REPORT
DIGEST

COMPLIANCE AUDIT
For the Two Years Ended:
June 30, 1998

Summary of Findings:

SYNOPSIS

• JCAR has not fully complied with the Illinois Administrative Procedure Act which requires the evaluation of all agency rules at least once every five years. This condition has existed since 1988.
• JCAR did not maintain adequate internal controls in certain areas including segregation of duties and maintenance of proper documentation.

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

FY 1998

FY 1997

FY 1996

• Total Expenditures (All Funds)

OPERATIONS TOTAL
% of Total Expenditures

Personal Services
% of Operations Expenditures
Average No. of Employees

Other Payroll Costs (FICA, Retirement)
% of Operations Expenditures

Contractual Services
% of Operations Expenditures

All Other Operations Items
% of Operations Expenditures

• Cost of Property and Equipment

$709,012

$709,012
100.00%

$533,924
75.31%
20

$95,094
13.41%

$31,505
4.44%

$48,489
6.84%

$122,718

$721,305

$721,305
100.00%

$562,838
78.03%
21

$91,509
12.69%

$24,363
3.37%

$42,595
5.91%

$136,909

$732,046

$732,046
100.00%

$562,118
76.79%
22

$89,238
12.19%

$44,254
6.04%

$36,436
4.98%

$174,163

FY 1998

FY 1997

FY 1996

Rules received/reviewed
Objections made
Recommendations made

569
17
10

578
18
8

627
17
16

Currently: Vicki Thomas

Proper documentation not maintained

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

NONCOMPLIANCE WITH ILLINOIS ADMINISTRATIVE PROCEDURE ACT

The Joint Committee on Administrative Rules (JCAR) has not fully complied with the Illinois Administrative Procedure Act (5 ILCS 100/5-130) which requires the evaluation of all rules of each agency at least once every five years. The Act requires JCAR's evaluation of the rules to include the following: organizational, structural and procedural reforms that affect rules or rulemaking; merger, modification, establishment, or abolition of regulations; elimination or phasing out outdated, overlapping, or conflicting regulatory jurisdictions or requirements of general applicability; and economic and budgetary effects.

We recommended JCAR either develop and implement a formal long range plan which addresses methods to bring its operations into compliance with these statutory requirements or seek legislative changes. (Finding 98-1, pages 10-12)

JCAR officials responded that legislative changes have been initiated in the past but were not passed. They will again consider this issue when drafting legislative recommendations for 1999. This finding has been repeated since 1988. (For previous agency responses, see Digest Footnote 1.)

INTERNAL CONTROL WEAKNESSES

JCAR did not maintain adequate internal controls in certain areas. We noted the following weaknesses:

• Expenditure records were inaccurate and did not agree with the State Comptroller's records. Some expenditures were not recorded and others were recorded in the wrong amount.
• Duties were not adequately segregated within the revenue, payroll, and expenditure functions.
• Documents were not always readily accessible.
• Two vendors were allowed to have database materials before payment was received.
• Proper authorization forms were not on file to support all payroll deductions.
• Supporting documentation was not on file for two instances of leave time used.

We recommended that duties be segregated among more personnel and proper documentation be maintained in the areas noted. (Finding 98-3, pages 14-16)

JCAR officials stated that responsibilities have been reassigned to better segregate duties and ensure the maintenance of accurate records.

OTHER FINDING

The remaining finding was less significant and has been given appropriate attention by the Agency. We will review the Agency's progress towards the implementation of our recommendations in our next audit.

Vicki Thomas, Executive Director, provided responses to our findings and recommendations.

AUDITORS' OPINION

We conducted a compliance audit of the Joint Committee on Administrative Rules as required by the Illinois State Auditing Act. The Agency has no locally held or federal or State trust funds, consequently, there are no financial statements requiring a financial audit leading to an opinion.

____________________________________
WILLIAM G. HOLLAND, Auditor General

WGH:KMA:pp

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for this audit were Martin & Shadid, CPAs, P.C.

DIGEST FOOTNOTES

#1: NONCOMPLIANCE WITH ILLINOIS ADMINISTRATIVE PROCEDURE ACT - Previous Agency Responses

1996: "JCAR acknowledges that it has not been able to carry out the statutory requirement that it conduct a 5-year review of all the rules of all State agencies. During 4 years early in JCAR's history (1980-83), an attempt was made to conduct these reviews, but that effort had to be abandoned for lack of adequate staff resources to conduct both on-going review of new regulations and the 5-year periodic review. ....JCAR will attempt to develop a plan that can be submitted to the General Assembly for its consideration in funding the operations of this agency. JCAR also periodically initiates or assists legislators with bills designed to update the Illinois Administrative Procedure Act. Such legislation is being drafted for consideration this session."

1994: "JCAR acknowledges that it has not been able to carry out the statutory requirement that it conduct a 5-year review of all the rules of all State agencies. During 4 years early in JCAR's 15-year history (1980-83), an attempt was made to conduct these reviews, but that effort had to be abandoned for lack of adequate staff resources to conduct both on-going review of new regulations and the 5-year periodic review. To responsibly fulfill both these mandates would require at least twice the staff resources that have been available to JCAR. . . . JCAR will again consider this issue when it devises its legislative recommendations."

1992: "JCAR acknowledges that it has not been able to carry out the statutory requirement that it conduct a 5-year review of all the rules of all State agencies. During 4 years early in JCAR's 15-year history (1980-83), an attempt was made to conduct these reviews, but that effort had to be abandoned for lack of adequate staff resources to conduct both on-going review of new regulations and the 5-year periodic review. To responsibly fulfill both these mandates would require at least twice the staff resources that have been available to JCAR. . . . JCAR will again consider this issue when it devises its legislative recommendations for 1994."

1990: "We concur with the finding, and since forms evaluation is part of the five-year review program, the Joint Committee will again introduce legislation identical to House Bill 1674 in the 1991 Spring Session of the General Assembly to make five-year review of agency rulemaking permissive rather than mandatory."

1988: "[Mr. Bruce Johnson, Director] I concur with the recommendation. I will recommend that the Joint Committee either amend Sections 7.08 and 7.6 of the Illinois Administrative Procedure Act to make the five year review and the evaluation of State forms permissive or that the Joint Committee request additional funding in order to comply."