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REPORT DIGEST CLYDE L. CHOATE LIMITED SCOPE COMPLIANCE
EXAMINATION For the Two Years Ended: June 30, 2007 Summary of Findings: Total this audit 7 Total last audit 8 Repeated from last audit 6 Release Date: June 12, 2008
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 are also available on the worldwide web at http://www.auditor.illinois.gov |
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 sufficient controls over the utilization,
recording and reporting of its property.
¨
The Center lacked adequate internal controls and documentation for the
operation of their locally held funds.
{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, 2007
|
EXPENDITURE STATISTICS |
FY 2007 |
FY 2006 |
FY 2005 |
|
·
Total Expenditures (All Funds)............................. |
$36,590,859 |
$34,297,934 |
$36,265,043 |
|
OPERATIONS TOTAL......................................
%
of Total Expenditures..................................
Personal
Services...........................................
%
of Operations Expenditures....................
Average
No. Of Employees.......................
Average
Salary Per Employee....................
|
$36,463,399
99.65%
$27,026,362
74.12%
511
$52,889 |
$34,175,495
99.64%
$26,251,923
76.82%
517
$50,777 |
$36,141,109
99.66%
$26,583,554
73.56%
530
$50,158 |
|
Other
Payroll Costs (FICA, Retirement)..........
% of Operations Expenditures.................... |
$5,073,333
13.91% |
$4,183,075
12.24% |
$6,053,530
16.75% |
|
Commodities………………………………….......
%
of Operations Expenditures.........................
Contractual
Services.......................................
% of Operations Expenditures.................... |
$1,400,265
3.84%
$2,545,235
6.98% |
$1,407,000
4.12%
$2,014,636
5.89% |
$1,331,468
3.68%
$1,867,849
5.17% |
|
All Other Items..............................................
%
of Operations Expenditures....................
GRANTS TOTAL....................................................
%
of Total Expenditures.....................................
|
$418,204
1.15%
$127,460
0.35% |
$318,861
0.93%
$122,439
0.36% |
$304,708
0.84%
$123,934
0.34% |
|
·
Cost of Property and Equipment...........................
·
Cost of Inventories on hand (not examined)......... |
$49,738,130
$381,496 |
$49,749,507
$366,191 |
$49,781,933
$614,018 |
|
SELECTED ACTIVITY
MEASURES (Not Examined) |
FY 2007 |
FY 2006 |
FY 2005 |
|
·
Average Number of
Residents...................................
|
248 |
251 |
267 |
|
·
Ratio of Employees to
Residents................................
|
2.1 to 1 |
2.1 to 1 |
2.0 to 1 |
|
·
Cost Per Year Per
Resident......................................
|
* |
$177,723 |
$181,186 |
|
* The Department had not calculated these figures as of
the end of fieldwork. |
|||
|
CENTER DIRECTOR |
|
During Audit Period: Ms. Janice Farmer, Center Director
Currently: Ms. Janice Farmer, Center Director |
|
Auditors unable to
report on inventory
Person responsible for maintaining inventory also performed physical counts
General store inventory was not well maintained
|
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. Total commodities expenditures were $1,400,265 and $1,407,000 for fiscal years 2007 and 2006, 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, 2006 and June 30, 2007 in the Center’s limited scope compliance examination report. During our testing of the Center’s commodity inventory records we noted deficiencies. Some of the problems noted follow:
·
Storekeepers
from three of the four stores (75%) who are responsible for maintaining the
inventory also performed the physical inventory counts. Temporary workers were brought in to help
with inventory; however, in the general store, the staff responsible for
maintaining the inventory performed the count and the temporary workers
recorded the figures.
·
Interim
periodic inventory test counts were not performed in FY07.
·
Inventory was
not well maintained in the general store (food). Inventory items were not stored in an orderly manner and the
same items were often stored in multiple locations. Instances were noted where food items that had expired were
still in inventory.
·
Sixteen of 24
(67%) items tested during the inventory test count required an adjustment to
write-down inventory. The majority of
adjustments made by the Center were to write-down food inventory. The frequent write-down of food inventory
suggests that items are being removed from the food store without appropriate
requisitions.
·
As a result
of the annual inventory count, during June 2007 the Center adjusted inventory
down by $439,784 (115%). Most of the
adjustment ($411,688) was due to the Center not recording their coal usage
during FY07.
·
The business
office frequently failed to forward weekly and monthly inventory reports to
the storekeepers.
·
One of twelve
(8%) commodities vouchers tested, valued at $418, could not be traced to the
Center's Monthly Status Report and was recorded in the wrong fiscal
year. The Center records inventory
into the inventory system at the date the storekeeper signs off on a
receiving report, which could be several days or weeks after the inventory is
actually received. This results in
ending inventory being incorrectly stated.
·
Seventeen of
77 (22%) items selected for test counts could not be reconciled to the June
30, 2007 Monthly Commodity Status Report. The business office has experienced significant turnover and changes in commodity control, purchasing and accountant supervisor. A lack of clarity between the central office and the Center led to the mistake between the comparison of cans to cases. (Finding 1, pages 9-11) We recommended the Center devote the resources necessary to timely report inventory transactions to the business office. In addition, we recommended the Center develop and implement internal control procedures to ensure the following are completed in a timely manner: · Inventory transactions are input into the reporting system · Inventory reports are distributed to the appropriate storekeepers · Requisition forms are completed every time inventory items are consumed We also recommended the Center conduct a complete physical inventory at the end of each fiscal year with staff independent of maintaining the inventory. The Center should develop procedures to ensure the general store inventories are better organized and they periodically test count inventory throughout the year to increase the accuracy of perpetual inventory records and ensure expired items are properly disposed.
Center officials partially agreed with our recommendations and stated it does ensure inventory in the food store is well maintained. The food store has been separated into areas for general storage, immediate use items and items needed for menu substitutes. The multiple locations have been established to increase efficiency at the facility. Inventory is rotated to minimize loss through expiration. Requisitions for all food items are prepared and submitted for approval in advance of issuance. Periodic test counts are performed throughout the year, discrepancies are followed up on and adjustments made if necessary.
Center officials agreed that some controls were not sufficient during the audit period due to the business office experiencing significant turnover and staff shortages which resulted in the recording and reconciling exceptions noted by the auditors. The facility now has additional staff and will increase controls over commodity inventories.
NONCOMPLIANCE WITH PROPERTY CONTROL
PROCEDURES
The
Center did not maintain sufficient controls over the utilization, recording
and reporting of its property. Some
of the conditions noted follow:
·
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 604 items valued at
$254,714.
·
Seventeen of
20 (85%) property location adjustments tested, valued at $4,722, were not
made timely. Since location
adjustments were not entered until several months after the asset inventory
count occurred we were unable to reconcile the Center's Asset Inventory Count
record to the Comptroller's Activity Location Report.
·
Three of 40
(7.5%) equipment items tested, totaling $2,032, did not have a property
control tag affixed and two of 40 (5%) items tested, totaling $876, could not
be traced from the inventory report to the physical asset.
·
Six of 15
(40%) asset transactions tested did not have proper documentation; this
included two transfers totaling $21,362 and four deletions totaling $20,150. Center management stated the storekeeper/property control position was vacant for several months. This resulted in delay in the accurate accounting of property. (Finding 2, pages 12-13) We recommended the Center
develop and implement internal procedures to ensure equipment transactions
have proper supporting documentation, approval, and are reported timely, all
capital assets have a control tag, and surplus and scrap property is reported
and transferred to Department of Central Management Services on a timely
basis. Center officials agreed with our recommendation and stated the Property Control Clerk position that remained vacant for several months during the audit period has now been filled. The facility has been working routinely to eliminate surplus, damaged and outdated equipment. Property will be marked with an indelible marker and a property control tag to ensure identification. Controls will be strengthened to ensure proper documentation, approval and timely reporting. INADEQUATE CONTROLS
OVER LOCALLY HELD FUNDS The
Center lacked adequate internal controls and documentation for the operation
of their locally held funds. Some of the exceptions noted
during our testing of the Patient Travel Trust Fund follow:
·
Although the
disbursement form has an area for a unique disbursement number, 10 of 10
(100%) disbursements tested, totaling $556, did not have a disbursement
number.
·
Two of ten
(20%) disbursements tested, totaling $216, that required travel vouchers be
completed, did not have completed travel vouchers.
·
The Patient
Travel Fund, which is a cash fund, had a negative balance during for 56 days
during FY06. The highest negative
balance was $437.
·
The Travel
Fund Disbursements Journal for July 2006 was missing. The following exceptions were
noted during our testing of the Special Trust Fund:
·
Eleven of
twenty (55%) disbursements tested, totaling $2,201, were missing supporting
documentation; seven disbursements were missing a voucher or invoice, three
disbursements were missing a disbursement request, and two disbursements did
not have any supporting documentation.
·
Seven of
twenty (35%) disbursements tested, totaling $340, did not have indication of
approval.
·
Four of
twenty (20%) receipts tested, totaling $138, could not be traced from the
receipts journal to the bank statement.
·
Two of twenty
(10%) individual items on deposit slips tested, totaling $46, could not be
traced from the bank statement to the receipt documentation. The
following exceptions were noted during our testing of the Recipient Trust
Fund:
·
Twenty of 100
(20%) disbursements tested, totaling $11,514, were missing supporting
documentation; sixteen disbursements did not have a disbursement request, two
disbursements were missing invoices, and four disbursements did not have any
supporting documentation.
·
Twenty-nine
of 100 (29%) disbursements tested, totaling $13,511, did not have indication
of approval.
·
Fourteen of
100 (14%) disbursements tested, totaling $2,643, were not stamped that they
were paid.
·
One of twenty
receipts (5%) tested, totaling $25, could not be traced from the receipts
journal to the bank statement. Center
management stated it does not currently have procedures in place that require
documentation of approval of disbursements and supporting documentation may
have been misplaced when someone was temporarily filling in for the person
that oversees the locally held funds.
Center management further stated some receipts could not be traced to
the bank statement because cash receipts are deposited together and there is
not a breakdown on the deposit slip for cash. Additionally, the accountant supervisor position was vacated
for most of the examination period. (Finding
3, pages 14-16) We
recommended the Center develop and implement internal controls to ensure that
disbursements from the fund have adequate supporting documentation, are
properly approved, are properly recorded in cash disbursements and receipts
logs and are periodically reconciled to the unexpended cash balance by an
individual independent of the receipt and disbursement process. Center officials agreed with our recommendations and stated the Center will strengthen controls over locally-held funds to ensure proper supporting documentation, approvals, recording of transactions, reconciliation and segregation of duties. The vacant Accountant Supervisor position has been filled and will oversee maintenance of the locally-held funds. 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.
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:aks SPECIAL ASSISTANT AUDITORS Our
special assistant auditors were Kemper CPA Group, LLP. |