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Thursday, May 20, 2010 03:31 pm

Auditor uncovers millions in misspent state funds

Accounting, documentation shortcomings rampant and costly, audits show

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A series of audits released last week reveal a rash of problems among state agencies and programs.

Performed by the office of Illinois Auditor General William Holland, the audits expose millions of dollars of undocumented spending, lax enforcement of inventory and spending controls and poor staff training that resulted in inaccurate financial records.

An audit of Illinois’ expanded All Kids insurance program, which offers health insurance to all uninsured Illinois children, shows most participants are not required to prove Illinois residency, verification of income is often incomplete and payouts are not terminated when enrollees fail to pay their premiums. Additionally, some enrollees continue to receive coverage past the cutoff age of 19, and federal grants available to the state for insuring documented aliens have been missed because some children were misclassified as undocumented aliens. The audit only examined ousted governor Rod Blagojevich’s 2006 expansion that included undocumented aliens and children whose parents made more than 200 percent of the federal poverty level. The expanded All Kids program cost the state $70 million in Fiscal Year 2009 and covered 94,525 children.

The Illinois Department of Transportation did not adequately track employee attendance, equivalent earned time or overtime, another audit said. IDOT could not provide supporting documentation for $59.4 million in federal grant money it spent, according to the audit, and the department did not have adequate controls to prevent inappropriate payments to vendors. A problem with inventory pricing, first identified by auditors in 1994, resulted in an estimated $7.5 million in overstated inventory figures, the audit shows. It also revealed that some employees got unapproved raises for extra duties that they supposedly took on, but which were not documented in their personnel files.

An audit of the Illinois Department of Public Health noted $178 million in awards and grants were not adequately documented, and no written rules govern the administration of those grants. The department also keeps incomplete records regarding criminal histories of nursing home patients, in violation of state law, the audit shows.

The Illinois Department of Healthcare and Family Services overpaid the University of Illinois Hospital by $5.6 million in FY2009, misclassified $27.7 million for accounting purposes and overcharged enrollees in the state Teachers’ Retirement Insurance Program by $885,000 for health insurance premiums, according to a separate audit. It also points out that the department violated state law by awarding a contract to an out-of-state firm with no Illinois offices for the department’s quality assurance oversight of managed health care programs.

According to another audit, the Illinois Department of Revenue understated refunds by $13.5 million, did not have adequate control over personal use of state vehicles and did not revoke lottery licenses of vendors who owe back taxes.

In contrast to most of the audits published last week, an audit of the office of Illinois State Treasurer Alexi Giannoulias showed only one problem, which related to an error in preparing financial statements for securities lending. Giannoulias is running for U.S. Senate and has battled criticism over his family’s troubled Broadway Bank and investment losses on the state’s Bright Start college savings program.

To read the audits, visit www.auditor.illinois.gov.

Contact Patrick Yeagle at pyeagle@illinoistimes.com.

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