REPORT DIGEST OFFICE OF THE COMPTROLLER -- FISCAL OFFICER RESPONSIBILITIES FINANCIAL AUDIT AND COMPLIANCE EXAMINATION FOR THE YEAR ENDED JUNE 30, 2018 Release Date: December 27, 2018 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 1 -- 1 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 1 -- 1 FINDINGS LAST AUDIT: 1 Category 1: Findings that are material weaknesses in internal control and/or a qualification on compliance with State laws and regulations (material noncompliance). Category 2: Findings that are significant deficiencies in internal control and noncompliance with State laws and regulations. Category 3: Findings that have no internal control issues but are in noncompliance with State laws and regulations. State of Illinois, Office of the Auditor General FRANK J. MAUTINO, AUDITOR GENERAL To obtain a copy of the Report contact: Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703 (217) 782-6046 or TTY (888) 261-2887 This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov SYNOPSIS • (18-1) The Office of the Comptroller did not make all statutorily mandated transfers between State funds within established timeframes, as required. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LATE PAYMENT OF STATUTORILY MANDATED TRANSFERS The Office of the Comptroller (Office) did not make all statutorily mandated transfers between State funds within established timeframes, as required. The Office processed transfers from 31 to 447 days after the mandated transfer date. The late transfers outstanding as of and paid after June 30, 2018 totaled $1.14 billion. The Office also made 193 late transfers, totaling $2.48 billion, between State funds that were made between one and 30 days after the statutorily mandated transfer date. Lastly, we noted 282 late transfers, totaling $1.306 billion, which were still outstanding as of November 13, 2018, relating to fiscal year 2017 and fiscal year 2016. (Finding 1, pages 9-10) This finding was first reported in 2009. We recommended the Comptroller make transfers within timeframes established by applicable statute. While we realize that lack of available funds in the State Treasury requires prioritization and cash management decisions, we recommended the Comptroller continue in its efforts to make transfers in as timely a manner as possible. Comptroller officials accepted the recommendation and stated the Office will continue in its efforts to make the required transfers to the extent possible given all the competing payments from limited resources in the state treasury. Unfortunately, due to continued fiscal circumstances that are outside of the control of the Comptroller’s Office, this repeated finding is outgrowth from the fact that the state did not have a complete budget for two years and is still facing a significant backlog of bills in the billions. In order to manage under this dire fiscal situation, the Office must continue to engage in cash management strategies that can maximize the use of limited state funds while also attempting to minimize the consequences of not having enough resources to address various pending vouches and transfers held at the Office. Until the backlog is adequately addressed, it will linger for several months and years to come. (For previous response, see Digest Footnote #1.) AUDITOR’S OPINION The auditors stated the fund balances at June 30, 2018, and the revenues and expenditures for the year then ended relating to the State of Illinois, Office of the Comptroller - Fiscal Officer Responsibilities’ Traditional Budgetary Financial Report, are fairly presented in all material respects. The auditors noted the financial statements have been prepared on a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The budgetary basis deficit of the General Funds decreased by $2.265 billion during the fiscal year ended June 30, 2018. At June 30, 2018, the budgetary basis fund balance of the General Funds was a deficit of $5.698 billion. ACCOUNTANT’S OPINION The accountants conducted a compliance examination of the Comptroller, Fiscal Officer Responsibilities for the year ended June 30, 2018, as required by the Illinois State Auditing Act. The accountants qualified their report on State compliance for Finding 2018-001. Except for the noncompliance described in this finding, the accountants stated the Comptroller complied, in all material respects, with the requirements described in the report. This financial audit and compliance examination were conducted by CliftonLarsonAllen LLP. JANE CLARK Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:PH DIGEST FOOTNOTE #1 -LATE PAYMENT OF STATUTORILY MANDATED TRANSFERS 2017: The Office accepts the recommendation. Taking into account the financial condition of state funds facing at times a $16 billion bill backlog, the Office will continue in its efforts to make she required transfers to the extent possible given all the competing payments from limited resources in the state treasury.