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State of Illinois Department of Transportation STATE OF ILLINOIS DEPARTMENT OF TRANSPORTATION COMPLIANCE EXAMINATION For the Year Ended June 30, 2007 STATE OF ILLINOIS DEPARTMENT OF TRANSPORTATION COMPLIANCE EXAMINATION For the Year Ended June 30, 2007 TABLE OF CONTENTS Page Agency Officials 1 Management Assertion Letter 2 Compliance Report Summary 4 Accountant’s Reports Independent Accountants’ Report on State Compliance, on Internal Control Over Compliance, and on Supplementary Information for State Compliance Purposes 7 Schedule of Findings Current Findings - State 11 Prior Findings Not Repeated - State 93 Management Audit Follow-up 94 Financial Statement Report The Department’s financial statement report for the year ended June 30, 2007, which includes the report of the independent auditors, basic financial statements, supplementary information, and the independent auditor’s report on internal control over financial reporting and on compliance and other matters based on an audit of basic financial statements performed in accordance with Government Auditing Standards has been issued in a separately bound document. Supplementary Information for State Compliance Purposes Summary 122 Fiscal Schedules and Analysis Schedule of Expenditures of Federal Awards 123 Notes to the Schedule of Expenditures of Federal Awards 124 Schedule of Appropriations, Expenditures and Lapsed Balances 129 Comparative Schedule of Net Appropriations, Expenditures and Lapsed Balances 135 Schedule of Changes in State Property 140 Comparative Schedule of Cash Receipts and Reconciliation of Cash Receipts to Deposits Remitted to the State Comptroller 141 Analysis of Significant Variations in Expenditures 148 Analysis of Significant Variations in Receipts 154 Analysis of Significant Lapse Period Spending 158 Analysis of Accounts Receivable 160 Analysis of Operations Agency Functions and Planning Program 161 Average Number of Full Time Employees 169 Annual Cost Statistics by Major Object Classification 170 Emergency Purchases 171 Schedule of Illinois First Projects (Not Examined) 172 Service Efforts and Accomplishments (Not Examined) 249 STATE OF ILLINOIS DEPARTMENT OF TRANSPORTATION COMPLIANCE EXAMINATION For the Year Ended June 30, 2007 AGENCY OFFICIALS Secretary of Transportation (01/26/07 – current) Mr. Milton R. Sees Secretary of Transportation (01/17/03 – 01/26/07) Timothy W. Martin Assistant Secretary Mr. David D. Phelps Director of Finance & Administration Ms. Ann L. Schneider Legal Counsel Ms. Ellen Schanzle - Haskins Bureau Chief, Business Services Mr. Bill J. Grunloh Department offices are located at: 2300 South Dirksen Parkway Springfield, Illinois 62764 310 South Michigan Avenue Chicago, Illinois 60604 1 COMPLIANCE REPORT SUMMARY The compliance testing performed during this examination was conducted in accordance with Government Auditing Standards and in accordance with the Illinois State Auditing Act. ACCOUNTANTS’ REPORT The Independent Accountants’ Report on State Compliance, on Internal Control Over Compliance and on Supplementary Information for State Compliance Purposes does not contain certain scope limitations, disclaimers, or other significant non-standard language. SUMMARY OF FINDINGS Compliance Financial Prior Number of Report Report Compliance Report Findings 23 3 11 Repeated findings 6 1 3 Prior recommendations implemented 4 0 18 or not repeated Details of findings are presented in a separately tabbed report section of this report. Details of Government Auditing Standards findings are issues related to significant deficiencies and material weaknesses in internal control over financial reporting. Findings related to Government Auditing Standards have been issued separately with the Department of Transportation’s Financial Statement Audit. SCHEDULE OF FINDINGS Item No. Page Description Current Findings (Government Auditing Standards) 07-1 * Accounts Payable Cut-Off 07-2 * Deferred Revenue 07-3 * Inaccurate Commodities Inventory Records Current Findings (State Compliance) 07-4 11 Inadequate support for payments made for consolidated services 4 07-5 13 Inadequate controls to prevent inappropriate payments to vendors 07-6 17 Failure to timely perform bridge inspections 07-7 23 Inadequate controls over employee attendance 07-8 26 Improper procurement procedures 07-9 34 Failure to provide notice and lack of documentation in procurement files 07-10 38 Inadequate controls over voucher processing 07-11 43 Inadequate controls over grant agreements 07-12 46 Inadequate controls over the administration of State vehicles 07-13 52 Inadequate monitoring of interagency agreements 07-14 56 Inadequate controls over travel expenditures 07-15 59 Inadequate monitoring of professional contracts 07-16 65 Inadequate controls over property 07-17 69 Inadequate support and untimely deposit of receipt transactions 07-18 71 Inadequate controls over employee overtime 07-19 73 Inadequate computer security controls 07-20 75 Lack of adequate disaster contingency planning or testing to ensure recovery of applications and data 07-21 78 Failure to properly complete employee performance evaluations 07-22 80 Inadequate controls over contractual agreement documentation 07-23 84 Failure to appoint an employee or determine the establishment of the Disadvantaged Business Enterprise Program Committee 07-24 86 Failure to establish an operable permanent noise monitoring system 07-25 88 Failure to obtain required reports from capital assistance grantees 5 07-26 90 Grant monitoring reports not received timely PRIOR FINDINGS NOT REPEATED (STATE COMPLIANCE) 07-27 93 Lack of documentation for employees assigned automobiles 07-28 93 Untimely contract filing with the State Comptroller 07-29 93 Failure to file Safe Routes to School Construction Report with the General Assembly 07-30 93 Inadequate procedures for disposal of confidential and sensitive documentation EXIT CONFERENCE The Department waived an exit conference in a letter dated January 23, 2008. Responses to the recommendations were provided by Ronald J. Mckechan, Chief of Audits in a letter dated January 29, 2008. * Findings are presented in the Financial Audit Report. 6 This State compliance examination report contains 23 Findings (numbers 4- 26). The Financial Statement Audit, a separate report document, contains three Findings (numbers 1-3). STATE OF ILLINOIS DEPARTMENT OF TRANSPORTATION SCHEDULE OF FINDINGS For the Year Ended June 30, 2007 07-4. FINDING (Inadequate support for payments made for consolidated services) The Illinois Department of Transportation (Department) made payments for Information Technology and Graphic Designers (consolidated services) to the Department of Central Management Services (DCMS), without supporting documentation. Public Act 93-25 authorized DCMS to consolidate Information Technology (IT) functions of State government. In addition, Public Act 93-839 authorized DCMS to consolidate Professional Services (Graphic Designers) of State government. As a result of the consolidations, DCMS billed the Department for services rendered on their behalf. Each month DCMS provided the Department a billing statement indicating the total charged to the Department. The Department did not receive sufficient supporting documentation to ensure the charges were for services incurred on their behalf. During our examination, we reviewed 10 IT billings, totaling $318,699, noting the Department did not obtain detailed support for payroll charges of $301,568. The Department received a spreadsheet indicating the charge for each employee; however, there was no detail to determine if the employee worked on behalf of the Department. Additionally, during our review of the Department’s District One IT Billings, we noted the Department had been billed and paid $13,658 in Building Rent. However, the Department had been billed and paid for the same space utilization through the Facility Management billings. In addition, we reviewed 13 Graphic Designer billings, totaling $9,845, noting the Department did not obtain detailed support for the charges. The Statewide Accounting Management System (SAMS) procedure 17.10.30 states “Agency level pre-auditing is defined as an examination by the agency head or designated individual for the purpose of determining the legality and propriety of a proposed transaction or a transaction in process.” Without proper detailed documentation, the Department was unable to determine propriety of the charges. 11 STATE OF ILLINOIS DEPARTMENT OF TRANSPORTATION SCHEDULE OF FINDINGS For the Year Ended June 30, 2007 The Fiscal Control and Internal Auditing Act (30 ILCS 10/3001) requires that agencies establish internal fiscal and administrative controls to provide assurance that resources, obligations and costs are in compliance with applicable laws, rules, and regulations. Department management stated they received monthly Internet Billing System (IBIS) billings for individuals. These bills were paid if the charges were in line with previous bills or with these resources. Failure to obtain adequate supporting documentation could lead to the Department paying for goods and services not incurred on their behalf. (Finding Code No. 07- 4) RECOMMENDATION We recommend the Department obtain adequate supporting documentation to ensure all charges billed by DCMS for consolidated services are on behalf of the Department. DEPARTMENT RESPONSE The Department agrees with this finding. The Department will no longer pay IBIS billings without proper documentation outlining the specific work performed. Failure to provide this documentation will prevent the Department
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