REPORT DIGEST

ENVIRONMENTAL PROTECTION AGENCY - WATER
REVOLVING FUND

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  May 25, 2021

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 0 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: 1

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are significant
deficiencies in internal control and
noncompliance with State laws and
regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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
www.auditor.illinois.gov

SYNOPSIS

• (20-01) The Agency had not
substantiated why student interns were
paid on regular, as opposed to
contractual, payroll vouchers and did
not have a reconciliation process to
provide assurance census data submitted
to its pension and other postemployment
benefits (OPEB) plans was complete and
accurate for the Water Revolving Fund
(Fund).

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE INTERNAL CONTROLS OVER CENSUS
DATA

The Agency had not substantiated why
student interns were paid on regular, as
opposed to contractual, payroll vouchers
and did not have a reconciliation process
to provide assurance census data
submitted to its pension and other
postemployment benefits (OPEB) plans was
complete and accurate for the Water
Revolving Fund (Fund)

During testing, some of the more
significant issues we noted included:

1) The Agency had not performed an
initial complete reconciliation of its
census data recorded by the State
Employees’ Retirement System (SERS) and
the Department of Central Management
Services (CMS) to its internal records to
establish a base year of complete and
accurate census data.

2) Seven of 35 (20%) employees tested
were student interns. We reviewed the
eligibility criteria for participation in
SERS and the Statewide Accounting
Management System (SAMS) for payroll
vouchers.  We noted the Agency does not
have documentation supporting its
conclusion why these student interns are
eligible to be paid on a regular payroll
voucher, which would then make the
student interns eligible for pension and
OPEB benefits, as opposed to a
contractual payroll vouchers.  (Finding
1, pages 51-53)

We recommended the Agency review the
applicable laws, rules, and regulations
that govern student intern payroll and
document its conclusions on whether a
regular or contractual payroll voucher
should be used to pay its student
interns. Further, we recommended the
Agency work with SERS and CMS to develop
an annual reconciliation process of its
active members’ census data from its
underlying records to a report from each
plan of census data submitted to the
plan’s actuary.

Agency officials stated they will
implement a reconciliation process with
SERS in accordance with guidance from the
same. The Agency agreed to disagree in
part to the student worker portion.
Student workers have a State
classification and pay plan, therefore
are employees of the State. The Agency
will pursue efforts with SERS, the
Auditor General, and CMS to further
clarify student workers payroll.

In an auditors’ comment, we stated the
Agency should evaluate whether they have
a contractual relationship as opposed to
a permanent and continuous employment
relationship with the student workers. If
applicable laws, rules, and regulations
require the Agency to pay the student
interns on a regular payroll voucher
which makes the student interns eligible
for pension and OPEB benefits, adequate
documentation should be maintained to
document the conclusions.

AUDITOR’S OPINION(S)

The auditors stated the financial
statements of the Agency’s Water
Revolving Fund as of and for the year
ended June 30, 2020, are fairly stated in
all material respects.

This financial audit was conducted by
Roth and Company, LLP.

JANE CLARK
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:PH