FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE PROCEDURES REGARDING EXCESS LAND
The Department did not have adequate procedures regarding the use and disposition
of excess land.
The Department has acquired numerous properties in previous years through
acquisition and eminent domain proceedings for future highway construction. These
properties are currently not being used. Department officials state that no comprehensive
inventory of excess land has been maintained. Currently, it is not possible to identify
these properties and determine their potential future use because no formal assessment of
the use of each significant parcel of excess land is performed. Management stated that the
Department relies on external parties who are interested in the purchase of excess land to
inquire of the Department about a potential sale. (Finding 1, page 10)
We recommended the Department follow the written policies and procedures to control the
use and disposition of excess land. The excess land should be inventoried and a complete
listing compiled, and that listing should be updated on a monthly basis. We also
recommended the Department revise its current policies and procedures to require that a
periodic evaluation of the use of each significant parcel of excess land be performed by
the District Engineer so that excess land can be identified and disposed.
Department officials responded that property acquired which is not needed for highway
construction will be inventoried as time permits and the Department will continue to
respond to citizen inquiries regarding excess property.
ESTIMATE OF ACCOUNTS PAYABLE WAS NOT SUFFICIENT
The Department did not have adequate procedures to estimate accounts payable at
year-end in the combined financial statements.
During our review of the Department’s estimate of accounts payable as of June 30,
2000, we reviewed subsequent disbursements in July, August, and September, 2000. We found
disbursements totaling $40,587,904 were not properly accrued in the accounts payable
estimate as of year end. Of this amount, the Department adjusted the combined financial
statements for the Road Fund and the State Construction Fund by $18,291,434 and
$9,067,329, respectively. The remaining amounts were not adjusted because management
believed the net effect of the offsetting federal reimbursements would not be material to
the Department’s financial statements. (Finding 2, page 11)
We recommended the Department develop improved methods to estimate this portion of its
accounts payable accrual.
Department officials responded that it has adjusted the method used for estimating year
end accounts payable.
COMMODITIES INVENTORY RECORDS ARE INADEQUATE
No formal commodities inventory policy exists. Inventory on hand did not reconcile
to the commodity inventory records maintained in the Department’s District
maintenance yards. No inventory records existed at the Springfield west yard in District
6.
Of the inventory records tested at Hillside, Stevenson, and Alsip in District 1;
LaSalle, Morris, and Yorkville in District 3; and Lincoln and Riverton in District 6; the
quantity on hand for specific inventory items did not reconcile to the Department’s
stock status reports for 15 out of 60 items tested. The most significant differences were
in the LaSalle and Yorkville yards where 5 of 10 and 3 of 10 items, respectively, did not
agree to the index cards. (Finding 4, page 13) This finding has been repeated since
1994.
We recommended the Department develop formal inventory policies and procedures for
all District maintenance yards and maintain inventory records throughout the year. The
Department should implement a policy for its inventories based on levels of inventory and
thresholds of consumption.
Department officials stated commodity items stored in maintenance yard stockrooms are
not material and consumption is monitored by issuing warehouses and distribution centers.
Inventory records at the yard level are not cost effective, yet may be voluntarily
maintained to avoid outages and provide estimated usage rates. The Department is
developing a system to analyze both warehouse inventory and yard expenditure records to
track commodity consumption for each yard. Unreasonable yard usage of commodities will be
investigated. (For previous Agency responses, see Digest Footnote 1.)
LACK OF COMPLIANCE WITH STATUTE
The Department’s Chief of Audits does not report to the Secretary of
Transportation as required by the Fiscal Control and Internal Auditing Act, but instead
reports to the Bureau Chief of Accounting and Auditing. The Act (30 ILCS 10/2002) requires
the chief internal auditor to report directly to the chief executive officer and have
direct communication with the chief executive officer and the governing board, if one
exists, in exercising audit activities.
As set forth by Departmental Order 7-1, the Chief of Audits has access and may
communicate directly to the Secretary of Transportation on any Departmental matter.
Although the Department believes that the existing relationship between the Chief of
Audits and the Secretary complies with the intent of the Statute, sound internal controls
dictate internal audit functions should exist outside organization’s primary
operational structures and should regularly report to the organization's executive
management (the Secretary). The Department’s existing reporting structure, as it
relates to the internal audit function, does not appear to fully promote exclusive
communication by the Chief of Audits and the Secretary of the Department. (Finding 5, page
14) This finding has been repeated since 1990.
We recommended the Chief of Audits report directly to the Secretary of
Transportation to comply with the Fiscal Control and Internal Auditing Act.
Department officials do not agree with our recommendation. They believe that the
current reporting relationship between the Chief of Audits and the Secretary has worked
well and meets the needs of the Department and the intent of the Statute. (For previous
agency responses, see Digest Footnote 2.)
OTHER FINDINGS
The remaining findings are less significant and are being given attention by the
Department. We will review progress toward implementing these recommendations in our next
compliance audit.
Responses to the recommendations were provided by Mr. David G. Campbell, Bureau Chief
of Accounting and Auditing.
AUDITORS’ OPINION
Our auditors state the combined financial statements of the Department as of
and for the year ended June 30, 2000 are fairly presented in all material respects.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:GSR:pp
SPECIAL ASSISTANT AUDITORS
KPMG, LLP were our special assistant auditors for this audit.
DIGEST FOOTNOTES
#1 INADEQUATE CONTROLS OVER COMMODITIES INVENTORY - Previous Agency Responses
1999: The Department agrees with the finding that field locations should be monitored
regarding their consumption of bulk and utilitarian commodities and is developing a system
to produce this information. However, the Department believes the cost of maintaining
perpetual inventory systems outweighs the benefits.
1998: (Same response as 1999.)
1996: (Same response as 1999.)
1994: (Same response as 1999.)
#2 INTERNAL AUDIT NONCOMPLIANCE - Previous Agency Responses
1999: "The Chief of Audits, in accordance with IDOT Departmental Order
7-1, has access and may report directly to the Secretary of Transportation on any audit
matter. Each internal audit report is addressed directly to the Secretary. The Chief of
Audits meets directly with the Secretary at his discretion to discuss the annual audit
work plan, results of specific audits, and concerns of the Secretary. We believe that the
current reporting relationship between the Chief of Audits and the Secretary has worked
well and meets the needs of the Department and the intent of the Statute."
1998: (Same response as 1999.)
1996: (Same response as 1999.)
1994: (Same response as 1999.)
1992: (Same response as 1999.)
1990: (Same response as 1999.)
