REPORT DIGEST

DEPARTMENT OF MILITARY AFFAIRS

FINANCIAL AND COMPLIANCE AUDIT
(In accordance with the Single Audit Act of 1984 and OMB Circular A-128)
For the Two Years Ended:
June 30, 1996

Summary of Findings:

Release Date:

April 3, 1997

State of Illinois
Office of the Auditor General

WILLIAM G. HOLLAND
AUDITOR GENERAL

Iles Park Plaza
740 E. Ash Street
Springfield, IL 62703
(217) 782-6046

SYNOPSIS

• The Department established a locally held bank account for the Lincoln Challenge Program without statutory authority, and did not file reports on this fund with the State Comptroller as required by the Comptroller's Uniform Statewide Accounting System (CUSAS).

• The Department did not assign mentors to all graduates of the Lincoln Challenge Program as required by their State plan filed with the Department of Defense.

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

FY 1996

FY 1995

FY 1994

• Total Expenditures (All Funds)

$23,631,203

$20,108,700

$17,294,847

OPERATIONS TOTAL
% of Total Expenditures

$21,601,962
91.4%

$18,225,433
90.7%

$15,993,956
92.5%

Personal Services
% of Operations Expenditures
Average No. of Employees

$7,705,392
35.7%
274

$7,590,898
41.6%
271

$6,992,034
43.6%
283

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

$656,099
3.0%

$607,170
3.3%

$569,175
3.7%

Contractual Services
% of Operations Expenditures

$1,716,606
8.0%

$1,631,515
9.0%

$1,668,841
10.4%

Lincoln's Challenge
% of Operations Expenditures

$9,025,804
41.7%

$5,540,632
30.4%

$5,043,418
31.5%

All Other Operations Items
% of Operations Expenditures

$2,498,061
11.6%

$2,855,218
15.7%

$1,720,488
10.8%

$1,518,408
6.4%

$1,395,363
6.9%

$1,300,891
7.5%

$510,833
2.2%

$487,904
2.4%

$0
0.0%

• Cost of Property and Equipment

$112,992,262

$102,018,477

$91,635,361

FY 1996

FY 1995

FY 1994

$14,469,692
507,691
18,500
271,367
$15,267,250

$12,889,668
512,600
0
358,173
$13,760,441

$8,152,211
0
51,500
579,559
$8,783,270

During Audit Period: Brigadier General Paul G. Gebhardt (Acting Director)
Currently: Adjutant General Richard G. Austin (effective February 1995)

The Department established a locally held bank account (checking account), but did not have statutory authority to do so

The locally held bank account had a cash balance of $84,704 at June 30, 1996

Twelve of sixty participants (20%) tested in the Lincoln Challenge Program did not have an assigned mentor

Department personnel indicated they were having trouble finding volunteers to become mentors

INTRODUCTION

The Department of Military Affairs was established by the Military Code of Illinois (20 ILCS 1805 et seq.). The Department acts as the channel of communication between the federal government and the State of Illinois on all matters pertaining to the State Military. The Adjutant General prepares and executes plans for organizing, supplying, equipping, and mobilizing the Organized Militia for use in national defense, State defense, and emergencies.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

LOCALLY HELD FUND CREATED WITHOUT STATUTORY AUTHORITY

The Department established a locally held bank account, (checking account) in September 1995 to aid in paying weekly allowances to participants in the Lincoln Challenge Program, and to hold money in trust for these participants. The Department had no statutory authority to create this fund. The State Finance Act (30 ILCS 230/2a.2) states, "No officer or employee of the State shall create or maintain or participate in a trust fund or bank or savings and loan association deposit of any money received by him by virtue of his office or employment except as provided by law."

During fiscal year 1996, receipts and disbursements totaled $401,412 and $316,708, respectively, with a cash balance of $84,704 at June 30, 1996. In addition, the Department did not report quarterly receipts and disbursements of this fund to the State Comptroller as required by CUSAS Procedure 33.13.10.

We recommended the Department obtain appropriate authority to maintain this account. We also recommended that once authorized, the Department properly report receipts and disbursements to the State Comptroller as required by CUSAS. (Finding 1, page 8)

Department management agreed with the finding, and indicated the Department intends to seek legislation to gain statutory approval for the fund. In addition, management indicated the Department is currently complying with CUSAS requirements of reporting receipts and disbursements to the Comptroller.

FAILURE TO ASSIGN MENTORS - LINCOLN CHALLENGE PROGRAM

During our audit testing of the Department's Lincoln Challenge Program we noted that twelve from a sample of sixty participants (20%) tested did not have a mentor assigned. During the post-resident phase of the Lincoln Challenge Program, each graduate of the "boot camp" phase is to be assigned a community volunteer (a mentor) that will serve as a positive role model for the participant and assist the participant to enroll in college or to gain employment.

By not assigning a participant to a mentor, the Department is not complying with a key component of this youth intervention program. Department personnel indicated this situation was due to the difficulties in finding volunteers.

We recommended the Department ensure that mentors are assigned to all graduates of the Lincoln Challenge Program. (Finding 4, page 12)

Department management agreed with the finding, and indicated the program has progressed significantly in recruiting eligible candidates to perform as mentors. In addition, the Department is working on agreements with several reputable mentoring organizations to provide mentors.

OTHER FINDINGS

The remaining findings are less significant and are being given attention by the Department. We will review progress towards the implementation of our recommendations in our next audit.

Adjutant General Richard G. Austin provided the Department's responses.

AUDITORS' OPINION

Our auditors state the June 30, 1995 and 1996 financial statements of the Department of Military Affairs are fairly presented.

__________________________________________
JOHN W. KUNZEMAN, Deputy Auditor General

JWK:RPU:pp

SPECIAL ASSISTANT AUDITORS

Sikich, Gardner & Co., LLP were our special assistant auditors for this audit.