REPORT DIGEST

DEPARTMENT OF REHABILITATION SERVICES
ILLINOIS SCHOOL FOR THE VISUALLY IMPAIRED

FINANCIAL AND COMPLIANCE AUDIT
For the Two Years Ended:
June 30, 1996

Summary of Findings:

Release Date:
May 8, 1997

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

SYNOPSIS

• Appropriations for the School were used to pay for work performed at another facility.

• An ongoing dispute with a utility company resulted in over $22,000 of unpaid finance charges accruing between May 1995 and June 1996. This finding has been repeated since 1994.

• Property and equipment records were not accurate. This finding has been repeated since 1988.

{Expenditures and Activity Measures are summarized on the next page.}

FY 1996

FY 1995

FY 1994

• Total Expenditures (All Appropriated
  Funds)

OPERATIONS TOTAL
% of Total Expenditures

 

Personal Services
% of Operations Expenditures
Average No. of Employees

 

Other Payroll Costs (FICA, Retirement)
% of Operations Expenditures

 

Contractual Services
% of Operations Expenditures

 

All Other Operations Items
% of Operations Expenditures

 

GRANTS TOTAL
% of Total Expenditures

• Cost of Property and Equipment

$6,218,254


$6,064,126
97.52%

$4,711,435
77.69%
139

$588,136
9.70%

$431,293
7.11%

$333,262
5.50%

$154,128
2.48%

$14,105,575

$5,793,739


$5,649,758
97.51%

$4,324,504
76.54%
138

$543,380
9.62%

$485,222
8.59%

$296,652
5.25%

$143,981
2.49%

$12,287,343

$5,457,652


$5,376,209
98.51%

$4,238,559
77.66%
143

$518,813
9.51%

$349,950
6.41%

$268,887
4.93%

$81,443
1.49%

$10,607,775

FY 1996

FY 1995

FY 1994

• Assets - As of June 30,
• Liabilities - As of June 30,
• Revenues
• Expenditures

$110,242
$22,353
$53,956
$123,357

$163,389
$6,099
$56,701
$51,269

$160,825
$8,967
$52,284
$33,654

FY 1996

FY 1995

FY 1994

• Average Student Population
• Employee to Student Ratio
• Cost per Student

93
1.49/1
$64,249

89
1.55/1
$62,543

106
1.35/1
$50,212

Currently: Dr. Dorothy Arensman, Superintendent

The School paid for work performed at another facility

Detailed itemized invoices were not required prior to payment

Over $22,000 of disputed finance charges have accrued

Twenty-four percent of the property items tested were inaccurate

FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS

IMPROPER USE OF SCHOOL APPROPRIATION

The Department of Rehabilitation Services (DORS) entered into a contract on behalf of the Illinois School for the Visually Impaired (School) to identify the location of lead paint at both the School and the Illinois School for the Deaf (ISD) during fiscal year 1995. The entire $80,000 was paid with School for the Visually Impaired appropriations.

We noted on a fiscal year 1996 request for additional fees by the vendor, the services performed were approximately 68% for ISD and 32% for the School.

In addition, the contract did not require the submission of detailed invoices of the work performed as required by the State Comptroller Act (15 ILCS 405/9) and CUSAS Procedure 17.10.50. Detailed invoices to support the payments would have enabled the School and ISD to monitor the work performed as the payments were made and to allocate the payments between entities as the work progressed. (Finding 1, page 17)

We recommended that funds be obligated only for authorized School expenditures. We also recommended that detailed support be required prior to approving contractual service payments.

The Department responded that neither the contractor nor the administration could estimate the appropriate split of funding between the School and ISD when the fiscal year 1995 contract was executed. The Department states the contract was originally presented to the Legislature as an overall plan for both facilities and approved. Consequently, they do not believe the School appropriation was improperly used. However, Department officials stated in the future they will obligate School funds only for authorized expenditures, and payment will only be made when detailed supporting documentation is submitted.

UNRECONCILED UTILITY BILLS

The School has been involved in a dispute since 1990 with a utility company for charges originating in fiscal year 1987. The dispute involves finance charges that had accrued for unpaid utility bills. A ruling by the Court of Claims in 1996 resulted in the settlement of claims through May 1995. However, $22,390 of finance charges accruing between May 1995 and June 1996 are still unresolved, and the utility company has not adjusted its billings to reflect the Court's ruling. This finding has been repeated since 1994. (Finding 3, page 20)

We recommended the School continue negotiations with the utility company to correct the outstanding balance to reflect actual charges owed by the School and to resolve those finance charges not resolved by the Court of Claims ruling. We also recommended the School pay all current charges timely and reconcile outstanding balances monthly to avoid further problems.

The Department responded that the case has been settled by the Court of Claims. They have met with the utility company and are in the process of getting all the late charges and interest written off the billing. The Department responded the utility company had indicated the December 1996 billing should reflect a correct balance with all of the interest and late charges removed. (For previous Department responses, see Digest footnote 1.)

INACCURATE PROPERTY AND EQUIPMENT RECORDS

The School's property and equipment records were not accurate. During our audit, we noted exceptions with 24% of the items tested. These exceptions included items totaling $18,476 which did not have property control tags, items totaling $10,831 that could not be located, items totaling $8,053 that were in the wrong location, as well as items located at the School but not listed on the property records. (Finding 4, page 22) This finding has been repeated since 1988.

We recommended the School comply with the State Property Control Act and DCMS' Property Rules. We also recommended the School communicate the importance of property control procedures to School employees. (For previous Department responses, see Digest footnote 2.)

The School concurred with the finding and will review requirements of the State Property Control Act and DCMS' Property Rules to ensure they are in place at the School. The School also stated there have been considerable steps taken to establish controls over the property area at the School.

OTHER FINDING

The remaining finding is less significant and is being given appropriate attention by the School. We will review progress toward implementing these recommendations in our next audit. Responses to the recommendations were provided by Ms. Pat Zak, Chief Internal Auditor for the Department of Rehabilitation Services.

AUDITORS' OPINION

Our auditors state the financial statements for the locally held funds of the Illinois Department of Rehabilitation Services - Illinois School for the Visually Impaired are fairly presented.

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:BAR:pp

SPECIAL ASSISTANT AUDITORS

Guthoff & Company, LTD. were our special assistant auditors for this audit.

DIGEST FOOTNOTES

#1 UNRECONCILED UTILITY BILLS - Previous Department Responses

1994: "The Agency agrees that for past periods utility bills at the School have gone unpaid. In the past, we have requested appropriations to pay for these liabilities and have been unsuccessful in acquiring any funds for this purpose. Again, in the FY96 budget submission, we have asked for funding so that these bills may be liquidated. If the Legislature deems this an appropriate utilization of funding and provides us with an appropriation, we will be able to liquidate these past debts. If not, we will have to keep asking for the funding. The Agency has no recourse other than to continue to ask for funding from the Legislature.

We will also meet with the vendor to try to negotiate a lower amount due. As part of this negotiation process, we will attempt to obtain an agreement that will stop the future accrual of interest charges."

#2 INACCURATE PROPERTY AND EQUIPMENT RECORDS - Previous Department Responses

1994: "We agree that extra effort needs to be made to assure all property and equipment records are completed timely and accurately at ISVI. We will conduct an overall review of the equipment and property management at the School to determine what course of action is best suited to resolve the problem. This review will be done by School staff, Central Office staff, and Internal Audit staff and recommendations will be made and implemented. If the recommendations include the addition of extra staff at the School for property management, we will review staffing plans at the time to determine if funding is available for additional staff, or if other options should be addressed, such as the use of part time or student workers. Procedures have already been developed and disseminated by Central Office to all facilities for uniform property control. We will make sure that these procedures are given to the appropriate staff at ISVI."

1992: "We concur and accept the recommendation."

1990: "We concur with the recommendation."

1988: "Recommendation accepted.

The Business Office staff have been reminded of the established procedures for reporting and recording all equipment transactions. Annual physical inventory counts will be performed by someone other than the property clerk."