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INTRODUCTION
This report presents our State compliance
examination of the Department of Financial and Professional Regulation and
our financial audit of the Security Deposit Fund for the year ended June 30,
2006.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
ADMINISTRATIVE PROCESSES NOT FULLY CONSOLIDATED
The Department has not consolidated many aspects
of its administrative processes as intended by Governor’s Executive Order
Number 6 (2004) (Executive Order).
The
Department of Financial and Professional Regulation was established on July
1, 2004 when the functions of the former Department of Professional
Regulation, Department of Financial Institutions, Department of Insurance and
Office of Banks and Real Estate, referred to here as “legacy agencies”, were
merged in accordance with the Executive Order.
During
our examination, we noted many of the operational and administrative
processes had not been consolidated, but continued to be performed in a
decentralized manner by each legacy agency.
Lack of consolidation, standardized controls and consistent
department-wide procedures were the cause of many of the findings in this
report. Specific problems noted were
as follows:
·
The Department’s annual accounting reports (GAAP
reporting packages) submitted to the Illinois Office of the Comptroller were
prepared separately by each legacy agency.
·
Receipts processing is not consolidated.
·
Reconciliations to State Comptroller fund records
were performed separately by each legacy agency.
·
There were inconsistent requirements for employee
evaluations among the four legacy agencies.
·
Policies and procedures over vehicle reporting and
operations for the four legacy agencies had not been standardized.
·
The Department’s computer disaster contingency plans
are not standardized and consist of the four legacy agency plans.
The
Executive Order was issued by the Governor on March 31, 2004 and gave the
four legacy agencies only three months to plan the consolidation. However, the weaknesses noted above were
still ongoing during our examination fieldwork, several months after the end
of fiscal year 2006.
The Department entered
into a multi-year agreement with a consultant at a cost of $699,880 ($200,000
in fiscal year 2005 and $499,880 in fiscal year 2006) to assist and support
the consolidation. Recommendations
for “should be” processes for the consolidated agency were received April 4,
2006, and the Department is in the process of evaluating the
recommendations. Based on the
timetable, the Department will be well into its third or fourth year of
existence until recommendations can be implemented. (Finding 1, pages 15-20)
We recommended the
Department continue its consolidation efforts including an overall
standardization of business practices throughout the Department. Further, the Department should accelerate
its efforts to standardize business practices to comply with the Executive
Order.
Department officials
disagreed with the finding and acknowledged that the Audit Report
demonstrates that there is work still to be completed. The Department stated they are moving on a
steady, efficient and responsible pace towards absolute consolidation of the
entire agency and noted it had made progress since last year’s audit
resulting in the elimination of 12 repeat findings.
In an auditors’
comment we acknowledged that the Department had made progress in its
consolidation efforts, but noted there are several areas which had not been
consolidated, as specifically identified in the finding. Auditors noted that in its response, the
Department identified several areas where progress was made, but much of this
was not completed until fiscal year 2007, which was after our examination
period.
Auditors also noted
that many unconsolidated areas were in the fiscal office, where the
Department acknowledged separate legacy systems, including separate
revenue/receipts systems, still exist and many of the weaknesses noted in
this report were a result of inconsistent legacy policies and procedures
utilized by the Department during the examination period.
NEED TO IMPROVE MONITORING OF INTERAGENCY AGREEMENTS
The Department’s
process to monitor interagency agreements was inadequate.
During our examination
of two interagency agreements between the Department and the Governor’s
Office of Management and Budget, the following deficiencies were noted:
·
2 out of 2 (100%) interagency agreements tested,
totaling $55,640, were not signed by all necessary parties before the
effective date. The agreements were
signed 174-294 days late.
·
1 out of 2 (50%) interagency agreements tested
pertaining to legal services, totaling $25,640, did not include supporting
documentation detailing the methodology used for determining the percent
allocation to be paid by the Department for billing of shared services.
·
1 out of 2 (50%) interagency agreements pertaining to
legal services had services invoiced prior to the effective date of the agreement
totaling $25,640. (Finding 2, page
21)
We recommended the
Department ensure all interagency agreements are approved by an authorized
signer prior to the effective date of the agreement. Further, the Department should require all
interagency agreements include methodology supporting the percent allocations
used for billing of shared services.
Department officials
concurred with our recommendation and stated it would take the necessary
steps to ensure that the recommendations of the auditors are implemented for
future interagency agreements.
NEED
TO IMPROVE TIMELINESS AND DOCUMENTATION OF ENFORCEMENT ACTIVITIES
The Department’s
Division of Professional Regulation’s Enforcement Unit did not perform and/or
document enforcement activities in a timely or sufficient manner.
The Department has established and
implemented guidelines and time frames for significant investigation,
prosecution, and probation/compliance activities of the enforcement
unit. Since the Department did
implement 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 34 investigation files
and noted numerous deficiencies, including the following:
·
In 12 out of 34 (35%) case files reviewed, the Department was unable to locate the case files or any
supporting documentation for the case.
·
In 9 out of 34 (26%) case files reviewed, an
Investigative Report was not included in the file.
·
In 4 out of 34 (12%) case files reviewed, significant
activities had not been completed for normal cases within 90 days of
receiving the complaint.
We reviewed 25 prosecution files
and noted numerous deficiencies, including the following:
·
In 5 out of 25 (20%) case files reviewed, the
Department was unable to locate the case file or any supporting documentation
for the case.
·
In 7 out of 25 (28%) case files reviewed, an
Investigative Report was not included in the file.
·
In 4 out of 25 (16%) case files reviewed, the Chief
Prosecutor did not review and assign the case within 30 days of
referral. For these cases, the review
and referral ranged from 41 to 110 days late.
We reviewed 16 probation files and
noted numerous deficiencies, including the following:
·
In 1 out of 16 (6%) case files reviewed, the
Department was unable to locate the case file or any supporting documentation
for the case.
·
In 11 out of 16 (69%) case files reviewed, an
Investigative Report was not included in the file.
·
In 8 out of 16 (50%) case files reviewed, the
acknowledgement letter sent to the complainant was not maintained in the case
file. Therefore, we were unable to
determine if one was completed or filed within 30 days of initial
receipt.
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. Continued deficiencies in the enforcement
process place the public at risk to licensees who are not fulfilling their
responsibilities. (Finding 3, pages
22-25) This finding was first
reported in 2004.
We recommended the Department
comply with the State Records Act and maintain the documentation required
within its Enforcement Unit files.
Further, the Department should allocate the resources necessary to
comply with its internal guidelines for the Enforcement Unit to ensure that
case files and the Regulatory Administration and Enforcement System reflect
necessary and significant investigative, prosecution, and
probation/compliance activities within the Department’s established time
frames.
The Department concurred with
the recommendation in that the investigators and prosecutors should perform
and document their activities within the timeframes and in the manner as set
by the policy manual. However, the
Department did not concur with the conclusion that enforcement files that are
not in strict compliance with the policy manual creates a significant public
risk.
The Department stated
that the policy manual guidelines are internal guidelines and noted that not
all aspects of an investigation or prosecution are within the control of the
Department. The Department stated it
would develop a written case review policy and directive and work with IT to
develop automated notices to inform the Chiefs when cases fall outside of
policy timelines. Further, the
Department is undertaking a complete revision of the enforcement policy
manual. (For previous Department
response, see Digest Footnote #1.)
In an auditors’ comment, we did
not concur with the Department’s assertion that enforcement files not in
strict compliance with the policy manual do not create a significant public
risk. Also, we noted that one of the
Department’s primary responsibilities is to regulate professions. Since the Department regulates thousands
of individuals and businesses, it is imperative the Department have strong
standardized policies and procedures for its Enforcement Unit. Auditors are holding the Department to its
own policies and procedures. If these
are inadequate, the Department needs to modify its policies and procedures.
As evidenced by the numerous
exceptions noted above, the Department’s documentation and recordkeeping in
its Enforcement Unit needs significant improvement. Failure to expeditiously discipline licensees who violate
governing regulations does indeed place the public at risk to licensees who
are not fulfilling their responsibilities.
NEED TO IMPROVE CONTROLS IN THE CONSUMER CREDIT SECTION
The Department’s
Division of Financial Institution’s Consumer Credit Section did not comply
with various statutory requirements of the Department.
During our review of the eight
areas within the Consumer Credit Section, we noted exceptions in 14 of 20
(70%) Consumer Installment Loan Act (CILA) licensee files tested:
·
2 out of 20 (10%) CILA files tested did not have an
annual examination performed as required by the Consumer Installment Loan
Act.
·
6 out of 20 (30%) CILA files tested did not contain
an annual report submitted timely, as required by Consumer Installment Loan
Act. The annual reports were
submitted from 2 to 92 days late.
·
11 out of 20 (55%) CILA files tested did not contain
an annual license fee submitted timely, as required by the Consumer
Installment Loan Act. (Finding 4,
pages 26-28)
We recommended the Department
strengthen internal controls to ensure all statutory requirements are
strictly adhered to, including the review of Department rules and policies to
ensure all statutory requirements are properly addressed. Further, the Department should review all
licensees’ files to ensure adequate documentation exists, and take measures
to terminate licenses where statutory provisions are not met.
Department officials
concurred that 2 of 20 files in the sample did not have examinations
conducted in fiscal year 2006. However, Department officials disagreed with bullet points two and three
and stated it had taken sufficient measures to monitor and control the
submission of annual reports and fees.
The Department noted that penalties for failure to submit these items
in a timely manner are discretionary and have been assessed when deemed
appropriate and that other than issuing fines the Department has no other
means to force a licensee to submit the required information. Per statute, licenses automatically expire
if not renewed by December 31.
In an auditors’ comment, we noted
the Department did not dispute the facts that CILA files did not contain an
annual report submitted timely or an annual fee submitted timely. Regardless of controls, these exceptions
are in noncompliance with the Consumer Installment Loan Act.
UNTIMELY REFUNDS ISSUED TO INSURANCE COMPANIES
The Department’s
Division of Insurance failed to issue timely refunds to insurance companies
for overpayment of the annual privilege tax as required by the Illinois
Insurance Code (Code).
During our examination
of the Department’s issuance of refunds, the Department failed to issue
refunds totaling $112,418 in a timely manner for 4 out of 25 (16%) refunds
tested, ranging from 1 to 285 days late.
Department personnel
stated written requests for refunds are often submitted with the tax return,
and may not be noted by the Department until a random audit or follow up call
by the company. In addition, due to
peak workload during March through June of each year, the refund process has
a low priority. (Finding 6, page 31)
We recommended the
Department issue the required refunds to insurance companies for overpayments
of the privilege tax within the 120 day requirement set forth by the
Code.
Department officials
concurred with our recommendation and stated it would make every effort to
issue the cash refunds as promptly as possible in the future.
FAILURE TO TIMELY RECONCILE DEPARTMENT RECEIPT RECORDS TO THE STATE
COMPTROLLER RECORDS
The Department did not
perform timely reconciliations of Department receipt records to the State
Comptroller records, as required by the Statewide Accounting Management
System (SAMS).
During the engagement
period, the Department’s receipts totaled $512,158,794. Receipts are collected by the Department
through five different cash systems.
Our testing of monthly receipt reconciliations of Department records
to the Comptroller’s SB04 Report noted the Department’s Division of
Professional Regulation failed to perform timely receipt reconciliations for
all twelve months of fiscal year 2006 in a timely manner. All monthly reconciliations were not
started until after fiscal year 2006 year end (July 2006) and not completed
until September 2006.
Department personnel
stated the timeliness and accuracy of receipt reconciliations are complicated
due to the use of several legacy financial systems and the current
implementation process of the Integrated Licensing and Enforcement System
(ILES) system for the Division of Professional Regulation. The implementation of the ILES system has
been initiated, but was not completed until fiscal year 2007. (Finding 7, pages 32-33) This finding was first reported in
2003.
We recommended the
Department ensure monthly reconciliations are performed in accordance with
SAMS procedures to ensure accurate financial reporting.
Department officials
concurred with our recommendation and stated it had taken interim steps to
consolidate the receipt reconciliations responsibilities within the Financial
Reporting Section of the Division of Fiscal Operations. (For previous Department response, see
Digest Footnote #2.)
NEED TO IMPROVE CONTROLS OVER VOUCHER PROCESSING, APPROVAL AND
PAYMENT
The Department did not
maintain adequate controls over the processing, approval and payment of
vouchers as required by the Illinois Administrative Code and Department
Policy.
During our testing of
invoice vouchers processed during the examination period, we noted the
following:
·
In 6 out of 60 (10%) invoice vouchers reviewed, the
vendor invoices were approved for payment from 2 to 37 days late;
·
In 10 out of 60 (17%) invoice vouchers reviewed, the
vendor invoices were not properly documented to identify the date of receipt
of a proper bill;
·
In 6 out of 60 (10%) invoice vouchers reviewed,
interest payments were not properly remitted to the vendors, totaling $69;
·
In 4 out of 50 (8%) invoice vouchers reviewed, there
was no copy of the required purchase order with the voucher. (Finding 10, pages 37-38) This
finding was first reported in 2003.
We recommended the
Department follow established policies and procedures to ensure invoice
vouchers are processed, approved and paid in a timely manner. Further, the Department should perform the
calculations necessary to determine if they owe any vendors interest and pay
required charges.
In its response Department
officials stated they believe adequate controls over processing, approval and
payment of vouchers are maintained.
The Department noted that the majority of processing delays were due
to vendor invoice problems and internal questions related to vendor invoices
that required time to review and confirm vendor billing accuracy (“proper
bill” as defined). (For previous
Department response, see Digest Footnote #3.)
In an auditors’ comment, we
noted that the Department did not dispute the facts noted in the
finding. Processing delays may have
been due to vendor invoice problems and internal questions relative to vendor
invoices. However, as noted in the
finding, the reasons for delays were not documented so auditors could not
determine when the invoice was a “proper bill”. Auditors noted the Department still has a responsibility to
comply with the Illinois Administrative Code and Department policy to ensure
vouchers are processed, approved and paid in a timely manner.
TIMESHEETS NOT MAINTAINED FOR CERTAIN EMPLOYEES
The Department is not
maintaining time sheets for union employees in compliance with the State
Officials and Employees Ethics Act (Act).
The Department
expended $39,725,118 for payroll and related costs and had an average of
approximately 500 union employees during fiscal year 2006.
During the engagement period, the
Department implemented an additional timekeeping system that is primarily
used to track time for merit compensation employees. This system does track time employees
spend on State business, but is not used for union employees. (Finding 11, page 39) This finding was first reported in
2004.
We recommended the Department
amend its policies to require all employees to maintain time sheets in
compliance with the Act.
Department officials concurred
with our recommendation and stated it was reviewing and addressing the timekeeping procedures for all
Department union employees. (For previous Department response, see
Digest Footnote #4.)
LACK OF AN ADEQUATE DISASTER CONTINGENCY PLAN FOR COMPUTER SYSTEMS
The Department did not
have a current, tested disaster contingency plan that addresses the recovery
of computer systems for all of its divisions.
The Department utilizes mainframe,
midrange and microcomputer networks comprised of approximately 115 servers
and 1,137 PCs to run its critical applications. The Divisions of Banking and Professional Regulation rely
heavily on information systems to track and process thousands of licenses for
the State. Recovery procedures for
these systems had not been formally documented.
The Department provided
documentation of disaster recovery procedures for its legacy agencies,
however, only the Division of Insurance document was up to date and had been
recently tested.
The Department’s Information
Technology (IT) functions are being consolidated into the Department of
Central Management Services (DCMS).
Service Level Agreements have been developed to outline the terms and
conditions under which DCMS will provide specified IT services to
consolidated agencies. (Finding 19,
pages 58-59)
We recommended the Department
develop and test a comprehensive disaster contingency plan that covers all
significant computer systems. The
Department should ensure that the responsibilities outlined in its Service
Level Agreement are adequately addressed in the Plan. In addition, the Department should work
with DCMS to ensure DCMS is complying with its responsibilities as outlined
in the Agreement.
In its response Department officials stated the move of DFPR
servers to DCMS is expected to be completed no later than August 31.
DFPR and DCMS are negotiating an agreement regarding the handling of DFPR
servers upon their relocation to CMS. The agreement, which is expected
to be formalized in 2007, explicitly assigns Disaster Recovery
responsibilities to DCMS.
DEPARTMENT BOARDS NOT FULLY STAFFED
The Secretary of the
Department did not appoint the required number of members to the various
Boards in order to fill vacancies.
·
The Secretary of the Department did not appoint three
members to the Social Work Examining and Disciplinary Board in order to fill
vacancies. Vacancies existed for two
public members since November 2002 and one licensed social worker since March
2002.
·
The Secretary of the Department did not appoint a
member to the Board of Nursing in order to fill a vacancy and allowed Board
positions to be held by individuals with expired terms. During our testing we noted that four of
ten (40%) positions were held by individuals with expired terms. One of ten (10%) positions has been vacant
since October 2005.
·
We noted during our testing of the State Pharmacy
Board that one of nine (11%) positions has been vacant since December 2005
and one of nine (11%) positions was held by an individual with term that
expired April 2004.
·
The Secretary of the Department did not appoint a
member to the Board of Orthotics, Prosthetics, and Pedorthics (Board) in
order to fill a vacancy and allowed Board positions to be held by individuals
with expired terms. During our
testing we noted that four of six (67%) positions were held by individuals
with expired terms. We also noted
that one of six (17%) positions (public consumer) has been vacant since
February 2001.
·
During our testing of the Board of Currency Exchange
Advisors we noted that seven out of seven (100%) board positions were
vacant. We noted that one position
has been vacant since January 1997, two positions have been vacant since
January 1998, two positions have been vacant since January 1999, and two
positions have been vacant since January 2001.
·
During our testing of the State Banking Board we
noted that three of four (75%) Class A positions were vacant and that seven
of ten (70%) Class B positions were vacant.
Department management
stated they are currently reviewing qualified candidates to fill the
vacancies. Department management
stated it is difficult to find willing candidates to fill the positions. Reappointments were not made due to
oversight. (Finding 28, pages
72-74) This finding was first
reported in 2004.
We recommended the Secretary
appoint qualifying members to these Boards as required by the Acts cited and
reappoint applicable Board members in a timely manner. In those cases where the Governor’s Office
is required to appoint the Board members we recommend the Department work
with the Governor’s Office to fill Board vacancies by appointing qualified
members to the Boards.
Department officials
concurred with our recommendation and stated that it would continue to work
with the Office of the Governor to ensure more timely appointments to the
various Boards/Committees. (For the
previous Department response, see Digest Footnote #5.)
RECOMMENDATIONS PRESENTED IN THE MANAGEMENT AUDIT OF GROUP WORKERS’
COMPENSATION SELF-INSURED POOLS NOT IMPLEMENTED
The Department did not
fully implement three of nine recommendations presented in the Management
Audit of Group Workers’ Compensation Self-Insured Pools (Management Audit)
conducted by the Office of the Auditor General.
The audit was released
in January 2003, pursuant to Legislative Audit Commission Resolution Number
121. The following are findings and
issues raised in the audit that have not been fully implemented:
·
The Management Audit found that there were pools in
liquidation and some active pools that included members with dissimilar risk
characteristics. The Workers’
Compensation Pool Law (215 ILCS 5/107a.03) enacted effective January 1, 2001
requires all pools to be comprised of members with homogenous risks. However, neither the statutes nor
Department rules define homogenous.
According to Department officials, this issue will be resolved by
regulations currently in draft form. Department officials have represented
that changes in regulations cannot be sought pending resolution of
outstanding lawsuits.
(Recommendation 4)
·
The Management Audit found that 12 of the 23 pools
licensed at December 31, 2001, either reported gross annual payrolls under
$10,000,000, or did not disclose payrolls in their annual statements at
all. Of the 9 active pools as of June
30, 2006, all had annual gross payrolls in excess of the statutory
requirement. The Department has
indicated that pools in runoff (not active) lack payroll. According to Department officials, this
issue will be resolved by regulations currently in draft form. Department officials have represented that
changes in regulations cannot be sought pending resolution of outstanding
lawsuits. (Recommendation 5)
·
The Management Audit found that the Group
Self-Insurers Workers’ Compensation Fund assets did not appear to be
sufficient to cover estimated claims against the fund as of June 30,
2002. As of June 30, 2002, the
Insolvency Fund balance was $152,051.
The estimated claims outstanding against the fund amounted to $1.1
million. The Management Audit
recommended the Department “Consider whether the statutory percentage of
semi-annual assessment paid by the pools should be increased to raise the
fund’s balance and seek legislation to assist in preventing future shortfalls.” In December of 2001, the Director ordered
assessments totaling in excess of $1.3 million. However, only $564,018 of these funds has been collected
through June 30, 2006. The primary
reason for this is that in October, 2002, lawsuits were filed by the pools
challenging the constitutionality of the statute. As of June 30, 2006, the outcome of the challenge was still
pending. Department officials have
represented that changes in legislation cannot be sought pending resolution
of outstanding lawsuits.
(Recommendation 9) (Finding
29, pages 75-77) This finding was first reported in 2004.
We recommended the
Department:
·
Continue in its efforts to enact final rules to
define homogeneous for pool membership, and monitor the pool members for
homogeneous risks on an ongoing basis;
·
Continue in its efforts to enact final rules that
would allow waiver of the gross payroll requirement for pools in runoff; and
·
Seek a statutory increase to the Insolvency Fund
assessments, or show cause why such an increase is not considered necessary.
Department officials
responded that all pools currently have members with homogeneous risks, but
it would continue to seek to enact rules to formalize this requirement.
Further, the Department responded that all pools with members currently meet
the statutory payroll requirement, but it would continue to seek to enact
rules to allow waivers for pools with no members. The Department also
responded that based on its current projections, the insolvency fund was
adequate to pay all losses for which the fund is responsible, but that it
would continue to evaluate the need to increase the assessments. (For the previous Department response, see
Digest Footnote #6.)
In an auditors’
comment, we noted that while all active pools have gross payrolls in
excess of the statutory requirements, the pools in runoff (not active) do not
meet these requirements and continue to subject the Department to unexpected
risks. Also, we disagreed with the
Department’s response indicating the insolvency fund is adequate to pay all
losses for which the fund is responsible.
Management had previously indicated that estimated claims outstanding
against the fund amounted to $1.1 million; however, funds available to pay these
claims at June 30, 2006 totaled only $375,000.
OTHER FINDINGS
The remaining findings are reportedly being given attention
by Agency management. We will review
progress toward implementation of our recommendations during our next
examination.
AUDITORS’ OPINION
Our auditors report the Department of Financial and
Professional Regulation’s financial statement of the Security Deposit Fund
#1109, as of and for the year ended June 30, 2006 is fairly stated in all
material respects.
____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JAF:pp
SPECIAL ASSISTANT AUDITORS
Sikich LLP was our special assistant auditors for this audit
and examination.
DIGEST
FOOTNOTES
#1 –
ENFORCEMENT ACTIVITIES NOT PERFORMED TIMELY AND NOT SUFFICIENTLY DOCUMENTED
2005: Concur.
The Chief of each investigative unit will be instructed to review all
investigative files before the files are either closed or sent to the
prosecution unit. Further, the Chiefs
will regularly review each investigator’s caseload to ensure that all reports
are signed and all activity is updated in the RAES system. The Chiefs of the prosecution unit will be
instructed to assign cases within 30 days of receipt. Further, they will regularly review the
cases of the attorneys to ensure that activity on the files is done within
the policy guidelines and that all documentation that must be in the attorney
work file is actually there. The
Administrative Assistants for each prosecution unit will be instructed to
review files referred from the investigations unit to ensure that all of the
investigative reports are signed and in the prosecution file. The Administrative Assistant will also
review the attorney’s files after the cases are disposed of to ensure that
copies of signed Director’s orders are contained in the files. The Chief of the probation unit will be
instructed to follow the policy guidelines to ensure that all deadlines are
met on a timely basis. The chief will
have regular case reviews with the investigators to ensure that the deadlines
are enforced and to ensure that all RAES entries are recorded in a timely
manner. A manual checklist is being
created to ensure all documents and processes have been completed
appropriately. Additionally, the
Department will explore the capabilities of ILES to provide an automatic
method of notifying staff of due dates for processes or actions.
#2 –
FAILURE TO TIMELY RECONCILE DEPARTMENT RECEIPT RECORDS TO THE ILLINOIS OFFICE
OF THE COMPTROLLER RECORDS
2005: Concur.
The Department is working on consolidating numerous legacy receipt
systems into a single integrated financial system. As this will be a multi-year project, the agency is taking
interim steps to consolidate receipt reconciliation functions within a common
area. This will help ensure
additional standardization and error checking procedures are implemented
until the new system can be developed.
The new system will be designed to provide a computerized receipt
function.
#3 –
INADEQUATE CONTROLS OVER VOUCHER PROCESSING, APPROVAL AND PAYMENT
2005: Concur.
DFPR is in the process of implementing a new policy requiring review
and approval of invoices by agency managers within a five-day time
frame. This will allow sufficient time
to process payments in accordance with the 30 day time limit defined in the Illinois
Administrative Code. The Accounting
Information System (AIS) generates an aging report that can be used to ensure
future compliance of the State Prompt Payment Act.
#4 –
TIME SHEETS NOT MAINTAINED FOR UNION EMPLOYEES
2005: Concur.
In January of this year, the Department implemented an additional
timekeeping system for the approximately 200 of its merit compensation
employees. This electronic system
requires employees to input the time they spend on state business to the
nearest quarter hour, and contains controls to ensure that submission of the
timesheet each week results in the employees, in effect, certifying their
timesheet. The Department policy was
communicated via e-mails and training sessions. The Department plans to begin negotiations with the unions to
expand this timekeeping system to all union employees later this year. Once this is completed, a formal, written
policy will be introduced.
#5 –
DEPARTMENT BOARDS NOT FULLY STAFFED
2005: Concur.
The Department will continue to work with the Governor’s Office to
fill the remaining vacancies on the State Banking Board of Illinois.
#6 -
RECOMMENDATIONS PRESENTED IN THE MANAGEMENT AUDIT OF GROUP WORKERS’
COMPENSATION SELF-INSURED POOLS NOT IMPLEMENTED
2005: Concur.
The Division of Insurance will continue its efforts to finalize and
submit a regulation to JCAR addressing the issues of similar risk
characteristics for the members of each workers’ compensation pool. The pool will also address whether any
required amount of member payroll is necessary for inactive pools which have
no members (pools in runoff). The
Division wishes to reiterate that even without the existence of regulation,
the members of each of the current active pools are annually reviewed by the
Division to assure they maintained the required minimum amount of
payroll. The Division will continue
its efforts to complete examinations of workers compensation pools within the
statutory timeframes. Such
examinations are conducted once every five years, while the Division receives
and analyses financial statements for every pool every three months, and
based on such analysis takes appropriate actions against the pools as
warranted. The Division will consider
proposing legislation, if necessary, pertaining to the amount of assessments
for the workers compensation pool insolvency fund once the litigation
challenging the constitutionality of the existing statute is resolved.
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