REPORT DIGEST

JOHN J. MADDEN MENTAL HEALTH CENTER

COMPLIANCE AUDIT
For the Two Years Ended:
June 30, 1997

Summary of Findings:

Release Date:
March 12, 1998

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

• The Center had excessive levels of inventory in its general stores and pharmacy. This condition has existed since 1993.
• The Center did not process invoices in a timely manner and vouchers did not contain the appropriate invoice number and/or date.
• The pharmacy did not have accurate counts of inventory on hand.

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

FY 1997

FY 1996

FY 1995

• Total Expenditures (All Appropriated Funds)

OPERATIONS TOTAL
% of Total Expenditures
Personal Services
% of Operations Expenditures
Average No. of Employees
Average Salary Per Employee

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

Contractual Services
% of Operations Expenditures

Commodities
% of Operations Expenditures

All Other Items
% of Operations Expenditures

GRANTS TOTAL
% of Total Expenditures

• Cost of Property and Equipment

$22,069,740

$22,069,740
100%
$17,709,228
80.2%
398
$44,496

$2,111,658
9.6%

$1,409,785
6.4%

$537,816
2.4%

$301,253
1.4%

$0
0%

$18,690,285

$21,560,747

$21,560,747
100%
$17,184,375
79.7%
411
$41,811

$2,014,154
9.3%

$1,529,711
7.1%

$540,666
2.5%

$291,841
1.4%

$0
0%

$15,687,227

$21,151,662

$21,151,662
100%
$16,948,539
80.1%
420
$40,354

$1,872,745
8.9%

$1,555,004
7.4%

$526,102
2.5%

$249,272
1.8%

$0
0%

$17,385,364

FY 1997

FY 1996

FY 1995

• Average Number of Residents

176

170

186

• Ratio of Employees to Residents

2.3/1

2.4/1

1.5/1

• Cost Per Year Per Resident

$154,117

$153,988

$141,278

• Department's progress in reducing employees' injuries
  (Workers' Compensation Claims)

116

125

153

Center staff did not transfer excess items in a timely manner

Invoices were processed 22 to 59 days after receipt

Differences in Pharmacy inventory counts

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

EXCESSIVE LEVELS OF INVENTORY

The Center had excessive levels of commodities within its pharmacy and general stores. We identified 45 items in the pharmacy and six items in the general stores which were in excess of a 12-month supply. This finding has been repeated since 1993. (Finding 1, page 12)

We recommended the Center review its inventory levels and dispose of excess inventory. Center officials responded that the recommendation was under study but believed that that the Center had made progress in reducing excess inventories. (For the previous Center responses, see Digest footnote #1.)

DEFICIENCIES IN PREPARATION OF
INVOICE VOUCHERS

The Center did not prepare invoice vouchers in a timely manner and some vouchers did not include all required information.

Out of 120 invoice vouchers reviewed, we found 10 were not processed within 20 calendar days as required by Department policies. These invoice vouchers were processed between 22 to 59 days after receipt. In addition, six other invoice vouchers did not include the appropriate invoice number and/or date . (Finding 2, page 14)

We recommended Center management ensure staff properly prepare invoice vouchers in a timely manner and follow established guidelines. Center management accepted the recommendation.

INACCURATE INVENTORY REPORTS

On June 30, 1997, we performed ten test counts of pharmacy inventory on hand. Four of the ten items did not agree with the June 30, 1997 Commodity Status Report. Differences between auditor counts and Center counts ranged from 641 to 21 for drugs such as anticonvulsants to antibiotics. (Finding 3, page 16)

We recommended the Center maintain accurate records of its pharmacy inventory. Center officials accepted the recommendation.

Mr. James Donkin, Chief Internal Auditor for the Department of Human Services, provided the responses to the recommendations in a letter dated January 9, 1998.

AUDITORS' OPINION

We conducted a compliance audit 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 single audit of the entire Department. Financial statements for the Department will be presented in the single audit report.

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:JAW:ak

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were Wolf & Company, LLP.

DIGEST FOOTNOTE

#1 EXCESS INVENTORY - Previous Center Response

1995: "Not accepted. The Center monitors its inventory levels and disposes of apparent surpluses in accord with the guidelines of the Illinois Department of Mental Health and Disabilities Policy and Procedures Directive Number 01.06.65.02. This directive states in part: "The Department goal for maximum inventory is a 12-month estimated usage amount. More than that is considered excessive; and, the facility should be prepared to justify excessive quantities maintained."

1993: "Accepted and in process of implementation. Our pharmacy has taken steps to ensure that the excesses observed by the auditors are corrected, and will routinely review inventory levels and dispose of excess inventories per Department policy. In addition, a systematic review will be conducted on a weekly basis, comparing physical inventory with a perpetual inventory system, and reconciling any differences in a timely fashion."