REPORT DIGEST OFFICE OF THE TREASURER – ILLINOIS ACHIEVING A BETTER LIFE EXPERIENCE PROGRAM FINANCIAL AUDIT FOR THE PERIOD JANUARY 9, 2017 THROUGH JUNE 30, 2017 Release Date: March 13, 2018 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 1 -- 0 -- 1 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 0 -- 1 FINDINGS LAST AUDIT: N/A 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 • (17-1) The Office did not maintain adequate controls to ensure the external service provider’s internal controls were reviewed. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS LACK OF ADEQUATE CONTROLS OVER THE REVIEW OF EXTERNAL SERVICE PROVIDER The Office of the Treasurer (Office) did not maintain adequate controls to ensure the external service provider’s internal controls were reviewed. The Office utilized an external service provider for the management of the Achieving a Better Life Experience Program (ABLE). The external service provider was responsible for the operations of the ABLE Program including recordkeeping, investment advisory and administrative services. In addition, the external service provider used third party subservice organizations to perform certain significant services. The external subservice organizations were responsible for various services including the recordkeeping platform, custody and cash management, and providing services for the checking account product within the Checking option. As of June 30, 2017, the net position held in trust for participants was $426,744. During testing, the auditors noted the Office did not maintain documentation of their analysis of the Service Organization Control (SOC) report for the external service provider and did not obtain or review the subservice organizations’ SOC reports. (Finding 2017-001, page 24) We recommended the Office review the SOC reports and maintain documentation of their analysis. Office personnel accepted the recommendation and stated they will maintain written documentation of the review of the SOC reports going forward. In addition, Office personnel stated that senior staff have already been trained on this topic to ensure written documentation is available in the future. AUDITOR’S OPINION The auditors stated the Office of the Treasurer, ABLE Program financial statements as of June 30, 2017 and for the period January 9, 2017 through June 30, 2017, are fairly stated in all material respects. This financial audit was conducted by Crowe Horwath 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:SJS