REPORT DIGEST OFFICE OF THE SECRETARY OF STATE FINANCIAL AUDIT For the Year Ended: (In accordance with the Single Audit Act and OMB Circular A-133) Summary of Findings: Total this audit 7 Release Date: State of Illinois WILLIAM G. HOLLAND To obtain a copy of the Report contact: (217)782-6046 or TDD (217) 524-4646 |
SYNOPSIS
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SECRETARY OF STATE
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1999
RECEIPT/EXPENDITURE STATISTICS | FY 1999 |
FY 1998 |
FY 1997 |
$1,164,020,126 |
$1,117,953,594 |
$1,093,960,883 |
|
(including lapse period) |
$464,331,627 |
$438,540,855 |
$418,290,431 |
OPERATIONS TOTAL % of Total Expenditures |
$228,870,207 49.3% |
$220,465,649 50.3% |
$210,026,175 50.2% |
Personal Services Regular Positions |
$127,394,980
|
$124,557,427
|
$120,756,926
|
Other Payroll Costs (FICA, Retirement) |
$26,595,942 |
$21,116,433 |
$19,638,702 |
Contractual Services |
$31,660,073 |
$31,807,015 |
$30,507,380 |
All Other Operations Items |
$43,219,212 |
$42,984,774 |
$39,123,167 |
AWARDS AND GRANTS TOTAL % of Total Expenditures |
$231,281,661 49.8% |
$211,797,678 48.3% |
$204,157,694 48.8% |
REFUNDS & PERMANENT IMPROVEMENTS - TOTAL % of Total Expenditures |
$4,179,759
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$6,277,528
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$4,106,562
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$361,372,846 |
$348,421,009 |
$337,851,681 |
CALENDAR YEAR |
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SELECTED ACTIVITY MEASURES | 1998 |
1997 |
1996 |
7,628,134 |
6,769,424 |
7,357,911 |
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2,478,866 |
2,295,538 |
1,569,895 |
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3,299,844 |
2,220,145 |
4,127,848 |
|
4,595,229 |
3,051,563 |
6,109,259 |
|
307,168 |
300,377 |
293,524 |
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$56.2 |
$23.0 |
$53.4 |
AGENCY HEAD(S) |
During Audit Period: Honorable George H. Ryan, Honorable
Jesse White |
More internal audit reviews needed
Large volume payments cause delays in deposits
Fund controls need strengthening
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FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF INTERNAL AUDIT REVIEW OF MAJOR COMPUTER SYSTEM CHANGES The Secretary of State was completing a major conversion to a new computing platform which cost over $22 million. This conversion required the computer applications used by the Agency to be modified or completely re-written in order to run on the new hardware and software. The Internal Audit Department had not adequately reviewed these significant modifications, nor did the Department contract these audit/review services to an outside vendor. There have been no independent information system control reviews completed by the Internal Audit Department during the audit period. The lack of adequate review of major modifications to a computer system is noncompliance with the Fiscal Control and Internal Auditing Act. This lack of review could lead to significant problems in the new computing environment. (Finding 6, pages 37-38) We recommended the Secretary of State proceed with the hiring of qualified Information Systems Auditors. This would allow the Internal Audit Department to perform necessary audits of IS practices and procedures, monitor controls in place, and make recommendations for additional controls. Information systems control reviews should be included as part of the normal internal audit cycle. Agency officials accepted the finding and recommendation and stated they are currently in the process of hiring one, possibly two, qualified Information Systems Auditors. DELAYS IN DEPOSITS OF DRIVERS PERMIT RECEIPTS Receipts for instruction permits were not deposited within 48 hours, as required by State statute. Instruction permits are received by the Secretary of State's Driver's Facilities from schools in large volumes. The schools requesting the permits collect the necessary documents and fees from the applicants and forward the paperwork and money to the Secretary of State Driver's Facilities. At the Chicago North Facility, the fees are not routinely deposited within the required 48 hours. The Facility Manager stated amounts may approach $5,000. The State Officers and Employees Money Disposition Act requires an accumulation of receipts exceeding $500 to be deposited into the State Treasury within 48 hours. Failure to deposit receipts within 48 hours could lead to theft or potential loss of funds. (Finding 2, pages 28-29) We recommended the Secretary of State assign staff to process the bulk instruction permits to ensure deposits are made according to statute. Agency officials accepted the finding and recommendation and stated they acknowledge that the funds are kept for more than 48 hours because driving schools remit a check rather than cash to cover the fees for all applications. A check significantly reduces the likelihood of theft or misapplication. Until such time as the staffing requirements can be addressed, an exception to the deposit deadline will be sought. NEED TO IMPROVE CONTROLS OVER TRUCK REGISTRATION PAYMENTS TO OTHER STATES The balance of the International Registration Plan (IRP) Fund was not reconciled to a detail listing of amounts due to other governments. The IRP Fund represents amounts collected on behalf of other states. These monies are paid to other states based on records of cash receipts maintained by Vehicle Services. However, the Secretary of State is unable to determine how to allocate and identify amounts due to other states and reconcile the amounts to the financial statements. As of June 30, 1999, the Fund balance payable of $5.5 million had not been reconciled. (Finding 5, pages 34-36) We recommended the Secretary of State allocate resources to identify the states that are owed money and the amounts due to them, and to maintain and report sufficient information on cash receipts and disbursements to provide for reconciliation to amounts payable to other governments within the IRP Fund. This reconciliation should be coordinated among the Accounting Revenue Department, the Budget and Fiscal Management Department and Vehicle Services. Agency officials responded that they accepted the finding and recommendation and stated in part, that since the IRP represents a one-stop registration process for trucking companies doing business in multiple states, some of the collections in IRP are necessarily owed to other states. Further, Agency officials agree the Office has been in violation of the IRP agreement by not remitting to other states within 45 days of receipt. They stated that, starting in January of 2000, planned procedural changes will allow more prompt remittance to other states. OTHER FINDINGS The remaining findings were less significant and are being given attention by the Office of the Secretary of State. We will review progress toward implementing all recommendations in our next audit. Agency responses to the findings were provided by Mr. Al DiSilvestro, Chief Auditor for the Office of the Secretary of State. AUDITORS' OPINION Our auditors state the financial statements of the Office of the Secretary of State as of June 30, 1999, and for the year then ended are fairly presented in all material respects.
___________________________________ WILLIAM G. HOLLAND, Auditor General WGH:KMM:pp SPECIAL ASSISTANT AUDITORS Kerber, Eck & Braeckel LLP were our special assistant auditors for this audit. |