REPORT DIGEST

DEPARTMENT OF MILITARY AFFAIRS

COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2022

Release Date:  September 14, 2023

FINDINGS THIS AUDIT: 18

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 6 -- 8
Category 2:  5 -- 5 -- 10
Category 3:  0 -- 0 -- 0
TOTAL:  7 -- 11 -- 18

FINDINGS LAST AUDIT: 18

Category 1: Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2: Findings that are
significant deficiencies in internal
control and noncompliance with State
laws and regulations.
Category 3: Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the
Auditor General
FRANK J. MAUTINO, 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 TTY (888) 261-2887

This Report Digest and Full Report are
also available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (22-1) The Department did not
maintain sufficient controls over its
property and related fiscal records.
• (22-2) The Department failed to fully
comply with the Fiscal Control and
Internal Auditing Act and International
Standards for the Professional Practice
of Internal Auditing.
• (22-6) The Department did not provide
adequate documentation or support for
testing compliance with multiple
statutory mandates.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

PROPERTY CONTROL WEAKNESSES

The Department of Military Affairs
(Department) did not maintain
sufficient controls over its property
and related fiscal records.

During testing, we noted the Department
did not maintain detailed supporting
documentation for its quarterly Agency
Report of State Property (Form C-15)
filed with the Office of Comptroller
(Comptroller).  As of June 30, 2021,
and 2022, the Department reported total
property of $462.1 million and $472.6
million, respectively.  Due to the lack
of detailed documentation, the
following compliance examination
procedures could not be performed:

• The State property listing provided
by the Department in response to audit
requests could not be reconciled with
the ending balances reported in the
Form C-15 Reports for the fourth
quarters ended June 30, 2021, and June
30, 2022, and to the balances reported
in the annual inventory certifications
submitted to the Department of Central
Management Services (CMS).

• Annual additions, deletions and net
transfers report provided by the
Department could not be agreed to
activity reports in the quarterly Form
C-15 Reports submitted to the
Comptroller.

• Property additions per the Form C-15
Reports could not be reconciled to the
Comptroller’s records reflected on the
Object Expense/Expenditures by Quarter
Report (SA02).

• During testing, the Department failed
to provide documentation of supporting
calculations for the SCO-537/538 forms,
and therefore, we were unable to test
if the Department appropriately
recorded the purchase as a building
improvement, land improvement, or site
improvement.

Due to these conditions, we were unable
to conclude whether the Department’s
population records were sufficiently
precise and detailed under the
Attestation Standards promulgated by
the American Institute of Certified
Public Accountants (AT-C § 205.36) to
test the Department’s equipment.

Even given the population limitations
noted above which hindered our ability
to conclude whether selected samples
were representative of the population
as a whole, we performed testing using
the records available.

Some of the more significant issues
noted included the following:

• Thirteen of 60 (22%) equipment items
were not found in the Department’s
property listing.

• Thirty-eight of 60 (63%) equipment
items, totaling $689,471, were recorded
in the Department’s property records
more than 90 days after acquisition,
ranging from 42 to 1,408 days late.

• Four of 60 (7%) equipment items,
totaling $172,020, were recorded twice
in the Department’s records.

• Twenty-seven of 29 (93%) permanent
improvement vouchers tested, totaling
$7,381,530, were remodeling,
renovation, and site improvement
expenditures, but were not added to the
Department’s property records.

• For nine of nine (100%) Capital
Development Board (CDB) projects
tested, totaling $12,816,993 as of June
30, 2022, the Department failed to
record transfers-in from CDB to the
Department’s property records. (Finding
1, pages 10-14)

This finding has been reported since
2004.

We recommended the Department take
actions to strengthen its internal
controls over the recording and
reporting of its State property and
equipment transactions to ensure
property records accurately reflect
equipment on-hand in accordance with
State regulations, and equipment items
are properly inventoried and tagged.
Further, we recommended the Department
implement a corrective action plan to
complete a full inventory to identify
and correct its accumulated property
and equipment errors.

Department officials agreed with the
finding.

NONCOMPLIANCE WITH FISCAL CONTROL AND
INTERNAL AUDITING ACT AND INTERNATIONAL
STANDARDS FOR THE PROFESSIONAL PRACTICE
OF INTERNAL AUDITING

The Department of Military Affairs
(Department) failed to fully comply
with the Fiscal Control and Internal
Auditing Act (Act) and International
Standards for the Professional Practice
of Internal Auditing (internal auditing
standards).

A few of the issues we noted during our
review of the Department’s internal
audit activities for Fiscal Years 2021
and 2022 follow:

• The Department did not have a two-
year audit plan for the Fiscal Year
ended June 30, 2021.

• Audits of the Department’s major
systems of internal accounting and
administrative controls were not
completed during Fiscal Years 2021 and
2022, thus there were no internal audit
reports completed and issued during the
examination period.

• The Chief Internal Auditor did not
submit a written report to the Adjutant
General detailing how the audit plan
was carried out, the significant
findings, and the extent to which
recommended changes were implemented
for Fiscal Years 2021 and 2022.
(Finding 2, pages 15-17)

This finding has been reported since
2012.

We recommended the Department implement
controls and develop policies and
procedures to ensure compliance with
the Act and internal auditing
standards.

Department officials agreed with the
finding.

FAILURE TO PROVIDE RECORDS OF
COMPLIANCE WITH STATUTORY MANDATES

The Department of Military Affairs
(Department) did not provide adequate
documentation or support for testing
compliance with multiple statutory
mandates.

During testing of the Military Code of
Illinois (20 ILCS 1805/43), the
Department could not provide support to
verify the termination of officers’
commissions for 10 of 40 (25%) officers
tested.  Therefore, we were unable to
determine whether the Department
complied with the statute.

We also requested a response and
information on the Department’s
compliance with other sections of the
Military Code of Illinois.  However,
the Department did not provide
responses to our requests.  Therefore,
we were unable to determine if the
Department was in compliance with
several other sections of the Military
Code of Illinois. (Finding 6, pages
27-28)

We recommended the Department comply
with the Illinois State Auditing Act
and provide the Auditor General with
requested documentation without delay.
Department officials agreed with the
finding.

OTHER FINDINGS

The remaining findings are reportedly
being given attention by Department
personnel. We will review the
Department’s progress towards the
implementation of our recommendations
in our next State compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a State
compliance examination of the
Department of Military Affairs
(Department) for the two years ended
June 30, 2022, as required by the
Illinois State Auditing Act.  The
accountants qualified their report on
State compliance for Findings 2022-001
through 2022-008.  Except for the
noncompliance described in these
findings, the accountants stated the
Department complied, in all material
respects, with the requirements
described in the report.

This State compliance examination was
conducted by Roth & Company, LLP.

JANE CLARK
Division Director

This report is transmitted in
accordance with Section 3-14 of the
Illinois State Auditing Act.

FRANK J. MAUTINO
Auditor General

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