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REPORT DIGEST CLYDE L. CHOATE
MENTAL
HEALTH AND DEVELOPMENTAL CENTER
LIMITED SCOPE COMPLIANCE EXAMINATION For the Two Years Ended: June 30, 2005 Summary of Findings: Total this audit 8 Total last audit 0 Repeated from last audit 0 Release Date: June 13, 2006
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 |
SYNOPSIS
¨
The Center did not complete an adequate year-end physical inventory and
did not sufficiently maintain perpetual commodities inventory records.
¨
The Center did not maintain proper documentation of property
transactions and did not reconcile Center property records to amounts
reported to the Illinois Office of the Comptroller.
¨
The Center failed to document review of payroll vouchers, did not
perform employee evaluations timely, and erroneously calculated an employee’s
accrued vacation.
¨
The Center lacked adequate internal controls and documentation for the
operation of the Patient Travel Trust Fund.
{Expenditures
and Activity Measures are summarized on the reverse page.} |
CLYDE L. CHOATE MENTAL
HEALTH AND DEVELOPMENTAL CENTER
LIMITED SCOPE COMPLIANCE
EXAMINATION
For The Two Years Ended
June 30, 2005
|
EXPENDITURE STATISTICS |
FY 2005 |
FY 2004 |
FY 2003 |
|
·
Total Expenditures (All Appropriated Funds)...... |
$36,265,043 |
$32,872,574 |
$31,985,202 |
|
OPERATIONS TOTAL......................................
%
of Total Expenditures..................................
Personal
Services...........................................
%
of Operations Expenditures....................
Average
No. Of Employees.......................
Average
Salary Per Employee.................... |
$36,141,109 99.66% $26,583,554 73.55% 530 $50,158 |
$32,791,775
99.75%
$24,420,337
74.47%
524
$46,604 |
$31,903,602
99.74%
$23,499,686
73.66%
489
$48,057 |
|
Other
Payroll Costs (FICA, Retirement)..........
% of Operations Expenditures.................... |
$6,053,530 16.75% |
$4,753,698
14.50% |
$5,018,358
15.73% |
|
Contractual Services.......................................
% of Operations Expenditures.................... |
$1,867,849 5.17% |
$1,980,368
6.04% |
$1,906,469
5.98% |
|
All Other Items..............................................
%
of Operations Expenditures....................
GRANTS TOTAL....................................................
% of Total Expenditures..................................... |
$1,636,176 4.53% $123,934 0.34% |
$1,637,372
4.99%
$80,799
0.25% |
$1,479,089
4.63%
$81,600
0.26% |
|
·
Cost of Property and Equipment...........................
·
Cost of Inventories on hand (not examined)......... |
$49,781,933 $567,639 |
$49,355,134
$403,708 |
$48,681,097
$390,543 |
|
SELECTED ACTIVITY
MEASURES (Not Examined) |
FY 2005 |
FY 2004 |
FY 2003 |
|
·
Average Number of
Residents................................... |
267 |
278 |
279 |
|
·
Ratio of Employees to
Residents................................ |
2.0 to 1 |
1.9 to 1 |
1.8 to 1 |
|
·
Cost Per Year Per
Resident...................................... |
* |
$162,461 |
$150,336 |
|
* The Department had not calculated these figures as of
the end of fieldwork. |
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CENTER DIRECTOR(S) |
|
During Audit Period: Ms. Janice Farmer, Center Director
Currently: Ms. Janice Farmer, Center Director |
|
Poor record keeping and numerous weaknesses in internal controls prevented auditors from reporting on inventory Requisitions not submitted to the business office timely Physical inventory not completed close to the fiscal year-end |
FINDINGS,
CONCLUSIONS, AND RECOMMENDATIONS INVENTORY NONCOMPLIANCE AND CONTROL WEAKNESSES The Center did not complete an adequate year-end physical inventory and did not sufficiently maintain perpetual commodities inventory records. The total value of commodities inventory at June 30, 2003 was $390,543. Total commodities expenditures were $1,331,468 and $1,237,837 for fiscal years 2005 and 2004, respectively. Because of poor record keeping and the numerous weaknesses noted in internal controls over commodities inventory, auditors were unable to report on commodities inventory balances at June 30, 2004 and June 30, 2005 in the Center’s limited scope compliance examination report. We noted the following exceptions and weaknesses during our testing of the Center’s commodity inventory records: · General store (food) requisitions were not being submitted to the business office in a timely manner. During our inventory observation on June 21, 2005 we noted 19 outstanding inventory requisition forms that were not entered into the inventory management system. · The Center’s complete physical inventory count was not performed close enough to fiscal year end to ensure accurate reporting of year-end inventory. · Most of the same staff responsible for maintaining the inventory performed the physical inventory counts. · No interim periodic inventory test counts were performed. · 40 of 72 (56%) items selected for test counts could not be reconciled to the June 30 Monthly Commodity Status Report. · Inventory was not well maintained in the general store (food). The same inventory items were often stored in various locations. · The Center was not inputting inventory transactions into their system on a timely basis. · The Center failed to follow a memo from the Department of Human Services (DHS) for fiscal year 2005 inventory cutoff. DHS sent a memo to the Centers stating that fiscal year 2005 inventory transactions could be input until July 10, 2005. We noted the Center input fiscal year 2006 transactions before July 10th and Center personnel indicated that fiscal year 2005 transactions were input after July 10th. · The business office frequently failed to forward weekly and monthly inventory reports to the storekeepers. · Inventory items were removed from the general store (non-food) without appropriate requisitions. The Illinois Administrative Code (44 Ill. Adm. Code 1.6010) requires each state agency to have general supervision and accountability for tangible personal property and other supplies under its control and to conduct a periodic inventory of all warehouses and similar storage areas under its jurisdiction. Center management stated that the problems with inventory were caused by employee turnover, employees on leave of absence, and insufficient staff allocated to this area. (Finding 1, pages 10-12) We recommended that the Center: · Devote the resources necessary to timely report inventory transactions to the business office; · Require the completion of requisitions and timely input inventory transactions into the reporting system; · Timely distribute inventory reports to the appropriate storekeepers; · Conduct a complete physical inventory near the end of the physical year with staff independent of maintaining the inventory; · Better organize general stores inventories by maintaining inventory items in one location; · Consider conducting periodic test counts of inventory throughout the year to increase the accuracy of perpetual inventory records. The Department and Center agreed with our recommendations and stated that management was currently implementing directives and procedures and would conduct training to address the recommendations. NONCOMPLIANCE WITH PROPERTY CONTROL PROCEDURES
The Center is not in compliance with property control procedures. We noted the following conditions: · During the tour of buildings and grounds, we noted a storage building that contained instances of oversupply and deterioration of property and equipment. The building contained 632 items valued at $213,258. Center officials acknowledged that some of the items were equipment in excess of the Center’s current needs and some of the items were likely scrap. · 21 of 32 (66%) property transactions tested did not have proper documentation maintained at the Center. · Reconciliations were not performed between the Property Control System (agency records) and amounts reported to the Illinois Office of the Comptroller. We were able to reconcile Center records to the ending balances reported to the Comptroller for the fiscal years ended June 30, 2004 and 2005, but were unable to reconcile Center records to the activity reported to the Comptroller during the period. According to Center personnel, the property control weaknesses were the result of employee turnover and unintentional oversight. (Finding 2, pages 13-14) Department and Center management accepted our recommendations to review internal procedures to improve controls and ensure equipment transactions are properly reported including reconciling Center records to those reported to the Illinois Office of the Comptroller, to prepare transaction forms in accordance with Department Procedures, and to report and transfer Surplus property on a more timely basis.
CONTROLS OVER
PERSONAL SERVICES NEED IMPROVEMENT The Center failed to document review of payroll vouchers, did not perform employee evaluations timely, and erroneously calculated an employee’s accrued vacation. · All 48 payroll vouchers examined totaling $6,258,595 showed no evidence of review by the Center’s management. Good internal control procedures require that Center personnel evidence their review of the payroll systems input that generates the payroll vouchers. · During our testing of employee files, we noted 5 of 50 (10%) files contained either untimely employee evaluations or employee evaluations that had not been completed. Three of the evaluations tested were performed an average of 6 months late. Two of the evaluations tested had not been performed in over a year as of the end of fieldwork September 30, 2005. The Illinois Administrative Code (80 IL Adm. Code 302.270) requires an agency to prepare an evaluation not less often than annually. · Out of 50 records tested we discovered 1 (2%) file with an improper calculation of prior service credit on the Center’s current records dating back to when the employee was hired in 1998. An employee was erroneously given full-time prior service credit for part-time work performed at a state university resulting in the employee receiving an extra 13.8 days of vacation valued at approximately $1,800. The Center is reviewing the extra vacation granted to determine their course of action. Center personnel indicated clerical oversights and turnover in the Business Administrator position were reasons for the lack of documented review of the payroll systems input that generates the payroll vouchers. Center personnel stated that the untimely employee evaluations, were caused by insufficient staff to timely perform this function. Center personnel stated the accrued vacation error was a clerical oversight. (Finding 3, pages 15-17) We recommended the Center document approval of payroll vouchers, allocate the resources necessary to timely perform employee evaluations, and properly assess the prior service status of employees when calculating accrued vacation for new employees. The Department and Center disagreed with our recommendation and noted that the State Finance Act (30 ILCS 105/9.03) clearly states that the Chief Executive Officer or his designee shall certify payroll vouchers. However, the Department and Center noted that the Center Business Administrator would now verify the payroll vouchers each payroll period and would allocate the resources necessary to timely perform employee evaluations. The Department and Center noted that the error in calculating
the improper service credit was action dated back to 1998 and was not a
matter that arose during the timeframe of the audit. In our auditors’ comment we noted that good internal control procedures would dictate that Center personnel located at the Clyde L. Choate facility in Anna, Illinois would need to evidence their review of the pertinent payroll input information. We noted that although the prior service calculation error occurred in 1998, the incorrect balance was still maintained on the facility records at the time of our examination. INADEQUATE CONTROLS
OVER PATIENT TRAVEL TRUST FUND The Center lacked adequate internal controls and documentation for the operation of Patient Travel Trust Fund. The following exceptions were noted during our testing of the Patient Travel Trust Fund: · The Center failed to maintain a disbursements log summarizing Patient Travel Trust Fund expenditures. Disbursements totaled $4,700 and $5,026 in fiscal years 2004 and 2005, respectively. · No reconciliations were performed of travel expenditures to unexpended cash balances. Appropriations from the travel line item to the Patient Travel Trust Fund were $5,800 and $3,300 in fiscal years 2004 and 2005, respectively. · Fiscal year 2004 patient travel fund expenditures records could not be located. Disbursements from the fund in fiscal year 2004 were $4,700. · Fiscal year 2005 patient travel fund expenditures could not be reconciled from agency records to supporting documentation. The unreconciled difference was $593. Center personnel indicated that they were aware of inadequate controls over this fund and cited staff shortages caused by the long-term leave of absence taken by the travel fund supervisor. (Finding 4, pages 18-19) We recommend the Center strengthen internal controls over the Patient Travel Trust Fund to ensure that expenditures from the fund have adequate supporting documentation, are properly recorded in cash disbursements logs and are periodically reconciled to the unexpended cash balance by an independent person. Department and Center management agreed with our recommendations and indicated that they have reassigned the responsibility for the Patient Travel Trust Fund. OTHER FINDINGS Department and Center management indicated that they are addressing the remaining findings and taking appropriate corrective action. We will review the Center’s progress toward implementation of our recommendations in our next compliance examination. Ms. Carol L. Adams, Secretary of the Illinois Department of Human Services provided the responses to our recommendations.
AUDITORS’
REPORT We
conducted a limited scope compliance examination 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 financial audit of the entire
Department. Financial statements for
the Department will be presented in that report. _____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JAF:pp SPECIAL
ASSISTANT AUDITORS Our special assistant auditors were West
& Company, LLC. |