REPORT
DIGEST

ENVIRONMENTAL PROTECTION AGENCY

FINANCIAL AND COMPLIANCE AUDIT
(In accordance with the Single Audit Act and OMB Circular A-133)

For the Two Years Ended:
June 30, 1998

Summary of Findings:

Total this audit 7
Total last audit 14
Repeated from last audit 3

Release Date:
May 5, 1999

Epa96001.gif (1611 bytes)

State of Illinois
Office of the Auditor General
WILLIAM G. HOLLAND
AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General
Attn: Records Manager
Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046 or TDD (217) 524-4646

This Report Digest is also available on
the worldwide web at
http://www.state.il.us/auditor

SYNOPSIS

  • The Agency did not submit an indirect cost rate proposal to U.S. EPA on a timely basis resulting in delayed federal reimbursement of indirect costs and lost interest earnings of over $6,000 for the State.
  • The Agency had not established controls sufficient to prevent duplicate payments to vendors. During 1997 and 1998, duplicate payments of more than $59,000 were made.
  • The Agency did not adequately estimate uncollectible accounts receivable. The Agency estimated an allowance of $198,000. Later it was determined that $1,044,000 should be reserved as uncollectible.
  • The Agency did not have an adequate computer disaster recovery plan.

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

 

ENVIRONMENTAL PROTECTION AGENCY
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1998

EXPENDITURE STATISTICS

FY 1998

FY 1997

  • 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

$318,692,986

$141,968,181
44.55%
$35,939,551
25.31%
1,219
$8,714,566
6.14%
$11,557,326
8.14%
$85,756,738
60.41%
$176,724,805
55.45%

$30,544,485

$321,082,694

$139,957,674
43.59%
$34,930,178
24.96%
1,232
$7,995,993
5.71%
$12,281,593
8.78%
$84,749,910
60.55%
$181,125,020
56.41%

$26,340,027

SERVICE EFFORTS AND ACCOMPLISHMENTS

FY 1998

FY 1997

AIR POLLUTION CONTROL
Permits issued:
State
Federal
Facilities inspected
Vehicle emission tests performed
LAND POLLUTION CONTROL
Permits issued:
Hazardous
Nonhazardous facilities
Facilities inspected
Cleanup programs:
Federal superfund cleanup (State-lead)
State cleanup projects completed
Leaking Underground Storage Tanks:
Cleanup initiated
Cleanup completed
WATER POLLUTION CONTROL
Permits issued
Facilities inspected
Financial assistance:
Wastewater loans issued
Drinking water loans issued



2,063
398
1,300
1,752


363
466
5,870

-
5

1,626
945

*13,984
1,815

27
5



2,296
333
1,392
1,905


270
470
6,269

-
7

1,050
944

9,165
1,622

34
N/A

AGENCY DIRECTOR(S)
During Audit Period: Mary Gade
Currently: Thomas V. Skinner

* Includes re-issuance of storm-water permits on a five year cycle.


















Late proposal cost State in excess of $6,000 in lost interest income
















Duplicate payments made totaling in excess of $59,000
















The Agency did not have adequate data entry and pre-audit procedures
















Allowance for doubtful accounts understated







No tests or updates have been made since June 1993

 

 

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INDIRECT COST RATE PROPOSAL NOT
SUBMITTED ON TIMELY BASIS

The Agency did not submit an indirect cost rate proposal on a timely basis resulting in delayed federal reimbursement of indirect costs and lost interest earnings for the State.

The Agency had not prepared and submitted an indirect cost rate proposal to its federal cognizant agency (U.S. EPA) for fiscal year 1998 until January 1998 and was prohibited from claiming reimbursement for indirect costs pending approval of the rate. The indirect cost rate proposal for fiscal year 1998 was required to be submitted prior to January 1997.

Agency officials have stated that the untimely submission was due to time constraints and other obligations on the person who was responsible for its preparation.

The receipt of indirect cost reimbursements of approximately $3,395,000 was delayed resulting in the loss of interest income to the State in excess of $6,000. However, federal grant funds available to the Agency were fully reimbursed and all allowable costs have been claimed. (Finding 98-1, pages 22-23)

Agency officials accepted our recommendation to establish adequate procedures to ensure indirect cost proposals are filed on a timely basis and state that this condition has been corrected.

DUPLICATE PAYMENT OF VENDOR INVOICES

The Agency had not established controls sufficient to prevent all duplicate payments of vendor invoices. For fiscal years 1997 and 1998, 42 duplicate payments totaling in excess of $59,000 were made to Agency vendors.

Differences in inputting procedures resulted in identical vendor invoice numbers being entered more than one way in the system and bypassing the control feature. The State Comptroller’s Office has established Statewide Accounting Management System Procedure 17.10.30 which requires the Agency to conduct a pre-audit of vouchers before processing for payment.

The Agency did not have adequate data entry and pre-audit procedures to ensure duplicate payment of invoices are not made. The amount reported above represents only the known duplicate payments based on refunds received. Additional duplicate payments could have been made and gone undetected or unreported due to the weaknesses in controls. (Finding 98-3, page 26)

Agency officials accepted our recommendation to establish and implement adequate controls to ensure that vendor invoice information is consistently entered into the system and that adequate pre-audit procedures are utilized. Further, Agency officials stated that procedures are being reviewed and they will establish controls to prevent this from occurring in the future.

INADEQUATE ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

The Agency did not adequately allow for estimated uncollectible accounts receivable. The accounts receivable balance at June 30, 1998 was $9,515,000 with an allowance for uncollectible accounts of $198,000.

Subsequent evaluation of the accounts receivable by the Agency determined that, of the receivables turned over to the Attorney General’s Office, $1,044,000 should be reserved as estimated uncollectible accounts at June 30, 1998.

Agency personnel stated that during the audit period they did not have formal procedures to ensure that all offices and bureaus routinely reported on the amounts of accounts receivable estimated to be uncollectible. (Finding 98-4, pages 27-28)

Agency officials accepted our recommendation that they review accounts receivable on a quarterly basis to determine if the allowance for uncollectible accounts adequately reflect those amounts.

INADEQUATE COMPUTER DISASTER
RECOVERY PLAN

The Agency did not have an adequate plan for reacting to disasters.

The Agency has approximately $7.6 million of computer equipment located at its facilities throughout the State. The Agency has over 1,270 microcomputers connected to local area networks (LANs) that process critical applications.

The planning document for the system is dated October 1992. The plan does not include recovery procedures for LANs. No tests or updates have been made since June 1993. An alternative work site has not been agreed on and the names, addresses and phone numbers of essential personnel were not current.

An effective disaster recovery plan can greatly assist management in coping with service disruptions resulting from fire, floods, storm, power failures or vandalism. (Finding 98-7, pages 32-33)

Agency officials accepted our recommendation to provide an effective disaster contingency plan for reacting to disasters and stated that with the completion of the centralization process, the disaster recovery process will be restarted and a disaster recovery plan should be completed and tested by December 31, 1999.

OTHER FINDINGS

The remaining findings and recommendations are less significant and have been given attention by the Agency. We will review progress towards the implementation of our recommendations during the Agency’s next audit.

The responses to our findings and recommendations were provided by Stuart Gresham, Chief Internal Auditor.

AUDITORS’ OPINION

Our auditors state the June 30, 1998 and June 30, 1997 combined financial statements of the Agency are fairly presented, except for the effects of such adjustments, if any, as might have been determined to be necessary had they been able to examine evidence regarding Year 2000 disclosures.



____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:TEE:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were Sikich Gardner & Co, LLP.