REPORT DIGEST

ILLINOIS HOUSING DEVELOPMENT AUTHORITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  December 21, 2023

FINDINGS THIS AUDIT: 3

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 1 -- 2
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  2 – 1 -- 2

FINDINGS LAST AUDIT: 2

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

INTRODUCTION

This digest covers the Illinois Housing
Development Authority (Authority) Financial
Audit as of and for the year ended June 30,
2023. The Authority’s Single Audit covering
the year ended June 30, 2023 will be issued
in a separate report at a later date.

SYNOPSIS

• (23-1) The Authority has not established
adequate internal controls over service
providers.

• (23-2) The Authority did not properly
reconcile a material lockbox deposit account
retaining cash
receipts at year-end.

• (23-3) The Authority did not have adequate
internal controls in place to properly
include in their financial statements all
material subsequent event disclosures prior
to and up through the date of the
Independent Auditor’s Report on the
financial statements for the year ended June
30,
2023.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROLS OVER SERVICE PROVIDERS

The Illinois Housing Development Authority
(Authority) did not maintain adequate
controls over service providers.

During the audit, we requested the Authority
provide a population of service providers
utilized. Although the Authority provided
the population, they did not provide
documentation demonstrating the population
was complete and accurate. Due to this
condition, we concluded the Authority’s
population was not sufficiently precise and
detailed under the Professional Standards
promulgated by the
American Institute of Certified Public
Accountants (AU-C § 330, AU-C § 530, AT-C §
205).

Even given the population limitations noted
above, we performed testing of three service
providers, noting:

• The Authority had not documented the
review of the service providers’ System and
Organization Control (SOC) reports to
determine the impact of deviation or a
modified opinion.
• The Authority had not documented the
review of the Complementary User Entity
Controls (CUECS) to ensure they had
implemented adequate internal controls.
• The contracts with the service providers
did not document roles and responsibilities,
and controls over the security, integrity,
availability, confidentiality, and privacy.
In addition, the contracts did not require
the service provider to undergo a SOC
examination.
(Finding 1, pages 101-102)

We recommended the Authority perform
procedures to ensure its listing of service
providers utilized is complete and accurate.
In addition, we recommended the Authority
review SOC reports and review its contracts
with service providers to ensure roles and
responsibilities and security controls are
documented and SOC examinations of the
service providers’ controls are carried out.

The Authority’s management agreed with the
finding.

INADEQUATE CONTROLS OVER RECONCILIATIONS

The Illinois Housing Development Authority
(Authority) did not properly reconcile a
material lockbox deposit account retaining
cash receipts at year-end.

We held discussions with the Authority
regarding a lockbox deposit account with
material cash receipts that had not been
properly reconciled at year-end. These
discussions identified lockbox cash receipts
had not been applied to the proper period,
accounts, or funds. On the last day of the
year, this lockbox account within the
Administrative Fund (Admin) received funds
totaling $15,255,073 that were due to the
Mortgage Loan Program Fund (MLP), Affordable
Housing Trust Fund (HTF), and the HOME
Program Fund for loan payments received, and
to the Homeowners Assistance Fund (HAF) for
grant disbursements returned. We determined
these cash deposits should have been
recorded in the Due from Other Funds account
totaling $7,733,758 under MLP, $2,488,740
under HTF, $2,815,667 under HOME, and
$2,216,908 under HAF. Conversely, these
amounts should have been reflected in the
Due to Other Funds account on the Admin Fund
side instead of the Accrued Liabilities and
Other account, as these deposits represent
cash on hand that is payable to other funds.

Lastly, receivable balances across
proprietary and governmental funds were
overstated by $13,038,165 due to these
lockbox cash receipts not being applied as a
reduction to receivables in the correct
period. Unearned revenue under the HAF
program was understated by $2,216,908 from
funds not being properly returned back to
the HAF. The Authority made the necessary
corrections to their financial statements.

In addition, we determined the Authority did
not accurately prepare the statement of net
position and statement of activities. We
proposed adjustments totaling $2,778,178 to
the Admin Fund, $437,568 to the Emergency
Rental Assistance Fund, and $536,379 to the
Illinois Housing Trust Fund. These proposed
adjustments relate to various liabilities
and income statement items that were not
recorded in the correct period, and to
changes of the allowance for uncollectible
accounts from the adjustments described in
the preceding paragraph. These proposed
adjustments were not corrected within the
Authority’s financial statements. (Finding
2, pages 103-104)

We recommended the Authority perform
adequate and timely reconciliation
procedures of all lockbox deposit accounts
to ensure all amounts are accurately
reported at year-end.

The Authority’s management agreed with the
finding.

INADEQUATE CONTROLS OVER SUBSEQUENT EVENT
DISCLOSURES

The Illinois Housing Development Authority
(Authority) did not have adequate internal
controls in place to properly include in
their financial statements all material
subsequent event disclosures prior to and up
through the date of the Independent
Auditor’s Report on the financial statements
for the year ended June 30, 2023.

The Independent Auditor’s Report was
originally dated on December 8, 2023 for the
Authority’s financial statements for the
year ended June 30, 2023. A signed
management representation was provided by
the Authority on December 8, 2023 stating,
among other representations, that the
Authority had disclosed all events occurring
subsequent to June 30, 2023 that would be
required to be disclosed under Accounting
Principles Generally Accepted in the United
States of America.

On December 12, 2023 the Authority informed
us there were three events relating to bond
issuances and authorizations that occurred
subsequent to June 30, 2023 that were not
previously included within their financial
statements that had an Independent Auditor’s
Report date of December 8, 2023.

Inadequate controls over the disclosure of
subsequent events could result in material
omissions which could negatively impact the
users of the Authority’s financial
statements.
(Finding 3, pages 105-106 )

We recommended the Authority ensure all
material subsequent event disclosures are
included within their financial statements
in accordance with Accounting Principles
Generally Accepted in the United States of
America.

The Authority’s management agreed with the
finding.

AUDITOR’S OPINION

Our auditors stated the financial statements
of the Authority as of June 30, 2023, and
for the year then ended, are fairly stated
in all material respects.

The financial audit was 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:TLK