendation and responded they have made
significant improvements in the maintenance of the records at transitional
centers during the past years and that increased utilization of automated
accounting systems will address several of the exceptions.
(For the previous Department response, see Digest footnote #2.)
Inadequate Documentation
of Employee Training and No Designated Training Coordinators
During our review of Department training
records, the Department was unable to document that 30 of the 30 employees
tested had met the minimum training hour requirement. Fifteen employees were from the General
Office, five were from the School District and ten were from Field
Services.
In addition, there were no designated
Training Coordinators for the General Office, School District or Field
Services. We reported the same issue
of not being able to document the minimum training hour requirements to the
Department in the previous three audits.
According to the
Department’s Administrative Directive, Clerical and Support staff (primarily
those who have little or no inmate contact) are required to complete a
minimum of 16 hours of training each year after their first year on the
job. All other employees are required
to complete a minimum of 40 hours each year.
To ensure all employees receive training, the Directive further
instructs that Training Coordinators shall be designated. Since the
Department failed to maintain the required documentation, we were unable to
determine if employees met the minimum training requirements.
Department
personnel indicated the lack of training documentation was a result of
untimely review and monitoring. The reason given by Department management
for the exceptions is the same as was provided in the audits for the two
years ending June 30, 2004, 2002 and 2000. (Finding
3, pages 22-23) This finding has been repeated since 2000.
We recommended the
Department allocate sufficient resources to comply with their Administrative
Directive to document and ensure employees receive the required training to
enable them to perform their specific job duties.
Department officials indicated they have implemented our
recommendation and have named a training coordinator who will be responsible
to ensure the proper tracking of training received and work with supervisors
to ensure training records are maintained. (For the previous Department
response, see Digest footnote #3.)
PAYROLL TIMEKEEPING SYSTEM
NOT AUTOMATED
The Department-wide payroll timekeeping system is not fully
automated. During the current
engagement period the Department implemented additional functions of the
payroll system they use to further automate the processing. This updated processing did not include
all of the Department employees.
We noted each correctional center still
maintained a manual timekeeping system for several hundred employees. Correctional center 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, are also forwarded to the timekeepers. No automation is involved except for the
processing of payroll warrants.
Department officials indicated there were
insufficient funds available to develop a Department-wide system to replace
the outdated manual system used for over 13,500 employees. The Department, as a part of the Shared
Services initiative, is participating in the design sessions for an integrated
financial system, which will include timekeeping and payroll applications.
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 4, page
24) This finding has been repeated
since 1998.
We recommended the
Department implement an automated timekeeping system.
Department officials accepted
our recommendation and noted as part of the Shared Services Program the
Department is scheduled to be one of the pilot agencies for the
implementation of an automated timekeeping solution. (For
the previous Department response, see Digest footnote #4.)
MARKUPS
ON Inmate Commissary Goods SOLD EXCEED LIMITS ALLOWED BY LAW
In testing the inmate commissary operations
it was identified the Department was adding a charge to the purchase price of
the goods to be resold in the commissaries prior to adding the statutorily
allowed percentage mark-up to arrive at the sales price to charge
inmates. The Department phased in the application of the charge, effective
November 1, 2005 the charge was set at 3%, and was raised January 1, 2006 to
7%. During fiscal year 2006
the Department collected $1,266,911, from the charge.
The Unified Code
of Corrections sets forth “the selling prices for all goods shall be
sufficient to cover the costs of the goods and an additional charge of up to
35% for tobacco products and up to 25% for non-tobacco products.” Based on the above statute the maximum
amount to charge inmates for items sold in the inmate commissary would be the
purchase price of the item plus any transportation costs the total of which
would then be marked up to a maximum of 25%-35%.
Department
management stated the charge was to help cover the costs of State employees
who work in the inmate commissary, inmate labor for the commissary and
utilities to operate the commissary.
Department management also noted that based on their interpretation of
the statute and Statewide Accounting Management System (SAMS) procedures they
were allowed to apply the charge. (Finding 14, pages 37-38)
We recommended the
Department comply with the statute and only mark-up the goods for resale in
the inmate commissary the allowable amounts.
We also recommended the Department seek a formal written opinion from
the Attorney General regarding whether the charge is statutorily allowed.
Department officials accepted our
recommendation and noted historically the Department has reflected a cost based
upon the items only. The Department went on to indicate they intend to work
with other authoritative State agencies regarding a more refined
interpretation of cost of goods.
Department Transferred Money From Appropriations and
DID not Pay Revolving Fund Billings
In
our testing we found that at June 30, 2006 the Department still owed the
Department of Central Management Services (CMS) revolving funds
$5,617,433. The Department
transferred funds from the appropriations of four classifications that should
have been used to pay billings from the CMS revolving funds. The net amount of transfers for fiscal
year 2006 for the four appropriations was $4,045,700. A total of $510,000 in transfers occurred
prior to June 30, 2006, the balance of the transfers occurred during July and
August of 2006, which was the fiscal year 2006 lapse period.
Department
management indicated they needed to transfer the funds from the
appropriations used to pay CMS revolving fund billings to meet other
obligations of the Department at the end of fiscal year 2006. Per the CMS Administrative Rules, “User
agencies shall not leave Internal Service Fund bills unpaid in order to
circumvent fiscal year budgetary controls”.
The Department transferred funds out of specific appropriations when
all of those funds would be needed to pay outstanding liabilities, thereby
obtaining an interest free loan from the CMS revolving funds until the next
fiscal year.
The
use of transfers in this manner distorts the actual budgetary process by misleading
what was actually used for the fiscal year related to those
appropriations. (Finding 17, pages 43-44)
We recommended
the Department follow the CMS Administrative Rules and only transfer funds
out of appropriations used to pay revolving fund billings when it is
determined there may be excess funds and not to pay other obligations when
those funds would be needed to pay current billings.
Department officials accepted our
recommendation and noted they used the statutorily allowed ability to make 2%
appropriation transfers as stated within the State Finance Act. In addition, the Department also indicated
they used the flexibility provided through utilizing CMS revolving fund
catch-up billings to free up funds for other mandated obligations.
NONCOMPLIANCE WITH THE
ILLINOIS PROCUREMENT CODE
The Department is not complying
with the requirements of the Illinois Procurement Code (Code) with regard to
purchases of items for resale in the Department’s commissaries at
Correctional Centers.
The commissaries commodity
purchases are made through non-appropriated locally held funds. As a result of testing performed during
our compliance examination we noted the following items:
-
Purchases
were not made by competitive sealed bidding or competitive sealed
proposals as required by the Code.
The Correctional Centers receive catalogs from various vendors
and select products from the catalogs for resale in the commissary.
-
Terms and
conditions for the purchases of goods from vendors for the commissaries
were not documented in the form of a contract as required by the
Code. Upon selection of a vendor
an Order For Delivery (OFD) is prepared to document the purchase.
-
None of the
required procurement notices were published in the Illinois Procurement
Bulletin as required by the Code.
-
The
Department’s Administrative Directive, which provides guidance to
employees on commissary purchase does not include all the requirements
as set forth in the Code.
Department management indicated they have
requested guidance and direction from CMS on the commissary purchasing. Due to security needs and specialized
products, CMS and the Department are working together to determine the proper
way to complete the purchases.
By not following the
requirements of the Code the Department has limited the pool of available
vendors to only a few selected vendors.
In addition, the Department may be paying more for commodities for
their commissaries than they should.
(Finding 21, pages 50-51)
We recommended the Department comply with the
requirements of the Illinois Procurement Code in making commissary purchases.
Department officials accepted our
recommendation and noted they will continue to work with CMS to define
competitive purchasing processes for the commissary operations that are
consistent with the State’s procurement policy while meeting the security and
safety needs of the Department.
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.
IYC - RUSHVILLE AND THOMSON CENTERS
During the
engagement period the Department had not moved any inmates into the IYC -
Rushville or Thomson centers. Funds were not specifically appropriated for
fiscal year 2005 or 2006 to fund the operation of either Center.
Since the
completion of the centers, the Department has incurred expenditures related
to personnel, contractual agreements and telecommunications to ensure the
buildings were being properly maintained and secured. The Department expended approximately $1.3
million and $2.2 million respectively, for fiscal years 2005 and 2006 on both
Centers. Part of the fiscal year 2006 expenditures are related to opening the
Minimum Security Unit at the Thomson Center. The Thomson Correctional
Center’s Minimum Security Unit began receiving inmates in August of 2006.
Effective
July 1, 2006 the Department of Human Services began utilizing IYC – Rushville
for their Treatment and Detention Facility.
AUDITORS’ OPINION
Our
auditors stated the Department’s financial statements as of and for the year
ended June 30, 2006 were fairly presented in all material respects.
_____________________________________
WILLIAM G. HOLLAND,
Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
Crowe
Chizek and Company LLC. were our special assistant auditors for this
engagement.
DIGEST FOOTNOTES
#1 Inadequate
Procedures Regarding State Vehicles–
Previous Department Response
2004: Recommendation accepted: The Department
will make every effort to enforce procedures and requirements for the
maintenance of State vehicles. The Department will remind staff of the
importance of accurate and timely submission of information regarding the use
of State vehicles and any accidents. Communication will be distributed to all
staff utilizing State vehicles to remind them of the polices and procedures
regarding the operation and maintenance of the automobiles.
#2 Adult Transition Centers Records
Not Properly Maintained - Previous
Department Response
(The Department response listed eight specific
items to address the detailed recommendation in the finding, the specific
responses are not included here, only a summary of the Department’s
response.)
2004: Recommendation Partially
Implemented. Several processing
changes have been made at the ATCs including automation of the maintenance
payment calculation; the consolidation of all inmate benefit funds; central
reconciliation of locally held fund reports; monthly dormant account and
check processing and other accounting procedures.
#3 Inadequate Documentation of Employee Training and No
Designated Training Coordinators –Previous
Department Response
2004: Recommendation accepted: The
Department will make every effort to ensure employee training is
documented. Training coordinators
will be named for the General Office, School District and Field Services
areas. Employees receive numerous
hours of training, most specifically on the job training. Due to limited staff, cross training is a
major requirement. The hours of on
the job training will be documented in order to address the appearance of a
lack of training. Additionally, a
local area training coordinator will be assigned by functional area for the
General Office, Field Services and School District. The Department Training Academy will hold training to ensure
the local area coordinators have an adequate base of knowledge to help the
employees in their area to meet their mandatory training hours.
#4 PAYROLL
TIMEKEEPING SYSTEM NOT AUTOMATED –Previous Department Response
2004: Recommendation accepted: the
Department is currently pursuing several options for the automation of the
timekeeping system. One avenue under
investigation is the modification and utilization of the Department of Human
Service’s system. All system options
are being carefully weighed to ensure the advantages are greater than the
limited resources expended.
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