REPORT DIGEST OFFICE OF THE STATE FIRE MARSHAL COMPLIANCE EXAMINATION For the Two Years Ended: June 30, 2008 Summary of Findings: Total this report 29 Total last report 27 Repeated from last report 17 Release Date: July 8, 2009 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 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 http://www.auditor.illinois.gov

SYNOPSIS Ø The Office did not exercise proper control over the contract and monitoring of the monies paid from the Firefighters Memorial Fund. Ø The Office did not exercise adequate control over contractual agreements. Ø The Office improperly used funds appropriated by the General Assembly. Ø The Office did not maintain accurate accounting records, perform timely expenditure reconciliations or report differences noted to the Office of the Comptroller. Ø The Office did not exercise adequate control over the purchase, recording and reporting of State property. Ø The Office did not adopt rules setting minimum training requirements and did not require applicants to submit all information required by the Petroleum Equipment Contractors Licensing Act. Ø The Office did not implement all enforcement measures required by the Elevator Safety and Regulation Act. Ø The Office did not adopt all required rules for or exercise adequate control over its processing of applications for boiler and pressure vessel repair licensure. Ø The Office did not conduct inspections of boilers and pressure vessels in a timely manner. {Expenditures and Activity Measures are summarized on the next page.}

OFFICE OF THE STATE FIRE MARSHAL

COMPLIANCE EXAMINATION

For the Two Years Ended June 30, 2008

EXPENDITURE STATISTICS	FY 2008		FY 2007	FY 2006
Total Expenditures (All Funds)................... OPERATIONS TOTAL........................ % of Total Expenditures.................. Personal Services............................. % of Operations Expenditures.... Average No. of Employees....... Average Salary Per Employee.... Other Payroll Costs (FICA, Retirement)..................................... % of Operations Expenditures.... Contractual Services....................... % of Operations Expenditures.... Lump Sums and Other Purposes...... % of Operations Expenditures.... All Other Operations Items % of Operations Expenditures.... AWARDS, GRANTS, AND OTHER... % of Total Expenditures............... Cost of Property and Equipment..............	$24,127,791 $18,408,804 76.3% $9,066,615 49.2% 155 $58,494 $3,928,514 21.3% $1,097,913 6.0% $2,021,905 11.0% $2,293,857 12.5% $5,718,987 23.7% $6,345,476		$21,865,600 $16,051,095 73.4% $8,361,968 52.1% 154 $54,298 $3,253,157 20.3% $1,121,612 7.0% $1,287,741 8.0% $2,026,617 12.6% $5,814,505 26.6% $5,055,927	$18,027,514 $14,285,583 79.2% $7,604,629 53.2% 145 $52,446 $2,891,060 20.2% $1,006,476 7.1% $638,710 4.5% $2,144,708 15.0% $3,741,931 20.8% $4,111,992
SELECTED ACTIVITY MEASURES (Not Examined)	FY 2008		FY 2007	FY 2006
Arson Investigations...................................... Boiler and Pressure Vessel State Inspections. Fire Prevention Building Inspections............... Fire Service Certifications.............................. Fire Service Examinations.............................. Underground Storage Tank (UST) Inspections. UST Emergency Responses and Investigations Elevator Licenses ……………………...		1,521 23,758 21,293 9,860 11,673 6,498 761 601	1,522 23,293 15,314 12,090 14,353 5,966 1,201 2,062	1,369 22,641 15,099 11,066 12,422 4,413 660 Not available

AGENCY HEAD

During Examination Period: David Foreman, State Fire Marshal

Currently: David Foreman, State Fire Marshal

$17,026 of Office expenses were paid entirely from the Fund $15,595 of duplicate and disallowed costs were paid Prior overpayments of $612 were not recouped Agency accepted the finding and recommendation A sole source contract was published 20 months late Contracts were approved after services performed or goods ordered Agency accepted the finding and recommendation $9,422 misused by Office for refunds Agency accepted the finding and recommendation Inaccurate expenditure records maintained Expenditure records not reconciled timely or at all Reconciliation differences not reported to the Comptroller Agency accepted the finding and recommendation $27,194 of PSSSC appropriation misused for the Office Property records were inaccurate or unsupported Property reports were inaccurate and untimely Agency accepted the finding and recommendation Rules were not established for minimum contractor training requirements Licenses were issued despite missing application documents $3,050 of nonrefundable license fees were refunded Agency accepted the finding and recommendation Certain required enforcement activities not implemented Agency accepted the finding and recommendation Licenses were issued despite missing application documents No rules for out of state licensure applications Agency accepted the finding and recommendation 36% of inspections tested were performed late Agency accepted the finding and recommendation

INTRODUCTION We conducted a compliance examination of the Office of the State Fire Marshal (Office) for the two years ended June 30, 2008. This report contains State compliance and internal control findings. Our compliance examination also included procedures examining the Office’s expenditures from its Shared Services appropriation in Fiscal Year 2008. The Office was one of the nine agencies participating in the implementation of the Public Safety Shared Services Center (PSSSC), located in the Department of Corrections. The Office reported unknown implementation costs for the PSSSC during Fiscal Years 2006, 2007, and 2008. Please refer to the Analysis of Operations section of the report (pages 108-110) for more information about the Office and the PSSSC. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF CONTROLS OVER FIREFIGHTERS MEMORIAL FUND DISTRIBUTIONS The Office of the State Fire Marshal (Office) did not exercise proper control over the contract and monitoring of the monies paid from the Firefighters Memorial Fund (Fund). We noted the following: The Office inappropriately paid Office-wide telephone and communications charges, totaling $17,026, entirely from the Fund. These charges were neither allocated to the responsible divisions, nor supported by documentation of the portion related to the statutory purposes of the Fund. The Office reimbursed the Foundation for duplicate billings and disallowed costs, totaling $15,595. The Office did not recoup $612 in prior audit period overpayments made to the Foundation for inappropriate expenditures. (Finding 1, pages 12-14) We recommended the Office establish and maintain internal controls to ensure distributions from the Fund are adequately monitored. Specifically, we recommended the following: · The Office should ensure all expenditures from the Fund are reasonable, necessary, and in compliance with law. · The Office should carefully review reimbursement requests received from the Foundation for reasonableness and duplicate billings before reimbursement is authorized. · The Office should work to recoup overpayments from the Foundation. Office officials accepted the finding and recommendation. Officials stated that in Fiscal Year 2009, the Office stopped the practice of charging telephone and communications services to the Firefighters’ Memorial Fund. Office officials also stated the Office will offset overpayments as part of the Fiscal Year 2009 reimbursement to the Foundation and will provide appropriate oversight of all expenditures. INADEQUATE CONTROLS OVER CONTRACTS The Office did not exercise adequate control over contractual agreements. We noted the following: · One of 9 (11%) sole source contracts, for $61,000, was published 20 months late in the Illinois Procurement Bulletin. · Six of 28 (21%) contracts tested, totaling $273,265, were not approved prior to the performance of services or ordering of goods. · Two of 28 (7%) contracts tested, totaling $49,471, did not include signature dates for all parties to document approval prior to the performance of services. (Finding 2, pages 15-16) We recommended the Office comply with the Illinois Procurement Code and publish a notice of intent to enter into a sole source contract in the Illinois Procurement Bulletin at least 2 weeks before execution. We also recommended the Office strengthen controls and internal communication to ensure contractual agreements are signed and dated prior to the beginning of services and ordering of goods. Office officials accepted the finding and recommendation. Officials stated the Office is now in compliance with all sole source postings, and corrective action is being taken for other exceptions noted. INAPPROPRIATE USE OF APPROPRIATED FUNDS The Office improperly used funds appropriated by the General Assembly. The Office received a lump sum appropriation of $25,000 for costs associated with hearing officers’ expenses. However, we noted the Office processed 29 vouchers, totaling $9,422, during Fiscal Year 2007 from this appropriation for refunds of overpayments received by the Office. (Finding 3, page 17) We recommended the Office limit expenditures from appropriated line items to the purpose for which they are appropriated. Also, the Office should utilize the appropriation transfer process or request supplemental appropriations when appropriations are insufficient to cover expenses incurred during the fiscal year. Office officials accepted the finding and recommendation and stated the Office will utilize the appropriation transfer process. Office officials also noted the Public Safety Shared Services Center is now responsible for this process. INACCURATE ACCOUNTING RECORDS The Office did not maintain accurate accounting records, perform expenditure reconciliations timely, or report differences between Office and Comptroller records. Office expenditure records were inaccurate for seven of 104 (7%) appropriation line items. The errors resulted in the overstatement of expenditures by a net $23,085 and the understatement of expenditures by a net $3,534 for Fiscal Years 2007 and 2008, respectively. In addition, the Office did not perform monthly reconciliations in 14 of 14 (100%) months in Fiscal Year 2007, and performed monthly reconciliations one to four months late for four of 14 (29%) months in Fiscal Year 2008. The Office did not prepare Reconciliation Exception Notifications to report discrepancies to the Comptroller. (Finding 4, pages 18-19) We recommended the Office implement controls to ensure accurate and complete records of all expenditures are maintained as required by the Fiscal Control and Internal Auditing Act. Also, the Office should allocate sufficient staff to perform monthly reconciliations of agency expenditures to Comptroller records as required by SAMS. Office officials accepted the finding and recommendation and noted the Public Safety Shared Services Center is now responsible for this process. INADEQUATE CONTROL OVER STATE PROPERTY The Office did not exercise adequate control over the purchase, recording and reporting of State property. We noted the following: · The Office utilized funds appropriated for costs and expenses related to or in support of the Public Safety Shared Services Center (PSSSC) to purchase a new folding and stuffing machine, totaling $27,194, for the Office’s Stevenson Drive location after sending the old machine to PSSSC. · Five of 50 (10%) items tested, totaling $32,199, appeared on the Office’s records but could not be found at the designated location within the Office. · For 1 of 25 (4%) vouchers tested, the description of the purchased item on the invoice did not match the description of the item contained in the Office’s records. · The Office could not locate supporting documentation to verify the historical costs for 4 of 22 (18%) additions to property inventory tested, totaling $8,152. · Five items were added to equipment records multiple times, resulting in equipment overstatements totaling $39,794 and errors in 4 of 8 (50%) property reports. · A $1,338 transfer-in was erroneously reported on 1 of 8 (13%) property reports. · One of 8 (13%) property reports were submitted 85 days late. · Eight of 8 (100%) property reports were initially filed with incorrect information and were revised and resubmitted 16 to 326 days later. (Finding 9, pages 28-30) This finding was first reported in 2004. We recommended the Office limit expenditures from appropriated line items to the purpose for which they are appropriated. Also, the Office should strengthen internal controls over equipment and ensure all equipment is accurately and timely recorded on the Office’s property records. Further, the Office should allocate sufficient resources and follow SAMS procedures to ensure accurate and timely completion of property reports. Office officials accepted the finding and recommendation and noted the Public Safety Shared Services Center is now responsible for the inventory process. (For the previous Office response, see digest footnote #1.) NONCOMPLIANCE WITH THE PETROLEUM EQUIPMENT CONTRACTORS LICENSING ACT The Office did not adopt rules setting minimum training requirements and did not require applicants to submit all information required by the Petroleum Equipment Contractors Licensing Act (Act). We tested 42 applications and noted licenses were issued to 100% despite the following deficiencies: · Twenty-eight (67%) applications lacked evidence of registration as an Illinois corporation or evidence of compliance with the Assumed Business Name Act; · Seven (17%) applications lacked a photo on evidence of a passing score on the required exam; · Six (14%) applications lacked evidence of successful completion of OSHA training courses; · Four (10%) issued licenses lacked the physical address for the licensee; · One (2%) application lacked evidence of liability coverage; and · Five of 28 (18%) applicants for renewal received refunds of non-refundable fees paid under the Act, totaling $3,050. Office personnel believed licensure requirements in the rules were sufficient to meet Office needs, maintenance of Illinois specific training rules required by the Act would be onerous, and future administrative rule changes would clarify minimum training requirements. (Finding 15, pages 42-44) We recommended the Office adopt rules outlining the minimum amount of training as required by the Act and comply with the Act’s prohibition of refunds or seek statutory changes to the Act. Further, the Office should thoroughly review all applications to ensure the applicants meet all of the required criteria before licensure is granted or renewed and maintain on file the supporting documentation. Office officials accepted the finding and recommendation and stated the Office will review the Act and administrative rules to become fully compliant. FAILURE TO IMPLEMENT ALL REQUIRED ELEVATOR SAFETY ENFORCEMENT MEASURES The Office did not develop an enforcement program which met all requirements of the Elevator Safety and Regulation Act (Act). Office personnel had implemented some enforcement activities, but did not conduct random on-site inspections, test existing installations, witness periodic inspections and testing, or assist in the development of public awareness programs. (Finding 19, pages 49-50) We recommended the Office take appropriate measures to implement all enforcement provisions as required by the Elevator Safety and Regulation Act. Office officials accepted the finding and recommendation and stated the Office will seek additional resources to complement existing enforcement activities. BOILER AND PRESSURE VESSEL REPAIR LICENSURE RULES AND CONTROL LACKING The Office did not adopt all required rules for or exercise adequate control over its processing of applications for boiler and pressure vessel repair licensure. We tested 14 new applications, and noted licenses were issued to 100%, despite the following deficiencies: · Ten (71%) application files lacked evidence of the name, registered address, the name of the registered agents and articles of incorporation for the corporation; · Three (21%) application files lacked evidence of registration as an Illinois corporation or evidence of compliance with the Assumed Business Name Act; · One (7%) application file lacked evidence of an affidavit stating the partnership had been legally formed, a letter of authority from the Illinois Secretary of State’s Limited Partnership Office; and a listing of all limited partners. In addition, we tested 25 renewing applicants and noted licenses were issued to 100%, despite the following: · Nine (36%) application files lacked proof of financial responsibility; · Six (24%) application files lacked evidence of a valid certificate of authorization to use the “R” repair symbol stamp; · Three (12%) applicants were not assessed reinstatement fees after renewing 69 to 194 days late; and · One (4%) applicant did not apply for renewal on the form provided by the Office. In addition, the Office lacked rules governing the review of out of state applications for licensure as required by the Boiler and Pressure Vessel Repairer Regulation Act (Act). (Finding 22, pages 55-57) We recommended the Office thoroughly review all applications to ensure the applicants meet all of the required criteria before licensure is granted or renewed, or seek amendment to the administrative rules for licensure. Also, Office personnel should seek training to familiarize themselves with the statute and administrative rules governing the licensure process. Further, rules should be adopted governing the review of out of state applicants for licensure as required by the Act. Office officials accepted the finding and recommendation and stated the Office will review the current license application and processes to become fully compliant with the Act. INSPECTIONS OF BOILER AND PRESSURE VESSELS NOT PERFORMED TIMELY The Office did not conduct inspections of boilers and pressure vessels in a timely manner. Eighteen of 50 (36%) boiler and pressure vessel inspections tested were performed from 12 to 68 days late, with an average of 26 days late. (Finding 23, page 58-59) This finding was first reported in 2002. We recommended the Office implement necessary controls to identify and perform inspections in a timely manner. Office officials accepted the finding and recommendation. Officials also stated the Office will continue to improve the timeliness of inspections and attempt to identify past due third party inspections and perform those that are more than 30 days past due. (For the previous Office response, see digest footnote #2.) OTHER FINDINGS The remaining findings are reportedly being given attention by the Office. We will review progress toward implementing those recommendations in our next examination. AUDITOR’S OPINION We conducted a compliance examination of the Office as required by the Illinois State Auditing Act. We have not audited any financial statements of the Office for the purpose of expressing an opinion because the Office does not, nor is it required to, prepare financial statements. ____________________________________ WILLIAM G. HOLLAND, Auditor General WGH:lkw AUDITORS ASSIGNED This examination was performed by the staff of the Office of the Auditor General. DIGEST FOOTNOTES #1 INADEQUATE CONTROL OVER THE PURCHASE, RECORDING AND REPORTING OF STATE PROPERY – Previous Office response 2006: Agreed. The Office changed to a new record-keeping system during the audit period in an attempt to strengthen controls and facilitate reporting. #2 INSPECTIONS OF BOILERS AND PRESSURE VESSELS NOT PERFORMED TIMELY – Previous Office Response 2006: Agreed. The Office agrees with the finding and will use the finding to help substantiate the needed rule change. The Office currently has the lowest past due level in several decades. No violations are included in our backlog.