Illinois Audit Advisory

              The following are excerpts from a speech
the Auditor General made on May 15,
2008 to the Springfield Chapter of the
Institute of Internal Auditors.
Let me begin by congratulating all of you
on the 30th anniversary of the Springfield
Chapter. The Chapter has been a leader in
promoting internal auditing not only in
State government, but also in other
governmental and private organizations.
I have had the privilege of speaking
to this Chapter on several occasions,
including in 1998 and 2004. Tonight I am
here to reflect on what I said back in 1998
and 2004. I will also discuss the current
audit process. I’ll outline for you how I
intend the audit process to proceed in the
future.
In 1998, my speech focused on techno-logical
threats facing State government
operations, specifically the Y2K issue and
hackers accessing our vital information
systems. These threats had the potential to
seriously compromise State government
operations, and as such, were clearly
unacceptable. Recognizing and responding
to these threats, internal auditors played
a vital role in assessing the risks they
posed and ensuring that the State took the
necessary steps to significantly alleviate
these threats.
In 2004, I spoke about changes in
auditing standards, as well as delays
encountered by our external audit process
because agencies were late in preparing
their financial statements. Furthermore,
when the financial information was submit-ted,
in many cases it was inaccurate and
unsupported. This was unacceptable. We
still encounter problems in this area,
although some agencies have made some
improvements. However, this continues to
be problematic and the number of Yellow
Book findings pertaining to significant
deficiencies in financial reporting are
numerous.
Now we turn to today. Once again, we are
facing serious challenges. The success of
our government relies on two fundamental
principles: accountability and transparency.
Unfortunately, much of what I see occur-ring,
when viewed from an accountability
and transparency perspective, is unaccept-able.
From my view, your impact and
influence have been eroded. Again, from
my view, this is truly unfortunate.
For instance, over the past several years,
internal auditors have been asked to
provide non-audit support. Evidence of
this diversion of resources is found in my
Office’s latest compliance examination at
CMS. The report contained a finding which
concluded that the Illinois Office of
Internal Audit did not complete audits of all
major systems of internal accounting and
administrative control as required by the
Fiscal Control and Internal Auditing Act.
For the two-year audit period ending June
30, 2006, the IOIA planned to conduct 196
audits but only completed 46 audits (23%)
with an additional 24 audits (12%) in
progress.
Another disturbing trend in recent years
that I believe is directly related to the
removal of internal auditors from the
agencies is the increase in the number
of findings in my Office’s financial and
compliance audits. For audits with the
period ending June 30, 2001, there were a
total of 267 findings. By 2006, the number
of findings more than doubled, to 608. I
appreciate that there are many factors that
drive the number of findings in my audits.
However, I believe a primary reason, and
very likely the main reason for the increase
in audit findings, has been the removal of
internal auditors from the agencies.
William G. Holland
AUDITOR GENERAL
Transparency and accountability.
These two words capture the very
essence of good government. State
government needs to be transparent:
nothing should be hidden and every-thing
should appear as it is. State
government also needs to be account-able:
it exists to serve the people of
Illinois, and, as such, has an obligation
to provide complete and timely finan-cial
and programmatic information so
that citizens can make informed deci-sions
about their State government.
My Office plays an integral role in
helping to ensure that State govern-ment
is transparent and accountable to
the people. The Illinois Constitution
established my Office to audit and pub-licly
report on the State’s finances, as
well as the effectiveness and efficiency
of agency operations.
Increasingly, my auditors have been
experiencing delays in receiving
requested information, failure to report
suspected fraud, and limited access
to agency personnel. These circum-stances
threaten our ability to effec-tively
carry out our responsibilities
and are unacceptable. The Advisory
contains excerpts from a speech I gave
earlier this year where I addressed
trends in State government that I find
both troubling and unacceptable.
I encourage you to carefully read my
comments from my May 15th speech.
These comments clearly describe my
approach to forthcoming audits.
______________________________
WILLIAM G. HOLLAND
September 2008
AIuLLINOdIS itAEmDerginVg andI PSotentOial AuRdit IYssues
Volume 14 • 2008 Annual
CHALLENGES TO ACCOUNTABILITY
AND TRANSPARENCY
2008 Illinois Audit Advisory 1
AUDITOR GENERAL’S
MESSAGE
See CHALLENGES on Page 2