State of Illinois Capital Development Board Financial Audit

              Office of the Auditor General, Iles Park Plaza, 740 E. Ash St., Springfield, IL 62703 • Tel: 217-782-6046 or TTY 888-261-2887
This Report Digest and a Full Report are also available on the internet at www.auditor.illinois.gov
CAPITAL DEVELOPMENT BOARD
Financial Audit
For The Year Ended June 30, 2011
Summary of Findings:
Total this audit:
Total last audit:
Repeated from last audit:
1
1
0
Release Date: March 6, 2012
INTRODUCTION
The Capital Development Board (Board) serves as the non-road, construction management agency of the State of Illinois. The auditor performed a financial audit of the Board for the year ended June 30, 2011.
SYNOPSIS
The Capital Development Board (Board) did not establish adequate controls over approval of contracts prior to the performance of services and resolution of outstanding procurement issues.
{Expenditures and Activity Measures are summarized on the reverse page.}ii
FINANCIAL INFORMATION: Governmental Funds (In Thousands)
2010
REVENUES
Federal capital grants.....................................................................
26,918$
34,293$
Licenses and fees...........................................................................
4,582
6,741
Other charges for services..............................................................
15,663
29,572
Total revenues.............................................................................
47,163$
70,606$
EXPENDITURES
Education.......................................................................................
248,306$
154,290$
General government.......................................................................
15,656
16,613
Environment and business regulation............................................
-
(9)
Capital outlays...............................................................................
56,347
66,398
Total expenditures......................................................................
320,309$
237,292$
OTHER SOURCES (USES)
Appropriations from State resources.............................................
4,755,403$
4,900,952$
Reappropriations to future year(s).................................................
(4,145,516)
(4,746,571)
Lapsed appropriations....................................................................
(308,757)
(8,093)
Receipts collected and transmitted to State Treasury.....................
-
(16)
Net change in liabilities for reappropriated accounts.....................
(23,078)
28,512
Operating transfers out...................................................................
(5,402)
(425)
Total other sources (uses)...........................................................
272,650
174,359$
Deficiency of Revenue Over Expenditures and Other
Sources (Uses)............................................................................
(496)$
7,673$
Fund balance, July 1......................................................................
8,925
1,252
Fund balance, June 30....................................................................
8,429$
8,925$
SELECTED ACCOUNT BALANCES: Statement of Net Assets (In Thousands)
2011
2010
Cash equity with State Treasurer..........................................................
3,009$
7,705$
Cash and cash equivalents....................................................................
4,731$
1,423$
Intergovernmental receivables ……………………………………..
1,626$
3,599$
Due from other State funds..................................................................
9,861$
5,856$
Capital assets not being depreciated.....................................................
26,085$
27,712$
Accounts payable and accrued expenses..............................................
31,175$
24,202$
Deferred revenue..................................................................................
399$
164$
EXECUTIVE DIRECTORS
During Audit Period: James Riemer, Executive Director (5/13/08 through 12/31/10)
Currently: James Underwood, Executive Director
CAPITAL DEVELOPMENT BOARD
FINANCIAL AUDIT
For The Year Ended June 30, 2011
2011
During Audit Period: Gevan Behnke, Acting Executive Director (1/1/11 through 3/17/11), James Underwood, Executive Director 3/18/11 through 6/30/11iii
Improper payments totaling $685,992 were made
Departure from the Board’s procurement process
Board agrees with auditors
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
INADEQUATE CONTROLS OVER APPROVAL OF CONTRACTS
The Board had not established adequate controls over approval of contracts prior to the performance of services and resolution of outstanding procurement issues.
Due to the lack of controls governing the interactions between the Board and the Chief Procurement Officer (CPO), we noted the following:
• Contract vouchers, totaling $685,992, represented improper payments for services performed prior to a properly executed contract.
• Approval by the CPO for an emergency purchase tested, totaling $28,311 was not evident on the payment voucher.
• Request for payments on vouchers, totaling $163,674, were put on hold by the Board’s fiscal department due to contract modifications, change orders, and authority to proceed for the construction work lacked the CPO’s approval.
Additionally, the Board performed an analysis and issued a report entitled “Project Process Assessment” which was dated July 2011. This report identified 135 instances of departure from the Board’s procurement practices. Noncompliance represented approximately 6% of the total contract actions processed over the past two years. (Finding 11-1, pages 36-38)
We recommend the Board work with the CPO to develop procedures to ensure all contracts are executed and approved prior to the start of the services. In addition, the Board should implement appropriate procedures to ensure services are not provided after the contracts have expired.
Board officials agreed with the finding and indicated they are working with the CPO to develop procedures to ensure contracts are executed and approved before work begins.iv
AUDITORS’ OPINION
Our special assistant auditors stated the Capital Development Board financial statements as of and for the year ended June 30, 2011 are fairly presented in all material respects.
___________________________________
WILLIAM G. HOLLAND
Auditor General
WGH:MKL
SPECIAL ASSISTANCE AUDITORS
E.C. Ortiz and Co., LLP were our special assistant auditors on this engagement.