East St. Louis Financial Advisory Authority 2002 Audit

REPORT DIGEST

EAST ST. LOUIS FINANCIAL ADVISORY AUTHORITY

FINANCIAL AND COMPLIANCE AUDIT

For the Two Years Ended:
June 30, 2002

Summary of Findings:

Total this audit 3
Total last audit 4
Repeated from last audit 1

Release Date:
March 11, 2003

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 Authority did not have adequate segregation of duties in the areas of equipment and cash receipts.

The Authority reimbursed its Board members for improper travel claims.

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

EAST ST. LOUIS FINANCIAL ADVISORY AUTHORITY
FINANCIAL AND COMPLIANCE AUDIT
For the Two Years Ended June 30, 2002

EXPENDITURE STATISTICS

FY 2002

FY 2001

Total Expenditures
Locally Held Funds Total
% of Total Expenditures
Appropriated Funds Total
% of Total Expenditures
Expenditures from the Lump Sum
Appropriations:
Personal Services
Contractual Services
Travel
Commodities
Printing
Equipment
Electronic Data Processing
Telecommunications
Total
Cost of Property and Equipment

$267,551
$3,556
1%
$263,995
99%

$200,237
49,801
7,530
2,731
60
0
0
3,636
$263,995
$94,654

$227,214
$5,712
2.5%
$221,502
97.5%

$176,344
32,614
2,669
3,208
155
2,584
0
3,928
$221,502
$94,654

SELECTED ACTIVITY MEASURES	FY 2002	FY 2001
Total Loan Repayments Loan Repayments - Principal Loan Repayments - Interest	$460,018 378,474 81,544	$276,011 213,924 62,087
City Loan Still Outstanding	$857,911	$1,236,385

SUPPLEMENTARY INFORMATION	FY 2002	FY 2001
Number of Authority Employees	5	4

EXECUTIVE DIRECTOR

During Audit Period: Mr. W. Kenneth Gearhart
Currently: Mr. W. Kenneth Gearhart

Duties were not adequately segregated in the areas of equipment and cash receipts

Improper travel claims were paid to Board members

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE SEGREGATION OF DUTIES

The Authority did not have adequate segregation of duties in the areas of equipment and cash receipts. One employee was responsible for recording equipment expenditures and maintaining property records. The same employee was also responsible for recording cash receipts and performing monthly reconciliations. This increases the risk that errors or irregularities could occur and not be found in the normal course of operations.

We recommended the Authority properly segregate duties in order to maintain an effective internal control over the record keeping and accounting duties concerned with asset custody and physical control over assets. (Finding 1, pages 10-11)

The Authority agreed with our recommendation and states it has revised procedures to maintain an adequate segregation of duties.

IMPROPER TRAVEL REIMBURSEMENT

The Authority reimbursed its Board members for improper travel claims. We tested six travel vouchers and noted the following:

Preferred hotels were not used on 2 of 6 (33%) vouchers tested resulting in excess payments of $155.

Duplicate car rental receipts were submitted and reimbursed on 1 of 6 (17%) vouchers tested resulting in an inappropriate reimbursement of $191.

One of 6 (17%) vouchers tested contained a reimbursement for the standard mileage rate, available for the use of a privately-owned vehicle on State business, to an employee driving a rental vehicle as well as the cost of the rental vehicle. The claim for the mileage resulted in an overpayment of $33.

Surcharges and refueling fees that totaled $38 were incurred on 1 of 6 (17%) vouchers tested.

One of 6 (17%) vouchers tested contained a reimbursement for long distance telephone charges for 15 minutes totaling $26 that were not business related and exceeded the allowable duration of a safe arrival call.

Two of 6 (33%) vouchers tested contained reimbursement for the purchase of alcoholic beverages totaling $13.

We recommended the Authority adequately review all travel reimbursement requests for compliance with Travel Regulation Council rules and the Travel Guide for State of Illinois Employees prepared by the Governor’s Travel Control Board and ensure that duplicate or inappropriate requests for reimbursement are not granted. (Finding 2, pages 12-13)

The Authority agreed with the recommendation and has revised procedures to more carefully check travel reimbursement requests for compliance with travel reimbursement regulations established by the Governor’s Travel Control Board. In addition, the Authority board members will be provided with a copy of the Travel Guide.

OTHER FINDING

The other finding noted in our report was less significant and the Authority has responded that corrective action is in process. We will review the Authority’s progress towards the implementation of our recommendation in our next audit.

Mr. W. Kenneth Gearhart, Director, provided responses to our findings and recommendations.

AUDITORS’ OPINION

Our auditors state the financial statements of the East St. Louis Financial Advisory Authority as of and for the year ended June 30, 2002 are fairly presented in all material respects.

____________________________________

WILLIAM G. HOLLAND, Auditor General

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AUDITORS ASSIGNED

Martin & Shadid were our special assistant auditors for this audit.