REPORT DIGEST

STATE OF ILLINOIS STATEWIDE SINGLE AUDIT
REPORT

SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  August 29, 2019

FINDINGS THIS AUDIT:  80

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  19 -- 58 -- 77
Category 2:  2 -- 1 -- 3
Category 3:  0 -- 0 -- 0
TOTAL:  21 -- 59 -- 80

FINDINGS LAST AUDIT: 72

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

• The State expended approximately $29
billion from federal awards in FY18.

• A total of 28 programs or program
clusters were classified and audited as
major programs at twelve (12) State
agencies.  These programs constituted
approximately 95.5% of all federal
spending, or about $27.7 billion.  In
addition, forty-four (44) State agencies
expended federal financial assistance in
FY18.  Eleven (11) State agencies accounted
for about 98.8% of federal dollars spent.

Statewide Finding – Financial Reporting

• The State of Illinois does not have an
adequate process in place to permit the
timely and accurate completion of the
Schedule of Expenditures of Federal Awards.
As a result, the State has a material
weakness on all federal programs for
financial reporting.

Auditor’s Adverse Opinion on Major Programs

• The Department of Human Services (DHS)
– did not have appropriate controls over
the Integrated Eligibility System (IES)
used for eligibility determinations
performed for the Supplemental Nutrition
Assistance Program (SNAP) Cluster,
Children’s Health Insurance Program (CHIP),
and Medicaid Cluster programs.
– did not have appropriate controls over
case file records maintained at its local
offices for beneficiaries of the
Supplemental Nutrition Assistance Program
(SNAP) Cluster, Children’s Health Insurance
Program (CHIP), and Medicaid Cluster
programs.
– could not locate case file documentation
supporting eligibility determinations for
beneficiaries of the Children’s Health
Insurance Program (CHIP) and the Medicaid
Cluster programs.
– did not perform “eligibility
redeterminations” for individuals receiving
benefits under the Children’s Health
Insurance Program (CHIP) and Medicaid
Cluster programs in accordance with
timeframes required by the respective State
Plans.

• The Department of Healthcare and Family
Services (DHFS)
– did not have appropriate controls over
the Integrated Eligibility System (IES)
used for eligibility determinations
performed for the Supplemental Nutrition
Assistance Program (SNAP) Cluster,
Children’s Health Insurance Program (CHIP),
and Medicaid Cluster programs.

• The Illinois Department on Aging (IDOA)
– did not correct improperly drawn and
reported cash advances made under the Aging
Cluster program.
– expended funds under the Aging Cluster
program which were not obligated within
required timeframes.

Significant Agency Finding Classified as a
Scope Limitation Resulting in an Auditor
Qualification

• The Illinois Department of Employment
Security
– The auditors were unable to obtain
sufficient appropriate audit evidence
supporting the compliance of the State with
the Unemployment Insurance program for
Allowable Costs/Cost Principles, Cash
Management, Period of Performance, and
Reporting, and consequently, were unable to
determine whether the State complied with
the requirements applicable to that
program.

Significant Agency Findings Classified as a
Material Weakness Resulting in an Auditor
Qualification

• The Department of Human Services has
material weaknesses for:
– not having appropriate controls over the
Integrated Eligibility System (IES) used
for eligibility determinations performed
for the Temporary Assistance for Needy
Families (TANF) Cluster.
– not having appropriate controls over case
file records maintained at its local
offices for beneficiaries of the Temporary
Assistance for Needy Families (TANF)
Cluster.
– not locating case file documentation
supporting eligibility determinations for
beneficiaries of the Temporary Assistance
for Needy Families (TANF) Cluster.
– not performing “eligibility
redeterminations” for individuals receiving
benefits under the Temporary Assistance for
Needy Families (TANF) Cluster.
– being unable to provide adequate
documentation to substantiate the MOE
requirements were met for the Block Grants
for Prevention and Treatment of Substance
Abuse (SAPT) program.
– charging unallowable expenditures to the
Vocational Rehabilitation Grants to States
(VR) program.

• The Department of Healthcare and Family
Services has material weaknesses for:
– not having appropriate controls over the
Integrated Eligibility System (IES) used
for eligibility determinations performed
for the Temporary Assistance for Needy
Families (TANF) Cluster.

• The Department of Children and Family
Services has material weaknesses for:
– not having an adequate process for
supporting adjustments to the Title IV-E
claiming report for both the Foster Care –
Title IV-E and Adoption Assistance
programs.
– not maintaining complete provider
licensing files, including documentation of
required background checks for foster care
service providers for the Foster Care –
Title IV-E program.

• The Illinois State Board of Education has
a material weakness for:
– did not perform adequate monitoring
procedures over subrecipients of the
Special Education Cluster (IDEA) (Special
Education) program.

INTRODUCTION

The Illinois Office of the Auditor General
conducted a Statewide Single Audit of the
FY18 federal grant programs.  The audit was
conducted in accordance with the Uniform
Guidance (Title 2 U.S. Code of Federal
Regulation Part 200, Uniform Administration
Requirements, Cost Principles, and Audit
Requirements for Federal Awards).

The Statewide Single Audit includes State
agencies that are a part of the primary
government and expend federal awards.  In
total, 44 State agencies expended federal
financial assistance in FY18.  A separate
supplemental report has been compiled by
the Illinois Office of the Auditor General.
This report provides summary information on
federal spending by State agency.  The
Statewide Single Audit does not include
those agencies that are defined as
component units such as the State
universities and finance authorities.  The
component units continue to have separate
single audits when required.

The Schedule of Expenditures of Federal
Awards (SEFA) reflects total expenditures
of approximately $29 billion for the year
ended June 30, 2018.  Overall, the State
participated in 334 different federal
programs, however, 10 of these programs or
program clusters accounted for
approximately 89.3% of the total federal
award expenditures.  (See Exhibit I in PDF
version of this digest)

The funding for the 334 programs was
provided by 22 different federal agencies.
Exhibit II shows that five federal agencies
provided Illinois with the vast majority of
federal funding in FY18. (See Exhibit II in
PDF version of this digest)

A total of 28 federal programs or program
clusters were identified as major programs
in FY18.  A major program was defined in
accordance with the Uniform Guidance as any
program with federal awards expended that
meets certain criteria when applying the
risk-based approach.  Exhibit III provides
a brief summary of the number of programs
classified as “major” and “non-major” and
related federal award expenditures. (See
Exhibit III in PDF version of this digest)

Eleven State agencies accounted for
approximately 98.8% of all federal dollars
spent during FY18 as depicted in Exhibit
IV. (See Exhibit IV in PDF version of this
digest)

AUDITORS’ REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND
MATERIAL EFFECT ON EACH MAJOR PROGRAM AND
INTERNAL CONTROL OVER COMPLIANCE

The auditors’ report contained
qualifications on compliance as summarized
below.  The complete text of the Auditors’
Report may be found on pages 24-29 of the
audit. (Please see table in PDF version of
this digest for a list of Adverse Opinions,
Qualifications [Scope Limitations], and
Qualifications [Noncompliance])

Internal Control Over Financial Reporting

We noted a matter involving internal
control over financial reporting for the
Schedule of Expenditures of Federal Awards
(Schedule) that was considered to be a
material weakness.  A material weakness is
a deficiency, or combination of
deficiencies, in internal control over
financial reporting, such that there is a
reasonable possibility that a material
misstatement of the entity’s Schedule will
not be prevented, or detected and corrected
on a timely basis.  The auditors noted that
during the past sixteen years there have
been various errors identified and reported
on the audits of State agencies and the
Office of the State Comptroller (IOC) in
its annual data gathering on the SCO forms
that are used to present the Schedule.
Thus, the auditors recommended the Office
of the Governor and the Illinois Office of
the Comptroller work together with the
State agencies to establish a corrective
action plan to address the quality of the
accounting information provided to and
maintained by the IOC as it relates to
year-end preparation of the Schedule.

Internal Control Over Compliance

We noted certain matters involving internal
control over compliance that were
considered to be significant deficiencies.
A control deficiency in an entity’s
internal control over compliance exists
when the design or operation of a control
over compliance does not allow management
or employees, in the normal course of
performing their assigned functions, to
prevent, or detect and correct,
noncompliance with a type of compliance
requirement of a federal program on a
timely basis.  A significant deficiency in
internal control over compliance is a
deficiency, or combination of deficiencies,
in internal control over compliance with a
type of compliance requirement of a federal
program that is less severe than a material
weakness in internal control over
compliance, yet important enough to merit
attention by those charged with governance.
Overall, 3 of the 80 findings reported in
the single audit were classified as
compliance significant deficiencies.

Material weaknesses were also disclosed in
our report.  A material weakness in
internal control over compliance is a
deficiency, or combination of deficiencies,
in internal control over compliance, such
that there is a reasonable possibility that
material noncompliance with a type of
compliance requirement of a federal program
will not be prevented, or detected and
corrected, on a timely basis.  Overall, 77
of the 80 findings reported in the single
audit were classified as a material
weakness.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

Exhibit V summarizes the number of report
findings by State agency, identifies the
number of repeat findings, and references
the findings to specific pages in the
report. (See Exhibit V in PDF version of
this digest)

Exhibit VI summarizes the total number of
findings, number of repeated findings and
the percentage of repeated findings for the
past ten years.  (See Exhibit VI in PDF
version of this digest)

THE FINANCIAL REPORTING PROCESS FOR THE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
(SEFA) IS INADEQUATE TO PERMIT TIMELY AND
ACCURATE REPORTING

The State of Illinois’ current financial
reporting process does not allow the State
to prepare a complete and accurate Schedule
of Expenditures of Federal Awards (SEFA) in
a timely manner.  Reporting issues at
various individual agencies caused delays
in finalizing the Statewide SEFA.

Accurate financial reporting problems
continue to exist even though the auditors
have: (1) continuously reported numerous
findings on the internal controls (material
weaknesses and significant deficiencies),
(2) commented on the inadequacy of the
financial reporting process of the State,
and (3) regularly proposed adjustments to
the financial statements year after year.
These findings have been directed primarily
towards major State agencies under the
organizational structure of the Office of
the Governor and towards the Office of the
State Comptroller (IOC).

The State of Illinois has a highly-
decentralized financial reporting process.
The system requires State agencies to
prepare financial reporting packages
designed by the IOC. These financial
reporting packages are completed by
accounting personnel within each State
agency who have varying levels of
knowledge, experience, and understanding of
IOC accounting policies and procedures.
Agency personnel involved with this process
are not under the organizational control or
jurisdiction of the IOC.

Although these financial reporting packages
are subject to review by the IOC’s
financial reporting staff during the
Comprehensive Annual Financial Report
(CAFR) preparation process and there are
minimum qualifications for all new GAAP
Coordinators who oversee the preparation of
financial reporting forms, the current
process still lacks sufficient internal
controls at State agencies.  As a result,
adjustments relative to the SEFA continue
to occur.

Additionally, internal control deficiencies
have been identified and reported relative
to the SEFA financial reporting process in
each of the past sixteen years as a result
of errors identified during the external
audits performed on State agencies. These
problems significantly impact the
preparation and completion of the SEFA and
the identification of major programs.  The
process is overly dependent on the post-
audit program even though the Illinois
Office of the Auditor General has
repeatedly informed State agency officials
that the post-audit function is not a
substitute for appropriate internal
controls at State agencies.

Errors identified in the SEFA reporting
process in the current year included
corrections to amounts reported or provided
during the audit and unreconciled amounts.
These items have been reported in agency
level findings for the Illinois Department
of Human Services (Finding Code 2018-010),
the Illinois Department of Healthcare and
Family Services (Finding Code 2018-026),
the Illinois Department of Children and
Family Services (Finding Code 2018-033),
the Illinois State Board of Education
(Finding Code 2018-046), the Illinois
Community College Board (Finding Code
2018-049), the Illinois Department of
Employment Security (Finding Code
2018-055), the Illinois Department of
Transportation (Finding Code 2018-069), the
Illinois Department on Aging (Finding Code
2018-078), and the Illinois Emergency
Management Agency (Finding Code No.
2018-080).  Additionally, other correcting
entries were required in order to
accurately state the financial information
provided by various other State agencies.

While many of the adjustments identified at
the State agencies are not quantitatively
material to the SEFA as a whole, the State
does not have a process in place to
evaluate items of this nature outside of
the audit process. Accordingly, an error
which may be material to the SEFA (in
either quantitative or qualitative terms)
could occur and not be detected by the
State.

Although the deficiencies relative to the
SEFA financial reporting processes have
been reported by the auditors for a number
of years, problems continue with the
State’s ability to provide accurate
external financial reporting.

Failure to establish effective internal
controls at all agencies regarding
financial reporting for the preparation of
the SEFA may prevent the State from
completing an audit in accordance with
timelines set forth by the Uniform Guidance
and may result in the suspension of federal
funding. (Finding 1, pages 33-35)  This
finding was first reported in the Statewide
Single Audit in 2002.

We recommended the Office of the Governor
and the IOC work together with the State
agencies to establish a corrective action
plan to address the quality of accounting
information provided to and maintained by
the IOC as it relates to year-end
preparation of the SEFA.

The Office of the Governor concurred with
the recommendation and stated the Office of
the Governor and the Office of the State
Comptroller will continue to work together
to address the core issues of the State’s
inability to produce timely and accurate
GAAP basis financial information.  The
State is in the midst of a multi-year
implementation of an Enterprise Resource
Planning (ERP) system to develop an
integrated enterprise-wide application
system for financials, which is an aspect
of the Governor’s Executive Order that
created the Illinois Department of
Innovation and Technology to transform
Illinois’ IT systems to be more responsive
to state employees and taxpayers. More
important, the State is moving the process
for preparing the SEFA to the supervision
of the Governor’s Office of Management and
Budget (GOMB), so that GOMB will be able to
work with agencies to reconcile and correct
items in the SEFA before they reach the
auditors’ hands.

The State Comptroller’s Office accepted the
recommendation and agreed that the existing
financial reporting systems need to be
upgraded with a cost-effective statewide
grants management system that is designed
to provide the information needed to
complete the SEFA report and to improve the
quality of the accounting information
provided to the IOC.

FAILURE TO ESTABLISH ADEQUATE CONTROLS OVER
THE INTEGRATED ELIGIBILITY SYSTEM

The Illinois Department of Human Services
(IDHS) and the Department of Healthcare and
Family Services (DHFS) did not have
appropriate controls over the Integrated
Eligibility System (IES) used for
eligibility determinations performed for
the Supplemental Nutrition Assistance
Program (SNAP) Cluster, Temporary
Assistance for Needy Families (TANF)
Cluster, Children’s Health Insurance
Program (CHIP), and Medicaid Cluster
programs.

IDHS administers the SNAP Cluster, the TANF
Cluster, and certain Medicaid Cluster
waiver programs and DHFS administers the
CHIP and Medicaid Cluster programs.  The
Affordable Care Act of 2010 required the
State to consolidate and modernize its
eligibility determination functions into a
single system which is known as the
Integrated Eligibility System (IES).
Effective October 1, 2013, the State
implemented IES and began performing and
documenting eligibility determinations for
certain beneficiaries of its Medicaid
Cluster program and later expanded the use
of IES to eligibility determinations for
beneficiaries of the SNAP Cluster, TANF
Cluster, and CHIP programs. In addition,
effective October 24, 2017, the State
implemented Phase II of IES. With the
implementation of Phase II, all eligibility
determinations and redeterminations for
beneficiaries of the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster
programs are performed and documented in
IES.  IES was developed through a
partnership between IDHS and DHFS with each
agency providing system requirements
specific to their respective federal
programs.

During our testwork, we were unable to
perform adequate procedures to satisfy
ourselves that certain general information
technology controls over the IES system
were operating effectively.  Specifically,
we noted IDHS and DHFS could not provide
all information necessary to test system
access security controls relative to the
network on which IES resides.
Additionally, a specific change management
policy was developed for IES; however, it
was not effective until April 1, 2018.

Accordingly, we were not able to rely on
IES with respect to our testing of the
eligibility and related allowability
compliance requirements for beneficiary
payments made under the TANF Cluster, CHIP,
and Medicaid Cluster programs.  We were
also not able to rely on IES with respect
to the special test and provision – ADP
System for SNAP related to the SNAP Cluster
program.

As discussed further in finding 2018-005,
we also noted due dates for cases that were
overdue for redeterminations as of the IES
go live date (October 24, 2017) and cases
that were due for redetermination between
October 1 and December 31, 2017 were
extended in the system by a year.

In addition to the control deficiencies and
noncompliance identified above, we noted
several potential instances of
noncompliance with requirements of the
State Plans for each of the federal
programs noted above identified during
analysis of IES data.  As discussed above,
the general IT control deficiencies
prevented us from relying on IES and, as a
result, we were not able to determine the
completeness and accuracy of the IES data
analyzed. The specific exceptions
identified in in the IES data provided by
the State were as follows:

• Cases were approved in IES despite
beneficiaries not meeting eligibility
requirements related to citizenship status
or residency (immigration status) and
without valid social security numbers or
submission of an application for a social
security number.  In reviewing the data
provided, we noted errors related to 129
SNAP/TANF cases and 406 CHIP/Medicaid
Cluster cases.
• Cases were redetermined in IES despite
beneficiaries not meeting eligibility
requirements related to citizenship status
or residency (immigration status) and
without valid social security numbers or
submission of an application for a social
security number.  In reviewing the data
provided, we noted errors related to 891
SNAP/TANF cases and 326 CHIP/Medicaid
Cluster cases.

While IDHS and DHFS were aware of certain
system issues and have established manual
workarounds for the known errors in
redetermination dates and identified in the
data above, formal procedures were not
established to monitor and evaluate
noncompliance resulting from the known data
errors during the year ended June 30, 2018.
Requirements of the State Plans were not
modified or waived by the federal agencies
for these matters during the year ended
June 30, 2018 and the payments made to or
on behalf of the beneficiaries impacted by
these matters were not excluded from
federal claims.

Failure to establish adequate controls over
systems used to determine the eligibility
of program beneficiaries inhibits the
ability of the State to properly determine
eligibility in accordance with program
requirements and may result in ineligible
beneficiaries receiving federal benefits
which are unallowable costs.  (Finding 2
(DHS), pages 42-45 and Finding 20 (DHFS),
pages 96-99)  These findings were first
reported in the Statewide Single Audit in
2015.

As a result of DHS’ and HFS’ failure to
have appropriate controls over the
Integrated Eligibility System, the State
did not comply in all material respects
with specific compliance requirements.  Due
to these failures, the auditors rendered an
adverse opinion on the SNAP, CHIP and
Medicaid Cluster programs, and a qualified
opinion on the TANF Cluster program.

We recommended IDHS and DHFS implement
adequate general information technology
control procedures for the IES system.  We
also recommended IDHS and DHFS evaluate the
known IES system issues, implement
monitoring procedures to identify potential
noncompliance relative to its federal
programs resulting from these items, and
consider the changes necessary with respect
to internal controls over eligibility
determinations to ensure only eligible
beneficiaries receive assistance under its
federal programs.

IDHS management accepted the recommendation
and stated they continue to enhance and
implement adequate general information
technology control procedures for the IES
system.  In addition, IDHS stated they are
evaluating the known IES issues and working
to implement monitoring procedures to
identify potential noncompliance relative
to our federal programs resulting from
these items.  They further stated they are
enhancing processes and considering changes
necessary with respect to internal controls
over eligibility determinations to ensure
only eligible beneficiaries receive
assistance under the federal programs.

DHFS management also accepted the
recommendation and stated change management
procedures have been documented and DHFS
will continue to identify potential
noncompliance and implement additional
procedures as necessary to ensure
eligibility determinations are documented
appropriately.

FAILURE TO PROPERLY MAINTAIN AND CONTROL
CASE FILE RECORDS

IDHS does not have appropriate controls
over case file records maintained at its
local offices for beneficiaries of the
Supplemental Nutrition Assistance Program
(SNAP) Cluster, Temporary Assistance for
Needy Families (TANF) Cluster, Children’s
Health Insurance Program (CHIP), and
Medicaid Cluster programs.

IDHS is the State agency responsible for
performing eligibility determinations for
the federal public welfare assistance
programs. IDHS has established a series of
local offices throughout the State at which
eligibility determinations and
redeterminations are performed and
documented. The eligibility intake
processes for each of the programs
identified above require case workers to
obtain and review supporting documentation
including signed benefits applications,
copies of source documents reviewed in
verifying information reported by
applicants, and other information.

Effective October 1, 2013, the State
implemented the Integrated Eligibility
System (IES) to perform and document
eligibility determinations for certain
beneficiaries of the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster
programs.  Since its initial
implementation, the use of IES has
continued to expand and documentation
related to eligibility determinations
performed using IES has generally resided
solely within the information system. In
addition, effective October 24, 2017, the
State implemented Phase II of IES. With the
implementation of Phase II, all eligibility
determinations and redeterminations for
beneficiaries of the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster
programs are performed and documented in
IES.

During our testwork, we noted the
procedures in place to maintain and control
manual beneficiary case file records do not
provide adequate safeguards against the
potential for the loss of such records.
Specifically, in our review of case files
at five separate local offices, we noted
manual case files were generally available
to all IDHS personnel and that formal
procedures have not been developed for
checking hard-copy case files in and out of
the file rooms or for tracking their
locations.  We selected 50 eligibility case
records from two off-site case file storage
facilities and noted 23 case records could
not be located for our testing.

In addition, during our testwork over case
files selected for the TANF Cluster, CHIP,
and Medicaid Cluster programs, we noted a
number of case files were provided several
weeks past the original request date due to
the fact that case files had been
transferred between local offices and were
not easily located by IDHS.  We also noted
3 CHIP and 3 Medicaid case files (with
medical payments sampled of $659 and
$22,363, respectively) for which IDHS could
not locate any case file documentation
supporting the eligibility determinations
performed on or prior to the service date
sampled. Medical payments made on behalf of
these beneficiaries of the CHIP and
Medicaid Program were $10,344 and $153,643
during the year ended June 30, 2018.

Details of the beneficiary payments
selected in our eligibility samples for the
TANF Cluster, CHIP, and Medicaid Cluster
programs are as follows:

Major Program -- Number of Cases Sampled --
Total Amount of Payments for Cases Sampled
-- Total Beneficiary Payments in Fiscal
Year 2018 -- Total Fiscal Year 2018 Program
Expenditures
TANF Cluster -- 50 -- $18,549 --
$30,103,000 -- $609,860,000
CHIP -- 65 -- 7,116 -- 332,187,000 --
348,948,000
Medicaid Cluster -- 125 -- 126,852 --
12,737,234,000 -- 13,256,148,000

As discussed above, effective October 24,
2017, the State implemented Phase II of
IES. With the implementation of IES Phase
II, all eligibility determinations and
redeterminations for beneficiaries of the
SNAP Cluster, TANF Cluster, CHIP, and
Medicaid Cluster programs are performed and
documented in IES. As discussed in findings
2018-002 and 2018-020, several errors were
identified in IES which resulted in
noncompliance with eligibility requirements
and affected the reliability of source
documentation maintained in IES for certain
eligibility determinations performed for
the SNAP Cluster, TANF Cluster, CHIP and
Medicaid Cluster programs.

IDHS has not established appropriate
procedures to ensure documentation
supporting eligibility determinations and
redeterminations are properly maintained in
accordance with program requirements.

Failure to properly maintain and control
beneficiary case file records may result in
the loss of source documentation necessary
to establish beneficiary eligibility and in
unallowable costs being charged to the
federal programs.  (Finding 3, pages 46-48)
This finding was first reported in the
Statewide Single Audit in 2007.

As a result of DHS’ failure to have
appropriate controls over case file records
maintained at its local offices for
beneficiaries, the State did not comply in
all material respects with specific
compliance requirements.  Due to this
failure, the auditors rendered an adverse
opinion on the SNAP, CHIP and Medicaid
Cluster programs, and a qualified opinion
on the TANF Cluster program.


We recommended IDHS review its current
process for maintaining and controlling
beneficiary case records and consider the
changes necessary to ensure case file
documentation is maintained in accordance
with federal regulations and the State
Plans for each affected program.

IDHS accepted the recommendation and stated
that in order to relieve some of the space
limitations, offsite storage facilities
were obtained and are being used.  In
addition, the Department stated they are
now utilizing a document management system
and as new cases are approved, the
information that was previously printed and
stored in paper case files is now retained
in the new electronic storage system.

MISSING DOCUMENTATION IN BENEFICIARY
ELIGIBILITY FILES

IDHS could not locate case file
documentation supporting eligibility
determinations for beneficiaries of the
Temporary Assistance for Needy Families
(TANF) Cluster, Children’s Health Insurance
Program (CHIP) and the Medicaid Cluster
programs.

Details of the beneficiary payments
selected in our samples for the TANF
Cluster, CHIP, and Medicaid Cluster
programs are as follows:

Case Type -- Number of Cases Tested --
Total Amount of Payments for Cases Tested
-- Total Amount of Payments Made on Behalf
of Beneficiaries for Fiscal Year 2018 --
Total Fiscal Year 2018 Program Expenditures
TANF Cluster -- 50 -- $18,549 --
$30,103,000 -- $609,860,000
CHIP -- 65 -- 7,116 -- 332,187,000 --
348,948,000
Medicaid Cluster -- 125 -- 126,852 --
12,737,234,000 -- 13,256,148,000

During our testwork, we selected
eligibility files to review for compliance
with eligibility requirements and for the
allowability of the related benefits
provided. Some of the exceptions we noted
during our testwork are as follows:

• In 12 TANF Cluster, 1 CHIP, and 2
Medicaid Cluster cases (with payments
sampled of $4,512, $18, and $3,693,
respectively), IDHS could not locate the
initial case application or redetermination
completed and signed by the beneficiary.
TANF Cluster cash assistance paid to these
beneficiaries during the year ended June
30, 2018 totaled $45,896.  Medical payments
made on behalf of these beneficiaries
during the year ended June 30, 2018 were
$15 and $34,302 for the CHIP and Medicaid
Cluster programs, respectively.
•In 16 Medicaid case files (with medical
payments sampled of $27,772), IDHS could
not provide adequate documentation that the
beneficiary assigned their right to collect
medical benefit payments to the State of
Illinois.  Medical payments made on behalf
of these beneficiaries during the year
ended June 30, 2018 were $297,472 for the
Medicaid Cluster program.
• In 24 TANF, 19 CHIP, and 17 Medicaid case
files (with TANF payments sampled of $9,257
and medical payments sampled of $1,752 and
$36,119, respectively), IDHS could not
provide source documentation from IES for
certain eligibility determinations
performed for the beneficiaries. TANF
Cluster cash assistance paid to these
beneficiaries during the year ended June
30, 2018 totaled $80,674.  Medical payments
made on behalf of these beneficiaries
during the year ended June 30, 2018 were
$23,843 and $320,960 for the CHIP and
Medicaid Cluster program.

We also noted the State implemented IES on
October 1, 2013 and has continued expanding
the use of IES to additional groups of
beneficiaries of the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster.
Effective October 24, 2017, the State
implemented Phase II of IES. With the
implementation of Phase II, all eligibility
determinations and redeterminations for
beneficiaries of the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster
programs are performed and documented in
IES. As discussed in findings 2018-002 and
2018-020, several errors were identified in
IES which resulted in noncompliance with
eligibility requirements and affected the
reliability of source documentation
maintained in IES for certain eligibility
determinations performed for the SNAP
Cluster, TANF Cluster, CHIP and Medicaid
Cluster programs.

IDHS does not have adequate resources to
perform and document eligibility
determinations.  Additionally, IDHS has not
established appropriate monitoring
procedures to ensure eligibility
determinations are properly documented in
accordance with program requirements.

Failure to maintain client applications for
benefits and/or source documentation for
redetermination/income verification
procedures performed may result in
inadequate documentation of a recipient’s
eligibility and in federal funds being
awarded to ineligible beneficiaries, which
are unallowable costs.  (Finding  4, pages
49-52)  This finding was first reported in
the Statewide Single Audit in 2001.

As a result of DHS’ failure to locate case
file documentation supporting eligibility
determinations for beneficiaries, the State
did not comply in all material respects
with specific compliance requirements.  Due
to this failure, the auditors rendered an
adverse opinion on the CHIP and Medicaid
Cluster programs, and a qualified opinion
on the TANF Cluster program.

We recommended IDHS review its current
process for maintaining documentation
supporting eligibility determinations and
consider changes necessary to ensure all
eligibility determination documentation is
properly maintained.

IDHS accepted the recommendation and stated
they will continue to ensure staff
understand the importance of proper and
accurate filing processes.  In addition,
IDHS stated they will continue to expand
the use of electronic document management
systems that now captures information that
has was previously printed and maintained
in paper case files.  IDHS further stated
they used and continue to use electronic
verifications available from the Federal
Data Services Hub, as notated per policy
and federal law, to establish factors of
eligibility.

FAILURE TO PERFORM ELIGIBILITY
REDETERMINATIONS WITHIN PRESCRIBED
TIMEFRAMES

IDHS did not perform “eligibility
redeterminations” for individuals receiving
benefits under the Temporary Assistance for
Needy Families (TANF) Cluster, Children’s
Health Insurance Program (CHIP), and
Medicaid Cluster programs in accordance
with timeframes required by the respective
State Plans.

Each of the State Plans for the TANF
Cluster, CHIP, and Medicaid Cluster
programs require the State to perform
eligibility redeterminations on an annual
basis.  During our testwork over
eligibility, we noted the State was
delinquent (overdue) in performing the
eligibility redeterminations for
individuals receiving benefits under the
TANF Cluster, CHIP, and Medicaid Cluster
programs. Specifically, effective with the
implementation of Phase II of the
Integrated Eligibility System (IES) on
October 24, 2017, we noted IDHS and the
Department of Healthcare and Family
Services (DHFS) made the decision to extend
the due date by one year for any
beneficiaries whose cases were overdue for
a redetermination at the time Phase II went
live.  IDHS and DHFS also extended the due
dates for beneficiaries whose cases were
scheduled to be redetermined from the go
live date (October 24, 2017) through the
end of the calendar year (December 31,
2017).  Neither IDHS, nor DHFS provided
evidence that the extension of the
redetermination due dates had been
discussed with or approved by the US
Department of Health and Human Services
during our audit procedures.

Additionally, in our testing of case files
selected for testing, we noted
redeterminations were not completed within
required time frames for 2 TANF cluster
cases, 5 CHIP cases, and 10 Medicaid
Cluster cases (with payments sampled of
$642, $330, and $17,382, respectively).
Delays in performing redeterminations
ranged from 2 to 17 months after the
required timeframe; however, we were unable
to determine whether these delays were
affected by the due date extensions
discussed in the previous paragraph.

Details of the beneficiary payments
selected in our samples for the TANF
Cluster, CHIP, and Medicaid Cluster
programs are as follows:
Major Program -- Number of Cases Sampled --
Total Amount of Payments for Cases Sampled
-- Total Beneficiary Payments in Fiscal
Year 2018 -- Total Fiscal Year 2018 Program
Expenditures
TANF Cluster -- 50 -- $18,549 --
$30,103,000 -- $609,860,000
CHIP -- 65 -- 7,116 -- 332,187,000 --
348,948,000
Medicaid Cluster -- 125 -- 126,852 --
12,737,234,000 -- 13,256,148,000

IDHS does not have adequate resources to
perform and document eligibility
redeterminations.  Additionally, IDHS has
not established appropriate monitoring
procedures to ensure eligibility
redeterminations are completed in
accordance with program requirements.

Failure to properly perform eligibility
redetermination procedures in accordance
with the State Plans may result in federal
funds being awarded to ineligible
beneficiaries, which are unallowable costs.
(Finding 5, pages 53-55)  This finding was
first reported in the Statewide Single
Audit in 2003.

As a result of DHS’ failure to perform
eligibility redeterminations for
individuals receiving benefits, the State
did not comply in all material respects
with specific compliance requirements.  Due
to this failure, the auditors rendered an
adverse opinion on the CHIP and Medicaid
Cluster programs, and a qualified opinion
on the TANF Cluster program.

We recommended IDHS review its current
process for performing eligibility
redeterminations and consider changes
necessary to ensure all redeterminations
are performed within the timeframes
prescribed within the State Plans for each
affected program.

IDHS management accepted the recommendation
and stated that as part of the IES Phase 2
implementation, added process steps were
needed for case actions due to conversion.
IDHS also stated the re-determination
process was enhanced with the
implementation of the new updated
processing system in IES phase 2, which
went live October 24, 2017.  The IES Phase
2 system assists in tracking and auto
initiating renewal notices to eligible
customers using a three step process.


FAILURE TO PROVIDE ADEQUATE DOCUMENTATION
FOR THE SAPT MOE REQUIREMENT

IDHS was unable to provide adequate
documentation to substantiate the MOE
requirements were met for the Block Grants
for Prevention and Treatment of Substance
Abuse (SAPT) program.

As a condition of receiving federal funding
under the SAPT program, USDHHS requires the
State to maintain the level of State and
locally funded expenditures for substance
abuse prevention and treatment activities
at an amount that is at least equal to the
average level of these same amounts for the
prior two years.  In addition, the State is
required to maintain its level of
expenditures for substance abuse prevention
and treatment services provided to pregnant
women and women with dependent children,
individuals with HIV, and individuals with
tuberculosis.

During the current fiscal year, we noted
IDHS was required to maintain aggregate
State expenditures for State fiscal year
June 30, 2018 of $86,140,869. IDHS reported
actual aggregate State expenditures for
State fiscal year June 30, 2018 of
$105,094,409.  However, IDHS could not
provide detailed supporting documentation
for managed care organization expenditures
totaling $31,331,157.  Of this amount,
$13,586,939 were estimated expenditures and
$17,744,218 were expenditures for which
IDHS could not provide underlying specific
capitation payment and beneficiary records
during our audit procedures. Accordingly,
these expenditures are not allowable for
purposes of meeting the maintenance of
effort requirement.

State funded expenditures used to meet the
SAPT MOE requirement totaled $105,094,409
for the year ended June 30, 2018.

Failure to maintain required State
expenditure levels for MOE and maintain
adequate supporting documentation to
support expenditures used to meet the MOE
requirement results in noncompliance with
program requirements.  (Finding 7, pages
60-61)  This finding was first reported in
the Statewide Single Audit in 2014.

As a result of IDHS not meeting its
maintenance of effort expenditures, the
auditors qualified their opinion on the
Block Grants for Prevention and Treatment
of Substance Abuse program.

We recommended IDHS review its process for
monitoring compliance with the SAPT MOE and
for maintaining documentation for
expenditures used to meet its SAPT MOE
requirement.

IDHS accepted the recommendation and stated
management will review and enhance its
process for monitoring compliance with the
SAPT MOE and for maintaining documentation
for expenditures used to meet its SAPT MOE
requirement.

UNALLOWABLE COSTS CHARGED TO THE VOCATIONAL
REHABILITATION PROGRAM

IDHS charged unallowable expenditures to
the Vocational Rehabilitation Grants to
States (VR) program.

During our comparison of the VR program
expenditure pattern as of and for the year
ended June 30, 2018 to the 2017 expenditure
pattern, we noted a change of approximately
$2.9 million in the Other than Personal
Services (contractual) expenditures. Upon
review of supporting documentation for this
expenditure, we noted this item pertained
to a repayment made by IDHS to USDE during
fiscal year 2018 for a cash overdraw
related to grant award H126A160018.
Specifically, IDHS repaid USDE $2,899,993
for failing to reduce its cash draws for
program income collected during the period
from October 1, 2015 to September 30, 2017.
The repayment to USDE was improperly
reported as an expenditure in 2018 by IDHS
on its financial reports and the Schedule
of Expenditures of Federal Awards (SEFA).

Additionally, IDHS is required to prepare a
final federal financial report (SF-425) for
the VR program for each grant at the end of
the grant period of performance. During our
testwork over the SF-425 report for the
federal fiscal year ending September 30,
2017, we noted IDHS inaccurately reported
the following line items:

Report Line Item -- Difference
Line 10c – Cash on Hand -- $2,899,993
Line 10m – Program Income Expended in
Accordance with the Deduction Alternative
-- 5,146,553
Line 10n – Program Income Expended In
Accordance with the Addition Alternative --
(5,146,553)

In considering the reporting process for
the SF-425 report, we noted IDHS does not
perform analytical or other monitoring
procedures during the report preparation
process to ensure amounts reported are
reasonable in relation to previously
reported information or expectations
relative to current program activities.

Failure to charge allowable costs and apply
program income in accordance with federal
regulations and the grant agreement results
in unallowable costs charged to the VR
program. In addition, failure to accurately
prepare financial reports prevents the USDE
from effectively monitoring the VR program.
(Finding 19, pages 93-95)

As a result of IDHS charging unallowable
expenditures, the auditors qualified their
opinion on the Vocational Rehabilitation
Grants to States program.

We recommended IDHS review its current
process for reporting and applying program
income and reviewing expenditures claimed
as federal expenditures for the VR program.
We also recommended IDHS review the process
and procedures in place to prepare
financial reports required for the VR
program and implement procedures necessary
to ensure the reports are accurate.

IDHS accepted the recommendation and stated
they adjusted its processes to accommodate
the program income appropriately for
federal reporting and cash draw purposes.


INADEQUATE PROCESS FOR SUPPORTING
ADJUSTMENTS TO THE TITLE IV-E CLAIMING
REPORT

DCFS does not have an adequate process for
supporting adjustments to the Title IV-E
claiming report.

DCFS is required to submit quarterly
financial reports (CB-496) for both the
Foster Care and Adoption Assistance
programs, which include information such as
current quarter claims and adjustments to
amounts reported in previous quarterly
claims. DCFS is required to maintain
complete and accurate records to support
amounts reported on its quarterly claiming
reports. Increasing and decreasing
adjustments to amounts previously claimed
are required to be reported on a gross
basis and supported by eligibility
determinations or documentation that
provides the basis for the adjustment.

During the year ended June 30, 2018, DCFS
identified and reported 79 increasing and
99 decreasing adjustments to the Foster
Care program.  DCFS also identified and
reported 25 increasing and 36 decreasing
adjustments to the Adoption Assistance
program.  Increasing and decreasing
adjustments reported on quarterly claims
pertaining to the year ended June 30, 2018
totaled as follows:

Quarter Ended -- Foster Care Increasing –
Foster Care Decreasing – Adoption
Assistance Increasing – Adoption Assistance
Decreasing
09/30/17 -- $7,652,356 -- $4,437,025 --
$17,837 -- $346,854
12/31/17 -- 8,883,995 -- 747,697 -- 216,114
-- 179,117
03/31/18 -- 3,654,900 -- 2,312,925 --
63,621 -- 40,178
06/30/18 -- 5,340,974 -- 3,515,885 --
233,912 -- 737,589

During our testwork over adjustments to the
Foster Care and Adoption Assistance
programs reported on quarterly claiming
reports filed during the year ended June
30, 2018, we noted DCFS did not properly
report adjustments on a gross basis for all
12 adjustments tested. Specifically, we
noted three increasing Foster Care
adjustments (totaling $14,354), six
decreasing Foster Care adjustments
(totaling $14,780), two increasing Adoption
Assistance adjustments (totaling $1,280),
and one decreasing Adoption Assistance
adjustment (totaling $7,286) sampled in our
testing included both debit and credit
transactions.

Accordingly, increasing and decreasing
adjustments reported by DCFS are
understated because they are reported net.

Additionally, in our testing of 40
individual adjusting transactions (30 from
Foster Care totaling $54,958 and 10 from
Adoption Assistance totaling $7,204), we
noted the DCFS could not provide the reason
the adjustment was made or documentation
supporting the adjustment for one
decreasing transaction totaling $1,019
sampled from a decreasing adjustment (of
$7,286) for the Adoption Assistance
program.

In evaluating DCFS’s process for
identifying and documenting adjustments
made to its quarterly claims, we noted DCFS
has not implemented adequate supervisory
reviews or other monitoring controls to
determine if the adjustments being made are
complete, accurate, and properly supported.

As of the date of our testing, DCFS had not
quantified the impact of this reporting
error.

Failure to properly report adjustments on a
gross basis inhibits the ability of USDHHS
to monitor the Foster Care and Adoption
Assistance programs.  Additionally, failure
to maintain proper supporting documentation
for expenditures (adjustments) claimed for
the Foster Care and Adoption Assistance
programs may result in payments to
ineligible beneficiaries which are
unallowable costs.  (Finding 28, pages
115-117)   This finding was first reported
in the Statewide Single Audit in 2016.

As a result of DCFS not having an adequate
process for supporting adjustments to the
Title IV-E claiming report, the auditor’s
qualified their opinion on the Foster Care
and Adoption Assistance programs.

We recommended DCFS review its current
process for reporting adjustments and
implement procedures to ensure the
adjustments claimed for the Foster Care and
Adoption Assistance programs are properly
determined and supported.  We also
recommended DCFS consider implementing
additional monitoring controls to ensure
the adjustments are reported in accordance
with program requirements.

DCFS agreed with the recommendation and
stated that although improvements have been
made to our federal claiming system,
additional system changes are required to
enable the Department to separately report
increasing and decreasing adjustments on a
gross basis as required.  DCFS further
stated this is a significant change to the
current system and will be completed as
resources become available.

FAILURE TO MAINTAIN ADEQUATE PROVIDER
LICENSING FILES

DCFS did not maintain complete provider
licensing files, including documentation of
required background checks for foster care
service providers.

The objective of the Foster Care program
administered by DCFS is to provide safe,
appropriate, substitute care for children
in Illinois in need of temporary placement
and care outside their homes. DCFS, as the
State foster care licensing authority, is
required to ensure foster family homes or
child care service providers are fully
licensed, which includes ensuring the
required background checks have been
performed and the safety considerations
with respect to child-care institution
staff have been addressed.

During our testwork of 50 Foster Care
maintenance assistance payments (totaling
$64,367), we reviewed the associated
provider licensing files for compliance
with licensing requirements and for the
allowability of related benefits paid, we
noted the licensing files for 36 foster
care beneficiary payments sampled (totaling
$35,664) related to 22 child care service
providers and 1 foster family home did not
contain documentation that verified the
safety considerations with respect to staff
of the institution had been addressed.
Specifically, required background
clearances were not obtained for all staff
members. DCFS claimed reimbursement for
foster care maintenance payments made to
these providers on behalf of these children
totaling $247,473 during the year ended
June 30, 2018.

As of the date of our testing, DCFS has not
evaluated whether additional errors exist
or quantified the impact of these errors on
the population.

In evaluating the controls in place
relative to this compliance requirement, we
noted DCFS did not follow its established
procedures for ensuring foster care
providers were properly licensed prior to
claiming Foster Care maintenance payments.
Additionally, monitoring controls were not
established to ensure licensing procedures
were being followed.

Foster care maintenance payments during the
year ended June 30, 2018 totaled
$69,602,000.

Failure to maintain complete provider
licensing files for foster family homes and
child-care institutions, including
documentation that required criminal
records checks and child abuse and neglect
registry checks have been performed for all
prospective foster parents, child-care
institution applicants, employees,
volunteers, or non-licensed service
providers, could result in payments being
made to ineligible service providers, which
are unallowable costs.  (Finding 29, pages
118-120)   This finding was first reported
in the Statewide Single Audit in 2016.

As a result of DCFS not maintaining
complete information, the auditors
qualified their opinion on the Foster Care
program.

We recommended DCFS implement procedures to
ensure the provider licensing files are
complete, including documentation that all
required background checks have been
performed and documentation that verifies
safety considerations with respect to
foster family homes and the staff of child-
care institutions has been properly
addressed.  Additionally, we recommended
DCFS evaluate its process for ensuring
providers are properly licensed and meet
program requirements prior to placing
Foster Care beneficiaries in their care and
claiming payments to these providers for
federal reimbursement.

DCFS agreed with the recommendation and
stated procedures exist to ensure that all
required background checks have been
performed and safety considerations with
respect to foster family homes and staff of
child-care providers are addressed before a
child is placed in a home.  DCFS further
stated they are continuing to review
procedures to ensure proper documentation
is maintained and available as required and
DCFS expects to make further improvements
to its reporting and monitoring
capabilities in order to meet program
requirements prior to placing foster care
beneficiaries in the care of properly-
licensed caregivers.

INADEQUATE MONITORING OF SPECIAL EDUCATION
SUBRECIPIENTS

ISBE did not perform adequate monitoring
procedures over subrecipients of the
Special Education Cluster (IDEA) (Special
Education) program.

ISBE selects subrecipients of certain USDE
programs to perform on-site fiscal and
administrative monitoring procedures using
a risk based approach.  ISBE’s risk
assessments are based on the funding level
received by the entity, the financial
status, the improvement status, any past
audit findings, and the type of entity.
Once the subrecipients are selected for
monitoring, ISBE selects programs and
individual locations within each
subrecipient for additional reviews which
may consist of on-site reviews, desk
reviews, or analytical procedures.

During the year ended June 30, 2018, ISBE’s
monitoring procedures were focused solely
on Title I, Title II, and the Careers and
Technical Education federal programs, as
well as select requirements for certain
state-funded programs.  Accordingly,
program requirements pertaining to the
Special Education program were not included
in the on-site reviews, desk reviews, or
analytical procedures discussed above
during the year ended June 30, 2018.
Additionally, we noted ISBE had not
performed a specific programmatic risk
assessment for the Special Education
program or reviewed any programmatic
requirements during the year ended June 30,
2018.

Payments to subrecipients of the Special
Education program during the year ended
June 30, 2018 totaled $494,005,000.

Failure to implement required risk
assessments and to adequately monitor
subrecipients results in noncompliance and
may result in subrecipients not properly
administering the federal programs in
accordance with laws, regulations, and the
terms and conditions of the award.
(Finding 42, pages 152-153)

As a result of not performing adequate
monitoring procedures over subrecipients,
the auditors qualified their opinion on the
Special Education Cluster (IDEA) program.

We recommended ISBE review its monitoring
procedures relative to the Special
Education program and implement additional
procedures as necessary to ensure proper
monitoring procedures are performed.

ISBE agreed with the recommendation and
stated Special Education Services has
engaged the support of one of ISBE’s
national technical assistance centers to
assist with implementation of a new
monitoring system.  They also stated
planning began in March 2019, with the
first phase of implementation scheduled to
begin in the fall of 2019.

FAILURE TO MAINTAIN ADEQUATE SUPPORTING
DOCUMENTATION FOR UI PROGRAM ADMINISTRATIVE
GRANTS

IDES could not provide appropriate
supporting documentation for certain cash
draws, adjustments, and financial and
special reports for administrative grants
of the Unemployment Insurance (UI) program.

Certain compliance requirements for the UI
program are dependent on queries and other
reports generated from data within the
State’s Enterprise Resource Planning (ERP)
system. During our audit, we noted monthly
financial closing procedures were not
performed and IDES was unable to generate
reports necessary to support its
administrative grants throughout the audit
period. Specifically, we noted the
following:

• IDES management was unable to provide
supporting documentation which agreed to or
could be reconciled to administrative cash
draw requests made during the year ended
June 30, 2018.
• IDES management was unable to demonstrate
the population of UI administrative grant
adjustments was complete and accurate due
to ERP data integrity issues.
• Financial and special reports prepared by
IDES were based upon queries of ERP data
which could not be reperformed or tested
for completeness and accuracy.

In addition, IDES was unable to provide a
Service Organization Control (SOC) report
covering ERP application or the general
information technology controls relevant to
the ERP. Accordingly, we were unable to
obtain sufficient and appropriate audit
evidence to conclude on the cash
management, period of performance, and
reporting (ETA 9130 – Financial Status
Report, UI Programs and ETA 2208A – UI
Contingency Report) compliance requirements
applicable to the UI administrative grants.

IDES reported total UI administrative
expenditures of approximately $186,200,000
in the SEFA as of and for the year ended
June 30, 2018.

As a result of IDES’ inability to provide
appropriate supporting documentation for
certain cash draws, adjustments, and
financial and special reports for
administrative grants, the auditors
qualified their opinion (scope limitation)
on the Unemployment Insurance program.

Failure to maintain supporting
documentation for administrative cash
draws, adjustments, and certain financial
and special reports prohibit the completion
of an audit and prevents the USDOL from
effectively monitoring the UI program.
(Finding 51, pages 177-178)

We recommended IDES implement procedures to
ensure adequate supporting documentation is
maintained for administrative cash draw
requests, adjustments, and certain
financial and special reporting applicable
to its federal programs.

IDES accepted the recommendation and state
they will continue to pursue the
development of accurate federal reports and
the remediation of the asset data in the
ERP system with DoIT.

FAILURE TO CORRECT IMPROPERLY DRAWN CASH
AND REPORTED CASH ADVANCES FOR THE AGING
CLUSTER

IDOA did not correct improperly drawn and
reported cash advances made under the Aging
Cluster program.

As reported in prior audit finding
2017-067, we noted IDOA personnel had
performed cash draws against Aging Cluster
grant awards for anticipated expenditures
that were not ultimately incurred.  As a
result, twelve Aging Cluster awards had
cash draws in excess of expenditures
(overdrawn) totaling $4,678,964 as of June
30, 2017.   We also reported non-Aging
Cluster Title III Part D and E grants were
overdrawn by $273,253 and $864,217,
respectively, as of June 30, 2017.

In addition, we had noted the cumulative
expenditure amounts used by IDOA management
to calculate the overdrawn amounts reported
above included expenditures for carryover
awards which may not have been obligated
with the period of performance as discussed
in prior audit finding 2017-068.
Accordingly, the amount of the overdraws
discussed in the previous paragraph may be
understated by any expenditures for
carryover awards that were not obligated
during the applicable Federal fiscal year.

During our 2018 audit procedures, we noted
IDOA personnel had not returned overdrawn
funds to the federal agency or corrected
its financial reports for known errors
identified in the prior year finding for
Federal fiscal year awards 2012 through
2017.  As the errors were not identified
until late in fiscal year 2018 and have not
been corrected as of the date our testing
(January 29, 2019), the reports submitted
by IDOA during State fiscal year 2018 for
federal fiscal year 2012 through 2017
awards are inaccurate.

Failure to refund overdrawn cash and
accurately report cash advances to USDHHS
in a timely manner results in noncompliance
with Treasury regulations and unallowable
costs being claimed to federal programs.
(Finding 73, pages 234-236)

As a result of the significance of the
noncompliance by IDOA with regard to the
requirements of, and material effect on,
the Aging Cluster program, the auditors
issued an adverse opinion on the Aging
Cluster program.

We recommended IDOA implement control
procedures to ensure cash draws are
performed in accordance with U.S. Treasury
regulations and cash advances are reported
and returned to USDHHS in a timely manner.
We also recommended IDOA implement
procedures to ensure financial reports
submitted are complete and accurate.

IDOA stated they have implemented control
procedures to ensure cash draws are
performed in accordance with US Treasury
regulations, cash advances are reconciled
and handled in a timely manner, and that
financial reports submitted are complete
and accurate.  IDOA also stated they will
work with USDHHS to revise prior reports
and return any monies necessary.

FAILURE TO OBLIGATE FUNDS IN ACCORDANCE
WITH PERIOD OF PERFORMANCE REQUIREMENTS

IDOA expended funds under the Aging Cluster
program which were not obligated within
required timeframes.

IDOA passed through $41,243,000 in Aging
Cluster funds to 13 Area Agencies on Aging
(AAA) to deliver services to the State’s
aged population during State fiscal year
2018. AAAs submit annual plans to IDOA
which include information about the
services to be provided and the budgeted
costs for the service period which
coincides with the Federal fiscal year. The
annual budgets prepared by the AAAs also
include an estimate of the unspent prior
year award which the AAA expects to spend
in the following Federal fiscal year known
as a carryover award. Funding and actual
expenditures are monitored throughout the
year and revisions are made to the AAA
budgets, including providing additional
carryover awards, as considered necessary.

Period of performance requirements for the
Aging Cluster require IDOA to obligate
funds during the Federal fiscal year for
which they are awarded. During our testing,
we noted the carryover awards issued by
IDOA for the Federal fiscal year 2017 grant
were not executed until October 2017.
Accordingly, carryover awards pertaining to
Federal fiscal year 2017 totaling $990,795
were not obligated within the Federal
fiscal year for which they were awarded.

Failure to obligate funds within required
timeframes results in unallowable costs
being charged to Federal programs.
(Finding 74, pages 237-238)

As a result of the significance of the
noncompliance by IDOA with regard to the
requirements of, and material effect on,
the Aging Cluster program, the auditors
issued an adverse opinion on the Aging
Cluster program.

We recommended IDOA implement procedures to
ensure grant funding is obligated within
required timeframes.

IDOA partially disagreed with the finding
stating all funds are obligated in the
original year in which IDOA is awarded the
funds for the Administration for Community
Living (ACL).  IDOA further stated they now
have multi-year grant agreements to handle
this situation.  They also stated ACL has
released new guidance for State Units on
Aging regarding the obligation of funds and
now provides State Units on Aging two
fiscal years to obligate Older Americans
Act funds.

The auditors commented on IDOA’s response
by stating the use of multi-year grant
agreements and the issuance of new guidance
referenced in IDOA’s response are not
relevant to the condition discussed in this
finding as they were not in effect during
federal fiscal year 2017.  As noted in the
finding, IDOA was required to obligate
funds related to its Federal fiscal year
2017 award during the Federal fiscal year
in which they were awarded to IDOA.

OTHER FINDINGS

The remaining findings pertain to other
compliance and internal control matters.
We will follow up on the status of
corrective action on all findings in our
next Statewide Single Audit for the year
ended June 30, 2019.

AUDITORS’ OPINION

The auditors state the Schedule of
Expenditures of Federal Awards for the
State of Illinois as of and for the year
ended June 30, 2018 is presented fairly in
all material respects.

This single audit was conducted by the firm
of KPMG 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:ETL