REPORT DIGEST

FINANCIAL AND COMPLIANCE AUDIT
For the Two Years Ended:
June 30, 1998

Summary of Findings:

SYNOPSIS

• The Agency did not sufficiently monitor, report, or pursue collections of accounts receivable.

• The Agency did not resume issuing certificates of storage tank removal or abandonment despite passage of a statutory amendment the Agency stated would allow them to comply with the mandate.

• The Agency used a lump sum appropriation designated for the registration of underground storage tanks to purchase vehicles for unrelated programs.

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

FY 1998

FY 1997

FY 1996

• 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

AWARDS, GRANTS, AND REFUNDS TOTAL
% of Total Expenditures

• Cost of Property and Equipment
  

• Net of $5 million General Revenue Fund transfer
  to the Fire Prevention Fund which was treated as
  expenditure.

$12,033,371

$10,129,666
84.2%

$6,087,682
60.1%

145

$1,768,045
17.5%

$718,964
7.1%

$1,554,975
15.3%

$1,903,705
15.8%

$2,941,398

$11,784,746

$9,494,351
80.6%

$5,425,424
57.1%

144

$1,446,107
15.2%

$672,569
7.1%

$1,950,251
20.6%

$2,290,395
19.4%

$2,772,931

$10,823,783

$8,531,077
78.8%

$5,128,148
60.1%

139

$1,376,400
16.1%

$551,886
6.5%

$1,474,643
17.3%

$2,292,706
21.2%

$2,591,593

FY 1998

FY 1997

FY 1996

• Statewide Arson Investigations
• Boiler and Pressure Vessel Safety Inspections
     (By State Inspectors)
     (By Insurance Inspectors)
• Fire Prevention Inspections
• Underground Storage Tank Inspections (Estimates)
• Firefighter Training Examinations

1,018
44,632
(17,996)
(26,636)
26,030
4,719
15,308

1,239
43,160
(16,282)
(26,878)
28,308
3,020
13,612

1,174
43,238
(16,038)
(27,200)
29,459
3,583
12,356

During Audit Period: Thomas L. Armstead

Currently: Thomas L. Armstead

23% of a lump sum appropriation was used to purchase vehicles for unrelated programs

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE COLLECTION AND REPORTING OF DELINQUENT ACCOUNTS RECEIVABLE

The Office of the State Fire Marshal (Agency) did not sufficiently monitor and pursue collections on delinquent accounts receivable and did not properly report accounts receivable information on quarterly and annual reports submitted to the State Comptroller.

The Agency did not report a reasonable amount of allowance for uncollectible accounts. As a result, the FY 98 net receivable amount was overstated by approximately $61,000 on quarterly accounts receivable reports and annual GAAP financial reports filed with the State Comptroller.

The Agency did not have adequate collection procedures for storage tank receivables. A policy had not been established to send more than one invoice to tank holders on a regular basis. In addition, delinquent accounts were not referred to the Comptroller's Offset system or outside collection agencies for collection. (Finding 98-1, pages 12-13) The collection portion of this finding has been repeated since 1990.

We recommended the agency send regular billings for all accounts, refer delinquent accounts to the Comptroller's Offset System and outside collection agencies and develop a reasonable method to estimate the allowance for uncollectible accounts.

The Office of the State Fire Marshal accepted the finding and stated a new data management system has already been established as a first step in implementing the recommendation. The Agency also stated it is studying specific means to implement each facet of the recommendation. (For previous agency responses see Digest Footnote #1.)

FAILURE TO ISSUE CERTIFICATES

The Agency did not issue certificates of removal or abandonment to owners or operators of underground storage tanks as required by statute.

Agency management stated in the prior audit that they stopped issuing certificates because they did not have the capability to conduct the necessary soil tests to determine that the site was really clean. Subsequent to the prior finding, Public Act 89-457 amended the statute to remove the part of the requirement the Agency stated it did not have the ability to meet. However, the Agency has not resumed issuing the certificates. (Finding 98-4, page 18)

We recommended the Agency comply with the statutory requirement to issue certificates of removal or abandonment or seek another statutory change to remove the requirement.

The Office of the State Fire Marshal accepted the finding and recommendation and stated it will seek a statutory change to remove the requirement to issue the certificate.

NONCOMPLIANCE WITH APPROPRIATION BILL

The Agency circumvented appropriation restrictions by paying expenditures unrelated to the registration of underground storage tanks from a lump sum appropriation for this program.

The Agency used $114,860 (23%) of an appropriation for registering storage tanks to purchase six vehicles for divisions unrelated to the program. Although one of these vehicles was initially assigned to the Division responsible for registering storage tanks, the vehicle was transferred two months later to another division. (Finding 98-5, page 19) Expenditure of a lump sum appropriation for unrelated purposes has been a finding since 1994.

We recommended the Agency comply with all provisions of appropriations, limit expenditures to the purpose for which they were appropriated, and request funds be appropriated in accordance with the Agency's needs.

The Agency accepted the finding and recommendation. (For previous agency responses see Digest Footnote #2.)

OTHER FINDINGS

The remaining findings were less significant and are being given appropriate attention by the Agency. We will review progress toward implementing all recommendations in our next audit.

AUDITOR'S OPINION

Our auditors state the financial statements as of June 30, 1997 and June 30, 1998 were 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 disclosure.

_____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:LKW:pp

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were Clifton Gunderson L.L.C.

DIGEST FOOTNOTES

#1: INADEQUATE COLLECTION AND REPORTING OF DELINQUENT ACCOUNTS RECEIVABLE - Previous Agency Responses.

1996: "The Agency accepts the finding and each of the recommendations."

1994: "The Agency is in agreement with this finding and the recommendation...

"The Agency is working with the Illinois Debt Collection Board concerning the collections and assessment of past due accounts. The Office of the Attorney General will also be contacted regarding this process."

1992: "The Agency accepts this finding. The Agency is taking steps to eliminate the backlog in order that the accounts receivable can be reviewed on a regular basis..."

1990: "The Agency accepts this finding...

"The Agency takes this finding seriously and has begun compliance with the items noted in the recommendation. The Agency is currently installing a new software release which will greatly enhance the ease of use in terms of reporting and targeting collection efforts..."

#2: NONCOMPLIANCE WITH APPROPRIATION BILL - Previous Agency Responses.

1996: "The Agency accepts the finding.

"Realignment of appropriations for FY98 has caused the line discussed in the finding to be eliminated."

1994: "The use of the Contractor Registration Fund was appropriate in view of the work performed and its purpose..."