REPORT DIGEST

 

DEPARTMENT OF TRANSPORTATION

 

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 2003

 

Summary of Findings:

 

Total this audit                         8

Total last audit                       12

Repeated from last audit         3

 

Release Date:

April 13, 2004

 

 

 

 

 

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 TDD (217) 524-4646

 

 

This Report Digest is also available on

the worldwide web at

http://www.state.il.us/auditor

 

 

SYNOPSIS

 
  • The Department did not have adequate procedures regarding the use and disposition of excess land. This condition has existed since 2000.
  • The Department lacked clearly defined computer security management structure and related policies and procedures increasing the possibility that security breaches may occur and not be detected, reported, or corrected.
  • The Department did not have adequate controls over commodities inventory. This condition has existed since 1994.

 

 

 

 

 

 

 

 

 

 

{Expenditures and Activity Measures are summarized on the reverse page.}

 

                    DEPARTMENT OF TRANSPORTATION

                    FINANCIAL AND COMPLIANCE AUDIT

                           For The Year Ended June 30, 2003

           (Comparative Data Shown for Year Ended June 30, 2002)

 

 

EXPENDITURE STATISTICS

FY 2003

FY 2002

! Total Expenditures (All Funds)

$4,173,396,298

$4,084,042,036

OPERATIONS TOTAL

% of Total Expenditures

$630,173,717

15.10%

$623,896,113

15.28%

Personal Services

% of Operations Expenditures

Average No. of Employees

$385,555,285

61.18%

6,620

$368,397,647

59.05%

6,822

Other Payroll Costs (FICA,

Retirement)

% of Operations Expenditures

 

$84,174,096

13.36%

 

$79,645,818

12.76%

Contractual Services

% of Operations Expenditures

$87,184,287

13.83%

$86,461,631

13.86%

All Other Operations Items

% of Operations Expenditures

$73,260,049

11.63%

$89,391,017

14.33%

GRANTS TOTAL

% of Total Expenditures

$1,312,479,828

31.45%

$1,365,104,629

33.42%

CONSTRUCTION TOTAL

% of Total Expenditures

$2,226,021,333

53.34%

$2,089,072,064

51.15%

CAPITAL IMPROVEMENTS TOTAL

% of Total Expenditures

$4,721,420

0.11%

$5,969,230

0.15%

CAPITAL ASSETS - GROSS

Infrastructure

All Other

Total

$19,871,479

2,301,907

$22,173,386

$18,904,350

2,198,929

$21,103,279

SELECTED ACTIVITY MEASURES (Unaudited)

FY 2003

FY 2002

! Number of bridges maintained/improved

319

237

! Percent of bridges needing repair (backlog)

7.1%

8.2%

! Lane miles of state-controlled highways

42,250

42,094

! Construction investment/lane mile

$51,770

$47,628

! Miles of pavement maintained/improved

1,561

1,177

! Percent of roads needing repair (backlog)

8.8%

9.3%

AGENCY SECRETARY(S)

During Audit Period: Mr. Timothy Martin

Currently: Mr. Timothy Martin

 

 

 

 

 

 

 

 

 

Excess land should be inventoried and disposed

 

 

Parcels of land remain unused with no identifiable planned use

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recommendations to lead to improved process

 

 

 

 

 

 

 

 

 

 

 

Several deficiencies noted in computer security needed to reduce potential for security breaches

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory on hand does not reconcile to inventory records

 

 

 

 

 

Most districts could not produce records that agreed with amounts reported in financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 that are currently not being used. Also, portions of parcels remain unused with no identifiable planned use.

Department officials state that although no comprehensive inventory of excess land has been maintained, action has been taken to record, for financial reporting purposes, the cost of those excess parcels that exceed 100 acres. Department personnel stated that as time permits, district land acquisition staff will inventory all property that is not needed for highway (or airport) construction. 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. (Finding 3, pages 14-15) This finding has been repeated since 2000.

We recommended the Department follow 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. Further, the Department should 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 it is addressing the shortcomings of its practices for the inventorying of excess highway property. The Department established a task force during the past year which identified and recommended modification to the land acquisition policies and procedures manual. Action based upon the recommendations will lead to an improved procedure to identify and inventory excess land during future land acquisitions and a computerized inventory of non-operating highway rights of way along currently used highways. (For previous Agency responses, see Digest Footnote No. 1.)

COMPUTER SECURITY WEAKNESSES

The Department does not have a formal security management structure or a documented, comprehensive security program.

During our review of the Department’s computer environment, we found:
  • computer security administration structure and responsibilities were not clearly defined,
  • policies and procedures were not formalized to effectively and consistently address computer security violation and incident response activities,
  • local area network (LAN) security policies and procedures did not exist, and
  • off-site storage facility for back-up tapes lacked physical security controls. (Finding 4, pages 16-17)

We recommended the Department develop a formal security management structure, designate a security officer, implement a security awareness program, and develop policies and procedures for security administration including LAN security, and restrict access to the off-site storage facility.

Department officials agreed with the finding in principle and are addressing the deficiencies.

 

NEED TO IMPROVE COMMODITIES INVENTORY RECORDS AND CONTROLS

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. These inventory records were given to Accounts and Finance Department which were used for financial statement preparation.

Of the commodity inventory records tested, most districts could not produce detail "priced" inventory listings that agreed with the amounts reported in the Departmental financial statements. Also, we noted that districts do not have a policy requiring the performance of periodic inventory counts to ensure the listings are accurate. (Finding 5, page 19) 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 they have not had sufficient resources to create a formal inventory policy or records. The Department has been developing a pilot program which, with the guidance of external expertise, utilizes inventory control as well as cost savings purchasing power of private industry. (For previous Agency responses, see Digest Footnote 2.)

 

OTHER FINDINGS

The remaining findings are less significant and are reportedly 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. Ron McKechan, Chief of Audits.

 

AUDITORS’ OPINION

Our auditors state the basic financial statements of the Department as of and for the year ended June 30, 2003 are fairly presented in all material respects.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:SES:pp

 

 

SPECIAL ASSISTANT AUDITORS

BKD, LLP were our special assistant auditors for this audit.

DIGEST FOOTNOTES

#1 INADEQUATE PROCEDURES REGARDING EXCESS LAND - Previous Agency Responses

2002: The Department will compile a listing of all excess land acquired in FY 2004 and ongoing. In addition, the Department will establish criteria and threshold for valuing excess land parcels prior to FY 2004. Based on these revised policies and procedures, the Department will complete its listing of excess lands acquired prior to FY 2004 within the next 5 years.

2000: The Department will inventory excess land not needed for highway construction as time permits. The Department will dispose of excess land when specifically requested by a citizen.

#2 INADEQUATE CONTROLS OVER COMMODITIES INVENTORY - Previous Agency Responses

 

2002: The Department maintains inventory records at maintenance field locations primary for estimating annual usage for future budget purposes. The Department will develop formal written policies to set threshold for tracking of commodities inventories in District Maintenance yards.

2000: 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.

1999: (Same response as 2000.)

1998: (Same response as 2000.)

1996: (Same response as 2000.)

                                        1994: (Same response as 2000.)