REPORT DIGEST VIENNA CORRECTIONAL CENTER LIMITED SCOPE COMPLIANCE ATTESTATION ENGAGEMENT For the Two Years Ended: June 30, 2008 Summary of Findings: Total this audit 19 Total last audit 13 Repeated from last audit 6 Release Date: August 6, 2009 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 properly reconcile general ledger accounts for locally held funds. § The Center had inadequate controls over locally held fund cash disbursements. § The Center did not accurately report receipts and disbursements for its locally held funds. § The Center inaccurately reported assets, liabilities, revenues, and expenses. § The Center failed to properly transfer unclaimed inmate cash account balances as required by State law. § The Center did not obtain proper approval for purchases with the Employee Benefit Fund. § The Center did not perform an independent test count of inventory. § The Center had inaccurate property control records. § The Center sent cash receipts to the Department’s Central Office without the Receipts Deposit Transmittal. {Expenditures and Activity Measures are summarized on the reverse page.}

ILLINOIS DEPARTMENT OF CORRECTIONS

VIENNA CORRECTIONAL CENTER

LIMITED SCOPE COMPLIANCE ATTESTATION ENGAGEMENT

For The Two Years Ended June 30, 2008

EXPENDITURE STATISTICS	FY 2008	FY 2007	FY 2006
Total Expenditures (All Appropriated Funds)........	$31,630,868	$28,855,852	$27,956,760
Personal Services....................................................... % of Total Expenditures..................................... Average No. of Employees................................ Average Salary Per Employee............................ Student, member, and inmate Compensation ..................... % of Total Expenditures..............................................	$20,641,931 65.26% 349 $59,146 $232,340 0.74%	$19,373,227 67.14% 354 $54,727 $245,003 0.85%	$18,881,531 67.54% 358 $52,742 $249,223 0.89%
Other Payroll Costs (FICA, Retirement)....................... % of Total Expenditures.....................................	$4,948,537 15.64%	$3,667,854 12.71%	$3,108,229 11.12%
Contractual Services................................................... % of Total Expenditures.....................................	$2,897,511 9.16%	$2,848,217 9.87%	$3,232,144 11.56%
Commodities…........................................................... % of Total Expenditures......................................... All Other Items........................................................... % of Total Expenditures..............................................	$2,552,260 8.07% $358,289 1.13%	$2,413,276 8.36% $308,275 1.07%	$2,206,432 7.89% $279,201 1%
Cost of Property and Equipment.............................	$63,239,415	$58,585,997	$56,702,915

SELECTED ACTIVITY MEASURES (not examined)	FY 2008	FY 2007	FY 2006
§ Average Number of Inmates.......................................	1,526	1,600	1,602
§ Ratio of Correctional Officers to Inmates.....................	1/5.9	1/6.2	1/6.2
§ Cost Per Year Per Inmate..........................................	$20,676	$18,020	$17,432
§ Rated Inmate Capacity....................................................	925	925	925
§ Approximate Square Feet Per Inmate..............................	42	38	37

CENTER WARDEN

During the examination period: Mr. Jody Hathaway ((07/01/06 to 09/15/07) and Ms. Yolande Johnson (09/15/07 to current)

Currently: Ms. Yolande Johnson

Inadequate segregation of duties General ledger accounts were not reconciled Cash disbursements were signed by an unauthorized individual Employee Commissary and Employee Benefit Funds reporting was inaccurate Errors in recording of assets, liabilities, revenues, and expenses Dormant account balances were not properly transferred Improper offset Department does not accept finding and recommendation Auditor’s Comment Approval not received from Employee Benefit Fund Committee for expenditures Physical inventory test counts were not conducted New equipment items were recorded on property control records 6 to 32 months after purchase Two equipment items could not be located for testing Proper transmittal forms were not prepared for cash receipts.

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, Employee Commissary Fund, and the Employee Benefit Fund. § An Account Technician I was permitted to receive cash and signed checks for all locally held funds. § An Account Technician I recorded transactions, received signed checks prior to check being mailed, and was Custodian of the Resident Travel and Allowance imprest cash box. (Finding 1, pages 12-13) We recommended the duties of receiving cash, preparing checks, custodian of cash, receiving resident checks, recording transactions, reconciling transactions and approving transactions be appropriately segregated. Center officials responded that they had implemented our recommendation. INADEQUATE CONTROLS OVER GENERAL LEDGER ACCOUNTS General ledger accounts in the locally held funds were not reconciled. § The change fund general ledger account was not reconciled to actual cash on hand, for the Employee Commissary Fund. § Accounts payable to the Fund Reimbursements in the Resident Trust Fund could not be reconciled to supporting documentation. The account had a balance of $16,832 at June 30, 2008. § Net Worth Transferred general ledger account for the Employee and the Resident Commissary Funds were not reconciled to net income of those funds. At June 30, 2008 the Employee and Residents Commissary Funds were understated by $343 and $140 respectively. (Finding 2, pages 14-15) We recommended the Center perform reconciliations over all general ledger accounts. 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. § The bank signature card indicated only one signature was required on the check for the Resident Commissary Fund. § 17 out of 90 (19%) cash disbursements had been signed by an individual not authorized in accordance with the Department’s Directives. § Five former employees were listed as an authorized signer on the signature card at the bank for the Employee Commissary, Employee Benefit, Resident Commissary, and Resident Trust Funds. (Finding 4, pages 18-19) We recommended the signature cards be updated immediately when a person leaves the Center’s employment. Additionally, the Center should comply with the Administrative Directives. Center officials responded that they had implemented our recommendation. INACCURATE REPORTING OF RECEIPTS AND DIBURSEMENTS FOR LOCALLY HELD FUNDS The Report of Receipts and Disbursements Locally Held Funds for the Employee Commissary and Employee Benefit Funds were inaccurate. Some of the problems noted follow: § Income of $1,614 and $1,774 were recorded as Miscellaneous receipts instead of “Auxiliary Enterprises” receipts at June 30, 2008 and 2007, respectively. § An equipment disbursement of $1,714 and $213 was reported as an awards and grants disbursement at June 30, 2008 and 2007, respectively. § Expenses of $(168) and $1,452 were reported as “Cost of Sales” disbursements instead of “Commodities” disbursements at June 30, 2008 and 2007, respectively. (Finding 6, pages 21-22) We recommended Center personnel prepare the Report of Receipts and Disbursements Locally Held Funds in compliance with Statewide Accounting Management System (SAMS) Procedures and the Department’s Administrative Directive. Center officials accepted our recommendation and stated they will make every effort to ensure compliance. INACCURATE REPORTING OF ASSETS, LIABILITIES, REVENUES, AND EXPENSES The Center did not record assets, liabilities, revenues, and expenses correctly on the Employee Commissary, Employee Benefit, Resident Commissary, and Resident Benefit Funds. § Accounts payable and cost of sales were understated by $586 on the Employee Commissary Fund at June 30, 2008, due to receiving reports being late. § The “Due from Resident Trust Fund” was overstated by $15,822 in the Resident Commissary Fund at June 30, 2008, due to transfers not being recorded properly. § Accounts payable and expenses were overstated by $1,050 on the Employee Benefit Fund at June 30, 2007, due to improper recording of expenses. § The “Due to Resident Benefit Fund” was understated and the “523-Salaries Fund” was overstated by $8,018 at June 30, 2007, due to the projected profit not being met. § Accounts payable and the Resident Trust Fund Imprest Box were understated by $3,928 in the Resident Trust Fund at June 30, 2007. (Finding 7, pages 23-25) We recommended invoices be expensed as incurred, money be deposited into the correct fund, transactions be recorded timely and in the correct period, and commissary accounts correctly identify inventory items. Center officials accepted our recommendation and stated they will make every effort to ensure compliance with accurate and timely reporting and accrual. FAILURE TO PROPERLY TRANSFER UNCLAIMED INMATE CASH ACCOUNT BALANCES The Center did not take appropriate action to ensure that individual dormant account balances were properly transferred to the General Revenue Fund (GRF). The Unified Code of Corrections (Code) requires the Department to establish accounting records with individual accounts for each inmate (730 ILCS 5/3-4-3(a)). In addition, the Code (730 ILCS 5/3-4-3(b)) requires any money held in accounts of an inmate which are unclaimed one year after release to be transferred to the GRF. We noted the Center improperly offset Inmate Trust Fund accounts with positive cash balances against accounts with negative balances prior to transfer of unclaimed cash balances to the GRF. Our testing of June 2008 dormant accounts noted dormant accounts totaling $3,218 were not transferred to the GRF. Center management indicated the Resident Trust Fund overall contains dormant accounts with restricted balances in excess of dormant accounts with credit balances, that these funds can not be submitted to the GRF. There are instances where cash payments are made to inmates in excess of their balance, which creates a negative balance. In these instances, offsetting negative account balances against other accounts in the Inmate Trust Fund effectively requires other inmate accounts to bear the costs of those deficits in violation of the Center’s fiduciary responsibility and the Code. (Finding Code No. 08-8, pages 26-27) We recommended the Center take appropriate action to ensure dormant cash balances are timely transferred to the GRF. Department officials did not accept our finding and stated they implemented policies and procedures that it feels are appropriate. In an auditor’s comment, we stated the Center has a fiduciary responsibility for the inmate accounts and should be evaluating each account within the Inmate Trust Fund individually for potential transfer to the GRF. LACK OF EMPLOYEE BENEFIT FUND PURCHASE APPROVAL The Center failed to obtain approval from the Employee Benefit Fund Committee for expenditures. § Nine of 26 (35%) expenditures tested, totaling $2,444, lacked proof of approval from the Employee Benefit Fund Committee. § Three of 26 (12%) expenditures, totaling $910 were approved by the Employee Benefit Fund Committee after being purchased. (Finding 11, page 30) We recommended that the Employee Benefit Fund Committee should approval all expenditures from the Fund prior to purchase. Center officials responded that they had implemented our recommendation. LACK OF PHYSICAL INVENTORY COUNTS The Center did not perform an independent test count of inventory. The Center did not conduct an independent inventory test count on the Resident Commissary and general stores physical inventory. (Finding 12, page 31) We recommended the Center comply with their Administrative Directives by performing an independent inventory test count. Center officials responded that they had implemented our recommendation. INACCURATE PROPERTY CONTROL RECORDS The Center’s property control records were not accurate. § Sixteen of 16 (100%) equipment purchases were recorded on the property listing from 6 to 32 months after the item had been received by the Center. This causes an understatement of equipment of $23,000 at June 30, 2007. § Ninety-eight of 112 (87%) property deletions tested did not have documentation indicating the date the Center received the “Request for Change of Status of Equipment” from the Departments Central Office. Therefore, timely removal from the property listing could not be determined. § Thirty-eight of 112 (34%) property deletions did not have documentation indicating the Center had received the “Request for Change of Status of Equipment” from the Central Office. § Two of 25 (8%) equipment items selected for testing could not be located at the Center. § Five of 25 (20%) equipment items tested were no longer being utilized thus property was overstated by $3,265 at June 30, 2008. § The Center had a cooling tower valued at $30,831 that was not recorded on the Center’s property control system during the first quarter of 2008. (Finding 14, pages 34-35) We recommended the Center ensure property control records are maintained in an efficient and timely manner. Center officials accepted our recommendation and stated they will make every effort to ensure compliance. LACK OF CASH RECEIPT TRANSMITTALS The Center sent cash receipts to the Department’s Central Office without the Receipts Deposit Transmittal Form, C-64, and the State Treasurer’s Office Transmittal, DC 276. The Center sent cash receipts to the Department’s Central Office without the proper transmittal forms. As of June 30, 2008 $126.50 of cash receipts received in fiscal year 2007 had not been deposited by the Comptroller’s Office. (Finding 15, page 36) We recommended the Treasurers Transmittal and the C-64 be prepared by the Center for all receipts and forwarded to the Division of Finance and Administration Fiscal Services Unit. Center officials responded that they had implemented our recommendation. AUDITORS’ OPINION The auditors qualified their report on State Compliance for findings 08-1, 08-2, 08-4, 08-6, 08-7, 08-9, 08-11 and 08-16. Except for the noncompliance described in these findings, the auditors state the Department complied, in all material respects, with the requirements described in the report. Financial statements for the Department will be presented in the Central Office report. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:MKL:pp SPECIAL ASSISTANT AUDITORS Our special assistant auditors were Dycus Bradley & Draves, P.C.