REPORT DIGEST

DEPARTMENT OF THE LOTTERY

FINANCIAL AND COMPLIANCE AUDIT

For the Year Ended:

June 30, 2000

Summary of Findings:

Total this audit 4

Total last audit 3

Repeated from last audit 0

 

Release Date:
February 28, 2001

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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
Attn: Records Manager
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 Lottery used sole source procurements rather than competitive selection procedures to extend two contracts to conduct and observe lottery drawings. The contracts totaled $201,351.
  • Approximately $17,000 in bonuses to 23 agents were not paid because two game shows out of 58 were overlooked.

 

 

 

 

 

 

 

 

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

 

DEPARTMENT OF THE LOTTERY

COMPLIANCE AUDIT

For The Year Ended June 30, 2000
EXPENDITURE STATISTICS

2000

1999
  • Total Expenses (All Funds)

$958,819,944

$976,338,693
OPERATIONS

% of Total Expenses

$62,931,714

6.6%

$65,183,184

6.7%

COMMISSIONS AND FEES

% of Total Expenses

$97,023,213

10.1%

$98,447,260

10.1%

PRIZES

% of Total Expenses

$798,865,017

83.3%

$812,708,249

83.2%
  • Total Operating Revenues

Ticket Sales
Unclaimed Prizes
Other Operating Revenues

$1,490,945,738

1,466,456,840

22,274,475

2,214,423

$1,501,148,077

1,474,209,059

24,771,633

2,167,385
  • Net Operating Income

$532,125,794

$524,809,384
  • Cost of Property and Equipment

$4,957,935

$5,012,051
   
SELECTED ACTIVITY MEASURES

2000

1999
  • Non Operating Income - Interest
  • Net Income

$1,038,872

$(3,835,692)

$901,581

$6,335,897

! Operating Transfers To Common School Fund

$537,000,358

$519,375,068
AGENCY DIRECTOR(S)
During Audit Period: Lori Montana

Currently: Lori Montana

 

 

 

 

The Lottery used sole source procurements rather than competitive selection procedures to extend two contracts to conduct and observe lottery drawings. The contracts totaled $201,351

 

 

 

 

 

 

 

 

 

 

Approximately $17,000 in bonuses to 23 agents was not paid

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

 

NONCOMPLIANCE WITH PROCUREMENT CODE

The Department of the Lottery did not comply with the Illinois Procurement Code for sole source procurements. The Lottery contracts with three accounting firms to conduct and observe the midday and evening drawings. Under the prior procurement code, the Lottery was exempt from competitive selection requirements. Under the new Procurement Code (effective July 1998) the Lottery lost this exemption. Since then, two of the firms’ contracts expired; rather than competitively awarding the contracts, the Department renewed the contracts using the sole source provision of the Procurement Code. The two contracts were valued at $201,351.

At least 13 other states use independent auditors, which include several large national accounting firms. Therefore, there are other firms that have the necessary experience or ability to oversee drawings which, based on our review, are not complicated enough to warrant the use of the sole source provision in awarding these contracts.

We recommended the Department comply with the Illinois Procurement Code and award contracts for professional and artistic services using the competitive request for proposal process. The Lottery disagreed with this finding and considered the Department to be in full compliance with the Procurement Code. In an Auditor Comment, we disagreed with the Lottery’s response, pointing out several factors militating against compatibility of service as the primary determinant to make the sole source awards.

BONUSES NOT PAID TO AGENTS

The Lottery did not pay bonuses to agents who sold instant tickets with a prize value of $1,000 or more. A total of $17,058.50 in bonuses to 23 agents was not paid as required. Two game shows out of 58 were overlooked for agent bonus payments.

We recommended controls be put in place to ensure all deserving agents are paid their bonuses. The Lottery concurred with this recommendation. They responded that subsequent to this occurrence, the process was automated and on October 21, 2000 the last game show was aired and these types of bonuses are no longer applicable to the Lottery’s operations.

OTHER FINDINGS

The remaining findings dealt with personal use of state vehicles not taxed as fringe benefits, and improperly entered time and attendance records. We will review the progress toward implementation of all recommendations in our next compliance audit.

AUDITORS’ OPINION

Our auditors stated the Department of Lottery’s financial statements as of June 30, 2000 were fairly presented in all material respects.

 

 

____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KMC:pp

 

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors for this audit were Martin & Shadid, CPAs.