REPORT DIGEST DEPARTMENT OF TRANSPORTATION FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2024 Release Date: July 8, 2025 FINDINGS THIS AUDIT: 3 CATEGORY: NEW -- REPEAT – TOTAL Category 1: 2 -- 0 -- 2 Category 2: 1 -- 0 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 3 -- 0 -- 3 FINDINGS LAST AUDIT: 1 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, 400 West Monroe, Suite 306, Springfield, IL 62704-9849 (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 INTRODUCTION The Department of Transportation (Department) is responsible for administrating and supervising the State’s transportation activities, including highways, rail, public transportation, and aeronautics. This digest covers the Department’s financial audit as of and for the year ended June 30, 2024. The Department’s State Compliance Examination covering the two years ended June 30, 2024, will be released at a later date. SYNOPSIS • (24-1) The Department has not established adequate internal controls over accurately recording capital asset activity for financial reporting purposes. • (24-2) The Department restated beginning net position for the General Fund and the Nonmajor Funds due to the correction of error in the prior year financial statements. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER CAPITAL ASSETS The Illinois Department of Transportation (Department) has not established adequate internal controls over accurately recording capital asset activity for financial reporting purposes. During our testing, we noted deficiencies within capital assets: • The Department did not accurately account for capital assets. The effect of this misstatement in the Department’s government- wide financial statement was an understatement of infrastructure assets of $2,600,138,000, an understatement of accumulated depreciation of $54,593,000, and an understatement of net position of $2,545,545,000 as of June 30, 2024. • During our testing of capital asset additions, we noted that the Department capitalized items that should have been expensed rather than capitalized. The Department analyzed the additions population and determined that the error for fiscal year 2024, net of accumulated depreciation, was $231,790,000. This misstatement resulted in an overstatement of infrastructure assets, net of accumulated depreciation, and an overstatement of net position of $231,790,000 in the Department’s government- wide financial statements. It was also determined that the same deficiency occurred in fiscal years 2022 and 2023, leading to a restatement to decrease the beginning net position of governmental activities by $507,787,000. The Department posted audit adjustments for both issues to correct its financial statements as of and for the year ended June 30, 2024. (Finding 1, pages 65-66) We recommended the Department strengthen internal controls over capital assets, including enhanced review procedures for asset activity and capitalization decisions. The Department stated it agrees with the finding. The Department further stated the error in the calculation of infrastructure assets, accumulated depreciation and net position has been fixed. Additionally, the Department stated the beginning net position was adjusted to correct capitalized assets error and will use the correct report for capitalizable expenditures for the infrastructure additions. Finally, the Department stated it will continue to enhance the review processes to avoid such errors in the future and ensure adherence to US generally accepted accounting principles to appropriately record assets and accumulated depreciation reported in the Department’s financial statements and enhance review processes to avoid formula errors in the future. INADEQUATE CONTROLS OVER FINANCIAL REPORTING The Department restated beginning net position for the General Fund and the Nonmajor Funds due to the correction of error in the prior year financial statements. During our review of the Department’s financial statements, we observed the Department had reclassified the Grade Crossing Protection Fund (Fund 0019) to be included within the General Fund. Fund 0019 was incorrectly reported in previous years as a Nonmajor Special Revenue Fund. In the current year, the Department discovered this error and restated beginning fund balance in order to increase the General Fund’s beginning fund balance and decrease the Nonmajor Funds’ beginning fund balance by $151,247. (Finding 2, page 67) We recommended the Department review the SAMS manual annually to ensure funds are classified properly in the financial statements. The Department agreed with the finding and stated the error in the beginning net position has been fixed. The Department also stated it will review annually the Statewide Accounting Management System (SAMS) that may impact fund classification listings. OTHER FINDINGS The remaining finding pertains to inadequate control over accounts payable. We will review the Department’s progress towards the implementation of our recommendations in our next financial audit. AUDITOR’S OPINION The auditors stated the financial statements of the Department as of and for the year ended June 30, 2024, are fairly stated in all material respects. This financial audit was conducted by CliftonLarsonAllen LLP. COURTNEY DZIERWA Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:meg