|
The Transportation Regulatory Fund balance exceeded statutory limits
Receipts and refunds were deposited late
Treasurer’s drafts were not timely submitted
Support could not be located for receipts and waived fees
The Commission had no formal policies and procedures for processing gross revenue tax returns and receipts
Cash in transit was not adequately safeguarded
Net unreconciled differences in expenditure records varied from $419 to $24,036 by fund.
Net unreconciled differences in receipt records varied from $965 to $3,567 by fund.
|
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
TRANSPORTATION REGULATORY FUND BALANCE
The fund balance of the Transportation Regulatory Fund exceeded the $2,898,185 fund balance permitted by the Illinois Commercial Transportation Law (625 ILCS 5/18c-1503) for both fiscal years 2002 and 2003.
The balance in the Transportation Regulatory Fund exceeded the statutory limits by $1,339,815 at June 30, 2003 and by $3,566,815 at June 30, 2002. (Finding 1, Pages 9-10). This finding has been repeated since 1997.
We recommended that the Commission implement controls to ensure it complies with the statute regarding the fund balance in the Transportation Regulatory Fund or seek legislative remedy to the statutory requirement.
The Commission responded that the agency has continued to work to reduce the Transportation Regulatory Fund balance. The Commission further stated that fees imposed on the motor carrier industry have not been raised while the fund balance has been above the required limit. Therefore, fees and taxes currently imposed do not reflect the true cost of regulating the industry. The Commission stated that a change to or elimination of the fund balance restriction in the law would be proposed. (For previous Commission responses, see Digest footnote #1.)
UNTIMELY DEPOSIT AND LACK OF SUPPORT
The Commission did not timely deposit or adequately support receipt transactions. We noted the following weaknesses:
- Receipts were not deposited timely in the State Treasury. Twenty-seven (27%) of 100 receipts tested and two (22%) of 9 refunds tested totaling $2,279,082 and $955, respectively, were deposited 1 to 56 days late. In addition, the timeliness of deposit could not be determined for seven (7%) receipts tested totaling $407,851 because the Commission did not maintain documentation of the date received.
- Twenty-eight (28%) out of 100 Treasurer’s drafts tested totaling $972,774 were not submitted to the Office of the Comptroller in a timely manner. The drafts were submitted between 2 and 33 days after receipt.
- Supporting documentation could not be located for five (5%) of 100 receipt transactions plus an additional nine (36%) of 25 transactions where fees were waived. The fourteen receipt transactions totaled $2,034. (Finding 4, Pages 14-15)
We recommended that the Commission make timely deposits into the State Treasury and document the date that receipts are received. Additionally, we recommended that the Commission submit Treasurer’s drafts to the Office of the Comptroller in a timely manner. Lastly, we recommended that the Commission implement controls over receipts to ensure adequate documentation is maintained and readily available.
The Commission responded that deposits will continue to be prepared on a daily basis and any individual receipts exceeding $10,000 received prior to 2 p.m. will be deposited on the day of receipt. The Commission noted that of the receipts not deposited on a timely basis, 12 receipts totaling $2,259,656 (99%) were deposited the day after they were received. The Commission further stated that Treasurer’s drafts are now being submitted to the Comptroller on a timely basis. The Commission also responded that policies and procedures have been developed and personnel have been trained to provide a better record of transactions.
INADEQUATE CONTROLS OVER RECEIPT PROCESSING
The Commission did not have adequate policies and procedures for the processing of gross revenue tax returns and other receipts. During our testing, we noted the following weaknesses:
- The Commission did not have formal approved policies and procedures for checking the accuracy of revenues reported and deductions taken on gross revenue tax returns. During FY 02 and FY 03, respectively, the Commission processed more than 972 and 1,008 quarterly, annual, or revised gross revenue tax returns, which produced approximately $10,326,000 and $8,273,000 in revenues.
- The Commission did not have formal policies and procedures for receipts processing. The Commission reported approximately $34,344,000 and $45,321,000 in receipts for FY 02 and FY 03, respectively.
- Adequate safeguards did not exist for cash receipts in transit from the Commission to the bank. Daily deposits were initially kept in a safe, then moved to the mailroom prior to transport to the Treasurer’s office. The mailroom was unlocked and unmonitored and allowed easy access to the deposits by anyone entering the mailroom. (Finding 5, Pages 16-17)
We recommended that the Commission develop formal written policies and procedures to govern their gross revenue tax return processing and receipt processing activities and guide employees’ actions. In addition, we recommended that deposits be adequately safeguarded while in transit.
The Commission responded that the deposit process has changed and deposits are not left unattended in the mailroom. The Commission further responded that formal written procedures are still being drafted for receipt and gross revenue tax processing.
INACCURATE AND IMPROPERLY RECONCILED ACCOUNTING RECORDS
The Commission did not maintain accurate and properly reconciled accounting records. We noted the following:
- The Commission’s expenditure records were inaccurate and did not agree with the State Comptroller’s records for 13 of 57 (23%) and 20 of 57 (35%) appropriation line items for FY 02 and FY 03 respectively. We noted that these unreconciled differences, which ranged from $5 to $9,790, were not reported to the Comptroller’s Office as required. These individual line item differences netted to $419 in the 001 fund in FY 03, $12,133 and $2,488 in the 018 fund and $13,788 and $24,036 in the 059 fund for FY 02 and FY 03, respectively.
- The Commission’s receipt records did not agree with the State Comptroller’s records for 9 of 13 (69%) and 7 of 14 (50%) receipt accounts in the Transportation Regulatory Fund and the Public Utility Fund for FY 02 and FY 03, respectively. We also noted that these unreconciled differences, which ranged from $84 to $15,856, were not formally reported to the Comptroller’s Office as required. These individual receipt account differences netted to $1,545 and $3,567 in the 018 fund and $965 and $2,314 in the 059 fund for FY 02 and FY 03, respectively.
Commission personnel stated that they had informally
worked with the Comptroller’s office to try to resolve some of the differences. (Finding 6, Pages 18-19)
We recommended that the Commission timely identify and formally notify the Comptroller’s Office of all corrections and unreconciled differences identified by the monthly reconciliations of agency receipts and expenditures to Comptroller records as required by SAMS to ensure accurate accounting records are maintained.
The Commission responded that the errors noted in the reconciliations of both revenue and expenditures were due to isolated instances and fiscal staff had worked with the Comptroller’s office to rectify the situations. In the future, the correct forms will be completed and forwarded to the Comptroller’s office.
OTHER FINDINGS
The remaining findings are less significant and are reportably being given attention by the Commission. We will review the Commission’s progress toward the implementation of our recommendations during our next audit of the Commission.
Mr. Scott Wiseman, Executive Director, provided the responses to our recommendations.
AUDITORS’ OPINION
We conducted a compliance audit of the Illinois Commerce Commission as required by the Illinois State Auditing Act. We have not audited any financial statements of the Commission 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:LKW:pp
AUDITORS ASSIGNED
This audit was conducted by the staff of the Office of the Auditor General.
DIGEST FOOTNOTES
#1 MOTOR VEHICLE AND TRANSPORTATION REGULATORY FUND BALANCES – Previous Commission Response
2001: "The Commerce Commission has continued its work to reduce the Transportation Regulatory Fund (TRF) balance. The preponderance of our TRF income is received in the months of October, November, and December. As of December 2001, income for calendar year 2001 is down by about $250,000 from last year at this time. This is largely the result of the recession that has hit the motor carrier industry very hard and which has caused a reduction in fee income as many trucking firms have ceased operations.
However, we anticipate a significant drop in the fund balance before the end of the year as a result of the legislature’s action in the spring session to transfer $2.7 million from the TRF to the Governor’s Technology Initiative program. Although these funds were earmarked for those purposes, in fact, they have not been transferred out of the TRF at this time; we anticipate that the funds will be transferred before the close of the fiscal year. Nevertheless, these funds are no longer available to the Commission and for all practical purposes should not be included in the TRF balance."
1999: "We agree that the Transportation Regulatory Fund has accumulated a large surplus. We have reduced fees nearly $3.5 million per year for a cumulative total of over $17 million since 1995. Despite the continued lowering or waiving of fees, motor carrier contributions to the fund have continued to accelerate. The economy is continuing to expand, and there are motor carrier companies operating more trucks in Illinois than ever before. However, because of recent increases in staff and anticipated carrier safety initiatives we believe that the annual growth rate of the fund balance will begin to slow.
There is also the continuing threat of federal elimination of the Single State Registration System. Elimination of that funding would fairly quickly eliminate the fund balance and might eventually necessitate the reinstatement of many intrastate fees."
1997: "We agree that the Transportation Regulatory Fund has accumulated a large surplus. We have reduced our fees nearly $3.5 million per year for a cumulative total of over $9 million since 1995. Despite the staff reduction caused by the Federal Trucking Deregulation and ICC’s continued efforts to cut revenue by repeatedly lowering or waiving fees, motor carrier contributions to the fund have continued to accelerate. This is mostly because the economy is booming. There are more motor companies operating more trucks in or through Illinois than ever before. In addition, implementation of the railroad safety initiatives has been a lengthy process and expenditures for that program have not yet met the new income levels.
We are planning to make a recommendation addressing the Single State Registration (SSRS) program fees to the Commission by July of 1998 (SSRS program is $3M annually). Because the SSRS program has, since 1996, been the subject of a Congressionally directed rulemaking at USDOT, due for completion by January 1, 1998, we are uncertain of the continuing status of the SSRS program at this time. USDOT recently conveyed to us that they intend to make a recommendation to Congress that the SSRS program be abolished. If the SSRS program is abolished, we will lose the $3M annually from the program and will, therefore, reduce the fund balance until revenues are brought back in line with expenditures."
|
