Audit of the Chicago Police
Department’s Equitable Sharing
Program Activities,
Chicago, Illinois
21-076
MAY 2021
EXECUTIVE SUMMARY
Audit of the Chicago Police Department’s Equitable Sharing
Program Activities, Chicago, Illinois
i
Objective
The U.S. Department of Justice (DOJ) Office of the
Inspector General (OIG) has completed an audit to
assess whether the Chicago Police Department
(Chicago PD) accounted for DOJ equitable sharing funds
and used such assets for allowable purposes as defined
by applicable guidelines.
Results in Brief
We found that the Chicago PD did not fully comply with
the requirements of the DOJ Equitable Sharing
Program. For example, the Chicago PD did not ensure
proper oversight of its program and had not
established policies and procedures to manage its
equitable sharing-related activities. Additionally, we
found that the Chicago PD did not have an adequate
process for recognizing and recording its equitable
sharing deposits upon receipt, and we identified
receipts not posted to the official equitable sharing
accounting records in a timely manner. We also
determined that the Equitable Sharing Agreement and
Certification report (ESAC) submitted during our review
period could not be reconciled to the Chicago PD’s
accounting records, and we found that the Chicago PD
did not have an adequate property management
system in place to identify and track equitable sharing-
funded equipment. Lastly, while we found that all
expenditure transactions we examined were
supported, we identified $49,273 in construction costs
that may have required prior approval from DOJ.
Recommendations
Our report includes eight recommendations to the DOJ
Criminal Division (Criminal Division), which oversees the
Equitable Sharing Program. Responses to our draft
report from the Criminal Division and the Chicago PD
response can be found in Appendices 3 and 4,
respectively. Our analysis of these responses can be
found in Appendix 5.
Audit Results
This audit covered the Chicago PD’s fiscal year (FY) 2019
and part of FY 2020. During the period we audited
(January 1, 2019, through April 30, 2020), the
Chicago PD received $4,319,357 in equitable sharing
funds. Equitable sharing revenues represent a share of
the proceeds from the forfeiture of assets seized in the
course of certain criminal investigations. We found that
the equitable sharing expenditure transactions we
reviewed were adequately supported, and the
Chicago PD’s ESAC, which was submitted in a timely
manner, accurately reflected the receipts contained in
the federal eShare system. However, we identified
significant internal control deficiencies in need of
improvement.
Accounting for and Use of Equitable Sharing Resources
We found that the Chicago PD did not implement
required accounting procedures and adequate internal
controls over its DOJ equitable sharing funds.
Specifically, we found that the Chicago PD did not have
written policies and procedures for its Equitable
Sharing Program activities, did not have adequate
management oversight of its program, did not properly
authorize its program expenditures, did not timely
reconcile or record its equitable sharing receipts in the
official accounting records, and did not have an
adequate property management system. In addition,
the Chicago PD used $49,273 in equitable sharing funds
for construction-related costs that may have required
prior DOJ approval.
Equitable Sharing Agreement and Certification Report
We found that the expenditure figures as well as the
beginning and ending balance amounts the Chicago PD
reported in its 2019 ESAC could not be reconciled to the
Chicago PD’s official accounting records. Additionally,
the Chicago PD did not, as required, retain supporting
documentation for the amounts reported on the ESAC.
ii
Table of Contents
Introduction ................................................................................................................................................... 1
DOJ Equitable Sharing Program .................................................................................................................. 1
Chicago Police Department ......................................................................................................................... 2
OIG Audit Approach ..................................................................................................................................... 2
Audit Results ................................................................................................................................................... 3
Accounting for Equitable Sharing Resources ............................................................................................ 3
Internal Control Environment and Program Management Weaknesses ........................................ 3
Lack of Compliance with Guidance for Expenditure Approvals ....................................................... 4
Weaknesses in Accounting for and Handling of Equitable Sharing Receipts .................................. 5
Inadequate Property Management ...................................................................................................... 8
Equitable Sharing Agreement and Certification Reports ........................................................................ 8
Completeness and Timeliness of ESAC Reports ................................................................................. 9
Accuracy of ESAC Reports .................................................................................................................... 10
Equitable Sharing Resources .................................................................................................................... 11
Use of Equitable Sharing Funds .......................................................................................................... 12
Supplanting ............................................................................................................................................ 14
Compliance with Audit Requirements ..................................................................................................... 14
Conclusion and Recommendations ........................................................................................................... 16
APPENDIX 1: Objective, Scope, and Methodology ................................................................................... 18
Objective ...................................................................................................................................................... 18
Scope and Methodology ............................................................................................................................ 18
Internal Controls ................................................................................................................................... 1 9
APPENDIX 2: Schedule of Dollar-Related Findings ................................................................................... 21
APPENDIX 3: The Criminal Division’s Response to the Draft Audit Report ............................................ 22
APPENDIX 4: The Chicago Police Department’s Response to the Draft Audit Report .......................... 24
1
Introduction
The Department of Justice (DOJ) Office of the Inspector General (OIG) completed an audit of the equitable
sharing funds received by the Chicago Police Department (Chicago PD) in Chicago, Illinois. The objective of
the audit was to assess whether the cash received by the Chicago PD through the Equitable Sharing
Program was accounted for properly and used for permissible purposes as defined by applicable
regulations and guidelines. The audit covered January 1, 2019, through April 30, 2020.
1
During that period,
the Chicago PD received $4,319,357 in equitable sharing revenues as a participant in the DOJ Equitable
Sharing Program.
DOJ Equitable Sharing Program
The Comprehensive Crime Control Act of 1984 authorized the implementation of the DOJ Asset Forfeiture
Program (Asset Forfeiture Program). The Guide to Equitable Sharing for State, Local, and Tribal Law
Enforcement Agencies, issued in July 2018 (Equitable Sharing Guide) describes the Asset Forfeiture Program
as a nationwide law enforcement initiative that removes the tools of crime from criminal organizations,
deprives wrongdoers of the proceeds of their crimes, recovers property that may be used to compensate
victims, and deters crime. A key element of the Asset Forfeiture Program is the Equitable Sharing Program.
2
The DOJ Equitable Sharing Program allows any state or local law enforcement agency that directly
participated in an investigation or prosecution resulting in a federal forfeiture to claim a portion of federally
forfeited cash, property, and proceeds.
Although several DOJ agencies are involved in various aspects of the seizure, forfeiture, and disposition of
equitable sharing revenues, three DOJ components work together to administer the Equitable Sharing
Program – the United States Marshals Service (USMS), the Justice Management Division (JMD), and the DOJ
Criminal Division’s (Criminal Division) Money Laundering and Asset Recovery Section (MLARS). The USMS is
responsible for transferring asset forfeiture funds from DOJ to the receiving state or local agency. JMD
manages the Consolidated Asset Tracking System (CATS), a database used to track federally seized assets
throughout the forfeiture life cycle. Finally, MLARS tracks membership of state and local participants,
updates the Equitable Sharing Program rules and policies, and monitors the allocation and use of equitably
shared funds.
State and local law enforcement agencies may receive equitable sharing funds by participating directly with
DOJ agencies on investigations that lead to the seizure and forfeiture of property, or by seizing property and
requesting one of the DOJ agencies to adopt the seizure and proceed with federal forfeiture. Once an
investigation is completed and the seized assets are forfeited, the assisting state and local law enforcement
agencies can request a share of the forfeited assets or a percentage of the proceeds derived from the sale
of forfeited assets. Generally, the degree of a state or local agency’s direct participation in an investigation
determines the equitable share allocated to that agency.
1
The Chicago PD’s fiscal year is based upon the calendar year.
2
The U.S. Department of the Treasury also administers a federal asset forfeiture program, which includes participants
from Department of Homeland Security components. This audit was limited to equitable sharing revenues received
through the DOJ Equitable Sharing Program.
2
To request a share of seized assets, a state or local law enforcement agency must first become a member of
the DOJ Equitable Sharing Program. Agencies become members of the program by signing and submitting
an annual Equitable Sharing Agreement and Certification (ESAC) report to MLARS. As part of each annual
agreement, officials of participating agencies certify that they will use equitable sharing funds for
permissible law enforcement purposes. The Equitable Sharing Guide outlines categories of permissible and
impermissible uses for equitable sharing funds and property.
Chicago Police Department
Established in 1835, the Chicago PD serves a population of over 2.7 million residents and is led by a
Superintendent who reports to the Mayor of the city of Chicago. The Chicago PD is comprised of Bureau
Chiefs, Deputy Chiefs, Commanders, Division Directors, Captains, Lieutenants, Sergeants, and District
Officers. As of September 2020, the Chicago PD had a workforce of 12,718 sworn officers, 659 civilian
employees, and 73 exempt employees.
3
According to Chicago PD officials, the Chicago PD became a
member of the DOJ Equitable Sharing Program in 1986. During the scope of our audit, the Chicago PD
Bureau of Organized Crime handled the DOJ Equitable Sharing request process and the submission of
annual reports to MLARS.
4
OIG Audit Approach
We tested the Chicago PD’s compliance with what we considered to be the most important conditions of the
DOJ Equitable Sharing Program to assess whether it accounted for equitable sharing funds properly and
used such revenues for permissible purposes. Unless otherwise stated, we applied the Equitable Sharing
Guide as our primary criteria. The Equitable Sharing Guide provides procedures for submitting sharing
requests and discusses the proper use of and accounting for equitable sharing assets. To conduct the audit,
we tested the Chicago PD’s compliance with the following:
Accounting for equitable sharing resources to determine whether standard accounting procedures
were used to track equitable sharing assets.
Equitable Sharing Agreement and Certification Reports to determine if these documents were
complete and accurate.
Use of equitable sharing resources to determine if equitable sharing cash and property were used
for permissible law enforcement purposes.
Compliance with audit requirements to ensure the accuracy, consistency, and uniformity of audited
equitable sharing data.
See Appendix 1 for more information on our objective, scope, and methodology.
3
Exempt Chicago PD positions are high-ranking, appointed positions. Exempt personnel include both sworn and
civilian appointments.
4
As of January 2021, the Chicago PD Bureau of Organized Crime was replaced by the Chicago PD Bureau of
Counter-terrorism. The Bureau of Counter-terrorism now handles the DOJ Equitable Sharing requests and submits the
ESACs via the eShare Portal.
3
Audit Results
Accounting for Equitable Sharing Resources
The Equitable Sharing Guide requires that law enforcement agencies use standard accounting procedures
and internal controls to track DOJ Equitable Sharing Program receipts. This includes establishing a separate
revenue account or accounting code for DOJ equitable sharing program proceeds. In addition, agencies
must deposit any interest income earned on equitable sharing funds in the same revenue account or under
the accounting code established solely for the shared funds. Further, equitable sharing disbursements are
required to be approved by the head of the participating law enforcement entity or a designee, law
enforcement agencies must retain all documents and records pertaining to their participation in the
Equitable Sharing Program for a period of at least 5 years, and participants are required to use the eShare
portal.
5
Based upon our review of documentation and interviews with the auditee, we identified significant
internal control weaknesses in the Chicago PD’s accounting for and reporting of financial activity related to
equitably shared funds.
Internal Control Environment and Program Management Weaknesses
The Equitable Sharing Guide states that participating law enforcement agencies must implement standard
accounting and internal controls to track equitably shared funds and tangible property and maintain and
follow written policies for accounting, bookkeeping, inventory control, and procurement that comply with
the applicable provisions of the OMB Uniform Administrative Requirements, Costs, Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). The applicable section on internal controls in the
Uniform Guidance (2 C.F.R. §200.303) states that a non-federal entity is responsible for establishing and
maintaining effective internal controls that provide reasonable assurance that the non-federal entity is
managing funds in compliance with federal statutes, regulations, and the terms and conditions of the
award. Further, these internal controls should be in compliance with guidance outlined in the “Standards
for Internal Control in the Federal Government” issued by the Comptroller General of the United States or
the “Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
According to the standards established by the Comptroller General, management is responsible for
ensuring that internal controls individually and in combination with other controls are capable of achieving
stated objectives and addressing related risks, such as fraud, waste, and abuse.
During our audit, we found that Chicago PD officials were not able to identify an individual or group of
individuals with overall responsibility for managing the Chicago PD’s equitable sharing program. In fact,
when we asked Chicago PD officials who was responsible for managing the program, the answers we
received varied. Some officials responded, “that is a good question,” or said they believed it was the
Chicago PD’s Finance Division. When we initiated our audit, we were assigned as our primary audit contact
the Chicago PD’s Finance Division, but as time went on, we found that the city of Chicago Department of
5
The eShare portal enables a participating agency to view the status of its pending equitable sharing requests and run
reports on disbursed equitable sharing. This is also the process used to process electronic payments.
4
Finance knew more about the financial aspects of the Chicago PD’s equitable sharing-related financial
activity.
6
During our discussions with officials from the Chicago PD and city of Chicago, we inquired whether there
were any policies or procedures for administering its participation in the DOJ Equitable Sharing Program, to
include matters such as properly identifying receipts and approving expenditures, as required by equitable
sharing guidelines. Chicago PD officials stated that they did not have any formal, written policies or
procedures specific to overall management of their DOJ equitable sharing program participation (including
properly identifying receipts or approving disbursements), but that the Chicago PD has procedures for
completing its annual Equitable Sharing Agreement and Certification form (ESAC). Chicago PD officials also
told us that the Chicago PD does have general, department-wide internal control policies that are outdated
and need to be updated after the conclusion of an ongoing departmental reorganization; these
department-wide policies do not reference the DOJ Equitable Sharing Program or the Chicago PD’s
participation and related activities.
We believe that the Chicago PD’s lack of leadership, appropriate oversight, and policies and procedures
specific to its DOJ equitable sharing program have led directly to the numerous internal control weaknesses
and noncompliance with Equitable Sharing program guidance that we identified during our audit and which
we discuss in the following sections. We therefore recommend that the Criminal Division require the
Chicago PD to institute over its DOJ Equitable Sharing Program an effective management structure and
formal, written policies and procedures that clearly lay out roles and responsibilities designed to achieve
organizational objectives and establish standard accounting procedures and internal controls to help ensure
compliance with the DOJ guidelines set forth to manage equitably shared funds and tangible property. Our
recommendations specific to individual elements of internal control can be found in the sections below.
Lack of Compliance with Guidance for Expenditure Approvals
Although required by the Equitable Sharing Guide, our audit revealed that expenditures during our review
period were not approved by the Chicago PD’s Superintendent or a designee. When we discussed this with
Chicago PD and city of Chicago officials, we were told that the Superintendent is not involved in the approval
process. Moreover, the officials could not provide us evidence that anyone during our review period was
granted the authority to approve expenditures of DOJ equitable sharing funds as the designee of the
Chicago PD Superintendent.
In December 2020, the Chicago PD Superintendent signed a letter that designated a Chicago PD official to
authorize expenditures of Chicago PD DOJ equitable sharing funds.
7
We met with this official in February
2021 to discuss this new authority, and there appeared to be some confusion over who was authorized to
approve equitable sharing expenditures. Moreover, the official told us that the Chicago PD had not
approved any expenditures of DOJ equitable sharing funds since the letter was signed in December 2020.
6
In Fall 2020, as part of an on-going reorganization, members of the Chicago PD Finance Division transitioned to the
newly formed Office of Public Safety Administration and became city of Chicago employees (rather than employees of
the Chicago PD). Throughout this report, we refer to them as Chicago PD Finance Division officials, which they were
during the entire scope of our audit.
7
In the Use of Equitable Sharing Resources section of this report, we discuss the results of our testing of a sample of
expenditures made with DOJ equitable sharing funds.
5
As a result, we could not confirm that the Chicago PD’s revised expenditure approval process was
functioning in compliance with program guidelines, and we therefore recommend that the Criminal Division
require the Chicago PD to provide evidence that the Chicago PD’s expenditures of DOJ equitable sharing
program funds are being properly approved.
Weaknesses in Accounting for and Handling of Equitable Sharing Receipts
Equitable sharing guidelines require the participating state or local law enforcement agency to establish
separate DOJ and U.S. Department of the Treasury accounts or accounting codes to track both revenue and
expenditures for each respective program. No other funds may be commingled in these accounts or with
these accounting codes.
We found that the Chicago PD and city of Chicago have a rather complex method for the flow of the
Chicago PD’s equitable sharing receipts from DOJ, as well as for the handling of equitable sharing
cash-on-hand. The Chicago PD receives DOJ equitable sharing receipts via electronic funds transfer, and the
funds are first deposited into a local bank account. This account is a simple deposit account and funds are
to remain there only temporarily before being swept into an investment account, a high-interest earning
account, or the city’s aggregate account (if not identified and claimed by the Chicago PD within 30 days). The
exhibit below depicts how the Chicago PD’s equitable sharing funds are received and processed based upon
our discussions with Chicago PD and city of Chicago officials.
Exhibit 1
Flow of the Chicago Police Department’s Equitable Sharing Deposits
Local
Chicago PD
Bank
Account
High‐InterestBank
Account
InvestmentAccount
CityofChicago
AggregatePool
Account
(UnclaimedEquitable
SharingFunds)
Equitable Sharing
Receipts
Source: OIG analysis of Chicago Police Department information.
6
Chicago PD and city of Chicago officials struggled to explain exactly how this process works and who was
specifically responsible for recording and reconciling in the city of Chicago’s financial system the
Chicago PD’s equitable sharing funds. In fact, Chicago PD Finance Division personnel told us they were
unaware that equitable sharing cash-on-hand was being transferred into investment and high-interest bank
accounts. Moreover, these individuals could not inform us where all equitable sharing cash-on-hand was
maintained.
We also found that neither the Chicago PD nor city of Chicago have controls or procedures to execute in the
event that invested equitable sharing funds, which are exposed to market risk, experience a loss in value.
According to the Guide, losses to any equitable sharing funds maintained in investment accounts in
accordance with the jurisdiction’s policies may not be allocated to or deducted from the equitable sharing
account. It follows that the participant should have policies or controls in place to ensure that any such
losses are handled appropriately and in compliance with the program guidance. When we asked if the
Chicago PD or city of Chicago had policies in place that detail what to do in case an investment account
containing equitable sharing funds were to experience a loss, a city of Chicago official told us that there is
no specific language in their investment policy that addresses “Equitable Sharing funds.” Moreover, the city
Treasurer’s Office stated that their procedure, in the event that losses are experienced, would be to book
the losses in the fund in which the losses are experienced.
With no controls in place to prevent this from occurring, it is possible that the invested Chicago PD equitable
sharing funds could experience losses and those losses could be deducted from the equitable sharing
account cash-on-hand amount. We therefore recommend that the Criminal Division require the Chicago PD
to institute controls to ensure compliance with the program guidance that prohibits any investment-related
losses from being allocated to or deducted from the equitable sharing account.
We also found that the Chicago PD Finance Division does not use the USMS’s eShare Portal to track
anticipated deposits or reconcile receipts.
8
According to Chicago PD Finance officials, they do not have
access to eShare.
9
Instead of using the eShare Portal, Finance Division officials generally wait until they
receive the monthly bank statement for the equitable sharing deposit account to identify the receipts and
then notify the City Treasurer’s Office of such deposits. Only then are the receipts recorded in the equitable
sharing accounting records and the money can be swept from the deposited account into either an
investment and/or high interest earning account. If, however, the receipts remain for more than 30 days in
the Chicago PD’s equitable sharing deposit account, the unclaimed funds are swept into the city’s main
aggregate account.
According to DOJ eShare reports, between January 1, 2019, and April 30, 2020, the Chicago PD received DOJ
equitable sharing revenues totaling $4,319,357 to support law enforcement operations. We compared the
Chicago PD’s accounting records to the eShare reports, and we determined that the Chicago PD did, in fact,
receive all these payments. To determine the timeliness of the Chicago PD’s accounting for these receipts,
we reviewed a sample of five of the highest-valued receipts from January 1, 2019, through April 30, 2020;
8
Information in the eShare Portal assists with reconciling deposits, as well as tracking and obtaining the status of
pending Department of Justice sharing requests.
9
Within the Chicago PD, the Bureau of Organized Crime has access to the eShare Portal, through which it submits
sharing requests. The Bureau of Organized Crime also, at the end of each fiscal year, reconciles Justice and Treasury
funds received between the DOJ eShare Portal and the bank statements.
7
our sample accounted for more than 21 percent of the total DOJ equitable sharing receipts received by the
Chicago PD during our audit period. As shown in Table 1 below, we found that the Chicago PD did not
account for all of these receipts in a timely manner.
Table 1
eShare Receipts and Chicago PD Accounting Records Comparison
Transaction Date
per eShare and
Bank Statements
Amount Date Receipt
Recorded in
Chicago PD
Equitable Sharing
Account Records
Number of Days
Between Receipt
and Recording of
Funds
01/24/2020 $357,094 03/09/2020 45
10/18/2019
a
256,049 11/27/2019 40
06/24/2019 114,678 09/30/2019 98
06/24/2019 104,091 09/30/2019 98
06/24/2019 90,399 09/30/2019 98
Total $922,311
a
The original deposit was overstated by $3,000. This was corrected by the city in January 2020.
Source: Chicago PD ESACs and accounting records.
As shown above, all of the eShare receipts in our sample were recorded in the Chicago PD’s equitable
sharing accounting records between 40 and 98 days after they were received by the Chicago PD. Because
these funds were not recognized in a timely manner, they would have been subjected to city of Chicago
revenue procedures, which require funds unclaimed after 30 days to be swept into the city aggregate
account (which does not earn interest). We confirmed that upon discovery of the unclaimed funds, the
Chicago PD Finance Division took action to claim the tested receipts and have the funds posted to the
equitable sharing accounting records.
The Chicago PD’s untimely recognition of equitable sharing revenue is indicative of poor financial
management, places the funds at risk of loss or misuse, and could impact the entity’s ability to comply with
program guidance, including requirements for accurate reporting. Moreover, the Chicago PD loses out on
the potential interest these receipts could earn had they been swept into the interest-earning accounts
rather than being moved to the city of Chicago aggregate account. Had the Chicago PD managed its
receipts using the eShare system and performed more timely reconciliations, we believe many of these risks
would have been mitigated. We therefore recommend that the Criminal Division require the Chicago PD to
enhance its equitable sharing receipt recognition process, to include regularly reconciling its DOJ equitable
sharing accounting records to the information in the eShare Portal.
8
Inadequate Property Management
The Equitable Sharing Guide states that agencies must maintain and follow written policies for inventory
control that comply with applicable portions of the OMB Uniform Administrative Requirements, Costs,
Principles, and Audit Requirements for Federal Awards (OMB Uniform Guidance). According to the OMB
Uniform Guidance, agencies must maintain property records that include a description of the property and
the source of funding. Additionally, the agency must conduct a physical inventory of the property at least
once every 2 years.
During our discussions with officials from the Chicago PD who are responsible for managing the
Chicago PD’s Asset Management System, we learned that the Chicago PD does not have the capability to
track equipment and property by funding source (such as identifying items purchased with equitable
sharing funds), nor does it conduct physical inventories. The officials told us that they were unaware of
when the Chicago PD may have last conducted a physical inventory, and they did not know how often
inventories should be conducted. To date the Chicago PD has yet to address these issues. Because the
Chicago PD does not track its equipment by funding source, Chicago PD officials could not provide a list of
equipment purchased with equitable sharing funds during the scope of our audit; therefore we could not
verify whether purchased equipment was at its assigned location and being used for permissible purposes.
We noted that these issues were also identified in the city of Chicago’s 2018 and 2019 single audit reports
and its current Consent Decree.
10
Because the DOJ OIG acts as the DOJ’s National Single Audit Coordinator
and is responsible for monitoring corrective action relative to single audit report findings concerning DOJ
funding, including those of the city of Chicago, we do not make a duplicate recommendation in this report.
Equitable Sharing Agreement and Certification Reports
Law enforcement agencies that participate in the DOJ Equitable Sharing Program are required to submit an
ESAC report, on an annual basis, within 2 months after the end of an agency’s fiscal year. This must be
accomplished regardless of whether equitable sharing funds were received or maintained that year. If an
ESAC is not approved before the end of the 2-month filing timeframe, the law enforcement agency will be
moved into a non-compliance status.
11
Additionally, the ESAC report must be signed by the head of the law
enforcement agency and a designated official of the local governing body. By signing and submitting the
ESAC report, the signatories agree to be bound by and comply with the statutes and guidelines that regulate
the Equitable Sharing Program.
According to the Chicago PD’s Standard Operating Procedures (SOP) for preparation and submission of its
ESAC, in January (following the end of the fiscal year on December 31) the Chicago PD’s Finance Division
begins and oversees the Chicago PD’s ESAC preparation and approval process, which involves contacting
several different departments within the Chicago PD and the city of Chicago to gather documents needed to
complete the ESAC. The below exhibit details the Chicago PD’s process for preparing the ESAC, as explained
in the SOP.
10
Our review of the city of Chicago’s single audit reports is discussed later in the Compliance with Audit Requirements
section of this report. A consent decree is a court-ordered agreement between a law enforcement agency and DOJ,
designed to correct systemic patterns of misconduct within a police department.
11
Any agency that remains non-compliant for more than 1 year will have all approved sharing pending disbursements
extinguished.
9
Exhibit 2
Chicago PD ESAC Preparation Procedures
MONTH PROCEDURES
January
City of Chicago Department of Finance asks the Chicago PD Bureau of Organized Crime –
Administration to: (1) reconcile Justice and Treasury funds received between the DOJ
eShare Portal and bank statements; and to (2) determine funds received from other law
enforcement agencies or task forces and whether there was other income, transfer of
funds, or receipt of any non-cash assets.
January
City of Chicago Department of Finance provides the Chicago PD Finance Office with
needed information for the form (interest/investment income, Single Audit information,
and Jurisdiction Finance Contact information).
January
Chicago PD Office of the General Counsel provides to the Chicago PD Finance Office
information regarding civil rights cases and discrimination allegations.
January
Chicago PD Finance Office: (1) reconciles expenditures in the city of Chicago's accounting
system and lists them, by expenditure category, on the ESAC; (2) researches and lists on
the ESAC the current and prior year budget information; and (3) drafts ESAC for pre-
approval review.
February
Chicago PD Bureau of Organizational Development reviews the ESAC and forwards it to
the Office of the Superintendent.
February
Office of the Chicago PD Superintendent reviews (and may request the Office of Legal
Affairs to review), approves, signs, and forwards the ESAC to the city of Chicago Office of
Budget and Management.
February
City of Chicago Office of Budget and Management reviews and approves the ESAC and
sends it to the Office of the Mayor.
February
Mayor's Office Chief of Staff reviews, approves, and signs the ESAC. Office sends it to the
Chicago PD and emails a copy to the Chicago PD Department of Finance confirming the
ESAC has been approved by the Office of the Mayor.
February
Chicago PD Department of Finance directs the Chicago PD Bureau of Organized Crime
Administration to submit the ESAC electronically.
February
Chicago PD retains the ESAC forms and all supporting documentation for future audits.
Source: Chicago Police Department
Completeness and Timeliness of ESAC Reports
We tested the Chicago PD’s compliance with ESAC reporting requirements to determine if its reports were
complete and submitted in a timely manner. We noted that the Chicago PD submitted its initial 2019 ESAC
in February 2020, within the 2-month required timeframe. However, MLARS required the Chicago PD to
submit an amended ESAC in July 2020 to correct the amounts it reported in four different categories on its
initial ESAC.
12
We reviewed the amended ESAC, found that it was complete and signed by appropriate
officials, and then used it for all of our subsequent ESAC analyses.
12
The four categories requiring correction were receipts, non-categorized expenditures, contracts for services
expenditures, and law enforcement equipment expenditures.
10
Accuracy of ESAC Reports
To verify the accuracy of the 2019 ESAC, we compared the receipts listed on the Chicago PD’s amended
ESAC to the total amounts listed as disbursed on the eShare report for the same time period. The amended
2019 ESAC report indicated receipts of $3,650,894, which matched the receipts listed on the eShare report.
However, as we continued our analysis, we were unable to reconcile other reported data on the ESAC.
As previously noted in Exhibit 2, the Chicago PD’s SOP for the Preparation and Submission of the ESAC
requires that the Chicago PD retain the ESAC forms and all supporting documents for future auditing
purposes. However, we found that the Chicago PD did not comply with this requirement and could not
provide us with documentation to demonstrate how the reported expenditure-related amounts, both by
category and cumulatively, were aggregated from the Chicago PD’s financial records. Because the Chicago
PD did not have this historical documentation, we requested information from the Chicago PD’s accounting
system to perform our own reconciliation of the figures reported on the ESAC. To comply with our request,
the Chicago PD relied heavily on a city of Chicago official to pull together the information. Although we
received a significant amount of information, we were unable to reconcile the cumulative or category-based
summary expenditure information.
Specifically, according to the list of expenditures provided to us by Chicago PD Finance Division officials, in
FY 2019 the Chicago PD expended DOJ equitable sharing funds totaling $2,943,023. However, we were unable
to reconcile this figure to the $3,028,681 in total expenditures reported on the amended 2019 ESAC. We also
attempted to reconcile the beginning balance (i.e., equitable sharing cash-on-hand as of January 1, 2019) as
reported on the Chicago PD’s ESAC to the accounting records. When we could not reconcile this amount, we
asked city of Chicago and Chicago PD Finance Division officials how they calculated the beginning balance
on the 2019 ESAC. This Chicago PD Finance Division official stated that when determining the beginning
equitable sharing fund balance to report on the ESAC, they used the ending balance that was reported on
the previous ESAC and they do not use the accounting records to confirm the figures. Therefore, the
beginning and resulting ending balances on the Chicago PD’s ESACs do not represent information gleaned
fully from the accounting records and instead include carryover figures from past reporting periods.
13
Further, although the ESAC requires that the agency report its equitable sharing expenditures by category,
we found that the Chicago PD does not track its equitable sharing expenditures by category. Rather,
Chicago PD Finance Division personnel told us that when they are completing the ESAC, they review
individual expenditures and assign the expenditures to spending categories on the ESAC based on their
knowledge of the transactions.
The Chicago PD’s method for identifying, categorizing, and reporting equitable sharing expenditures lends
itself to errors and inconsistencies and is not reliable. As previously noted, three of the four items on the
Chicago PD’s initial 2019 ESAC submission that had to be corrected were expenditure categories and we
were unable to use the Chicago PD’s accounting records to verify the expenditure figures. Moreover,
throughout our audit, the Chicago PD and the city of Chicago struggled to provide us with basic financial
information on the Chicago PD’s equitable sharing program activities. Therefore, we recommend that the
Criminal Division require the Chicago PD to perform an in-depth review of its equitable sharing financial
13
According to a Chicago PD Finance Division official, this method for determining the beginning and ending ESAC
balances has been in use since at least 2002.
11
activity and either: (1) provide detailed documentation to support its existing FY 2019 and FY 2020 ESAC
submissions, or (2) submit amended ESACs along with detailed documentation to support the balance and
expenditure figures reported. We also recommend that the Criminal Division require the Chicago PD to
revise its expenditure tracking process. This revised process should include controls to help ensure that the
Chicago PD: (1) properly tracks all DOJ equitable sharing funds by category, (2) accurately reports on the
ESAC the correct figures as reflected in its financial system, and (3) retains supporting documentation for the
amounts reported on the ESAC.
Equitable Sharing Resources
The Equitable Sharing Guide requires that equitable sharing funds or tangible property received by state
and local agencies be used for law enforcement purposes that directly supplement the appropriated
resources of the recipient law enforcement agency. Exhibit 3 reflects examples of permissible and
impermissible uses under these guidelines.
12
Exhibit 3
Summary of Permissible and Impermissible Uses of Equitable Sharing Funds
Permissible Uses
Matching funds
Contracting services
Law enforcement equipment
Law enforcement travel and per diem
Support of community-based programs
Law enforcement awards and memorials
Law enforcement training and education
Joint law enforcement/public safety operations
Law enforcement operations and investigations
Law enforcement, public safety, and detention facilities (with prior approval)
Drug and gang education and other awareness programs
Impermissible Uses
Loans
Supplanting
Costs related to lawsuits
Extravagant expenditures
Non-federal undercover money laundering investigations
Purchase of food and beverages
Creation of endowments or scholarships
Personal or political use of shared assets
Transfers to other law enforcement agencies (waiver can be obtained in certain limited circumstances)
Petty cash accounts and stored value cards
Purchase of items for other law enforcement agencies
Uses contrary to the laws of the state or local jurisdiction
Use of forfeited property by non-law enforcement personnel
With some exceptions,
salaries and benefits of sworn or non-sworn law enforcement personnel.
Source: Guide to Equitable Sharing for State, Local, and Tribal Law Enforcement Agencies.
Use of Equitable Sharing Funds
Guidance governing the Equitable Sharing Program requires that equitable sharing funds or tangible
property received by state and local agencies be used for law enforcement purposes that directly
supplement the appropriated resources of the recipient law enforcement agency. Also, participating
agencies must use the funds prudently to avoid any appearance of extravagance, waste, or impropriety.
Further, equitable sharing program guidance specifies permissible and impermissible expenditures to
include those related to construction. Specifically, it states that agencies must contact MLARS prior to using
DOJ equitable sharing funds for all improvement and expansion projects (for example, the construction of a
13
new facility or minor renovations including drywall, electrical, HVAC replacements, and internal
modifications to an existing facility).
As noted previously, we were unable to reconcile the total expenditures in the Chicago PD’s accounting
records to what the Chicago PD reported on its 2019 ESAC. However, by working closely with Chicago PD
and city of Chicago officials, we were able to sample and test individual expenditure transactions that had
been recorded in the Chicago PD’s equitable sharing accounting records. According to the accounting
records provided to us during the audit, the Chicago PD expended DOJ equitable sharing funds totaling
$2,943,023 in FY 2019 and $643,799 in FY 2020 through April 30, for a total of $3,586,822 spent during our
review period.
14
We judgmentally selected and tested 76 transactions totaling $2,230,410 or 62 percent, of
the total funds expended as recorded in the accounting records, to determine if the expenditures of DOJ
equitable sharing funds were permissible and supported by adequate documentation. The transactions in
our sample included expenditures for public safety equipment, training, travel and per diem, and law
enforcement operations and investigations. Based upon our review of the supporting documentation
provided by the Chicago PD and the city of Chicago, we determined that its DOJ equitable sharing fund
expenditures were supported by adequate documentation. However, as previously noted in the Accounting
for Equitable Sharing Resources section of this report, neither the Chicago PD Superintendent nor a
designee approved expenditures as required by the Equitable Sharing Guide.
Additionally, although the transactions we reviewed indicated that the equitable sharing funds generally
were used for permissible purposes as outlined in the Equitable Sharing Guide, we found that, during the
scope of our audit, the Chicago PD expended $49,273 in equitable sharing funds to pay for construction
expenses. However, according to MLARS, the Chicago PD did not seek nor receive prior approval for any
construction-related expenditures, as required by the Equitable Sharing Guide. Further, the $49,273 was
paid against seven large construction contracts dating from May 2017 and August 2018 and totaling
$985,458. Based upon documentation provided by the Chicago PD and the city of Chicago, it appears that
equitable sharing funds were used prior to our audit review period to make additional payments against the
seven construction contracts.
When we informed the Chicago PD of this issue, a Finance Division official explained that all of the projects
that make up the $49,273 noted above were initially approved and then begun (and some were completed)
before DOJ released its July 2018 Guide, in which all construction costs, including minor renovations,
required prior approval from MLARS. The official told us that when these projects were approved and
started, interim DOJ guidance from July 2014 was in effect, and this guidance stated that approval from
AFMLS (the prior name of MLARS) was required prior to building new facilities or making structural changes
to existing facilities. The official also noted that under the July 2014 guidance, approval was not required for
cosmetic or non-structural improvements such as cabling, electrical, interior walls, carpeting, or furniture
costs, and that all of the $49,273 was spent for what the Chicago PD considered to be non-structural
improvements. Specifically, the official told us that the funds were all spent on technology renovation
projects to build out Strategic Decision Support Centers, which are technology rooms in police districts that
14
As noted throughout the report, because of issues we identified in the Chicago PD’s management of its equitable
sharing program, we cannot be certain these summary expenditure amounts from the Chicago PD’s accounting records
are accurate. We previously recommended that the Criminal Division require the Chicago PD to conduct an in-depth
review of its equitable sharing financial activity and provide detailed documentation to support its FY 2019 and FY 2020
ESAC submissions.
14
make it easier and quicker for the districts to access crime cameras and mobile phone technology. Thus,
the official concluded, the costs were permissible.
We reviewed the information provided by the Chicago PD. As noted, the $49,273 was paid in 2019 and was
part of seven larger and more extensive contracts from 2017 and 2018 totaling close to $1 million, and the
work took several years to complete. Moreover, our review of Chicago PD’s construction contracts revealed
elements of work such as demolition, carpentry, masonry, abatement, and plumbing. The scope of work
outlined in the contracts indicates the construction projects would likely be considered structural
improvements and non-cosmetic, thereby requiring prior approval. We therefore recommend that the
Criminal Division review this issue and, if appropriate, require the Chicago PD to remedy the $49,273 in
construction costs that did not receive prior approval by MLARS. We also recommend that the Criminal
Division identify and, if appropriate, require the Chicago PD to remedy any additional unapproved
construction costs that were incurred prior to or after our audit review period.
Supplanting
The Equitable Sharing Guide requires that shared resources be used to increase or supplement the
resources of the recipient agency and prohibits the use of shared resources to replace or supplant the
appropriated resources of the recipient. In other words, the recipient agency must benefit directly from the
equitable sharing funds. To test whether equitable sharing funds were used to supplement rather than
supplant local funding, we interviewed local officials and reviewed the budgets for the city of Chicago and
the Chicago PD for FYs 2016 through 2020. We found that the city of Chicago budget increased by
26 percent during this timeframe, while the Chicago PD’s budget for the same period increased by
18 percent.
There was no decrease in the city of Chicago budget that was offset by the Chicago PD’s budget, and there
also was no decrease in the Chicago PD’s budget that coincided with a proportional increase in equitable
sharing revenue. Therefore, we determined that there was no indication that the city of Chicago was
supplanting its budget with equitable sharing funds during our period of review.
Compliance with Audit Requirements
The Equitable Sharing Guide requires that state and local law enforcement agencies that receive equitable
sharing cash, proceeds, or tangible property comply with the Single Audit Act Amendments of 1996 and the
audit requirements within 2 C.F.R. §200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). The Single Audit Act provides for recipients of
federal funding above a certain threshold to receive an annual audit of their financial statements and
federal expenditures. Under the Uniform Guidance, such entities that expend $750,000 or more in federal
funds within the entity’s fiscal year must have a “single audit” performed annually covering all federal funds
expended that year. The Single Audit Report is required to include a Schedule of Expenditures of Federal
Awards for the period covered by the auditee’s financial statements. In addition, an entity must submit its
Single Audit Report no later than 9 months after the end of the fiscal year covered by the audit.
We reviewed the city of Chicago’s Single Audit Report for FY 2019 and determined that it included DOJ
equitable sharing expenditures on its Schedule of Expenditures of Federal Awards. We compared the
amount the city of Chicago reported to the amount the Chicago PD reported on its ESAC for FY 2019, and we
15
found that the amounts matched. However, as noted previously, we were unable to determine if the
expenditures the Chicago PD reported on its 2019 ESAC were accurate.
The city of Chicago's Single Audit Report for FY 2019 noted two prior year findings related to the Equitable
Sharing Program. The first was that the Chicago PD was not able to adequately demonstrate that proper
equipment records were being maintained and all equipment purchases with equitable sharing funds were
being properly tracked. According to the city of Chicago’s response to the FY 2018 Single Audit Report, the
Chicago PD would remedy this finding by either modifying its existing property system or purchasing a new
system. However, as noted in the Accounting for Equitable Sharing Resources section on this report, this
corrective action had not yet occurred by the time of our audit.
The second finding was that the Chicago PD did not submit its 2018 ESAC by the 2-month deadline after the
city’s fiscal year-end. According to the city of Chicago’s response to correspondence related to the FY 2018
Single Audit Report, the Chicago PD has remedied this finding by implementing Standard Operating
Procedures for the preparation and submission of the ESAC. Because the FY 2019 ESAC was submitted
within the required timeframe, we believe this corrective action is adequate.
16
Conclusion and Recommendations
We tested the Chicago PD’s compliance with what we considered to be the most important conditions of the
DOJ Equitable Sharing Program to assess whether the Chicago PD accounted for equitable sharing funds
properly and used such revenues for permissible purposes. Overall, we found that the Chicago PD did not
fully comply with program requirements and did not have proper management oversight of its equitable
sharing program. Specifically, the Chicago PD lacked formal, written policies and procedures governing its
DOJ equitable sharing activities; did not properly approve its DOJ equitable sharing expenditures; did not
properly account for or handle its equitable sharing receipts; and did not have the required property
management program in place over items purchased with DOJ equitable sharing funds. Also, although we
verified the reported receipts, we were unable to confirm as accurate the expenditure and beginning and
ending balance amounts reported on the Chicago PD’s FY 2019 ESAC because the Chicago PD could not
provide adequate accounting records or other documentation to support the reported figures. We were,
however, able to determine that the sample of DOJ equitable sharing fund expenditures we reviewed were
adequately supported, but we identified construction expenditures totaling $49,273 that may have required
prior DOJ approval.
We recommend that the Criminal Division:
1. Require the Chicago PD to institute over its DOJ Equitable Sharing Program an effective
management structure and formal, written policies and procedures that clearly lay out roles and
responsibilities designed to achieve organizational objectives and establish standard accounting
procedures and internal controls to help ensure compliance with the DOJ guidelines set forth to
manage equitably shared funds and tangible property.
2. Require the Chicago PD to provide evidence that the Chicago PD’s expenditures of DOJ equitable
sharing program funds are being properly approved.
3. Require the Chicago PD to institute controls to ensure compliance with the program guidance that
prohibits any investment-related losses from being allocated to or deducted from the equitable
sharing account.
4. Require the Chicago PD to enhance its equitable sharing receipt recognition process, to include
regularly reconciling its DOJ equitable sharing accounting records to the information in the eShare
Portal.
5. Require the Chicago PD to perform an in-depth review of its equitable sharing financial activity and
either: (1) provide detailed documentation to support its existing FY 2019 and FY 2020 ESAC
submissions, or (2) submit amended ESACs along with detailed documentation to support the
balance and expenditure figures reported.
6. Require the Chicago PD to revise its expenditure tracking process. This revised process should
include controls to ensure that the Chicago PD: (1) properly tracks all DOJ equitable sharing
17
expenditures by category, (2) accurately reports on the ESAC the correct figures as reflected in its
financial system, and (3) retains supporting documentation for the amounts reported on the ESAC.
7. Review the $49,273 in construction costs paid in 2019 and, if appropriate, require the Chicago PD to
remedy this amount that did not receive prior approval by MLARS.
8. Identify and, if appropriate, require the Chicago PD to remedy any additional unapproved
construction costs that were incurred prior to or after our audit review period.
18
APPENDIX 1: Objective, Scope, and Methodology
Objective
The objective of the audit was to assess whether the Chicago PD accounted for equitable sharing funds and
used such revenues for permissible purposes defined by applicable guidelines.
Scope and Methodology
We conducted this performance audit in accordance with Generally Accepted Government Auditing
Standards. Those standards require that we plan and perform the audit to obtain sufficient and
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
Our audit concentrated on, but was not limited to, the equitable sharing activities of the Chicago PD
between January 1, 2019, and April 30, 2020. During this period, the Chicago PD received $4,319,357 in DOJ
equitable sharing funds. In its 2019 ESAC, the Chicago PD reported a beginning balance of DOJ equitable
sharing funds totaling $7,479,451 on January 1, 2019. As noted in the report, we verified the amount
received; however, we were unable to verify the Chicago PD’s January 1, 2019, beginning balance.
Our audit was limited to equitable sharing revenues received through the DOJ Equitable Sharing Program.
We tested compliance with what we considered to be the most important conditions of the DOJ Equitable
Sharing Program. We reviewed laws, regulations, and guidelines governing the accounting for and use of
DOJ equitable sharing receipts, including the Guide to Equitable Sharing for State, Local, and Tribal Law
Enforcement Agencies, issued in July 2018. Unless, otherwise stated in our report, the criteria we audited
against are contained in these documents.
As a result of the COVID-19 pandemic response, we performed our audit fieldwork exclusively in a remote
manner. We interviewed Chicago PD and city of Chicago officials and examined records, related revenues,
and expenditures of DOJ equitable sharing funds. In addition, we relied on computer-generated data
contained in the federal eShare system to identify equitably shared revenues and property awarded to the
Chicago PD during the audit period. We did not establish the reliability of the data contained in eShare as a
whole. However, when viewed in context with other available evidence, we believe the opinions,
conclusions, and recommendations included in this report are valid.
Our audit specifically evaluated the Chicago PD’s compliance with three essential equitable sharing
guidelines: (1) accounting for equitable sharing receipts, (2) Equitable Sharing Agreement and Certification
reports, and (3) the use of equitable sharing funds. In planning and performing our audit, we considered
internal controls established and used by the Chicago PD over DOJ equitable sharing receipts. However, we
did not assess the reliability of the Chicago PD’s financial management system, or the extent to which the
financial management system complied with internal controls, laws, and regulations overall.
During the course of our audit, we judgmentally selected and tested a sample of 5 receipts totaling $922,311
and a sample of expenditures totaling $2,230,410. A judgmental sampling design was applied to capture
19
numerous aspects of the disbursements reviewed, such as dollar amounts. This non-statistical sample
design does not allow projection of the test results to all disbursements.
Our audit included an evaluation of the Chicago PD’s most recent annual audit. The results of this audit
were reported in the Single Audit Report that accompanied the city of Chicago’s basic financial statements
for the year ended December 31, 2019. We reviewed the independent auditor’s assessment, which
disclosed two prior internal control issues. We have addressed these weaknesses in our report as they
relate to the Chicago PD’s equitable sharing program.
We discussed the results of our review with officials from the Chicago PD and the city of Chicago throughout
the audit and at a formal exit conference. As appropriate, their input has been included in the relevant
sections of the report.
Internal Controls
In this audit, we performed testing of internal controls significant within the context of our audit objective.
We did not evaluate the internal controls of the Chicago PD to provide assurance on its internal control
structure as a whole. Chicago PD management is responsible for the establishment and maintenance of
internal controls in accordance with the Equitable Sharing Guide and 2 C.F.R. §200.303. Because we do not
express an opinion on the Chicago PD’s internal control structure as a whole, we offer this statement solely
for the information and use of the Chicago PD and the Criminal Division.
In planning and performing our audit, we identified the following internal control components and
underlying internal control principles as significant to the audit objective:
Internal Control Components & Principles Significant to the Audit Objective
Control Environment Principles
Management should establish an
organizational structure, assign responsibility, and
delegate authority to achieve the entity’s objectives.
Control Activity Principles
Management should design control activities to achieve objectives and respond to risks.
Management should implement control activities through policies.
Information & Communication Principles
Management should use quality information
to achieve the entity’s objectives.
Management should externally communicate the necessary quality information to achieve
the entity’
s objectives.
Monitoring Principles
Management should remediate ide
ntified internal control deficiencies on a timely basis.
20
We assessed the design, implementation, and operating effectiveness of these internal controls and
identified deficiencies that we believe could affect the Chicago PD’s ability to effectively and efficiently
operate, to correctly state financial information, and to ensure compliance with laws and regulations. The
internal control deficiencies we found are discussed in the Audit Results section of this report. However,
because our review was limited to these internal control components and underlying principles, it may not
have disclosed all internal control deficiencies that may have existed at the time of this audit.
21
APPENDIX 2: Schedule of Dollar-Related Findings
Description Amount Page
Questioned Costs:
Unapproved Construction Costs $49,273
14
Questioned Costs $49,273
TOTAL DOLLAR-RELATED FINDINGS $49,273
22
APPENDIX 3: The Criminal Division’s Response to the
Draft Audit Report
U.S. De
partmen
t
of
Justice
Criminal Division
Washington,
D.
C.
20530
April 5, 2021
ME
M
ORANDUM
TO
:
Caro
l S.
Tara
szka, Regional Audit
Ma
na
ger
Chi
cago Regional Audit Office
Office
of
the
Inspect
or
General
FROM:
Alice W. Dery,
Chief
Ali
ce
W.
Dery
Program Management.
and
Training U
ni
t
Mo.
uey
Laundering
and
As
set
Reco
very
Sec
ti
on
SUBJECT:
DRAFT
AUDIT
RE
P
ORT
for t
he
Chicago Police Department
's
E
qu
itable
Sh
aring
Program Acti
vi
ti
es
.
In a memorandum
da
t
ed
March 26, 2021, yo
ur
office
pr
ovi
ded
a draft
audi
t report for
the
Chicago Police Department that includes ac
ti
ons nece
ss
ary
fo
r
clo
sure
of
the
au
dit r
eport
findings.
Th
e Money Laundering
and
As
se
t Recovery
Sec
ti
on (MLARS) concurs with all
findings and recommenda.tious
in
the
draft
audit report.
Upon receipt
of
the
final audit report, MLARS wi
ll
w
or
k with
the
C
hi
cago
Police
Department
to
correct
al
l
identified
findings.
23
cc:
Jessica Schmaus. Audit Liaison
U.S.
Department
of Justice.
C
rimina
l Division
Louise. D
uh
ameJ
Ac
t
ing
Assistant Director, Audit Liaison Group
In
ter
na
l Rev
enue
and Evaluati
on
Office
Justice. Manage.me.at Division
As
We.y
Hine
s, Audit
Lia
ison
Au
di
t
Li
aiso
n
Group
In
tem
al Rev
enue
and Evaluation Office
Justice Management Division
2
24
APPENDIX 4: The Chicago Police Department’s Response to
the Draft Audit Report
Lori E. Lightfoot
M
ay
or
Department
of
Police •
City
of
Chicago
3510 S.
Mi
chigan Avenue • Chicago, Illinois 60653
David O.
Brown
S
up
erintendent
of
Police
April
14
, 2021
Carol S. Taraszka
Regional Audit Manager
Chicago Regional Audit Office
Office
of
the
In
spector General
U.
S.
Department
of
Justice
500 West Madison St. Suite
1121
Chicago, Illinois 60661
Dear
Ms.
Taraszka:
This letter is in response to your March 26, 2021 letter addressed to Superintendent David
O.
Brown concerning
the Audit
of
the Chicago Police Department's Equitable Sharing Program Activities for the period
of
January
I,
2019 through April 30, 2020. This matter was referred
to
the
Office
of
Public Safety Administration (OPSA),
Finance
and
Accounting Section for response.
On
behalf
of
the Chicago Police Department, the OPSA Finance and Accounting Section has taken positive
actions
to
ad
dr
ess each
of
the
points you raised as communicated
in
your March 26, 2021 letter. Following are
our
responses to each
of
the eight recommendations, in the order
in
which they were presented in your letter.
Recommendation
#1
You recommended that the Chicago
PD
be required
to
institute over its DOJ Equitable Sharing Program an
effective management structure and formal, written policies and procedures that clearly lay out roles and
responsibilities designated to achieve organizational objectives and establish standard accounting procedures and
internal controls to help ensure compliance with
the
DOJ guidelines set forth to manage equitably shared funds
and tangible property.
We agree with this recommendation.
On
behalf
of
the Chicago
PD
, the Office
of
Public Safety Administration (OPSA) Finance is responsible for the
financial administration
of
Chicago
PD's
DOJ equitable sharing funds.
We
will define an effective management
structure and formal, written policies and procedures that clearly lay out roles and responsibilities designated
to
achieve Chicago
PD's
organizational objectives and establish standard accounting procedures and internal
controls
to
ensure compliance with the
DOJ
guidelines to manage equitably shared funds and tangible property.
As
we work
on
addressing and correcting the other recommendations outlined in the audit report, we will
document and ensure compliance
of
all
of
the
recommendations stated above.
Our
goal is to complete the review
and develop written policies and procedures
by
July
20
21.
Emer
ge
ncy: 9-
1-1
• Non-E
mer
gency: (Within City limit
s)
3-1- 1 • Non
-E
mer
gen
cy
an
d
TI
Y:
{O
ut
si
de City
limits)
312-746-6
000
•
E-
mail
: police@cityofchicago.org • We
bsit
e: www.cityofchicago.or
g/
police
25
Chicago Police Department
DOJ
Equitable Sharing Audit
Recommendation
#2
You
recommended that
the
Chicago
PD
be
required
to
provide evidence that
the
Chicago
PD
's expenditures
of
DOJ
equitable sharing program funds
are
being
properly approved.
We
agree
with
this
recommendation.
Effective
March
25
, 2021,
all
Chicago
PD
's
DOJ
equitable sharing program expenditures are being reviewed
and
approv
ed
by
Chicago
PD
's
Chief
of
Bureau
of
Counter
Terrorism.
Recommendation
#3
You
recommended that
the
Chicago
PD
be
requjred
to
institute controls
to
ensure compliance
with
the
program
guidance
that
prohibits
any
investment-related losses from
being
allocated
to
or
deducted from
the
equitable
sharing account.
We
agree
with
this recommendation.
On
April 7,
2021,
OPSA
Finance,
the
City
of
Chicago Department
of
Finance
(COC
DOF)
and
the
City
of
Chicago
Treasurer's
Office (COC
CTO)
met
to
discuss the controls that
need
to
be
in
place
to
ensure compliance
with
the
program
guidelines that prohibits
any
investment-related losses from
being
allocated
to
or
deducted from
the
equitable sharing account.
The
COC
Treasurer's Office is
the
department that invests all funds for
the
City
of
Chicago.
They
reconcile
cash
on
a daily basis. Until,
at
such
time,
as
they
are
able
to
officially amend
the
City
of
Chicago's Investment policy, they will prepare
an
interim policy immediately
to
ensure loss
es
from being
allocated
to
or
deducted from
the
equitable sharing account.
To
ensure compliance
with
this
recommendation,
the
OPSA
Finance will include
this
in
its
written policies and
procedures
during
the
reconciliation of Chicago
PD
DOJ
equitable sharing funds
in
the
Ci
ty
of
Chicago's
ledgers
to
ensure the
COC
Treasurer's Office is complying
with
recommendation.
Recommendation
#4
You
recommended that
the
Chicago
PD
be
required
to
enhance
its
equitable sharing receipt recognition process,
to include regularly reconciling its
DOJ
equitable sharing accounting records
to
the
information in
the
eShare
Portal.
We
agree
with
this
recommendation.
Effectively immediately,
the
OPSA
Finance will query
CPD's
DOJ
Equitable Sharing
bank
statements
on
a
weekly basis.
OPSA
Finance will reconcile the
DOJ
equitable sharing receipts
and
accounting records to
the
information
in
the eShare Portal.
The
City
of
Chicago Treasurer's
Office
receipts
CPD's
DOJ
Equitable Sharing interest
and
investment income.
They
will provide
OPSA
Finance
with
copies
of
th
e
bank
statements so that
OPSA
Finance
can
reconcile those
transactions
in
the
accounting records.
This
process will
be
included
in
the
written policies
and
procedures.
26
Chicago Police Department
DOJ
Equitable Sharing Audit
Recommendation #5
You recommended
that
the Chicago
PD
be
required
to
perform
an
in-depth review
of
its equitable sharing
financial activity
and
either: (1) provide detailed documentation
to
support its existing
FY
2019
and
FY
2020
ESAC
submissions,
or
(2) submit
amended
ESACs
along
with
detailed documentation
to
support
the
balance
and
expenditures figures reported.
We
agree with
this
recommendation.
Effective immediately, the
OPSA
Finance
will begin a review
of
the
City
of
Chicago's
Department
of
Finance
ledgers for
CPD's
DOJ
Equitable Sharing
Funds
and conduct an in-depth review
of
the
financial activity for
the
FY
2019 and
FY
2020
submissions.
We
are currently working
with
the
City
of
Chicago Department
of
Finance
to
ensure
we
have
access
to
all reports needed
to
conduct
the
reconciliation,
which
will
be
shared
with
the
DOJ
Criminal Division for their review.
After
the
review,
and
if
needed,
the
FY
2019
and
FY
2020
ESACs
will
be
amended.
Our
goal is
to
complete
our
in-depth review
of
FY
2019
and
FY
2020
by
the
end
of
May
2021
to
submit to
DOJ
Criminal Division for their review, comparison
to
the
ESACs
and
receive their recommendation(s)
on
how
to
make corrections,
if
needed.
As
OPSA
Finance conducts
the
in-depth review
of
the
City
of
Chicago's
ledgers,
we
will document and develop
appropriate written policies and procedures
on
how
to
conduct monthly reconciliations.
Recommendation #6
You
recommended that the Chicago
PD
be
required
to
revise its expenditure tracking process.
This
revised
process should include controls that ensure that
the
Chicago PD: (1) properly tracks all
DOJ
equitable sharing
expenditures
by
category, (2) accurately reports
on
the
ESAC
the
correct figures as reflected
in
its financial
system,
and
(3) retains supporting documentation for
the
amounts reported
on
the
ESAC.
We
agree
with
this recommendation.
In
February 2021,
OPSA
Finance implemented
an
application called WorkFront. WorkFront is a project
management software that is currently
being
used
for receiving, approving, processing
and
tracking expenditures
for all funding sources, including
CPD's
DOJ
Equitable Sharing Funds. WorkFront allows for supporting
documentation (Chicago
PD
DOJ
Equitable Sharing approved expenditures
by
the
Superintendent
or
his
designee, invoices, requisitions
and
funding sources)
to
be
uploaded
and
the
expenditures to
be
tracked from the
beginning until paid. WorkFront is
an
internal tracking software that is used
by
OPSA
Finance.
All
invoices are
reviewed
by
an
O
PSA
official for completeness before
the
invoices
are
entered
in
the
City
of
Chicago's
Financial
Management
and
Purchasing System
for
payment.
The
City
of
Chicago's
Financial Management
and
Purchasing
System (FMPS)
is
the
City's
official system for processing payments
to
all vendors through the
City
of
Chicago's
Procurement process,
and
for posting expenditures to
the
City's
ledgers.
Only
the invoices are uploaded
in
the
City
of
Chicago
FMPS
system
and
the
funding strip is entered
in
order
to
process payment. All supporting
documents for
Chicago
PD's
DOJ
equitable sharing funds will remain on-site
with
OPSA
Finance saved
in
WorkFront.
27
Chicago Police Department
DOJ
Equitable Sharing Audit
To
ensure compliance that all
DOJ
equitable sharing expenditures are tracked
by
category,
OPSA
Finance will
include a comment
in
WorkFront specifying the correct expenditure category
per
the
DOJ
equitable sharing
guidelines that can
be
used as a reference
with
reporting the expenditures
in
the ESAC.
And
to ensure
compliance that
OPSA
Finance accurately reports
on
the
ESAC
the correct figures as reflected
in
its financial
system (which is FMPS),
OPSA
Finance is also going to attempt to see
if
the
DOJ
equitable sharing" category"
can
be
included as part
of
the funding strip when entered
in
FMPS. As
of
the date
of
this response,
OPSA
Finance has not had
an
opportunity to test the funding strip.
If
the category can
be
included as part
of
the funding
strip, then this
be
included
in
the written policies
and
procedures.
Recommendation
#7
You recommended that the
DOJ
Criminal Division should review the $49,273
in
construction costs paid
in
2019
and,
if
appropriate, require the Chicago
PD
to
remedy that
did
not receive prior approval
by
MLARS.
We
respectfully disagree
with
this recommendation.
OPSA
Finance welcomes the
DOJ
Criminal Division to review
the
$49,273
in
constructions costs that were paid
in
FY
2019, as
they
were the final expenses to
an
earlier construction project [Strategic Decision Support Center
(SDSC) Technology renovation project] that
had
started
in
FY
2017 and
FY
2018 before
the
new
DOJ
Guidelines went into effect. Although
the
SDSC Technology renovation project was
not
prior approved
by
MLARS, earlier costs associated with the SDSC Technology renovation project were included as part
of
MLARS'
review
of
the Chicago
PD's
FY
2018 ESAC. During that review, MLARS inquired about the
$1,089,874.87
of
construction costs that was reported
in
Chicago
PD's
FY
2018 ESAC. Chicago
PD
described
the construction costs as contractual renovation costs
and
MLARS
stated they were fine.
If
after
DOJ
Criminal Division review
of
the construction costs and they determine that Chicago
PD
should have
sought prior approval from MLARS, then
OPSA
Finance
would
like
to
respectfully request a waiver
on
behalf
of
Chicago PD.
Recommendation #8
You recommended that the
DOJ
Criminal Division should identify and,
if
appropriate, require the Chicago PD to
remedy any additional unapproved construction costs that were incurred prior to
or
after
our
audit review period.
We
respectfully disagree
with
this recommendation.
During the review
of
Chicago
PD's
FY
2018 ESAC,
MLARS
sent an email on April 18, 2019 inquiring about
Line C: law enforcement, public safety & detention facilities.
MLARS
noted that Chicago
PD
spent
$1,089,874.87
on
Line C
and
they wanted to know
if
the
expenditures were contractual
or
cosmetics
expenditures.
The
former Chicago
PD
Finance Division responded
on
April 19, 2019 stating that the
expenditures were contractual expenditures for renovation.
On
that same day,
MLARS
responded to the email
stating they were fine.
28
Chicago Police Department
DOJ Equitable Sharing Audit
The breakdown
of
Line C
of
the $1,089,874.87 that was reported in the
FY
2018 ESAC is as follows:
Pro_ject
Expenditures Description
Central Detention Build
out - 1st District
$
9,815.12
Build two rooms (one for male and the other one
for female) within Chicago PD's 1st District
Central Detention prisoner(s) property room. This
required building a wall the length
of
an existing
room with openings and another partition wall to
separate the two rooms.
16th District - Security
Upgrade
$
175,502.43
A security system was installed that is used for
prisoner processing and prisoner holding.
Strategic Decision Support
Center (SDSC)
Technology Rooms
$
874,126.97
Build out SDSC Technology Rooms for the
following districts: 2, 3, 4, 5,
8,
10,
12
and 25
*SDSC Room Furnishings
$
30,430.35 Furniture for the SDSC Rooms
$
1,089,874.87
Total
* According to the FY 2014 equitable sharing guidelines, furnishings were listed in category
C: law enforcement, public safety and detention facilities. However, if required, after DOJ
Criminal Division review, these expenses can
be
re-categorized to category D for equipment.
The breakdown
of
Line C
of
the $145,456.25 that was reported in the
FY
2017 ESAC is as follows:
Project
Expenditures Description
Strategic Decision Support
Center (SDSC)
Technology Rooms
$
145,456.25
Build out SDSC Technology Rooms for the
following districts: 6, 9, 10 and
15
OPSA
Finance welcomes the
DOJ
Criminal Division to review all
of
the constructions costs associated with all
of
the projects above that incurred in
FY
2017 and
FY
2018.
If
after
DOJ
Criminal Division's review and
if
they
believe that Chicago
PD
should have requested prior approval from MLARS, then OPSA Finance would
respectfully like to request a waiver.
Should you have questions concerning any
of
the responses provided, please feel free to contact Michele James,
Assistant Director
ofOPSA
Finance at 312-745-5688.
29
Signature Page:
Sincerely
,
David
O.
Brown
Superintendent
of
Police
Chicago Police Department
Executive Director
Office
of
Public Safety Administration
CC
:
Anne
Insley
MLARS Program Analyst
Money Laundering
& Asset Recovery Section
Criminal Division
Alice Dery
Chief
of
Program Management and Training
Unit
Criminal Division
Jose M. Tirado
Chief
of
Bureau
of
Counter Terrorism
Chicago Police Department
Chicago Police Department
DOJ
Equitable Sharing Audit
30
APPENDIX 5: Office of the Inspector General Analysis and
Summary of Actions Necessary to Close the Report
The OIG provided a draft of this audit report to the Criminal Division and the Chicago PD. The
Criminal Division’s response is incorporated in Appendix 3 and the Chicago PD’s response is
incorporated in Appendix 4 of this final report. In response to our draft audit report, the Criminal
Division concurred with our recommendations, and as a result, the status of the audit report is
resolved. The Chicago PD agreed with six recommendations and disagreed with two
recommendations. The following provides the OIG analysis of the response and summary of actions
necessary to close the report.
Recommendation for the Criminal Division:
1. Require the Chicago PD to institute over its DOJ Equitable Sharing Program an effective
management structure and formal, written policies and procedures that clearly lay out roles
and responsibilities designed to achieve organizational objectives and establish standard
accounting procedures and internal controls to help ensure compliance with the DOJ
guidelines set forth to manage equitably shared funds and tangible property.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD agreed with our recommendation and stated in its response that its Office of
Public Safety Administration Finance (OPSA Finance) will define an effective management
structure and formal written policies and procedures that clearly lay out roles and
responsibilities designated to achieve the Chicago PD’s organizational objectives and
establish standard accounting procedures and internal controls to ensure compliance with
the DOJ guidelines to manage equitably shared funds and tangible property.
This recommendation can be closed when we receive evidence that the Chicago PD has
instituted over its DOJ Equitable Sharing Program an effective management structure and
formal, written policies and procedures that clearly lay out roles and responsibilities
designed to achieve organizational objectives and establish standard accounting procedures
and internal controls to help ensure compliance with the DOJ guidelines set forth to manage
equitably shared funds and tangible property.
2. Require the Chicago PD to provide evidence that the Chicago PD’s expenditures of DOJ
equitable sharing program funds are being properly approved.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
31
The Chicago PD agreed with our recommendation and stated in its response that effective
March 25, 2021, all the Chicago PD’s DOJ equitable sharing program expenditures are being
reviewed and approved by the Chicago PD’s Chief of Bureau of Counter Terrorism.
This recommendation can be closed when we receive evidence that the Chicago PD’s
expenditures of DOJ equitable sharing program funds are being properly approved in
accordance with DOJ guidance.
3. Require the Chicago PD to institute controls to ensure compliance with the program
guidance that prohibits any investment-related losses from being allocated to or deducted
from the equitable sharing account.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD agreed with our recommendation and stated in its response that OPSA
Finance, the city of Chicago Department of Finance, and the city of Chicago Treasurer’s Office
collaborated to discuss the controls needed to ensure compliance with the program
guidelines that prohibit any investment-related losses from being allocated to or deducted
from the equitable sharing account. Further, the Chicago PD indicated its intent to officially
amend its investment policy to account for these controls and stated that, while this official
policy is in being developed, the city of Chicago Treasurer’s Office will immediately prepare
an interim investment policy to prevent losses from being allocated to or deducted from the
equitable sharing account.
This recommendation can be closed when we receive evidence that the Chicago PD has
instituted controls to ensure compliance with the program guidance that prohibits any
investment-related losses from being allocated to or deducted from the equitable sharing
account.
4. Require the Chicago PD to enhance its equitable sharing receipt recognition process, to
include regularly reconciling its DOJ equitable sharing accounting records to the information
in the eShare Portal.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD agreed with our recommendation and stated that effective immediately
OPSA Finance will query Chicago PD DOJ Equitable Sharing bank statements on a weekly
basis and will reconcile the DOJ equitable sharing receipts and accounting records to the
information in the eShare portal. The Chicago PD also stated that the city of Chicago
Treasurer’s Office will provide OPSA Finance with bank statements so that it can reconcile
interest and investment income transactions in the accounting records. Further, the
32
Chicago PD said that it would include this process in its written policies and procedures.
This recommendation can be closed when we receive evidence that the Chicago PD has
enhanced its equitable sharing receipt recognition process, to include regularly reconciling
its DOJ equitable sharing accounting records to the information in the eShare Portal.
5. Require the Chicago PD to perform an in-depth review of its equitable sharing financial
activity and either: (1) provide detailed documentation to support its existing FY 2019 and
FY 2020 ESAC submissions, or (2) submit amended ESACs along with detailed documentation
to support the balance and expenditure figures reported.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD agreed with our recommendation and stated in its response that OPSA
Finance will immediately begin a review of the Chicago PD’s DOJ Equitable Sharing Funds and
conduct an in-depth review of the financial activity for the FY 2019 and FY 2020 ESAC
submissions. In addition, the Chicago PD said that it is working with the city of Chicago
Department of Finance to ensure it has access to all reports needed to conduct the
reconciliation. The Chicago PD also stated that it would provide its reconciliation results to
the Criminal Division for review and, if necessary, make corrections to the ESACs. Further,
the Chicago PD said that the Office of Public Safety Administration Finance will document
and develop written policies and procedures on how to conduct monthly reconciliations.
This recommendation can be closed when we receive evidence the Chicago PD performed
an in-depth review of its equitable sharing financial activity and either: (1) provided detailed
documentation to support its existing FY 2019 and FY 2020 ESAC submissions, or
(2) submitted amended ESACs along with detailed documentation to support the balance
and expenditure figures reported.
6. Require the Chicago PD to revise its expenditure tracking process. This revised process
should include controls to ensure that the Chicago PD: (1) properly tracks all DOJ equitable
sharing expenditures by category, (2) accurately reports on the ESAC the correct figures as
reflected in its financial system, and (3) retains supporting documentation for the amounts
reported on the ESAC.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD agreed with our recommendation and stated in its response that in
February 2021, OPSA Finance implemented project management software that is currently
being used for receiving, approving, processing, and tracking expenditures for all funding
sources, including the Chicago PD’s equitable sharing funds. The Chicago PD also said that
33
this software allows for the inclusion of supporting documents and expenditures can include
a comment to specify the associated DOJ equitable sharing expenditure category. In
addition, the Chicago PD stated that OPSA Finance will attempt to add the spending
categories to the city of Chicago’s Financial Management and Purchasing System.
This recommendation can be closed when we receive evidence that the Chicago PD has
revised its expenditure tracking process. This revised process should include controls to
ensure that the Chicago PD: (1) properly tracks all DOJ equitable sharing expenditures by
category, (2) accurately reports on the ESAC the correct figures as reflected in its financial
system, and (3) retains supporting documentation for the amounts reported on the ESAC.
7. Review the $49,273 in construction costs paid in 2019 and, if appropriate, require the
Chicago PD to remedy this amount that did not receive prior approval by MLARS.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the Chicago
PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD disagreed with our recommendation and stated in its response that OPSA
Finance welcomes the Criminal Division to review the $49,273 in construction costs that
were paid in FY 2019. According to the Chicago PD, these costs were the final expenses to
an earlier construction project that started in FY 2017 and FY 2018 before the
implementation of new DOJ Guidelines more explicitly requiring construction projects to be
pre-approved by the Criminal Division. The Chicago PD also stated that although the project
did not receive prior approval from MLARS, earlier costs associated with the project were
included as part of MLARS’s review of the Chicago PD’s FY 2018 ESAC. In addition, the
Chicago PD stated that during that review, MLARS inquired about the $1,089,874.87 in
construction costs that were reported in the Chicago PD’s FY 2018 ESAC, and that the
Chicago PD described the construction costs as contractual renovation costs, and “MLARS
stated that the costs were fine.”
The Chicago PD also stated that if after the Criminal Division reviews the construction costs
and determines that the Chicago PD should have sought prior approval from MLARS, OPSA
Finance would request a waiver on behalf of the Chicago PD.
As noted in our report, current program guidance (issued in July 2018) states that agencies
must contact MLARS prior to using DOJ equitable sharing funds for all improvement and
expansion projects (for example, the construction of a new facility or minor renovations
including drywall, electrical, and internal modifications to an existing facility). Also as noted
in our report, when we informed the Chicago PD of the potential of questioned costs associated
with construction-related costs paid for with equitable sharing funds in 2019, a Finance
Division official explained that all of the projects that make up the costs in question were
begun during a period covered by DOJ guidance issued in July 2014, which required prior
DOJ approval when building new facilities or making structural changes to existing facilities
but did not require approval when only cosmetic or non-structural changes were made.
34
We reviewed the contracts related to this construction and found that the work described
included demolition, carpentry, masonry, abatement, and plumbing to be done on existing
Chicago PD facilities. Based on these descriptions, we concluded that this work could be
considered non-cosmetic, structural improvements, and would thus require prior DOJ
approval under the July 2014 guidelines. However, neither the July 2014 nor July 2018
guidance contains a definition of what constitutes a “structural improvement.”
While we believe the construction work in question paid for with equitable sharing funds
could be structural in nature and could have required prior approval in accordance with
both current and prior guidance, the Chicago PD’s response indicates that officials believe
the work performed was permissible under the guidance in place at the time the projects
were initiated. In addition, the Chicago PD’s response also referred to correspondence with
MLARS about construction-related cost information in its ESAC submissions for FY 2018.
According to the Chicago PD, these interactions would have served to make MLARS aware of
the work being performed. However, it is not clear from the information provided that the
exchanges related only to the categorization of costs on the ESAC and if they would have
allowed appropriate MLARS decision makers to have a sufficient understanding of the
Chicago PD’s construction-related projects.
Given the changes in program guidance, the lack of clarity in the term “structural
improvement,” and the information from the Chicago PD regarding previous interactions
with MLARS about its ESAC submissions, we continue to believe that MLARS should review
the Chicago PD’s construction-related activity and determine if the $49,273 in equitable
sharing funds expended during our review period required prior approval. Therefore, this
recommendation can be closed when we receive evidence that the Criminal Division has
reviewed the $49,273 in construction costs paid in 2019 and, if appropriate, required the
Chicago PD to remedy this amount that did not receive prior approval by MLARS.
8. Identify and, if appropriate, require the Chicago PD to remedy any additional unapproved
construction costs that were incurred prior to or after our audit review period.
Resolved. The Criminal Division agreed with our recommendation. The Criminal Division
stated in its response that upon receipt of the final audit report, it will work with the
Chicago PD to correct all identified findings. As a result, this recommendation is resolved.
The Chicago PD disagreed with our recommendation and stated in its response that during
the review of the Chicago PD’s FY 2018 ESAC, MLARS sent an email on April 18, 2019,
inquiring about expenditures categorized as law enforcement, public safety, and detention
facilities. The Chicago PD stated that in its email, MLARS noted that Chicago PD reported
$1,089,874.87 in this category, and MLARS wanted to know if the expenditures were
contractual or cosmetic expenditures. The Chicago PD also stated that the former
Chicago PD Finance Division responded on April 19, 2019, stating that the expenditures were
contractual expenditures for renovation, and on that same day, MLARS “responded to the
email stating they were fine.” In addition, the Chicago PD response included two tables that
list its ESAC expenditure breakdown by project and description for FYs 2017 and 2018.
35
Further, the Chicago PD stated in its response that OPSA Finance welcomes the Criminal
Division to review all the construction costs associated with all the projects incurred in
FYs 2017 and 2018. The response states that if the Criminal Division’s determines that the
Chicago PD should have requested prior approval from MLARS, OPSA Finance would request
a waiver.
As noted in recommendation #7, we believe the work described could be considered
non-cosmetic, structural improvements. Given the changes in program guidance, the lack of
clarity in the term “structural improvements,” and the information from the Chicago PD
regarding previous interactions with MLARS about its ESAC submissions, we continue to
believe that MLARS should review the Chicago PD’s construction-related activity and
determine if the construction-related expenses required prior approval. Therefore, this
recommendation can be closed when we receive evidence that the Criminal Division has
Identified and, if appropriate, required the Chicago PD to remedy any additional
construction costs that were incurred prior to or after our audit review period that should
have been pre-approved according to applicable Equitable Sharing guidelines.
