REPORT DIGEST HISTORIC PRESERVATION AGENCY COMPLIANCE EXAMINATION For the Two Years Ended: June 30, 2012 Release Date: June 27, 2013 Summary of Findings: Total this audit: 12 Total last audit: 17 Repeated from last audit: 9 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 www.auditor.illinois.gov SYNOPSIS • Controls over the administration of State grants were not adequate. • Donation box procedures for historical sites were not properly followed. • The Agency did not maintain adequate controls over travel expenditures. • The Agency did not maintain sufficient controls over the recording and identification of State-owned equipment. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS NEED TO IMPROVE CONTROLS OVER GRANT MONITORING The Agency did not exercise adequate controls over its administration of State grants. We noted the following: • Two of eight (25%) grant agreements tested, totaling $42,000, did not include detailed financial budgets or other detailed information regarding the use of the grant funds. • For six of eight (75%) grants tested, totaling $100,222, the grantee failed to submit required monthly progress reports and completion reports. Three of the grantees failed to provide all required monthly progress reports, and one grantee did not provide any monthly progress reports. Two of the grantees failed to provide both quarterly and completion reports. • Grant agreement documentation for two of eight (25%) grants tested, totaling $35,486 did not include an adequate explanation as to why the agreements were amended to increase the amount and percentage paid by the State. (Finding 1, pages 11-12) 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. Further, changes in grant terms should be necessary and documented. 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. Agency officials concurred with our recommendations and stated the Agency has revised its grant agreements to include all required provisions and certifications. The Agency also stated they will reinforce with staff and grantees the requirement to provide detailed budget information and documentation, including progress and completion reports, in a timely manner. Further, the Agency stated they will also review procedures for amending grant agreements to ensure that such changes are documented, justified and appropriate. (For the previous Agency response, 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, 17 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 donations totaled $390,848 and $390,974 in FY12 and FY11, respectively. We reviewed donation procedures at five sites throughout the State and noted the following: • Four of five (80%) historical sites tested did not remove the cash from the donation boxes daily and record the totals as required. The staff generally collected, counted, and recorded the donation box receipts once a week. • Two of five (40%) historic sites tested did not make weekly deposits as required. • Two of five (40%) sites tested did not make deposits when the balance of cash exceeded $500. • Two of five (40%) sites tested did not maintain the keys to the donation boxes in a secure location. One location maintained the key in an unlocked desk during the day. At the other location, the key was not secured and was accessible by all employees during the day and stored in an unlocked drawer at night. • One of five (20%) historical sites tested did not maintain an adequate segregation of duties over the donation box. At a site with 4 employees during testing, the same employee recorded the donation amounts on the ledger, prepared and signed the checks, made the deposits to the local account, issued the checks to the Central Office, and performed the monthly reconciliation. We recommended the Agency ensure all historic sites are following the Agency’s requirements for donations and maintain a separation of duties when possible. (Finding 2, pages 13-14) Agency officials concurred with our recommendation and stated they will review the written procedures regarding administration of donation receipts and will require staff training to ensure the procedures are understood and followed. NEED TO IMPROVE CONTROLS OVER TRAVEL EXPENDITURES The Agency did not exercise adequate controls over its travel expenditures. We noted the following: • Twenty-two of 58 (38%) travel vouchers tested, totaling $5,987, were submitted from 65 to 330 days after the last day of travel. • Twelve of 58 (21%) travel vouchers tested were not approved by the traveler’s immediate supervisor. • Five of 58 (9%) travel vouchers tested contained reimbursements of travel expenses that were not in accordance with travel allowances. One traveler rented vehicles for two trips and also claimed and received reimbursement for private vehicle mileage totaling $231. Another traveler submitted three travel vouchers with reimbursements for per diem which exceeded the allowable per diem rates by $149. • The Agency submitted one of four (25%) Travel Headquarters (TA-2s) reports to the Legislative Audit Commission (LAC) nine days late. (Finding 3, pages 15-16) We recommended the Agency ensure travel vouchers are timely submitted and approved. We also recommended the Agency ensure all travel vouchers are completed in accordance with the Illinois Administrative Code and travel regulations and seek reimbursement of any overpayment of travel expenses. Lastly, we recommended the Agency ensure the TA-2s are timely filed. Agency officials concurred with our recommendations and stated they will reinforce to travelers the requirement to submit reimbursement requests timely, accurately and with all proper approvals. The Agency will also strive to submit all of the Travel Headquarter reports timely and will investigate and seek recovery as needed for reimbursements not in accordance with the travel regulations. NEED TO IMPROVE CONTROLS OVER STATE- OWNED EQUIPMENT The Agency did not maintain sufficient controls over the recording and identification of State-owned equipment. We noted the following: • Two of twelve (17%) equipment vouchers tested contained four items totaling $6,535 that were not recorded on the Agency’s property control records. • Nine of 25 (36%) equipment additions tested totaling $59,679 were recorded on the Agency’s property listing from 28 to 263 days late. • One of 25 (4%) equipment deletions tested totaling $250 was removed from the Agency’s property records 23 days late. • Eight of 45 (18%) equipment items observed during historical sites testing were not tagged with a property identification number. In addition, seven of the items were not recorded on the Agency’s property control records. (Finding 5, pages 18-19) This finding was first reported in 2008. We recommended the Agency implement controls to ensure all equipment and purchases are timely recorded and removed from the property records. In addition, we recommended the Agency ensure all equipment is tagged and inventoried. Agency officials concurred with our recommendations and stated they will post adjustments to inventory records and will stress the importance of accurately identifying and ensuring all required inventory items, including donated items, are tagged and recorded in a timely manner. (For the previous Agency response, see Digest Footnote # 2). OTHER FINDINGS The remaining findings pertain to: 1) concession leases, 2) timesheets and leave requests, 3) performance evaluations, 4) internal control certifications, 5) Identity Protection Act, 6) petty cash funds and change funds, and 7) noncompliance with the Historic Preservation Agency Act. We will review the Agency’s progress towards the implementation of our recommendations in our next engagement. AUDITOR’S OPINION We conducted a compliance examination of the 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 it required to, prepare financial statements. WILLIAM G. HOLLAND Auditor General WGH:PH:rt AUDITORS ASSIGNED This examination was performed by the staff of the Office of the Auditor General. DIGEST FOOTNOTES #1 - NEED TO IMPROVE CONTROLS OVER GRANT MONITORING - Previous Agency Response We concur. The Agency will insure all necessary provisions are included in the Agency’s grant agreements and we will stress to grantees the importance of submitting accurate and timely reports. # 2 - NEED TO IMPROVE CONTROLS OVER STATE-OWNED EQUIPMENT- Previous Agency Response We concur. The Agency will insure equipment items are properly tagged and that all reporting is completed. Obsolete equipment will be addressed as necessary.