REPORT DIGEST

DEPARTMENT OF VETERANS' AFFAIRS - CENTRAL OFFICE

FINANCIAL AND COMPLIANCE AUDIT
(In accordance with the Single Audit Act of 1984 and OMB Circular A-128)
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

• The LaSalle, Manteno, and Quincy Veterans' Homes were not properly licensed by the State of Illinois as nursing homes.

• The Department processed numerous small dollar vouchers through the State Disbursement System instead of establishing and maintaining a petty cash fund.

• The auditor's opinion on the Department's financial statements was qualified due to the Department's omission of the Anna Veterans' Home Members' Trust Fund.

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

FY 1996

FY 1995

FY 1994

• Total Expenditures (All 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

$7,267,251

$6,151,934
85%

$3,909,981
64%
117

$637,927
10%

$619,502
10%

$984,524
16%

$1,115,317
15%

$1,241,962

$6,713,903

$5,613,539
84%

$3,577,258
64%
113

$571,037
10%

$581,255
10%

$883,989
16%

$1,100,364
16%

$1,017,802

$6,500,056

$5,238,801
81%

$3,392,145
65%
113

$539,328
10%

$575,929
11%

$731,399
14%

$1,261,255
19%

$964,961

AGENCY DIRECTOR(S)

Currently: Robert Foster

The noncompliance issue could result in an estimated loss of $12.5 million in federal funds

The Department processed 1,485 small dollar vouchers through the State disbursement system

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

NONCOMPLIANCE WITH USDVA NURSING HOME LICENSING REQUIREMENT

Three of the four State Veterans' Homes were not in compliance with federal licensing requirements. Federal regulations and standards require the Homes to meet the same standards established for community nursing homes in order to receive federal financial assistance. Illinois law requires community nursing homes to be licensed by the Illinois Department of Public Health, but the law specifically excludes State Veterans' Homes from this requirement. Because of this conflict between federal regulations and State law, not all of the Veterans' Homes meet the federal requirements necessary to receive federal financial assistance.

The three Homes noted in our finding are located in LaSalle, Manteno, and Quincy. The Veterans' Home in Anna is managed and operated by a private organization and has met the licensing requirements.

Noncompliance with the licensure standard may result in an estimated loss of federal per diem payments of $12.5 million per year, and a loss of eligibility of the 65% reimbursement rate provided by the USDVA for construction and renovation projects. (Finding 1, page 9)

We recommended the Department resolve the noncompliance issue in an expeditious manner, and implement a more formal system for addressing known noncompliance issues. The Department responded it has repeatedly sought legislation that would permit licensure as a nursing home and it is unable to obtain licensing without legislation.

NUMEROUS SMALL VOUCHERS WERE PROCESSED THROUGH THE STATE DISBURSEMENT SYSTEM

During the audit period, the Department used the State disbursement system to pay 1,485 vendor invoices which ranged from $1.25 to $49.99. Processing invoices for less than $50 is generally more efficient using a petty cash system instead of the State disbursement system. (Finding 7, page 20)

The Department agreed with our recommendation to establish a petty cash fund.

OTHER FINDINGS

The remaining findings were less significant and, according to the Department, are being given appropriate attention. We will review progress toward implementing our recommendations in our next audit.

Responses to the recommendations were provided by the Department's Chief Internal Auditor, Mr. Wilfred Kaltenbach.

AUDITORS' OPINION

We have qualified our opinion on the Department's financial statements as of and for the years ended June 30, 1996 and 1995. The qualification was necessary because the statements do not include the Anna Members' Trust Fund, which should be presented in order to conform with generally accepted accounting principles. We have addressed the circumstances concerning the omission of this fund in our audit report for the Anna Veterans' Home.

 

 

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:GSS:pp

AUDITORS ASSIGNED

This audit was performed by the Auditor General's staff.