REPORT DIGEST

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

Summary of Findings:

SYNOPSIS

• The Board paid the salaries of employees who were temporarily assigned to other State agencies and made other expenditures which were not in compliance with its Appropriation Act.

• The Board did not maintain accurate property control records.

• The Board purchased an excess supply of postage at the end of FY 98.

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

FY 1998

FY 1997

FY 1996

• Total Expenditures (All Funds)
  Springfield
  Des Plaines

OPERATIONS TOTAL
% of Total Expenditures
Springfield
% of Total Expenditures
Des Plaines
% of Total Expenditures
Personal Services
% of Operations Expenditures
Springfield
% of Operations Expenditures
Des Plaines
% of Operations Expenditures
Average No. of Employees
Other Payroll Costs (FICA, Retirement)
% of Operations Expenditures
Springfield
% of Operations Expenditures
Des Plaines
% of Operations Expenditures
Contractual Services
% of Operations Expenditures
Springfield
% of Operations Expenditures
Des Plaines
% of Operations Expenditures
All Other Operations Items
% of Operations Expenditures
Springfield
% of Operations Expenditures
Des Plaines
% of Operations Expenditures

• Cost of Property and Equipment

$2,973,949
$1,121,036
$1,852,913
$2,973,949
100.0%
$1,121,036
37.70%
$1,852,913
62.30%
$2,070,928
69.64%
$846,893
28.48%
$1,224,035
41.16%
68
$368,572
12.39%
$151,053
5.08%
$217,519
7.31%
$100,823
3.39%
$36,869
1.24%
$63,954
2.15%
$433,626
14.58%
$86,221
2.90%
$347,405
11.68%

$784,016

$2,414,953
$749,915
$1,665,038
$2,414,953
100.0%
$749,915
31.05%
$1,665,038
68.95%
$1,535,617
63.59%
$551,698
22.85%
$983,919
40.74%
55
$236,895
9.81%
$90,187
3.73%
$146,708
6.08%
$69,337
2.87%
$27,281
1.13%
$42,056
1.74%
$573,104
23.73%
$80,749
3.34%
$492,355
20.39%

$676,556

$972,055


$972,055
100.0%




$545,650
56.13%




17
$87,674
9.02%




$41,861
4.31%




$296,870
30.54%

$174,998

FY 1998

FY 1997

FY 1996

• Properties Appealed
  Springfield
  Des Plaines
• Properties Closed
  Springfield
  Des Plaines
• Properties Pending at June 30,
  Springfield
  Des Plaines

8,287
6,308
1,979
7,165
6,509
656
7,035
4,902
2,133

5,870
5,041
829
6,743
6,724
19
5,913
5,103
810

6,787


7,365


6,786

Appropriations were not properly used

Postage was purchased in excess of a fiscal year's needs

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NONCOMPLIANCE WITH APPROPRIATION ACT

 

The Board did not comply with the provisions of its Appropriation Act.

 

The Board was appropriated amounts to meet ordinary and contingent expenses of both the Board and the Board as prescribed under Public Act 89-126, which increased the Board's jurisdiction to hear appeals for counties with a population of 3,000,000 or more. During FY97, the Board established an office in Des Plaines to hear appeals for counties with a population greater than 3,000,000, specifically, Cook County. The office was staffed in anticipation of an increased caseload of 40,000 based on the average number of cases handled by the Cook County Board of Tax Appeals. The actual number of Cook County appeals filed during FY97 and FY98 were 829 and 1,979, respectively. The Board anticipates this caseload to increase significantly in future years.

 

During our testing we noted the following inappropriate expenditures:

¨ Twenty-five Board employees assigned to the Des Plaines office were temporarily assigned to other State agencies during FY98, but were paid approximately $73,770 from amounts appropriated to the Board to comply with Public Act 89-126. Eleven employees were appraisal specialist hearing officers and 14 were clerical.

¨ Ten Board employees assigned to the Springfield office were paid a total of $155,000 from amounts appropriated to the Board to comply with Public Act 89-126 during FY97. The Board did not maintain records to determine the amount of time the Springfield office employees spent on work that related to duties described by Public Act 89-126.

¨ Five of 70 (9%) vouchers tested totaling $28,060 for equipment and postage were charged to amounts appropriated to comply with Public Act 89-126; however, the goods and services were for the Springfield office. (Finding 1, pages 12-15)

We recommended the Board expend funds only for the purposes for which such funds have been appropriated. We also recommended the Board continue to plan future staffing levels sufficient to accomplish it mandates.

 

The Board took exception to our finding. The Board stated employees were transferred to other State agencies to prevent layoffs. The Board stated the recommendation for transfer of employees came from representatives of the executive branch and action was taken by the Board only after it was clear that such a procedure was authorized under the Intergovernmental Cooperation Act and the current collective bargaining agreement.

 

Nevertheless, section 2 (b) of article VIII of the Illinois Constitution of 1970 provides that "the General Assembly by law shall make appropriations for all expenditures of public funds by the State." In furtherance of that constitutional provision, the legislature enacted an appropriation bill providing specific amounts of money to fund the ordinary and contingent expenses of the Property Tax Appeal Board. Expending those funds for purposes other than those enacted by the General Assembly is a violation of the appropriation bill, and it is axiomatic that no State agency--through an interagency agreement or otherwise--possesses the authority to effectively "amend" a law duly passed by the General Assembly.

 

INACCURATE PROPERTY CONTROL RECORDS

 

The Board did not maintain accurate property control records during the audit period. We noted the following weaknesses:

¨ The Board did not submit a list of property with a value of $500 or greater to the Department of Central Management Services (DCMS) or file the annual certification of inventory for FY98.

¨ The Board did not file three FY98 Quarterly Fixed Asset Reports to the Comptroller.

¨ Detailed property records were understated by approximately $32,720, and two of 25 (8%) items tested with an estimated value of $2,300 were not included on the property records.

¨ Six of 30 (20%) items selected for testing totaling $3,388 were included on the property records even though the property had been transferred to another agency in May 1997, and five of 12 (42%) vouchers selected for testing included equipment items that were not properly recorded. Sixteen items were overstated on the property records by $6,876 and 31 items were understated by $8,167.

¨ The Board performed a physical inventory of its property during FY98; however, it was unable to reconcile any differences because its records were not timely maintained.

¨ The Board did not have adequate segregation of duties over equipment. One employee was responsible for recording equipment expenditures, receiving equipment, maintaining property control records and performing the annual physical inventory. (Finding 2, pages 16-18)

We recommended the Board supervise, control, and inventory all property, complete and file the quarterly reports of fixed assets and the annual certification of inventory. Equipment purchased should be promptly entered on the property records. Physical inventories should be performed and reconciled to the detailed property listing.

 

The Board agreed with our finding and has taken action to ensure accurate property control records for the future. (For previous agency response, see Digest footnote 1.)

 

EXCESS POSTAGE SUPPLY

 

The Board purchased an excess supply of postage at the end of FY98.

 

The Board purchased $10,000 in postage for each of its Springfield and Des Plaines offices in June 1998. The postage meters at year end for Springfield and Des Plaines had balances of $16,790 and $32,627, respectively. Total postage used during FY98 by the Springfield and Des Plaines office was $15,540 and $4,590, respectively. (Finding 3, pages 19-20)

 

We recommended the Board comply with the statutory requirements and purchase postage based on the fiscal year's needs.

 

The Board stated the purchase of postage was necessary to insure proper mailings could be made for the anticipated increase in the 1997 assessment year's appeals.

 

Postage should be charged to the appropriation for the year in which the postage is used. The anticipated increase in appeals still had not yet occurred by the close of the first quarter of FY99.

 

OTHER FINDING

 

The remaining finding is less significant, and Board management has responded that appropriate corrective action is in process. We will review progress towards implementation of our recommendations in the next audit.

 

Mr. James Chipman, Executive Director, provided responses to our findings and recommendations.

 

AUDITORS' OPINION

We conducted a compliance audit of the Property Tax Appeal Board as required by the Illinois State Auditing Act. The Board had no locally held funds 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:GR:pp

 

SPECIAL ASSISTANT AUDITORS

McGreal, Johnson and McGrane were our special assistant auditors for this audit.

 

DIGEST FOOTNOTE

#1 INACCURATE PROPERTY CONTROL RECORDS - Previous Agency Response

 

1996: "The Property Tax Appeal Board agrees with this finding. The Board is currently taking back the responsibility for maintaining property control records from the Department of Revenue and expects future accountability will be timely and accurate."