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Department made
payments from improper line items
Department did not
receive guidance or documentation with billings from CMS
Evidence of savings
not provided to auditors
Department payment
methodology
Efficiency
initiative payments totaled $20,363,841
17 vouchers were
found to contain Prompt Payment Act deficiencies
Four vouchers have
outstanding interest due of $495
74% of separated
employees in our sample had active phone credit cards
Inventory on hand
does not reconcile to inventory records
Tests conducted at
35 locations noted problems with improper reconciliation with year-end test
counts
State's
Transportation Master Plan not submitted to Governor and General Assembly
Last published
State Transportation Master Plan prepared and submitted in 1995
Inadequate
procedures regarding the use and disposition of excess land
Parcels of land
remain unused with no identifiable planned use
No comprehensive
inventory of excess land has been maintained
Department task
force initiatives in FY 04
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INTRODUCTION
This report presents our financial audit and State
compliance examination for the year ended June 30, 2004.
FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
PAYMENTS WERE MADE FOR EFFICIENCY INITIATIVE BILLINGS FROM IMPROPER
LINE ITEM APPROPRIATIONS
The Department made payments for efficiency initiative
billings from improper line item appropriations. Public Act 93-0025, in
part, outlines a program for efficiency initiatives to reorganize,
restructure and reengineer the business processes of the State. The State Finance Act details that the
amount designated as savings from efficiency initiatives implemented by the
Department of Central Management Services (CMS) shall be paid into the
Efficiency Initiative Revolving Fund.
The Act further requires State agencies to pay these amounts from the
line item appropriations where cost savings are anticipated to occur.
The Department did not receive guidance or documentation with
the billings from CMS detailing from which line item appropriations savings
were anticipated to occur. According
to Department staff, they received no documentation or information from CMS
detailing the nature and/or type of savings that CMS anticipated. Other than the data they received from
consultants (which was not provided to the auditors), the only guidance
received was the amount of payments that should be taken from the General
Revenue Fund (GRF) versus the Road Fund for the September 2003 billing.
The Department made payments for billings not from line
item appropriations where the cost savings were anticipated to have occurred
but from line items prorated among the Districts. For example, if an initiative would anticipate to save
“commodities,” all Districts appropriations for commodities would pay an
amount based on the individual budgeted amount to the total Departmental
budgeted amount.
The Department made payments for billings not from line item
appropriations where the cost savings were anticipated to have occurred but
from line items on a proportional basis.
The Department used:
- $3,779,441
from the various Contractual Services line item appropriations of
$62,614,500 (6.0%) to assist in paying for the Procurement and
Information Technology Initiative billings
- $155,200
from its Travel line item appropriations of $3,022,600 (5.1%) to assist
in paying for the Procurement Initiative billing
- $776,600
from its Commodities line item appropriations of $16,380,300 (4.7%) to
assist in paying for the Procurement Initiative billing
- $1,859,400
from its Equipment line item appropriations of $10,055,200 (18.5%) to
assist in paying for the Procurement and Information Technology
Initiative billings
- $434,400
from its EDP line item appropriation of $1,233,400 (35.2%) to assist in
paying for the Information Technology Initiative billing
- $629,700
from its Telecommunications line item appropriations of $8,512,000
(7.4%) to assist in paying for the Procurement Initiative billing
- $3,536,000
from its Operation of Automotive Equipment line item appropriations of
$24,082,200 (14.7%) to pay for the Vehicle Fleet Management and assist
in paying the Procurement Initiative billings
- $500,000
from its Permanent Improvements, Lump Sum and Other Purposes line item
of appropriation of $7,500,000 (6.7%) to assist in paying for the
Procurement Initiative billing
- $8,693,500
from its Transportation and Related Construction line item appropriation
of $376,227,000 (2.3%) to assist in paying for the Procurement
Initiative billing
The Department paid a total of
$20,363,841 for efficiency initiatives from the Road Fund. (Finding 1, Pages
11-15)
We recommended that the Department only make payments for
efficiency initiative billings from line item appropriations where savings
would be anticipated to occur.
Further, the Department should seek an explanation from CMS as to how
savings levels were calculated, or otherwise arrived at, and how savings achieved
or anticipated impacted the Department’s budget.
Department officials did not agree with the finding; and, in
fact, stated they complied with CMS direction and the State Finance Act. They stated that CMS billings were at the
summary level and it was the Department’s task to determine the anticipated
savings by line item. Also, there was
nothing in the nature of the savings that were anticipated to favor one
appropriation over another beyond a simple proration. Also, up until the time of the invoices,
their discussions with CMS included only savings of the Road Fund. Based on additional Departmental
investigation of the billings, the Department concluded the billing of the
GRF was in error; and thus, paid the entire amount from the Road Fund.
In an auditor’s comment we questioned how the Department can
have assurance that simply prorating the initiative payments among
appropriation lines would result in the correct amount being paid from the
proper appropriation. Without
specific guidance from CMS regarding the nature and type of savings
initiative projects, it is unclear whether the methodology of using lump sum
appropriations appropriated to the Highway Capital Improvements and the
Construction and Land Acquisition Divisions, that were made for specific
purposes by the General Assembly, were the funds that should be used for
efficiency payments.
NEED TO IMPROVE TIMELINESS OF VOUCHER APPROVALS
The Department did not always date stamp upon receipt,
approve, and pay all vouchers in a timely manner.
In our voucher testing during FY2004, 17 vouchers were noted
with processing and or documentation exceptions, as follows:
§
13 vouchers were not approved by the Department
within 30 days.
§
1 voucher was approved timely but not paid by the
State timely.
§
3 vouchers did not include a departmental approval
date; and thus, the Department’s timeliness could not be determined.
Of the 17 vouchers with
exceptions, four of the vouchers should have included
interest payments totaling approximately $495 in accordance with the State’s
Prompt Payment Act.
Department staff stated that
oversight was the cause for the failure to date stamp all vouchers
processed. Also, 13 of 36
departmental accounting entities failed to monitor the calculation and payment
of interest. (Finding 2, pages
16 – 17) This finding was
first reported in 2003.
We recommended that the
Department enforce current policies that require the approval of all invoices
within 30 days; and, implement policies and procedures to ensure that
interest is paid on invoices not paid within 60 days after the receipt of the
invoice.
Department officials agreed
with the finding and recommendation and state they have issued policies and
procedures to ensure that interest is paid on invoices that are not paid
within 60 days. (For the previous
agency response, see Digest footnote #1)
INADEQUATE CONTROL AND MONITORING OF PHONE CREDIT CARDS AND CELL
PHONES
The Department did not cancel phone credit cards of former
employees and lacks policy on employee cell phone usage and assignment.
During our review of 50 employees, we noted the Department
did not timely cancel the phone credit cards for 37 employees (74%) who had
separated either during the current year or in prior year(s). Of the 37 separated employees in our test,
12 had separated during the current year with the remaining 25 having
separated in the prior five years.
(Finding 3, pages 18-19) This
finding was first reported in 2003.
We recommended the Department follow its procedures to ensure
that all phone cards are cancelled in a timely manner upon employee
separation. Further, the Department
should develop and issue a policy governing the assignment and monitoring of
cell phones.
Department
officials agreed with the finding and recommendation. (For the previous agency response,
see Digest Footnote #2)
NEED TO IMPROVE COMMODITIES INVENTORY RECORDS AND CONTROLS
No formal commodities inventory policy exists. Actual quantities on hand did not
reconcile to the commodity inventory records. These inventory records were given to Accounts and Finance
Department which were used for financial statement preparation.
The Department’s commodities include items such as road salt,
signs, calcium chloride, culverts, and repair parts and totaled $17.5 million
as of June 30, 2004. We tested
commodity inventory records at 35 locations and found the Department did not
properly reconcile test counts taken during the year-end physical inventories
to the inventory records. Also, we
noted that districts do not have a policy requiring the performance of
periodic inventory counts to ensure the listings are accurate. (Finding 4, pages 20-21) This
finding was first reported in 1994.
We recommended the Department develop formal inventory policies
and procedures for all District maintenance yards and maintain inventory
records throughout the year. Also,
the Department should perform periodic test counts of commodities inventory
and reconcile those counts to its commodities records. At a minimum, year-end physical
inventories should be taken and the Department's records adjusted.
Department officials agreed with the finding and
recommendation and stated that during FY 04 a pilot program was developed
utilizing inventory control as well as cost savings purchasing power of
private industry that allows for better tracking of all commodity
purchases. When this pilot program is
completed, it will be studied and expanded to other IDOT yards, depots and
warehouses. Formal policies and
procedures will be developed as the program is expanded to other
districts. (For previous Agency
responses, see Digest Footnote #3.)
NEED TO MAINTAIN STATE’S MASTER PLAN
The
Department did not maintain and submit to the Governor and General Assembly a
master plan for highway, waterway, aeronautic, mass transportation and
railroad systems.
During our
review and testing of the statutory mandates, we noted that the Illinois
Statewide Transportation Plan (master plan) was last published in 1995. The Department is required to publish a
master plan and submit it to the Governor and the General Assembly by January
1st every two years.
(Finding 7, pages 26-27)
We
recommended the Department maintain its master plan and submit it by January
1st every two years as required by law.
Department
officials agree with the finding and recommendation but feel compliance with
the mandate is sufficiently met through the publication of the following two
documents: (1) Driving the Economy – a Departmental assessment of the
physical condition of transportation facilities and measurement of
transportation demands, and (2) Annual and Multi-Year capital programs for
highways, transit, airports and rail.
Also, the January 1st deadline is impractical due to the
timing and availability of the information.
Department officials state they will be working with the appropriate
authorities to rescind or revise the requirement.
NEED TO IMPROVE PROCEDURES REGARDING EXCESS LAND
The Department did not have adequate procedures regarding the
use and disposition of excess land. The Department is also improperly classifying excess land available for
sale on the financial statements.
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. Certain excess lands are from pieces of larger parcels acquired
but remain unused with no identifiable planned use. Pursuant to Federal Highway Administration regulations,
proceeds received from the sale or rental of land acquired with Federal funds
are restricted in their use to other eligible Title 23 projects, only.
Department officials state that no comprehensive inventory of
excess land has been maintained. In
the past, the Department has relied on external parties interested in
purchasing excess land to inquire of the Department about a potential
sale.
During FY2004, the Department established a task force that
developed policies and procedures for all Districts to use in recording
non-operating highway right-of-way inventory. On July 1, 2004, the Department added the services of an
engineering firm to supplement its nine District’s land acquisition staff in
this project. (Finding 8, pages 28-30)
This finding was first reported
in 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, reported and disposed.
Department officials agreed with the finding and
recommendation and stated that policies and procedures have been updated to
reflect the creation of the NON-Operating Highway Right of Way (NORWAY)
inventory. District property managers
are assisting in this effort. Once a
parcel (or portion thereof) is reviewed and determined to be excess, one of
the various disposal methods will be initiated. The Department expects to have a complete excess land inventory
in FY06 or early FY07. (For previous
Agency response, see Digest Footnote #4.)
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, 2004 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 UNTIMELY VOUCHER APPROVAL - Previous
Agency Response
2003: Accepted. The Department will issue a memorandum to appropriate personnel
to ensure that all invoices are approved within 30 days after receipt of the
invoice.
#2 INADEQUATE CONTROL AND MONITORING OF PHONE CREDIT
CARDS AND CELL PHONES - Previous Agency Response
2003: Accepted. The Department plans on developing a Web
based form that will allow coordinators fill out employee requested
services. A more timely and accurate
information system is needed to give quicker details of hires, termination or
retirees, and transfer’s. Bureau of
Information Processing would be responsible to get information on telephone
cards or other services
#3 INACCURATE COMMODITIES INVENTORY RECORDS -
Previous Agency Response
2003: Accepted. The Department has studied a number of issues relating to the
proper inventorying and control of commodities. A pilot program is being developed which utilizes the inventory
control expertise as well as cost savings purchasing power of private industry. Once the pilot program is completed, it
will be evaluated and expanded as necessary to provide adequate commodities
inventory control to the Department.
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