REPORT DIGEST
HISTORIC PRESERVATION AGENCY
COMPLIANCE EXAMINATION
For the Year Ended June 30, 2010
Release Date: July 14, 2011
Summary of Findings:
Total this audit: 17
Total last audit: 15
Repeated from last audit: 11
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703
(217) 782-6046 or TTY (888) 261-2887
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SYNOPSIS
• The Agency did not exercise adequate controls over its
administration of State grants.
• The Agency did not have adequate controls over donations
received at its historic sites.
• The Agency did not maintain adequate controls over
artifacts and its concession leases.
• The Agency did not exercise adequate controls over
contractual and interagency agreements.
• The Agency did not complete and file its internal control
certifications as required.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
NEED TO IMPROVE CONTROLS OVER GRANTS
The Agency did not exercise adequate controls over its
administration of State grants.
We noted the following:
• Six of 8 (75%) grant agreements tested, totaling $322,500,
did not contain a provision requiring all funds unexpended at the end of the
grant agreement period to be returned to the State within 45 days.
• Seven of 8 (88%) grant agreements tested, totaling
$334,166, did not include detailed financial budgets or other detailed
information regarding the use of the grant funds.
• The Agency paid both the State and local share totaling
$9,672 for a grant to a county for educational brochures related to the
county’s historic preservation program. Although the original State grant
amount and obligation document totaled $14,000 with a local match totaling
$6,000, documentation showed the Agency notified the county that the award was
reduced to $7,000 due to limited State funding.
However, the Agency then paid the entire project costs totaling $9,672,
resulting in an overpayment of $2,672.
• Three of 8 (38%) grant agreements tested, totaling
$297,500, did not contain a provision requiring the filing of quarterly reports
describing the progress of the program, project, or use and the expenditure of
grant funds.
• For 3 of 8 (38%) grants agreements tested, totaling
$33,666, the grantees failed to submit required monthly and completion
reports. Two of the grantees failed to
provide 6 of their monthly reports, and one of the grantees did not provide any
monthly reports. In addition, no completion
reports were provided by the grantees.
(Finding 1, pages 12-13) This
finding was first reported in 2008.
We recommended the Agency implement controls to ensure grant
agreements contain provisions necessary to properly administer State grant
funds, including, at a minimum, those required by the Illinois Grant Funds
Recovery Act. In addition, we
recommended the Agency implement controls to ensure Agency grant monitors
require grantees to submit required reports timely to ensure grant funds are
being expended as intended. We also
recommended the Agency obtain reimbursement for the overpayment noted.
Agency officials concurred with our recommendation and
stated they will insure all necessary provisions are included in the Agency’s
grant agreements and they will stress to grantees the importance of submitting
accurate and timely reports. (For the
previous Agency responses, see Digest footnote # 1).
NEED TO IMPROVE CONTROLS OVER DONATIONS
The Agency did not have adequate controls over donations
received at its historic sites.
According to Agency records, 23 State historic sites
maintain locked boxes designated for visitors to make donations. Each site maintains a local bank account for
depositing the donated funds.
According to Agency records, the donation boxes collections
totaled $491,503 and $429,313 in FY10 and FY09, respectively. We reviewed donation procedures at 4 sites
throughout the State.
During testing, we noted the following:
• One of 4 (25%) historic sites tested had employees that
were not aware of the donation procedures required by the Agency and several
deficiencies were noted:
- Two employees had keys to the donation box, and one of the
employees kept their key in a drawer at the front desk of the visitor’s center
so the seasonal employee could open the box to make change when necessary. The
Agency’s procedures require keys to be kept in a secured lock box at all times.
- We scanned donation records for two months and noted three
instances where deposits were not made when donations totaled over $500. We
noted weekly deposits were made for 3 weeks that totaled $1,343, $1,763, and
$2,229.
• Two of 4 (50%) historical sites tested did not maintain an
adequate segregation of duties. At both sites that employed more than one
person, the same employee counted the cash donations, prepared the deposit, and
received and reconciled the bank statement.
In addition, at one site, the same employee also delivered the deposit
and prepared the check for deposit into the State Treasury.
• One of 4 (25%) historic sites tested did not remove the
donations from the donation boxes daily and record them as required. The staff
generally collected, counted, and recorded the donation box receipts every few
days or once a week. We noted 12 instances where weekly instead of daily totals
totaling from $728 to $3,664 were recorded on the weekly donation form.
• One of 4 (25%) historic sites tested did not make weekly
deposits as required. The site manager generally made only monthly deposits as
there were no instances when donations recorded exceeded $500.
We recommended the Agency ensure all historic sites are
following the Act’s and Agency’s requirements for donations and maintain a
separation of duties when possible.
(Finding 2, page 14-15)
We recommended the Agency ensure all historic sites are
following the Act’s and Agency’s requirements for donations and maintain a
separation of duties when possible
Agency officials
partially concurred with our recommendation and stated they agree that the keys
at the site noted should be better secured and that they need to adequately
segregate duties; however, it is only suggested, not required, to remove
donations daily as per their procedures, and by law funds must only be
forwarded to the Agency weekly on Monday once they exceed $500.
In an auditors’ comment, we noted the Agency’s written
procedures for donations state “Money should be counted daily or, if receipts
are small, at least weekly, and corresponding records are to be
maintained.” The instances we noted
where daily records were not maintained included cash totals from $728 to
$3,664 which we did not consider small.
We agree the Act requires transmitting funds to the Agency for deposit
in the State Treasurer on Monday of each week if the amount to be deposited
exceeds $500. However, the Agency’s written procedures
require deposits to be made at least weekly to the local bank accounts. The site noted was generally only making
monthly deposits.
NEED TO IMPROVE CONTROLS OVER ARTIFACTS AND CONCESSION
LEASES
The Agency did not maintain adequate controls over artifacts
and its concession leases.
During site visit testing, we noted the following:
• Six of 30 (20%) artifacts tested from the artifact
inventory listing could not be located during testing.
• Two of 4 (50%) historical sites tested had lease
agreements with the Foundations for the sites’ concessions operations that had
been expired for 6 months and 22 months as of June 30, 2010.
• One of 4 (25%) historical sites tested was unable to
provide documentation required by the concession lease. The quarterly donation reports and a copy of
the insurance binder were not provided to the auditors for review. (Finding 3, pages 16-17)
We recommended the Agency implement controls to ensure its
artifact inventory records are accurate. We also recommended the Agency ensure
all concession leases are current and ensure documentation is maintained of all
required reports and insurance.
Agency officials concurred with our recommendation and stated
they will reinforce procedures related to artifact inventories and they will
bring all of their lease agreements current as soon as possible.
NEED TO IMPROVE CONTROLS OVER CONTRACTUAL AGREEMENTS
The Agency did not exercise adequate controls over
contractual and interagency agreements.
During testing, we noted the following:
• Seven of 10 (70%) contracts tested did not contain the
ethical certifications regarding compliance with the Environmental Protection
Act and the required registration with the State Board of Elections.
• The associated Contract Obligation Documents (CODs) for 3
of 10 (30%) contracts tested contained incorrect award code information. Two
CODs were coded as small purchases and one COD was coded as a sole source
procurement when the contracts were competitively bid. In addition, the beginning date for services
on one of the CODs did not agree to the contract execution date.
• The Agency failed to ensure accurate contract award notice
information was posted on the Illinois Procurement Bulletin (IPB). For 4 of 10 (40%) contracts we tested, we
noted the following:
- Contract inception dates published in the IPB did not
agree to the inception dates on the corresponding contracts for 3 of 10 (30%)
contracts tested totaling $256,150. The
differences noted were from 1 to 35 days.
- The contract termination date published in the IPB did not
agree to the termination date on the corresponding contract for a contract totaling
$500,000.
- The total amount of an awarded contract published in the
IPB was overstated by
$302,400.
• Two of 5 (40%) interagency agreements tested were not
signed by all parties prior to the performance of services under the associated
contract. Signatures were obtained from
13 to 29 days after the inception of the associated contract. (Finding 9, page 26-27)
We recommended the Agency strengthen controls to ensure
contractual agreements contain all required disclosures and certifications. We
also recommended the Agency ensure CODs are correctly completed and accurate
contract information is published in the Illinois Procurement Bulletin. Further, we recommended the Agency ensure all
interagency agreements are timely signed.
Agency officials concurred with our recommendation and
stated they will insure contract certifications are updated and that COD’s are
accurate and complete. They also stated
they will seek to have all interagency agreements signed in a timely manner.
FAILURE TO TIMELY FILE INTERNAL CONTROL CERTIFICATIONS
The Agency did not complete and file its internal control
certifications as required.
We noted the Agency did not complete an evaluation of
internal controls or file a certification in FY09. In addition, the FY10 certification was
filed 46 days late. (Finding 12, page
31)
We recommended the Agency complete the internal control
evaluations and timely file the certifications as required.
Agency officials concurred with the recommendation and
stated they will try to meet required filing deadlines.
OTHER FINDINGS
The remaining findings are reportedly being given attention
by the Agency. We will review the
Agency’s progress towards the implementation of our recommendations in our next
engagement.
AUDITORS’ OPINION
We conducted a compliance examination of the Historic
Preservation Agency as required by the Illinois State Auditing Act. We have not audited any financial statements
of the Agency for the purpose of expressing an opinion because the Agency does
not, nor is required to, prepare financial statements.
WILLIAM G. HOLLAND
Auditor General
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AUDITORS ASSIGNED
The compliance examination was performed by the Office of
the Auditor General’s staff.
DIGEST FOOTNOTE
# 1 INADEQUATE CONTROL OVER GRANT MONITORING
2008: We concur. The omitted provision in the agreement
pertaining to unspent funds was an oversight.
In addition, the Agency will reinforce the various reporting
requirements with grantees and stress with staff the importance of closely
monitoring the grants.