REPORT DIGEST DEPARTMENT OF NATURAL RESOURCES FINANCIAL AUDIT OF CAPITAL ASSET ACCOUNT For the Year Ended June 30, 2008
COMPLIANCE
EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this audit 13 Total last audit 34 Repeated from last audit 10 Release Date: June 11, 2009
State of
Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL To obtain a copy of the
Report contact: Office of the Auditor
General
(217) 782-6046 or TTY (888)
261-2887 This Report Digest and the
Full Report are also available on the worldwide web at http://www.auditor.illinois.gov |
SYNOPSIS
·
The Department
did not maintain adequate controls over its capital assets. ·
The
Department’s year-end accounting reports submitted to the Illinois Office of
the Comptroller were not accurate. ·
The
Department did not enter written warnings and citations issued by
Conservation Police Officers into the Traffic Information Planning System in
a timely manner. ·
The
Department did not maintain time sheets for its employees in compliance with
the State Officials and Employees Ethics Act. ·
The
Department did not complete employee performance evaluations in a timely
manner. ·
The
Department did not maintain adequate controls over processes related to
telecommunications equipment and expenditure records.
Expenditures and Activity Measures are summarized on the next page.} |
DEPARTMENT OF NATURAL RESOURCES
FINANCIAL AUDIT OF CAPITAL ASSET
ACCOUNT for the Year Ended June 30, 2008 AND COMPLIANCE EXAMINATION
For the Two Years Ended June 30,
2008
|
FY
2008 |
FY
2007 |
FY
2006 |
Total Expenditures (All Appropriated Funds) OPERATIONS TOTAL....................... % of Total Expenditures................. Personal Services........................... % of Operations Expenditures......... Average
No. of Employees: Regular................................. Part-time..............................
Other Payroll Costs (FICA, Retirement) % of Operations Expenditures...... Contractual Services................... % of Operations Expenditures......... All Other Operations Items.............. % of Operations Expenditures.......... GRANTS, REFUNDS, OTHER........ % of Total Expenditures..............
Cost
of Property and Equipment (in thousands) |
$245,307,622 $138,447,412 56.4% $86,577,556 62.5% 1,430 226 $25,013,289 18.1% $12,906,059 9.3% $13,950,508 10.1% $106,860,210 43.6% $1,198,138 |
$256,232,571 $134,079,401 52.3% $84,969,389 63.4% 1,453 233 $20,925,102 15.6% $14,505,102 10.8% $13,679,808 10.2% $122,153,170 47.7% $1,131,260 |
$232,954,718 $124,860,019 53.6% $80,218,899 64.2% 1,627 238 $17,456,235 14.0% $15,066,287 12.1% $12,118,598 9.7% $108,094,699 46.4% $1,089,590 |
SELECTED ACTIVITY MEASURES (Not Examined) |
FY
2008 |
FY
2007 |
FY
2006 |
Site Attendance..................................................... Protected Natural Area Acreage........................... Hunting Licenses Issued........................................ Fishing Licenses Issued......................................... Students Certified in Safety Education Classes....... Number of deer harvested..................................... |
41,580,000 89,764 194,458 601,687 20,261 199,671 |
45,190,627 89,731 201,764 627,483 19,098 197,807 |
42,456,815 87,731 193,931 1,073,937 19,945 197,296 |
AGENCY DIRECTOR |
During Audit
Period: Sam Flood, (Acting) Currently: Marc
Miller (Acting), effective February 6, 2009 |
Failure to maintain
sufficient evidence for amounts recorded
Department agrees
with auditors
Year end accounting
reports not prepared accurately
Department could
not provide supporting documentation
Amounts could not
be agreed to the Department’s records
Failure to maintain
support
Department agrees
with auditors
Approximately
10,000 written warnings per year
Written citations
not entered timely
Department agrees
with auditors
Department uses
various timekeeping processes
Department agrees
with auditors
Employee
performance evaluations not completed timely
Department agrees
with auditors
Review of telephone
calls not required
Records not updated
for changes in assignment of equipment
Department agrees
with auditors |
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS INADEQUATE CONTROLS OVER CAPITAL ASSETS The Department did not maintain adequate control over its capital assets. We noted the Department did not maintain sufficient evidence to ensure the existence, valuation, and rights on amounts capitalized as Site Improvements for the Bikeways project. The Department did not obtain documentation from the Illinois Department of Transportation for $454,607 recorded in the Capital Asset Tracking System (CATS) for the bikeway project in FY08. To date, assets totaling $27,038,768 have been capitalized under the Bikeway project. (Finding 1, pages 14-15) We recommended the Department increase its efforts to ensure pertinent documents are obtained and reviewed to ensure the Department has satisfactory title to its assets and the assets are properly valued. Further, we recommended the Department perform a physical inspection of these assets before they are recorded to obtain reasonable assurance these assets physically exist. Department officials agreed with our recommendation and stated they will develop a procedure to ensure DNR has satisfactory title to assets and that those assets are properly valued and they will perform a physical inspection of the assets. INADEQUATE PREPARATION OF GAAP PACKAGE AND DIFFICULTY IN USING
PROGRAMMATIC ACCOUNTING SYSTEM The Department's year end accounting reports (GAAP Package Forms) submitted to the Illinois Office of the Comptroller were not accurate. We noted the following: · The Department did not maintain adequate supporting documentation and the GAAP packages were not prepared in an orderly manner, making it difficult to properly review. The Department could not provide supporting documentation for various amounts reported on the Interfund Activity – Grantee Agency (SCO -567) form and the Interfund Activity – Grantor Agency (SCO -568) form. In addition, receipt and expenditure amounts reported on the Grant/Contract Analysis (SCO-563) forms differed from Department records. · The Department provided grant analysis worksheets prepared by fiscal staff as supporting documentation for the Grant/Contract Analysis (SCO-563) form. The total federal expenditures per the SCO-563 for fiscal year 2008 were $34,858,000; however, these amounts could not be agreed to the Department’s accounting records. · The Department did not maintain support from its Programmatic Accounting System (PAS) in an orderly manner, making it difficult to use for purposes of GAAP reporting. (Finding 2, pages 16-17) This finding was first reported in 2000. We recommended the Department comply with established procedures to ensure GAAP reporting packages are accurately prepared and supporting documentation is maintained in an orderly and complete manner. Department officials agreed with our recommendation and stated the Department is seeking an outside firm to provide training to help the Department become self-sufficient in the preparation of the GAAP packages for the following year. Department officials also stated increased efforts will be made for better organization and maintenance of supporting documentation and that they are reviewing alternatives to the current programmatic timekeeping system since the Agency is no longer a pilot for a State-wide solution. (For previous Department Response, see Digest Footnote #1) STATE POLICE TRAFFIC INFORMATION PLANNING SYSTEM (TIPS) NOT UPDATED IN A TIMELY MANNER The Department did not enter written warnings and citations issued by Conservation Police Officers (CPO) into the Traffic Information Planning System (TIPS) in a timely manner. The TIPS is a computerized system administered by the State police that provide law enforcement officials information on citations and written warnings. It is the Department’s responsibility to enter information regarding citations and written warnings issued by CPO’s into the TIPS. Department personnel stated CPO’s issue approximately 10,000 written warnings per year. During our testing, we noted the Department did not enter
current period written warnings into TIPS.
The backlog of warnings not entered into TIPS dates back to July 1999. We also tested 40 written citations and
noted seven (18%) had not been entered into TIPS as of June 30, 2008, at
least seven to nine months after issuance.
(Finding 5, page 22) This finding was first reported in 2002. We recommended the Department make the necessary provisions to enter all past and future citations issued by the CPO’s into TIPS in a timely manner. Department officials agreed with our recommendation and stated they will continue to work to fund the additional staff this process requires. In addition, the Department is working with the Illinois State Police on implementing electronic citations which will allow the Department to stay current on the entry of citations and ultimately eliminate all backlogs of written warnings and citations. (For the previous Department response, see Digest Footnote #2) TIME SHEETS NOT MAINTAINED IN COMPLIANCE WITH THE STATE OFFICIALS AND
EMPLOYEES ETHICS ACT The Department did not maintain time sheets for its employees in compliance with the State Officials and Employees Ethics Act. The Department’s employees’ time (other than senior management) was tracked using a “negative” timekeeping system whereby the employee was assumed to be working unless otherwise noted. Although senior management staff did maintain their time sheets in compliance with the Act, the Department’s other employees did not document the time spent each day on official State business to the nearest quarter hour as required. (Finding 6, page 23) This finding was first reported in 2004. We recommended the Department apply the appropriate resources necessary to ensure its policies and procedures are updated, based on the expected implementation of the new timekeeping system, in order to comply with the Act. Department officials agreed with our recommendation and stated the Department was involved in a pilot program with a timekeeping vendor that was scheduled to deliver a timekeeping solution by April 2009, unfortunately at the beginning of calendar year 2009, the program was placed “on hold” due to funding shortfalls. Department officials also stated they will continue to work within its own IT Division and limited budget to develop and implement a timekeeping tracking system which will include a programmatic timekeeping piece for activity based and federal reimbursement tracking and to comply with the Ethics Act. (For the previous Department response, see Digest Footnote #3) EMPLOYEE PERFORMANCE EVALUATIONS NOT COMPLETED TIMELY The Department did not complete employee performance evaluations in a timely manner. During our testing of 35 employees for each fiscal year we noted the following: · In FY07, 22 of the 35 employees tested were required to have evaluations (the remaining 13 were temporary help or no longer employed). Four (18%) employees were missing evaluations and seven (31%) evaluations were completed from two days to seven months late. · In FY08, 12 of the 35 employees tested were required to have evaluations (the remaining 23 employees were temporary help or no longer employed). Four (33%) employees were missing evaluations and five (41%) were completed from 24 days to two months late. (Finding 7, page 24) This finding was first reported in 2004. We recommended the Department ensure adequate resources are provided for ongoing training and follow-up, and to establish and maintain appropriate internal controls for the timely completion and submission of evaluation reviews. We also recommended immediate supervisors be held responsible for completing evaluations in a timely manner. Department officials agreed with our recommendation and stated that although the Office of Human Resources does currently review the timeliness of the completion of employee evaluations and maintains a database of past due evaluations, the current policies and procedures will be examined and more language regarding enforcement and review by Director and Deputy Directors will be added. (For the previous Department response, see Digest Footnote #4) INADEQUATE
CONTROLS OVER TELECOMMUNICATIONS EXPENDITURES AND RECORDS The Department did not maintain adequate controls over processes related to telecommunications equipment and expenditure records. We noted the following:
· The Department did not require supervisors to adequately review and verify a monthly-itemized listing of local and long distance calls. We reviewed the phone bills for FY07 and FY08 for four divisions, which included three different months for both years. We noted one (25%) division in FY07 and two divisions (50%) in FY08 where there was not supervisor’s approval. · Telecommunication records were not updated for changes in assignments of equipment, such as cell phones, calling cards, pager and phone lines. We tested 64 assignments and 26 phone lines. We noted five (8%) assignments where cell phones, pagers or calling cards were no longer needed based on current job assignment or not currently being used by the person listed by the Telecom Liaison for the Department. · During our testing of calls, we noted four instances of 26 (15%) lines tested in which employees assigned to the line had changed, and two of four employees mentioned above were terminated and records were not updated for changes. (Finding 12, pages 32-33) This finding was first reported in 2002. We recommended the Department ensure all divisions adhere to established policies and procedures and update the status of calling card, cell phone and pager records in a timely manner. Department officials agreed with our recommendation. (For previous Department Response, see Digest Footnote #5)
OTHER FINDINGS The remaining findings pertain to 1) failure to monitor and enforce concessionaire lease agreements, 2) failure to follow up on outstanding tickets with the Circuit Clerk, 3) failure to fill Illinois State Museum Board vacancies, 4) amounts reported on Agency Fee Imposition Report Forms do not reconcile to Department records, 5) inadequate controls over petty cash funds, 6) failure to adequately prepare bank reconciliations, and 7) lack of contingency planning or testing to ensure recovery of computer systems. We will follow up on these findings during our next examination of the Department. AUDITORS’ OPINION We conducted a financial audit of the
Department’s Capital Asset Account for the year ended June 30, 2008 and a
compliance examination of the Department for the two years ended June 30, 2008
as required by the Illinois State Auditing Act. Our special assistant auditors stated that the
Department’s capital asset account as of June 30, 2008 is presented fairly in
all in all material respects. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:JSC:pp AUDITORS ASSIGNED Our special assistant auditors for this engagement were Washington, Pittman & McKeever, LLC. DIGEST FOOTNOTES#1 – INADEQUATE PREPARATION OF GAAP PACKAGES
AND DIFFICULTY IN USING PROGRAMMATIC ACCOUNTING SYSTEM – Previous Department
Response 2006: We partially agree. The Department’s Programmatic Accounting
System is indeed cumbersome to use and the Department is reviewing
alternatives to collect this data.
However, additional steps were taken in FY 2006 to ensure that the
information would be prepared in an accurate and complete manner as
possible. For instance, the Office of
Fiscal Management required that programmatic timesheets be submitted roughly
45 days earlier than normal – so that the actual cost amounts would be
captured instead of using estimates for GAAP reporting purposes. We also feel compelled
to point out to the reader that the sampling error cited by the auditors in
bullet #1 is misleading in that is shows the percentage of the packages they
chose to review as opposed to the actual number of packages completed, 56. This would change the calculation of the
number of funds with adjustments from 3.5% versus the 9% shown in the report. It should also be noted
that the bulk of the adjustments relates to accounts payable adjustments –
which were previously cited in audit finding 6-1. Furthermore, it should be noted that the
auditors passed on adjusting the capital asset financial statements - while
making the adjustment on GAAP reports. Auditor Comment: Bullet #1 refers to two funds with material
adjustments. Problems with utilizing
PAS extended across all funds. Materiality levels at a
fund level are much lower than at the capital asset account level. Therefore, audit adjustments made at the
fund level were not required to be posted at the capital asset level due to
materiality. #2 – STATE POLICE TRAFFIC INFORMATION
PLANNING SYSTEM (TIPS) NOT UPDATED IN A TIMELY MANNER – Previous Department
Response 2006: We agree.
The Department’s Office of Law Enforcement will work with Department’s
Budget Division to assess the resources needed to address record keeping for
written warnings and reprioritize existing resources to the maximum extent
possible before requesting additional assistance. #3 – TIME
SHEETS NOT MAINTAINED IN COMPLIANCE WITH THE STATE OFFICIALS AND EMPLOYEES
ETHICS ACT – Previous Department Response 2006: We agree.
The DNR is currently working with a consultant and another state
agency to develop a Request for Proposal (RFP) to implement an automated
timekeeping system. The official RFP
is scheduled to be advertised as early as March 12, 2007. This system will place the DNR in
compliance with the Ethics Act. #4 –
EMPLOYEE PERFORMANCE EVALUATIONS NOT COMPLETED – Previous Department Response 2006: We agree.
The Department has already implemented corrective action in July 2006
as follows. The Office of Human
Resources does currently review the timeliness of completing employee
evaluations. The Office of Human
Resources maintains a database of past due evaluations. If evaluations are not timely, Human
Resources sends a “past due” notice and copies the respective Deputy Director
responsible for the division. The
Office of Human Resources will work closer with the Director and Deputy
Directors to ensure timely completion of employee evaluations and to better
enforce the “past due” notices. #5 – INADEQUATE
CONTROLS OVER TELECOMMUNICATIONS EQUIPMENT AND RECORDS – Previous Department
Response 2006: We agree. The Department has already implemented corrective action. However, this was not fully operational until after midnight on June 30, 2006, hence, the repeated finding. |