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REPORT DIGEST ILLINOIS DEPARTMENT OF
PROFESSIONAL REGULATION STATE COMPLIANCE ATTESTATION EXAMINATION For the Year Ended: June 30, 2004 (Final Examination) Summary of Findings: Total this report 22 Total last report 19 Repeated findings 12 Release Date: June 23, 2005
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 is also
available on the worldwide web at http://www.state.il.us/auditor
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SYNOPSIS ¨ The Department made payments for efficiency initiative billings from improper line item appropriations. Efficiency payments totaled $451,049 in fiscal year 2004. ¨ Five out-of-country travel vouchers for Department employees to participate in fact finding trips to Canada and Europe for the Governor’s Task Force on Importation of Canadian and European Drugs, totaling $12,371, were not approved in advance by the Chairman of the Governor’s Travel Control Board. ¨ The Department entered into an interagency agreement to pay a portion of the costs of a contract to investigate the circumstances of a fire without documentation to support the share of costs allocated to the Department. ¨
The Department did not conduct employee performance
evaluations on a timely basis. ¨
The Department was not maintaining time sheets for
its employees in compliance with the State Officials and Employees Ethics
Act. ¨
The Department did not maintain adequate controls
over vehicle reporting and operation of automotive equipment expenditures. ¨ The Department did not comply with provisions of the Illinois Vehicle Code. ¨ The Department did not always follow established guidelines and time frames for significant investigation, prosecution, and probation/compliance activities within the Enforcement Division. ¨ The Department failed to set fees for the roofing industry license in accordance with the Illinois Roofing Industry Act.
{Expenditure statistics and Activity Measures are summarized on the reverse page.} |
DEPARTMENT OF PROFESSIONAL REGULATION
STATE
COMPLIANCE ATTESTATION
EXAMINATION
For The Year Ended June 30, 2004
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EXPENDITURE STATISTICS |
FY
2004 |
FY
2003 |
FY
2002 |
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! Total Expenditures (All
Funds)........... |
$22,141,379 |
$23,984,253 |
$23,693,591 |
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Personal Services........................... % of Total Expenditures............. Average No. of Employees........ Average Salary per Employee.... |
$12,475,352 56.3% 248 $50,304 |
$14,322,501 59.6% 275 $52,082 |
$13,634,702 57.5% 293 $46,535 |
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|
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Other Payroll Costs (FICA,
Retirement).... % of Total Expenditures............ |
$5,412,634 24.5% |
$5,281,018 22.0% |
$5,060,641 21.4% |
|
|
|
Other Personal Services (Board Member
Per Diems)............................................. % of Total Expenditures........................ |
$0 0.0% |
$281,735 1.2% |
$252,239 1.1% |
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|
|
Contractual Services...................... % of Total Expenditures............ |
$2,346,555 10.6% |
$2,226,148 9.3% |
$2,629,831 11.1% |
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|
|
Electronic Data Processing............. % of Total Expenditures............... |
$827,512 3.7% |
$810,709 3.4% |
$948,217 4.0% |
|
|
|
Telecommunication....................... % of Total Expenditures............... |
$396,337 1.8% |
$419,860 1.8% |
$394,530 1.7% |
|
|
|
Travel........................................... % of Total Expenditures............... |
$271,082 1.2% |
$262,969 1.1% |
$268,192 1.1% |
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|
|
Operation of Automotive Equipment % of Total Expenditures.............. |
$173,079 .8% |
$165,432 .7% |
$161,129 .7% |
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|
|
Printing......................................... % of Total Expenditures.............. |
$105,676 .5% |
$84,875 .4% |
$123,012 .5% |
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|
|
Refunds......................................... % of Total Expenditures............... |
$50,320 .2% |
$78,391 .3% |
$55,201 .2% |
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|
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All Other Items.............................. % of Total Expenditures............ |
$82,832 .4% |
$50,615 .2% |
$165,897 .7% |
|
|
|
! Cost of
Property and Equipment......... |
$5,487,034 |
$5,614,847 |
$4,754,999 |
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|
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SELECTED ACTIVITY MEASURES (not examined) |
FY
2004 |
FY
2003 |
FY
2002 |
|
|
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! Initial Applications Received.................... |
57,144 |
59,059 |
64,822 |
|
|
|
! Renewals Received................................ |
279,651 |
201,573 |
272,721 |
|
|
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! Complaints Received............................... |
9,781 |
11,085 |
9,165 |
|
|
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! Cases Closed at Prosecution........................ |
1,270 |
1,313 |
1,107 |
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|
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! Investigative
Cases Referred to Prosecution... ! Complaints
Referred to Investigations............. |
6,368 1,424 |
7,592 2,924 |
5,503 5,243 |
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! Total Receipts Collected.......................... |
$28,112,134 |
$22,663,531 |
$34,617,856 |
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AGENCY DIRECTOR(S) |
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During Audit Period: Patrick Hughes, Acting (June 24, 2003 to July 28, 2003), Fernando E. Grillo (July 29, 2003 to June 30, 2004) Currently: Fernando E. Grillo, Secretary, Department of Financial and Professional Regulation; Daniel Bluthardt, Director, Division of Professional Regulation |
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Department did
not receive guidance or documentation with the billings from CMS Efficiency initiatives payments totaled $451,049 Efficiency payments were made from line item appropriations which had available monies Five Department
employees traveled out-of-country as part of a Governor’s Task Force
$12,371 of
out-of-country travel was not approved prior to travel occurring
Interagency
agreement did not document basis for allocation of cost to the Department
Department paid
$125,000 during FY 2004 for its allocated share of an independent examination
of the fire in the Cook County Administration Building
36% of employees
tested did not have performance evaluations performed timely Department
employees did not maintain time sheets as required by the Act Documentation not
maintained on submitting accident reports
Accident Review
Committee has not met since 1998
Fuel purchased on a
weekend without prior approval of a supervisor 3 employees
assigned a State vehicle did not file the required certification during the
audit period Employees that filed certifications
during the audit period filed the wrong certification Department’s
Vehicle Policy needs to be updated
Deficiencies were
noted in testing investigation files
Deficiencies were
noted in testing prosecution files Deficiencies were
noted in testing probation files
Fee set by the
Department for renewal of roofers licenses was not in accordance with statute
$47,813 of fees
were collected in excess of the statutorily allowed amounts |
INTRODUCTION
This digest covers our final State compliance attestation examination of the Department of Professional Regulation and is for the year ended June 30, 2004. Effective July 1, 2004, Executive Order Number 6 (2004) transferred all powers, duties, rights and responsibilities vested in the Department of Professional Regulation to the newly created Department of Financial and Professional Regulation. The transferring of responsibilities was considered in developing the recommendations to the findings.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS PAYMENTS WERE MADE FOR Efficiency Initiative BILLINGS FROM IMPROPER LINE ITEM APPROPRIATIONS
The
Department made payments for efficiency initiative billings from improper
line item appropriations and funds.
Public Act 93-0025, in part, outlines a program for efficiency
initiatives to reorganize, restructure and reengineer the business process of
the State. The State Finance Act
details that the amount designated as savings from efficiency initiatives
implemented by the Department of Central Management Services (CMS) shall be
paid into the Efficiency Initiatives Revolving Fund. The Act further requires State agencies to
pay these amounts from line item appropriations where the cost savings are
anticipated to occur. The
Department did not receive guidance or documentation with the billings from
CMS detailing from which line item appropriations savings were anticipated to
occur. According to Department staff,
the Department was not provided any evidence of savings by CMS. The only guidance received was the amount
of payments that should be taken from the General Revenue Fund versus other
funds for the September 2003 billings.
The Department, since it
received no General Revenue Fund appropriations, was directed to make
payments from other appropriated funds. During FY04, the Department received three billings from CMS for savings from efficiency initiatives and made payments totaling $451,049. Based on our review, we question whether the appropriate appropriations, as required by the State Finance Act, were used to pay for the anticipated savings. We found the Department made payments for these billings not from line item appropriations where the cost savings were anticipated to have occurred but from line items that simply had known available funds. The Department used:
We recommended the Department only make payments for efficiency initiative billings from line item appropriations where savings would be anticipated to occur. Further, the Department should seek an explanation from CMS as to how savings levels were calculated, or otherwise arrived at, and how savings achieved or anticipated impact the Department’s budget. Department officials concurred with our recommendation and stated that pursuant to the provisions of Public Act 93-0025 and recommendations of the Governor’s Office of Management and Budget, the Department made efficiency initiative payments from line items where the anticipated savings would have the least effect on the Department’s ability to meet its statutory requirements. The Department will continue to seek from the Department of Central Management Services specific information identifying these savings. Failure to enforce travel rules The Department did not enforce the travel regulations outlined within the Travel Guide for State of Illinois Employees (Travel Guide) which was developed by the Governor’s Travel Control Board. During our review of travel vouchers, we noted the following: Five out-of-country
travel vouchers for Department employees to participate in fact finding trips
to Canada and Europe for the Governor’s Task Force on Importation of Canadian
and European Drugs, totaling $12,371, were not approved in advance by the
Chairman of the Governor’s Travel Control Board. Travel to Canada occurred October 7–10, 2003, but was not
approved by the Chairman of the Governor’s Travel Control Board until January
6, 2004. Travel to Europe occurred
May 3 – 15, 2004, but was not approved by the Chairman of the Governor’s
Travel Control Board until August 23, 2004.
Department personnel
stated they mistakenly thought that since the Governor’s Office requested the
travel, that the Governor’s Office had sought the necessary advance approval
for the travel. (Finding 2, pages 14-15) We recommended the
Department establish effective controls over travel. Department officials concurred with our recommendation and stated the agency was notified only six days in advance of the out-of-country travel requests for the fact finding trip to Canada and only 11 days prior to the out-of-country trip to Europe for the Governor’s Task force on Importation of Canadian and European Drugs. It was mandated by the task force for the I Save Rx plan that the travel be implemented as quickly as possible. The Department also noted they will exercise increased awareness in the future to ensure Travel Control Board requirements are met.
Inadequate documentation for allocation of interagency costs The Department entered into an interagency agreement to pay a portion of the costs of a contract to investigate the circumstances of a fire without documentation to support the share of costs allocated to the Department. The Illinois State Fire
Marshal initiated an Interagency Agreement (Agreement) with five other State
agencies to retain a contractor to conduct an independent examination (the
Project) of the circumstances surrounding a fire in the Cook County
Administration Building at 69 West Washington Street in Chicago. The fire occurred October 17, 2003. The Agreement stated the costs for the
Project would not exceed $1.9 million spread over fiscal years 2004 and 2005. During fiscal year 2004 the Department paid $125,000 for its allowable share of the Project. The Department could not provide documentation to demonstrate why it was bearing such a large portion of the contract, nor could they provide support on the methodology of allocating the costs. Allocations for fiscal year 2005 appear they will be based on the Department’s ability to pay, and not on the relative benefits to the Department. Department personnel
stated the Department was a party to the Agreement and shared in the cost, as
it is responsible for regulating security guards. (Finding 3, pages 16-17)
We recommended the
Department obtain written justification for any allocation of costs made to
the Department in future Interagency Agreements. Department officials concurred with our recommendation and stated they scrutinized and oversaw their portion of the contract and will ensure more detailed documentation of its costs in future interagency agreements.
EMPLOYEE PERFORMANCE EVALUATIONS NOT PERFORMED ON A TIMELY BASIS During our testing, we noted 9 out of 25 (36%) employees tested did not have a performance evaluation completed on a timely basis. For the 9 employees noted, the untimely evaluations ranged from 15 to 176 days late. Personnel rules issued by the Department of Central Management Services (80 Ill. Admin. Code 302.270) require performance records to include an evaluation of employee performance prepared by each agency not less often than annually. In addition, Department of Professional Regulation Policy requires all employees, including employees who are eligible for an annual satisfactory performance increase, merit compensation increase or at the maximum salary within the salary range, to have an annual performance evaluation. According to Department personnel, management has made the evaluation process a priority; however, supervisors assigned responsibility for completion of the evaluations have failed to follow Department policy. Department personnel also noted another contributing factor was the loss of staff, specifically supervisory level staff, due to early retirements. (Finding 6, page 20) This finding was first reported in 1993. We recommended the Department hold management personnel accountable for completing employee performance evaluations on a timely basis. Department officials concurred with our recommendation and indicated they are developing and implementing agency-wide performance evaluation policies and procedures to ensure that evaluations are filed timely. (For the previous Department response, see Digest Footnote #1)
NONCOMPLIANCE
WITH THE STATE OFFICIALS AND EMPLOYEES ETHICS ACT The Department was not maintaining time
sheets for its employees in compliance with the State Officials and Employees
Ethics Act (Act). Employees’ time was
tracked using a “negative” timekeeping system whereby the employee is assumed
to be working unless noted otherwise.
The Act requires the Department to
adopt personnel policies consistent with the Act. The Act notes policies shall require State employees to
periodically submit time sheets documenting the time spent each day on
official State business. No time
sheets documenting the time spent each day on official State business were
maintained. Department management stated they
relied on advice from the Governor’s Office staff who initially stated that
agencies using the Department of Central Management Services payroll system,
which the Department uses, would be in compliance with the Act. (Finding 7, page 21) We recommended the Department amend its
policies to require employees to maintain time sheets in compliance with the
Act. Department
management concurred with our recommendation and noted they will continue to
explore ways to amend its policies to adopt more affirmative timekeeping
systems. Controls over vehicle reporting and operation of automotive
equipment expenditures The Department did not maintain adequate controls over vehicle reporting and operation of automotive equipment expenditures. During our testing of the Department’s Vehicle Policy, dated May 1, 1997, accident reports filed and automotive invoice vouchers processed during the examination period we noted a number of deficiencies. Some of the deficiencies noted were: · In 8 out of 8 (100%) accident files reviewed during the examination period, the Department did not maintain documentation of submitting the required form to the Illinois Department of Transportation, as required by the Department’s Vehicle Policy. · The Department did not follow its Vehicle Policy, which requires an Accident Review Committee. The Committee did not meet at all during fiscal year 2004. In the prior compliance report, it was noted that the Committee has not met since 1998. · In 3 out of 65 (5%) automotive invoice vouchers tested, the invoice voucher was for the purchase of fuel on a weekend and did not have prior approval of a supervisor, as required by the Department’s Vehicle Policy. Department officials stated there were several issues contributing to the problems noted including procedures not being followed, a need to more efficiently allocate resources and the learning curve associated with doing more with less. (Finding 10, pages 26-28) This finding was first reported in 2003. We recommended the
Department revise, review and approve a Vehicle Policy to ensure adequate
controls over the operations of automotive equipment and expenditures. We further recommended the Department
reiterate the importance of adherence to established policies and procedures
to all Department employees. Department management
concurred with our recommendation and noted they are developing a new
comprehensive vehicle policy to establish better controls over the operations
of automotive equipment and expenditures.
(For the previous Department response, see Digest Footnote #2) CERTIFICATION OF LICENSE AND AUTOMOTIVE LIABILITY COVERAGE The Department did not properly certify license and automotive liability coverage, certify vehicle assignments, and revise its Vehicle Policies in compliance with the Illinois Vehicle Code (Code). We tested 64 employee vehicle assignments during fiscal year 2004 and noted the following: · For 3 (5%) assignments during fiscal year 2004, a certification of license and automotive liability coverage was not on file. · For 61 (95%) assignments during fiscal year 2004, a certification was signed; however, the certification was not in accordance with the Code. The certifications were for travel reimbursement on personal vehicle use for State business, rather than for assigned State vehicles. · The Department has not revised its Vehicle Policy, dated May 1, 1997, to adhere to the requirements of the Code. According to the Code, every employee of a State agency, who is assigned a specific vehicle owned or leased by the State on an ongoing basis, shall provide a certification annually to the Director. The certification shall affirm that the employee is duly licensed to drive and that the employee has liability insurance coverage extending to the employee when the assigned vehicle is used for other than official State business. According to Department officials, the Department of Central Management Services has been unsuccessful in establishing a policy under the current bargaining unit contracts that requires an employee assigned a State vehicle on an ongoing basis to certify liability insurance coverage extending to the employee when the vehicle is used for other than State business. (Finding 11, pages 29-30) This finding was first reported in 2001. We recommended the Department establish and enforce a policy and obtain certification forms for license and automotive liability insurance for State assigned vehicles, as required by statute, or rescind an employee’s authority to use a State assigned vehicle if they refuse to provide the required certification. Department officials concurred with our recommendation and stated they will continue to work with Central
Management Services on collective bargaining efforts to correct this finding. (For
the previous Department response, see Digest Footnote #3) Enforcement
activities not performed timely and/or not sufficiently documented The Department has established and implemented guidelines and time frames for significant investigation, prosecution, and probation/compliance activities of the Enforcement Division. Since the Department implemented guidelines to ensure that the investigation and prosecution activity is initiated and completed within reasonable time parameters, we used their guidelines and time frames as the criteria for our tests. We reviewed 22 investigation files and some of the deficiencies noted were: · In 6 out of 22 (27%) case files reviewed, investigative reports were not generated within 30 days of the investigative activity. The completion of the investigative reports ranged from 42 days to 139 days. ·
In 2 out of 22 (9%) case files
reviewed, the probation investigator did not interview the respondent and no
correspondence in the file was maintained. ·
In 2 out of 22 (9%) case files
reviewed, the investigator failed to interview the complainant within 30
calendar days from the date assigned to the case. We
reviewed 20 prosecution files and some of the deficiencies noted were: ·
In 3 out
of 20 (15%) case files reviewed, the Chief Prosecutor did not review and
assign the case within 30 days of referral.
For all three cases, the review and referral ranged from 33 to 69 days
late. · In 1 out of 20 (5%) case files reviewed, the attorney did not file the Notice of Formal Complaint within 60 days of the initial assignment. The case was assigned on 4/26/04 and the formal complaint was filed on 8/19/04. We
reviewed 9 probation files and
some of the deficiencies noted were: · In 8 out of 9 (89%) case files reviewed, the probation investigator did not interview the respondent within 30 days of the signing of the consent order. The period of time for all cases ranged from 41 days to over 2 years. ·
In 5 out
of 9 (56%) case files reviewed, the Chief of Probation Investigations did not
review the file and assign the case to a probation investigator within 10
days of the consent order. In carrying out the Department’s mission to serve, safeguard, and promote the public welfare, the Department has a responsibility to expeditiously discipline licensees who violate the governing regulations to prevent further harm to the public. The Department believes the deficiencies above were attributed in part to the loss of a significant number of staff due to the State’s Early Retirement Incentive and considering the number of complaints received and unusual circumstances regarding the nature of some cases, noncompliance with established guidelines will occur. (Finding 12, pages 31-34) We recommended the Department continue its effort to improve controls
through monitoring of established procedures over the Enforcement Division to
ensure case files and the Regulatory Administration and Enforcement System
reflects necessary and significant investigative, prosecution, and
probation/compliance activities in the Department’s established time frames. Department officials
concurred with our recommendation and noted management responsible within the
various areas of the Enforcement Divisions will be instructed to review files
before they are closed or sent on for further enforcement. They will also be instructed to ensure
that all required information is entered into the tracking and monitoring
system and it is done in a timely manner.
They will also be instructed to assign the cases within the required
timeframes and to follow the policy guidelines to ensure that all deadlines
are met on a timely basis.
FEES FOR ROOFING LICENSURE INCONSISTENT WITH ROOFING INDUSTRY ACT During our testing, we noted the fees set by the Department, through the Emergency Rules for the Administration of the Act (68 Ill. Admin. Code 1460.80), published on April 10, 2003, were not in accordance with the Illinois Roofing Industry Act (Act). The Emergency Rules state the renewal fee is set at $62.50 per year and the fee for issuance of a duplicate/replacement license for a change of name or address is $20. Per the Act the biennial renewal fee shall not exceed one-half of the initial application fee and issuance of a duplicate/replacement license for a change of name or address should be $10. The Department has set the initial application fee at $125; therefore, the biennial renewal fee should not exceed $62.50. In addition, a fee for an application filed during the second half of the biennial period was not established by the Emergency Rules. The Department renewed 765 roofer licenses during fiscal year 2004 and collected $95,625 in fees for roofing license renewals under the Emergency Rules. Based on what is allowed by the Act, the Department collected $47,813 in excess of the allowable renewal fees. Department officials stated the intent was to set the biennial renewal fee to be $62.50 per year and the fee for issuance of a duplicate/replacement license to be $20. Department officials further stated the inconsistency with the Act was due to an oversight and they will seek to amend the Act. (Finding 19, pages 44-45) This finding was first reported in 2003. We recommended the Department amend the Rules to set the correct fees as mandated by the Act, or seek a legislative remedy to the statutory requirement. In addition, we also recommended the Department seek guidance to determine if amounts collected in excess of statutorily allowed fees should be refunded. Department officials concurred with our recommendation and indicated that Legislation was introduced (HB 561) and passed during the 2005 Spring Session to correct fees. In addition, Department officials noted they sought guidance on the potential need for a refund from the Department's Office of Legal Affairs and the Office of the General Counsel at the Governor's Office of Management and Budget. The conclusion reached was that a refund was not necessary. (For the previous Department response, see Digest Footnote #4) OTHER FINDINGS
The remaining findings are reportedly being given attention by management. We will review the progress toward the implementation of our recommendations in our next State compliance attestation examination of the Department of Financial and Professional Regulation. Responses to our findings and recommendations were provided by Mr. Travis March, Chief Fiscal Officer in a correspondence dated May 31, 2005. AUDITORS’ OPINION We conducted a State compliance
attestation examination of the Department as required by the Illinois State
Auditing Act. We have not audited any
financial statements of the Department for the purpose of expressing an
opinion because the Department does not, nor is it required to prepare
financial statements. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:RPU:pp SPECIAL ASSISTANT AUDITORS
The accounting firm of Sikich Gardner & Co, LLP served as our special assistant auditors for the engagement. DIGEST FOOTNOTES
#1 –
EMPLOYEE PERFORMANCE EVALUATIONS NOT PERFORMED ON
A TIMELY BASIS - Previous Department Response
2003: Concur.
Human Resources will develop and implement training of supervisory
staff on the performance evaluation system and establish a procedure to
efficiently monitor evaluations to ensure their completion in a timely
manner. #2 – Controls over vehicle reporting and
operation of automotive equipment expenditures - Previous Department
Response 2003: Concur. The Department will ensure future
accident files are reviewed, maintained and filed with Central Management
Services in a timely manner. The
Department will also make necessary changes to the vehicle policy and
establish better controls over the operations of automotive equipment and
expenditures. #3 –
CERTIFICATION OF LICENSE AND
AUTOMOTIVE LIABILITY COVERAGE - Previous Department Response
2003:
Concur. The Department will work
with Central Management Services to seek guidance on how to correct this
finding. #4 – FEES FOR ROOFING LICENSURE INCONSISTENT WITH ROOFING INDUSTRY ACT - Previous Department Response 2003: Concur.
The Department is seeking a legislative remedy and will seek guidance
to determine if amounts collected in excess of statutorily allowed fees
should be refunded. |
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