REPORT DIGEST

DEAF AND HARD OF HEARING COMMISSION

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2019

Release Date:  March 18, 2021

FINDINGS THIS AUDIT:  10

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 3 -- 5
Category 2:  3 -- 2 -- 5
Category 3:  0 -- 0 -- 0
TOTAL:  5 -- 5 -- 10

FINDINGS LAST AUDIT: 6

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 are
also available on the worldwide web at
www.auditor.illinois.gov

INTRODUCTION

Because of the significance and
pervasiveness of the matters described
within the findings included within the
report, we expressed an ADVERSE OPINION
on the Commission’s compliance with the
specified requirements which comprise a
State compliance examination. The
Codification of Statements on Standards
for Attestation Engagements (AT-C§
205.72) states a practitioner “should
express an adverse opinion when the
practitioner, having obtained sufficient
appropriate evidence, concludes that
misstatements, individually or in the
aggregate, are both material and
pervasive to the subject matter.”

SYNOPSIS

• (19-1) The Commission did not provide
requested documentation to auditors.
• (19-2) The Commission did not have
adequate segregation of duties over its
expenditure processing function.
• (19-3) The Commission did not ensure
all monthly reconciliations of the
Commission’s receipt and expenditure
records to the records of the Office of
the State Comptroller were timely and
accurately performed.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

FAILURE TO PROVIDE REQUESTED ENGAGEMENT
DOCUMENTATION

The Deaf and Hard of Hearing Commission
(Commission) did not provide requested
documentation to auditors.

During the compliance examination, we
made numerous requests from the
Commission which were not fulfilled as
follows:

• The Commission did not provide
requested information related to the
operation of its petty cash fund.
• The Commission did not provide
requested information related to its
property control operations:
– Corresponding invoice-vouchers for
equipment purchased during Fiscal Year
2018 and Fiscal Year 2019; and,
– Supporting documentation related to the
deletion of equipment items during Fiscal
Year 2018 and Fiscal Year 2019.
• The Commission did not provide
requested information regarding the
extent of electronic processing and
complexity of electronic operations,
including policies and procedures
governing confidential information.
Additionally, information regarding
application administration and access
rights was not provided.  (Finding 1,
pages 12-13)

We recommended the Commission ensure
documentation is provided to the auditors
in a timely manner as required by the
Illinois State Auditing Act.

The Commission agreed with the
recommendation, noting it will ensure all
future audit requests are responded to in
a timely manner going forward.

INADEQUATE SEGREGATION OF DUTIES

The Commission did not have adequate
segregation of duties over its
expenditure processing function.

During testing, we noted for non-payroll
expenditures, one individual had the
authority to perform the following parts
of the transaction cycle, including:

• Authorization by reviewing and
approving transactions, including having
signature authority;
• Custody by maintaining electronic and
physical records and submitting
expenditures for payment to the State
Comptroller;
• Recordkeeping by preparing entries and
maintaining the Commission’s internal
accounting records; and,
• Reconciliation by preparing
reconciliations to the State
Comptroller’s records to verify each
transaction’s validity, proper
authorization, and entry into the
Commission’s accounting records.

We did not identify any compensating
controls to mitigate this significant
control weakness over the Commission’s
non-payroll expenditure transaction
cycle, which totaled $427,841 during
Fiscal Year 2018 and $272,154 during
Fiscal Year 2019.  (Finding 2, pages
14-15)

We recommended the Commission implement
procedures to limit one person from
having the authority to perform all the
functions associated with a transaction.

The Commission agreed with the
recommendation, noting the Commission
will review and implement controls to
ensure fiscal prudence in managing the
resources.

FAILURE TO PERFORM REQUIRED
RECONCILIATIONS

The Commission did not ensure all monthly
reconciliations of the Commission’s
receipt and expenditure records to the
records of the Office of the State
Comptroller (Comptroller) were timely and
accurately performed.

During testing, we noted the following:

• Eighteen of 24 (75%) monthly
reconciliations of the Commission’s
receipt records to the Comptroller’s
Monthly Revenue Status Report (SB04) were
not performed.  These reconciliations
were for the months of July 2017 through
December 2018. We were able to reconcile
the Commission’s records to the SB04.

• Six of 24 (25%) monthly reconciliations
of the Commission’s receipt records to
the Comptroller’s SB04 did not contain
documentation of the date of completion.
As such, we were unable to determine if
the reconciliations were performed
timely.

• The Commission included a credit of
$210 on its Fiscal Year 2018 receipts
ledger that was processed in Fiscal Year
2017.  As a result, the Commission’s
Fiscal Year 2018 receipts records were
overstated by $210.

• The Commission maintained spreadsheets
reconciling the Commission’s expenditure
records to those of the Comptroller for
Fiscal Year 2018 and Fiscal Year 2019.
During our review of the spreadsheets, we
noted the following:
– The spreadsheets did not document the
dates of reconciliation.  As such, we
could not determine the timeliness of the
reconciliations performed.
– The amounts reported in the
Commission’s expenditure records did not
agree to the Comptroller’s records for
Fiscal Year 2018.  The discrepancies
totaled $75,525.  (Finding 3, pages
16-17)

We recommended the Commission strengthen
its controls and procedures to ensure its
receipts and expenditure records are
properly and timely reconciled to
Comptroller records.

The Commission agreed with the
recommendation, noting they will
implement procedures for formal
reconciliations to be documented and
completed in a timely manner.

OTHER FINDINGS

The remaining findings pertain to voucher
processing weaknesses, noncompliance with
statutory requirements, inadequate
controls over receipts, noncompliance
with the Fiscal Control and Internal
Auditing Act, inadequate controls over
Agency Fee Imposition Reports, inadequate
controls over personal services, and
failure to report held invoices to the
State Comptroller. We will review the
Commission’s progress towards the
implementation of our recommendations in
our next compliance examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Commission for the two
years ended June 30, 2019, as required by
the Illinois State Auditing Act.  Because
of the effect of the noncompliance
described in Finding 2019-001 through
Finding 2019-005, the accountants stated
the Commission did not comply with the
requirements described in the report.

This compliance examination was conducted
by the Office of the Auditor General’s
staff.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:cgc