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A disclaimer of opinion on the Department’s financial statements was issued
because we were not able to satisfy ourselves about the amounts at which the revenues,
expenditures, accounts receivable, and accounts payable were recorded in the
Department’s books, records, and financial statements.
The Department did not have adequate control over voucher processing.
The Department did not adequately perform its review of the systems of internal
control, identify all material weaknesses, or prepare a corrective action plan.
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FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
INADEQUATE FINANCIAL REPORTING
The Department of Human Rights did not maintain adequate financial records or
prepare accurate GAAP Reporting Packages (reports in compliance with Generally Accepted
Accounting Principals) for submission to the Illinois Office of the Comptroller.
As part of the year-end accounting and financial reporting closing process, State
Agencies are required to prepare GAAP Reporting Packages and submit them to the
Comptroller, which uses the information to prepare the State’s General Purpose
Financial Statements. The information reported by an agency should agree to its underlying
supporting records and should be reconciled to Comptroller records. We noted significant
errors in the Department’s GAAP Reporting Packages, such as information reported not
being reconciled to Comptroller records; all required schedules not being submitted; and
inadequate records, schedules and reconciliations to support grant/contract analysis,
accounts receivable, and accounts payable.
Because detailed records of accounts receivable and accounts payable were not
maintained by the Department and certain prior year records and supporting data were not
retained, we were not able to satisfy ourselves about the amounts at which the revenues,
expenditures, accounts receivable, and account payable were recorded in the books,
records, and financial statements. A disclaimer of opinion on the Department’s
financial statements was issued. (Finding 1, pages 13-14) This finding, or variations
thereof, has been repeated since 1997.
We recommended the Department identify the accounting principle issues involved and
keep adequate records so that complete and accurate GAAP Reporting Packages can be
prepared. The Department responded that most records needed for preparing GAAP packages
and financial statements were maintained but that some records had been archived. The
Department also stated that they were making the necessary adjustments to prior year
records so that GAAP packages and financial statements will be correct. (For previous
agency responses, see Digest Footnote 1.)
INADEQUATE VOUCHER PROCESSING
The Department did not have adequate control over voucher processing. We
noted the following:
- Fifty-four of 258 (20.9%) vouchers tested, totaling $143,412 were not approved within 30
days of receipt of the vendor’s invoice.
- Nine of 258 vouchers tested, totaling $9,284, had processing errors and omissions such
as not being coded, not coded in accordance with the expenditure authority, or not
approved by the receiving officer. These errors had been noted by the Department.
- Seven of 50 (14%) contractual services vouchers tested, totaling $67,489, did not have
Contract Obligation Documents properly completed with signature approval on file.
Untimely processing and approval of vouchers can expose the Department to interest
charges and late fees, and may also result in a loss of credit with vendors. (Finding 2,
pages 15-16) This finding has been repeated since 1995.
We recommended the Department more consistently adhere to the established system of
internal control over voucher processing. The Department stated they would make every
effort to reduce the occurrence of errors. (For previous Agency responses, see Digest
Footnote 2.)
INADEQUATE REVIEW OF INTERNAL CONTROLS
The Department of Human Rights did not adequately perform its review of the system
of internal control, did not identify material weaknesses in the system, or prepare a
corrective action plan.
The Fiscal Control and Internal Auditing Act requires State agencies to establish and
maintain a system of internal fiscal and administrative controls and to evaluate them and
certify them annually. The Statewide Accounting Management System (SAMS) provides
evaluation procedures and discusses the reporting of weaknesses in a Corrective Action
Plan. We found that the Department did not perform complete analyses of all systems, did
not indicate the internal control weaknesses that had been reported in audit reports, did
not file the fiscal year 2000 certification letter on time, and that the certification
letter was not signed by the chief executive officer, as required. (Finding 5, pages
20-21)
The Department agreed with our recommendation to comply with the Statute and follow the
SAMS procedures.
OTHER FINDINGS
Other findings dealt with control over telephone expenditures and the correctness
of the Agency Workforce Report. We will review progress toward implementation of all our
recommendations during the next audit.
AUDITOR'S OPINION
Our auditors state they were unable to express an opinion on the Department of Human
Right’s financial statements because detailed records of accounts receivable and
accounts payable were not maintained and certain prior year records and supporting data
were not available for their audit.
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WILLIAM G. HOLLAND, Auditor General
WGH:KMC:ak
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors for this audit were Parker & Meltzer.
Digest Footnotes
- INADEQUATE FINANCIAL REPORTING – (Previous Department
Responses)
1999: "The Department will comply with the recommendation and keep
accurate records so that a complete and accurate GAAP package can be prepared."
1997: "The Department was aware and did maintain most of the supporting
documentation for reported year-end financial information. Steps have been implemented and
staff hired to ensure that all supporting documentation is retained in file."
- INADEQUATE VOUCHER PROCESSING - (Previous Department Responses)
1999: "The Department has updated its procedures and implemented control to
monitor and correct its own errors."
1997: "The Department agrees as recommended by the Auditors. The Department will
establish a more stringent policy in order to strengthen controls over voucher
processing."
1995: "The Department agrees with the recommendation. But, the receipt of federal
funds are not always timely for payment of vendors within 30 days. Therefore, for internal
control, invoices are not approved or paid until funds are available for expenditure.
This avoids vouchers being processed and returned by the Comptroller’s Office
because monies are not available in the appropriate expenditure line. In the future, the
Department will make every effort to approve and pay vouchers within 30 days."
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