REPORT DIGEST

ILLINOIS LABOR RELATIONS BOARD

COMPLIANCE EXAMINATION

For the Two Years Ended:

June 30, 2007

Summary of Findings:

Total this audit 11

Total last audit 6

Repeated from last audit 2

Release Date:

March 13, 2008

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

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Springfield, IL 62703

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SYNOPSIS

¨ The Board had not established adequate planning, oversight, and controls over a contract for an information system project, which resulted in a costly system conversion project that did not meet the Board’s standards.

¨ The Board did not maintain sufficient controls over the recording and reporting of State property.

¨ The Board did not maintain adequate controls over travel.

¨ The Board had not adopted formal policies and procedures over employee leaves of absence.

¨ The Board did not have adequate controls over its receipt processing.

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

ILLINOIS LABOR RELATIONS BOARD

COMPLIANCE EXAMINATION

For The Two Years Ended June 30, 2007

EXPENDITURE STATISTICS

FY 2007

FY 2006

FY 2005

Total Expenditures (All Funds)....................

$1,715,136

$1,710,643

$1,575,913

Personal Services.............................

% of Total Expenditures.................

Average No. of Employees............

$1,180,181

68.8%

$1,125,471

65.8%

$1,072,824

68.1%

Other Payroll Costs (FICA, Retirement)

% of Total Expenditures..................

$221,639

12.9%

$169,286

9.9%

$250,653

15.9%

Contractual Services...........................

% of Total Expenditures.................

$177,612

10.4%

$271,808

15.9%

$52,983

3.4%

Electronic Data Processing...............

% of Total Expenditures..................

$42,481

2.5%

$54,893

3.2%

$20,380

1.3%

All Other Items..................................

% of Total Expenditures.................

$93,223

5.4%

$89,185

5.2%

$179,073

11.3%

Cost of Property and Equipment..............

$185,220

$207,660

$276,310

SELECTED ACTIVITY MEASURES (Not Examined)

FY 2007

FY 2006

FY 2005*

· Representation cases filed

· Charges against labor organization

· Charges against employer

· Mediation/Arbitration cases

* Some FY05 amounts have been changed to reflect updated Board records.

330

334

296

329

402

312

318

281

247

AGENCY DIRECTOR(S)

During Examination Period: John Brosnan

Currently: John Brosnan

Costly system conversion project did not meet the Board’s standards

Database did not meet Board requirements

Payments totaled $28,950

Board officials agree with auditors

Property reports filed up to 269 days late

No documentation for equipment deletions totaling $135,138

Equipment purchases totaling $5,976 were never recorded

Equipment items not recorded on property control listing

Difference of $67,635 between reports

Board officials agree with auditors

Reimbursements in excess of travel allowances

Reimbursements totaling $1,469 were not properly documented

Travel vouchers not properly completed

Traveler was overpaid $136

Board officials agree with auditors

Employee overpaid $1,820

Board officials agree with auditors

Receipt ledger was not maintained

Checks not entered in check log

Checks were never deposited

Board officials agree with auditors

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

COMPUTER SYSTEM DEFICIENCY

The Illinois Labor Relations Board (Board) had not established adequate planning, oversight, and controls over a contract for an information system project, which resulted in a costly system conversion project that did not meet the Board’s standards.

During the period, the Board entered into a contract for the conversion of the case management tracking system to an Access database. However, the Board did not receive a database which met their requirements. In addition, due to the difficulties encountered, the Board decided not to convert the Local Panel case tracking system. Therefore, the Board is maintaining two databases which do not meet their needs. The Board paid the vendor $28,950 for this project, including $2,750 to try to rectify the problems. (Finding 1, page 8)

We recommended the Board perform a detailed review of its computer systems conversion and contract monitoring process to provide for adequate planning, oversight, staff involvement, and management controls for externally converted applications.

Board officials concurred with the finding and stated they will exercise greater oversight control on future conversion and/or upgrade projects.

INADEQUATE CONTROLS OVER THE RECORDING AND REPORTING OF STATE PROPERTY

The Board did not maintain sufficient controls over the recording and reporting of State property. Some of the conditions noted follow:

· Five of 8 (63%) Quarterly Reports of State Property (C-15s) were filed 1 to 269 days late.

· The Board did not maintain documentation to support equipment deletions totaling $135,138 during the period. In addition, the Board did not maintain documentation for additions to its property listing.

· The Board did not include equipment purchases of 3 printers, totaling $4,563, on its FY06 C-15s. These printers were added to the Board’s property listing yet never added to the C-15. In addition, the Board did not include a book totaling $1,413 on the FY07 C-15s.

· Fifty-one equipment items totaling $32,130 were purchased during the period and not recorded on the property listing.

· The installment purchase for 13 computers was recorded at $217 less than the actual cost listed on the C-15s.

· The FY06 C-15 beginning balance was reported at $15,151 greater than the FY05 ending balance.

· The Board did not reconcile its property listing to the C-15’s filed with the IOC. A difference of $67,635 was not reconciled or explained.

· The property and equipment expenditures processed by the IOC during FY06 and FY07 did not reconcile to additions recorded on the Quarterly C-15 reports. Property and equipment expenditures totaling $14,155 and $4,491 were never recorded on the C-15’s during FY06 and FY07, respectively. (Finding 2, pages 9-10)

We recommended that the Board establish a corrective action plan to address controls to ensure an accurate property listing and accurate State property reporting for the Board. Further, the Board should file their Quarterly Reports of State Property by the reporting deadlines, properly report additions and maintain adequate documentation for the property reports as required by SAMS. The Board should also reconcile its property reports and records to the C-15’s and expenditures for property processed through the IOC on a quarterly basis to ensure completeness and accuracy of its property records.

Board officials concurred with the finding and stated they have instituted new procedures and an inventory management program to ensure correct reporting of assets.

Travel processing weakness

The Board did not maintain adequate controls over travel. We noted the following:

· Seven of 25 (28%) vouchers tested, totaling $674 were reimbursed to employees for rates claimed in excess of State travel allowances. We noted 7 instances of reimbursements to employees for lodging rates claimed in excess of rates set forth by the Governor’s Travel Control Board. Excess rates claimed for lodging were between $19 and $196. We noted 2 instances of excess per diem reimbursement with a total overpayment of $42. We noted 3 reimbursements of unallowable miscellaneous expenses including $8 for a mini bar purchase and $14 in personal phone charges.

· Seven of 25 (28%) vouchers tested were not supported by proper documentation, including receipts for transportation, lodging and other expenses. Reimbursements in the amount of $1,469 were paid without proper documentation to support the expenses.

· Three of 25 (12%) travel vouchers tested were not submitted within 60 days, which is considered to be a reasonable period of time. These travel vouchers totaled $389 and were submitted between 10 and 129 days late.

· Three of 25 (12%) travel vouchers tested were not properly completed as 2 vouchers did not have the detail object code listed and another voucher did not record the employee’s social security number.

· The Board did not comply with its policy to ensure employees using private vehicles for State business completed certifications of driver’s license and auto insurance forms annually. Five of 5 (100%) employees tested did not have annual certifications on file.

· One of the top five (20%) travelers tested requested reimbursement twice for the same travel expenses. The traveler was overpaid $136. (Finding 5, pages 14-16)

We recommended the Board strengthen its internal controls over travel to ensure that all employees are completing annual certification of driver’s license and auto insurance coverage in accordance with the Board’s Personnel and Policy Manual; travel vouchers are submitted timely; reimbursements are in accordance with the Governors Travel Control Board and Travel Regulation Council regulations; travel vouchers are properly supported; travel vouchers are properly completed; duplicate payments are not made; and reimbursement for overpayments to employees are obtained.

Board officials concurred with the finding and stated they have taken such recommendations by the Auditor General and changed current practices to reflect the recommendations.

lack of policies and procedures over leaves of absence

The Board had not adopted formal policies and procedures over employee leaves of absence.

During the period, one employee requested a leave of absence. However, the Board did not have a formal policy governing the procedures to be followed. As a result, the employee was not taken off the payroll during the leave of absence when benefit time was not used. Auditors noted the employee was overpaid $1,820. (Finding 6, page 17)

We recommended the Board develop formal policies governing employee leaves of absence procedures to be followed including proper removal of an employee from the payroll. Further, the Board should obtain reimbursement for overpayments.

Board officials concurred with the finding and stated they are developing formal policies for employee leave of absence procedures and will attain reimbursement for overpayment.

Receipts PROCESSING weaknesses

The Board did not have adequate controls over its receipt processing. During our testing we noted the following:

· During the period, the Board did not maintain a receipt ledger documenting monies received and deposits made. Some documentation such as copies of checks, copy fee invoices, deposit slips, Treasurer’s Drafts and Receipt Deposit Transmittals (RDT) were kept in a file folder. The Board did maintain a check log documenting the date, payor, check number and amount; however, we noted that the log was incomplete and was not reconciled to deposits made.

· The Board did not perform monthly reconciliations of agency receipts to Comptroller’s records (SB04). As a result the following errors went undetected:

¨ One deposit in FY06 was overstated by $10. Two checks totaling $25 were miscalculated and deposited in the amount of $35.

¨ Nine checks totaling $276 were not entered on the check log as received.

¨ Two checks received totaling $221 could not be located and were never deposited.

¨ One check totaling $149 was deposited into an incorrect receipt account. (Finding 7, pages 18-19)

We recommended that the Board strengthen its controls over receipt processing to adequately record receipts, timely identify and correct errors, and maintain complete and accurate receipt records. Further, the Office should properly prepare monthly reconciliations of agency receipts to Comptroller records.

Board officials concurred with the finding and stated they have taken into consideration the recommendations and will work to establish and implement procedures for receipt processing and recording.

OTHER FINDINGS

The remaining findings are reportedly being given attention by the Board. We will review the Board's progress toward implementation of our recommendations in our next examination.

AUDITORS’ OPINION

We conducted a compliance examination of the Illinois Labor Relations Board as required by the Illinois State Auditing Act. We have not audited any financial statements of the Illinois Labor Relations Board for the purpose of expressing an opinion because the Illinois Labor Relations Board does not, nor is it required to, prepare financial statements.

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:GR:pp

AUDITORS ASSIGNED

The compliance examination was conducted by the Auditor General’s staff.