REPORT DIGEST

VIENNA CORRECTIONAL CENTER

LIMITED SCOPE COMPLIANCE ATTESTATION ENGAGEMENT

For the Two Years Ended:

June 30, 2006

Summary of Findings:

Total this audit                        13

Total last audit                          0

Repeated from last audit           0

Release Date:

June 20, 2007

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

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

This Report Digest and full Report is also available on

the worldwide web at

http://www.auditor.Illinois.gov

SYNOPSIS

•      The Center did not maintain an adequate segregation of duties over locally held funds.

•      The Center did not maintain adequate controls over locally held fund cash disbursements.

•      The General Office Reporting Package was inaccurate.

•      The Employee Commissary Fund cash was not counted by an independent employee.

•      Bank reconciliations for locally held funds were not prepared or approved.

•      Vendor invoices did not agree to the receiving reports for the Employee Commissary Fund. 

•      The Center ceased recording inventory, conducting physical inventory and independent test counts of inventory.

•      The Center did not exercise adequate controls over voucher processing.

{Expenditures and Activity Measures are summarized on the reverse page.}

EXPENDITURE STATISTICS

FY 2006

FY 2005

FY 2004

      Total Expenditures (All Appropriated Funds)........

$27,956,760

$28,687,042

$27,354,008

     Personal Services......................................................

         % of Total Expenditures...................................

         Average No. of Employees...............................

         Average Salary Per Employee..........................

     Student, member, and inmate Compensation ...................

         % of Total Expenditures............................................

$18,881,531

67.53%

358

$52,742

$249,223

0.89%

$18,350,015

63.96%

363

$50,551

$243,676

0.85%

$17,065,183

62.3%

353

$48,343

$257,052

0.90%

     Other Payroll Costs (FICA, Retirement).....................

         % of Total Expenditures...................................

$3,108,229

11.1%

$4,193,617

14.62%

$3,609,104

13.1%

     Contractual Services..................................................

         % of Total Expenditures...................................

$3,232,144

11.6%

$3,120,985

10.88%

$3,117,671

11.3%

     Commodities….........................................................

         % of Total Expenditures........................................

    All Other Items..........................................................

         % of Total Expenditures............................................

$2,206,432

7.88%

$279,201

1%

$2,572,244

8.97%

$206,505

.72%

$3,024,109

11.0%

$280,889

1.4%

      Cost of Property and Equipment.............................

$56,702,915

$56,361,743

$55,948,415

SELECTED ACTIVITY MEASURES (not examined)

FY 2006

FY 2005

FY 2004

      Average Number of Inmates.......................................

1,602

1,564

1,590

      Ratio of Correctional Officers to Inmates.....................

1/6.2

1/5.9

1/5.9

      Cost Per Year Per Inmate..........................................

$17,432

$18,341

$17,181

      Rated Inmate Capacity....................................................

925

925

925

      Approximate Square Feet Per Inmate..............................

37

38

38

CENTER WARDEN

     Warden (04/01/06 to current) Mr. Jody Hathaway

     Warden (07/01/04 to 03/31/06) Mr. Jay Merchant

Inadequate segregation of duties

Majority of the cash disbursements were signed by an unauthorized individual

Employee Commissary Fund reporting was inaccurate

Cash was not independently verified

Locally held fund bank reconciliations were not prepared or approved

Receiving reports did not agree with vendor invoices

Inventory receiving reports were not recorded and physical inventory was not conducted

Vouchers were not timely approved for payment

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO IMPROVE INTERNAL CONTROLS OVER LOCALLY HELD FUNDS

     The Center did not maintain an adequate segregation of duties over locally held funds.

•        The Accountant recorded, wrote and mailed checks, and reconciled transactions for the Resident Commissary Fund, Resident Benefit Fund, Employee Commissary Fund, and the Employee Benefit Fund. 

•        An Account Technician I was permitted to receive cash, write checks, sign checks, and mail checks for all locally held funds.

•        The Office Assistant was permitted to write and mail checks for all locally held funds.  (Finding 1, pages 11-12)

     We recommended the duties of receiving cash, writing checks, mailing checks, recording transactions, reconciling transactions and approving transactions be appropriately segregated. 

     Center officials responded that they had implemented our recommendation. 

INADEQUATE CONTROLS OVER LOCALLY HELD FUND CASH DISBURSEMENTS

     The Center did not maintain adequate controls over locally held fund cash disbursements.

•      A former warden was listed as an authorized signer on the signature card at the bank for the Employee Commissary Fund, Employee Benefit Fund, and Resident Commissary Fund.

•      68 out of 91 (75%) cash disbursements had been signed by an individual not authorized in accordance with Department Directives.

•      The bank signature card indicated only one signature was required on the check for the Resident Commissary Fund and the Resident Benefit Fund.   (Finding 2, pages 13-14)

     We recommended the signature cards be updated immediately.  Additionally, the Center should comply with the Administrative Directives and Institutional Directives. 

Center officials responded that they had implemented our recommendation.

INACCURATE REPORTING ON THE GENERAL OFFICE REPORTING PACKAGE

     The General Office Reporting Package for the Employee Commissary Fund was inaccurate.  Some of the problems noted follow:

•         Net worth transferred did not equal net income by $443 at June 30, 2005, resulting in an understatement.

•         Fiscal year 2005 profit transfer, $443, was recorded in Due to Employee Benefit Fund on the fiscal year 2006 General Office Reporting Package.  Sixty percent of this profit should have been recorded in Due to the Department’s Reimbursement Fund (523 Fund).

•         Due to 523 Fund was overstated and Due to Employee Benefit Fund was understated by $3,013 on the fiscal year 2006 General Office Reporting Package due to transfers not being posted correctly.  (Finding 5, pages 18-19)

     We recommend the Accountant be trained in the preparation of the General Office Reporting Package.

    Center officials accepted our recommendation and stated they would ensure the financial reports are presented timely and accurately.

LACK OF INDEPENDENT VERIFICATION OF CASH

     The Employee Commissary Fund cash was not counted by an independent employee.

     The cashier in the Business Office prepares the Employee Commissary daily sales summary, counts the cash and prepares the cash receipt and deposit ticket. 

     Total cash received was $138,270 and $114,512 for fiscal year 2006 and 2005, respectively.  (Finding 06-6, page 20)

     We recommended an independent employee prepare the daily sales summary and count the cash prior to forwarding the cash to the Business Office.

     Center officials responded they had implemented our recommendation.

BANK RECONCILIATIONS WERE NOT PREPARED OR APPROVED

     Bank reconciliations for locally held funds were not prepared or approved.

     Bank reconciliations for the Employee Commissary Fund and the Employee Benefit Fund were not prepared for March 2005.  Bank reconciliations for the Employee Commissary Fund, Resident Commissary Fund and the Resident Benefit fund were not approved by the Business Administrator for December 2004.  (Finding 06-7, page 21)

     We recommended the Center prepare bank reconciliations and the Business Administrator approve them.

     Center officials accepted our recommendation and stated they would ensure reconciliations are prepared and approved.

INACCURATE RECEIVING REPORTS

     Vendor invoices did not agree to the receiving reports for the Employee Commissary Fund.  Some of the problems noted follow:

•      A receiving report indicated 2,130 bags of ice had been received when only 230 bags were received.

•      A vendor invoice stated 1,680 bottles of water had been received; however, the receiving report indicated no bottles of water had been received.

•      A receiving report indicated 1,000 16 ounce lids had been received when 2,000 16 ounce lids had been received.

•      A receiving report indicated 120 candy bars had been received when 240 candy bars had been received.  (Finding 06-8, page 22)

     We recommended vendor invoices be properly matched to receiving reports and any discrepancies be investigated.

     Center officials accepted our recommendation and stated they would ensure store receiving reports are completed accurately.

LACK OF INVENTORY RECORDING AND PHYSICAL INVENTORY COUNTS

     The Center ceased recording inventory, conducting physical inventory and independent test counts of inventory.

     The Center stopped recording receiving reports and store requisitions on the Automated Inventory Management System (AIMS) from February 1, 2005 to May 15, 2005.   Additionally, the Center did not conduct independent inventory count on the Employee Commissary, Resident Commissary, and general stores physical inventory.  (Finding 9, pages 23-24)

     We recommended the Center record requisitions, conduct physical inventory counts and perform an independent inventory test count.

            Center officials accepted our recommendation.

VOUCHERS NOT TIMELY SUBMITTED

     The Center did not exercise adequate controls over voucher processing.

     Ten of 52 (19%) of vouchers tested, totaling $258,948, were approved for payment from 10 to 56 days late.  The Center paid $3,161 in interest charges during the two year period ended June 30, 2006.  (Finding 06-10, page 25)

     We recommended the Center comply with 74 Ill. Adm. Code 900.70 by having the proper review completed prior to the expiration of the thirty-day time period.

     Center officials accepted our recommendation and stated they would ensure complying with the requirements established by the Prompt Payment Act.

AUDITORS’ OPINION

     We conducted a limited scope compliance attestation engagement of the Center as required by the Illinois State Auditing Act.  We also performed certain agreed-upon procedures with respect to the accounting records of the Center to assist our audit of the entire Department.   Financial statements for the Department will be presented in that report.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:MKL:pp

SPECIAL ASSISTANT AUDITORS

      Our special assistant auditors were Dycus Bradley & Draves, P.C.