REPORT DIGEST

STATE OF ILLINOIS STATEWIDE SINGLE AUDIT
REPORT

SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  August 27, 2020

FINDINGS THIS AUDIT:  69

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  18 -- 50 -- 68
Category 2:  0 -- 1 -- 1
Category 3:  0 -- 0 -- 0
TOTAL:  18 -- 51 -- 69

FINDINGS LAST AUDIT: 80

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
$26.7 billion from federal awards in
FY19.

•	A total of 33 programs or program
clusters were classified and audited as
major programs at fourteen (14) State
agencies.  These programs constituted
approximately 96% of all federal
spending, or about $25.7 billion.  In
addition, forty-five (45) State agencies
expended federal financial assistance in
FY19.  Eleven (11) State agencies
accounted for about 98.7% 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 Disclaimer of Opinion on a
Major Program

•	The Illinois Department of
Employment Security:
•	Auditors were unable to obtain
audit evidence supporting the State’s
compliance with the Allowable Cost/Cost
Principles and Reporting requirements
applicable to the Employment Service
Cluster.

Auditor’s Adverse Opinion on Major
Programs

•	The Department of Human Services:
•	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:
•	Did not have adequate procedures
to determine and document eligibility for
beneficiaries of the Children’s Health
Insurance Program (CHIP) and the Medicaid
Cluster programs.

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

•	The Illinois Department of
Employment Security:
•	Was unable to provide a Service
Organization Control (SOC) report
covering the ERP application or the
general information technology controls
relevant to the ERP. Auditors were unable
to obtain sufficient and appropriate
audit evidence relative to several direct
and material compliance requirements for
the Unemployment Insurance program.
•	The Illinois Criminal Justice
Information Authority:
•	Could not provide documentation
to support the amounts reported to meet
the three priority area earmarking
requirements and the underserved victims
earmarking requirements.  Auditors were
unable to obtain sufficient and
appropriate audit evidence to conclude on
the earmarking compliance requirement
applicable to the Crime Victim Assistance
program.

Significant Agency Findings Classified as
Material Noncompliance Resulting in an
Auditor Qualification

•	The Department of Human Services:
•	Did not have appropriate controls
over the Integrated Eligibility System
(IES) used for eligibility determinations
performed for the Temporary Assistance
for Needy Families (TANF) Cluster
program.
•	Did not have appropriate controls
over case file records maintained at its
local offices for beneficiaries of the
Temporary Assistance for Needy Families
(TANF) Cluster program.
•	Could not locate case file
documentation supporting eligibility
determinations for beneficiaries of the
Temporary Assistance for Needy Families
(TANF) Cluster program.
•	Did not perform “eligibility
redeterminations” for individuals
receiving benefits under the Temporary
Assistance for Needy Families (TANF)
Cluster program in accordance with
timeframes required by the respective
State Plans.
•	Made improper payments to
beneficiaries of the Temporary Assistance
for Needy Families (TANF) Cluster
program.
•	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.







Significant Agency Findings Classified as
Material Noncompliance Resulting in an
Auditor Qualification (cont.)

•	The Department of Children and
Family Services:
•	Did not have an adequate process
for supporting adjustments to the Title
IV-E claiming report for the Adoption
Assistance and the Foster Care – Title
IV-E programs.
•	Did not maintain complete
provider licensing files, including
documentation of required background
checks for foster care service providers
for the Foster Care – Title IV-E program.
•	The Department on Aging:
•	Did not perform risk assessments
and on-site reviews of fiscal compliance
requirements for subrecipients of the
Aging Cluster program.
•	Did not adequately review single
audit reports received from its
subrecipients for the Aging Cluster
program on a timely basis.
•	Illinois State Board of
Education:
•	Did not perform adequate
monitoring procedures over subrecipients
of the Special Education Cluster (IDEA)
(Special Education) and Career and
Technical Education (CTE) programs.


INTRODUCTION

The Illinois Office of the Auditor
General conducted a Statewide Single
Audit of the FY19 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, 45 State agencies expended federal
financial assistance in FY19.  A separate
supplemental report has been compiled by
the Governor’s Office of Management and
Budget and 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 $26.7 billion for the
year ended June 30, 2019.  Overall, the
State participated in 321 different
federal programs; however, 10 of these
programs or program clusters accounted
for approximately 87.9% of the total
federal award expenditures.  (See Exhibit
I in PDF version of this digest)

The funding for the 321 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
FY19. (See Exhibit II in PDF version of
this digest)

A total of 33 federal programs or program
clusters were identified as major
programs in FY19.  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 98.7% of all federal
dollars spent during FY19 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 25-31 of the audit.

Disclaimer of Opinion

The auditors were unable to express an
opinion on compliance for the following
major program:

(See table in PDF version of this digest)

Adverse Opinion

The auditors expressed an adverse opinion
on compliance for the following major
programs:

(See table in PDF version of this digest)

Qualifications (Scope Limitation)

The auditors qualified their report on
major programs for the following
noncompliance findings:

(See table in PDF version of this digest)

Qualifications (Noncompliance)

The auditors qualified their report on
major programs for the following
noncompliance findings:

(See table in PDF version of this digest)

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
seventeen 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, 1 of the 69
findings reported in the single audit was
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, 68 of the 69
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

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 and SEFA 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
Illinois Office of 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
seventeen 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.

During fiscal year 2019, the State’s
process for compilation of the SEFA was
based on the financial information
reported to the Illinois Office of
Comptroller by the State agencies.  The
first official draft of the SEFA was
provided in April 2020 and the SEFA and
related notes were not finalized until
June 2020.

We also noted the following deficiencies
in the SEFA preparation process which
resulted in errors in the amounts
initially reported in the SEFA provided
for audit:

• Procedures were not implemented to
identify errors made by State agencies in
reporting information to the IOC.
Specifically, we identified several
differences between amounts provided for
our audit and amounts reported to the
IOC.  In many cases these errors were the
result of State agencies reporting
changes in accrual accounting estimates
or other errors in the cash basis
expenditure information used by the State
to compile the SEFA which needed to be
corrected to prepare the SEFA on a cash
basis of accounting.
• Unsupported adjustments were made to
change amounts previously reported by
State agencies during the State’s
procedures to confirm the accuracy of
amounts reported on the Statewide SEFA
with State agencies.  Specifically, we
noted the Illinois Department of Children
and Family Services requested adjustments
to remove expenditures from the Foster
Care Title IV-E program and to increase
expenditures under the Adoption
Assistance program in the amounts of
$15.2 million and $1.5 million,
respectively.  These amounts were
improperly adjusted and were corrected in
the final SEFA.
• Negative expenditures reported by the
Illinois Department of Healthcare and
Family Services for a disallowance of
costs from more than 20 years ago were
netted against current year Medicaid
Cluster program expenditures.  As a
result, Medicaid Cluster program
expenditures were understated by
$144,794,000 in the initial SEFA prepared
by the State.  This amount was corrected
in the final SEFA.
• Expenditures which were not originally
reported to the IOC were added to the
SEFA.  Specifically, we noted
expenditures totaling $734 thousand were
added to the SEFA based on a request by
the Illinois Board of Higher Education
(IBHE).  Supporting documentation for the
amounts reported for the SEFA compilation
could not be provided.  IBHE noted the
adjustment was requested because no
Federal expenditures were originally
reported to the IOC; whereas, amounts
provided to subrecipients were reported.

While many of the adjustments identified
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.
When evaluating the SEFA errors
identified by our audit procedures
individually and in the aggregate, we
noted a change in our Type A threshold
and the Federal expenditures reported for
certain programs which changed our major
program determination.  Specifically, we
noted our Type A threshold increased by
$165,668 to $40,064,954 and the Veterans
State Nursing Home Care – CFDA No. 64.015
(Veterans Care) program expenditures
decreased by $308,000 to $39,879,000.  As
a result, this program was a Type B
program which was unnecessarily tested as
a major program.

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
36-40) This finding was first reported in
the Statewide Single Audit in 2002.

We recommended the Office of the
Governor, GOMB, 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.  We further recommended the State
develop a process to assess adjustments
to the final SEFA for accuracy and
materiality.

GOMB accepted the recommendation and
stated they worked with State agencies to
develop better reporting capabilities and
to encourage the development of positions
within state government with appropriate
qualifications to support enhanced
reporting.  For the upcoming year, GOMB
stated they plan to conduct trainings for
agency accounting and auditing staff in
the fall on the importance of this
reporting and with advice on preparing
the reports in a more accurate and timely
manner.

The IOC accepted the recommendation and
stated they agree 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 ELIGBILITY 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 an excessive
number of unique users (120) have
administrative access to the IES
database.  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 and
the Income Eligibility Verification
System related to the TANF Cluster.

Details of the beneficiary payments paid
by the State during the year ended June
30, 2019 for the SNAP Cluster, TANF
Cluster, CHIP, and Medicaid Cluster
programs are as follows:

Major Program -- Total Beneficiary
Payments in FY19 -- Total FY19 Program
Expenditures -- %’s

SNAP Cluster -- $2,658,587,000 --
$2,774,178,000 -- 95.8%
TANF Cluster -- 34,612,000 -- 609,298,000
-- 5.7%
CHIP -- 368,849,000 -- 386,959,000 --
95.3%
Medicaid Cluster -- 10,844,109,000 --
11,545,096,000 -- 93.9%

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 3 pages
48-50) This finding was first reported in
the Statewide Single Audit in 2015.

As a result of IDHS’s 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 implement adequate
user access control procedures for the
IES system.

The Department accepted the
recommendation and stated they began
working with DoIT-DHS leadership staff in
April 2020 to review all users with IES
administrative access privileges from up-
to-date listings provided by DoIT
(internal users) and management third
party vendor (external users).

AILURE 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.

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 two storage
facilities, 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 60 eligibility case records from
two off-site case file storage facilities
and noted 11 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.

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

Major Program -- # of Cases -- Payments
for Cases Sampled -- Beneficiary Payments
in FY 2019 -- Total FY19 Program
Expenditures
TANF Cluster -- 50 -- $12,342 --
$34,612,000 -- $ 609,298,000
CHIP -- 100 -- 286,783 -- 368,849,000 --
386,959,000
Medicaid Cluster -- 100 -- 112,812 --
10,844,109,000 -- 11,545,096,000

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
finding 2019-003, deficiencies in general
information technology controls were
identified in IES which affected the
reliability of source documentation
maintained in IES for 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 4, pages 51-53) This finding was
first reported in the Statewide Single
Audit in 2007.

As a result of IDHS’ 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.

The Department accepted the
recommendation and stated that due to
office space limitations and the large
volume of paper files, offsite storage
facilities have been used. They further
stated the over time, the number of case
files maintained in hard copy form will
be reduced as all new cases are
maintained in the new electronic document
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:

Major Program -- # of Cases -- Payments
for Cases Sampled -- Beneficiary Payments
in FY 2019 -- Total FY19 Program
Expenditures
TANF Cluster -- 50	$12,342 --
$34,612,000 -- $609,298,000
CHIP -- 100	286,783 -- 368,849,000 --
386,959,000
Medicaid Cluster -- 100 -- 112,812 --
10,844,109,000 -- 11,545,096,000

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

• In 13 TANF Cluster, 5 CHIP, and 11
Medicaid Cluster cases (with payments
sampled of $3,610, $18,649 and $32,001,
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, 2019
totaled $42,137.  Medical payments made
on behalf of these beneficiaries during
the year ended June 30, 2019 were $32,606
and $216,458 for the CHIP and Medicaid
Cluster programs, respectively.
• In 1 CHIP case file (with medical
payments sampled of $188), IDHS could not
locate adequate documentation evidencing
income verification was performed.
Agency staff indicated that an income
verification was performed but was not
updated in the case profile.  Medical
payments made on behalf of this
beneficiary during the year ended June
30, 2019 were $4,662 for the CHIP
program.
• In 2 TANF Cluster cases (with a payment
sampled of $637), IDHS could not locate
the Responsibility Service Plan completed
and signed by the beneficiary. TANF
Cluster cash assistance paid to these
beneficiaries during the year ended June
30, 2019 totaled $6,153.
• In 4 TANF Cluster cases (with payments
sampled of $882), IDHS could not provide
adequate documentation evidencing the
child on the case met the age
requirement. TANF Cluster cash assistance
paid to this beneficiary during the year
ended June 30, 2019 totaled $8,821.
• In 1 TANF Cluster case (with payment
sampled of $222), the initial TANF
application was not signed by the
beneficiary. TANF Cluster cash assistance
paid to this beneficiary during the year
ended June 30, 2019 totaled $3,454.
• In 1 TANF Cluster case (with payment
sampled of $231), IDHS could not provide
adequate documentation evidencing the
beneficiary’s income. TANF Cluster cash
assistance paid to this beneficiary
during the year ended June 30, 2019
totaled $2,387.
• In 1 TANF Cluster case (with payment
sampled of $181), IDHS could not provide
a completed Mid-Point Report (MPR)
covering the payment date. TANF Cluster
cash assistance paid to this beneficiary
during the year ended June 30, 2019
totaled $2,300.
• In 2 TANF Cluster Child Support Non-
Cooperation special test cases, IDHS
could not provide evidence that the
beneficiary was sanctioned subsequent to
the beneficiary’s failure to cooperate.
TANF Cluster cash assistance paid to
these beneficiaries during the year ended
June 30, 2019 totaled $10,778.
• In 3 TANF Cluster Child Support Non-
Cooperation special test cases, IDHS
failed to take timely action in
sanctioning the beneficiary subsequent to
the beneficiary’s failure to cooperate.
TANF Cluster cash assistance paid to
these beneficiaries during the year ended
June 30, 2019 totaled $14,022.
• In 1 TANF Cluster Child Support Non-
Cooperation special test case, a 1611
child support non-cooperation form was
incorrectly issued. TANF Cluster cash
assistance paid to this beneficiary
during the year ended June 30, 2019
totaled $6,991.

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 2019-003, 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 5,
pages 54-57) This finding was first
reported in the Statewide Single Audit in
2001.

As a result of IDHS’ 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.

The Department accepted the
recommendation and stated they continue
to communicate to staff the importance of
proper and accurate filing processes.
Since October 2017 all case files have
been maintained electronically.

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.

During our testing, we noted 10,281 TANF
Cluster cases had their due dates
extended one year through October 2018.
We also noted 7,019 TANF Cluster cases
were subsequently redetermined; however,
3,263 TANF Cluster cases were still not
redetermined by the required due date.

Additionally, in our testing of case
files selected for testing, evidence was
not provided to document redeterminations
were performed within required time
frames for 5 TANF cluster cases, 5 CHIP
cases, and 11 Medicaid Cluster cases
(with payments sampled of $918, $21,068,
and $63,591 respectively). Delays in
performing redeterminations exceeded 12
months after the required timeframe. We
were able to determine multiple cases
which 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 -- # of Cases -- Payments
for Cases Sampled -- Beneficiary Payments
in FY 2019 -- Total FY19 Program
Expenditures
TANF Cluster -- 50 -- $12,342 --
$34,612,000 -- $609,298,000
CHIP -- 100 -- 286,783 -- 368,849,000 --
386,959,000
Medicaid Cluster -- 100 -- 112,812 --
10,844,109,000 -- 11,545,096,000

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 6, pages 58-60) This
finding was first reported in the
Statewide Single Audit in 2003.

As a result of IDHS’ 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.

The Department accepted the
recommendation and stated the
redetermination process as part of IES
Phase 2 now includes the tracking and
auto initiating of renewal notices to
eligible customers using a three-step
process.  They also stated with the task-
based business model, processing centers
to help with aging tasks have been
established to ensure redetermination
timeliness.

IMPROPER TANF CLUSTER BENEFICIARY
PAYMENTS

IDHS made improper payments to
beneficiaries of the Temporary Assistance
for Needy Families (TANF) Cluster
program.

During our testwork of 50 TANF Cluster
program beneficiary payments, we noted
five beneficiaries (with payments of
$1,221) received payments that were
improperly calculated. As a result of the
calculation errors, the monthly payments
for these beneficiaries were understated
in total by $529. Total payments made to
these beneficiaries under the TANF
Cluster were $9,456 for the year ended
June 30, 2019.  As of the date of our
testing (February 7, 2020), the payment
errors identified in our sample had not
been corrected by IDHS.

Beneficiary payments selected in our
sample totaled $12,342.  Payments made on
behalf of beneficiaries of the TANF
Cluster program totaled $34,612,000
during the year ended June 30, 2019.

Failure to properly calculate benefit
payments may result in unallowable costs
being charged to the TANF Cluster.
(Finding 7, pages 61-62)

As a result of IDHS failing to properly
calculate beneficiary payments, the
auditors qualified their opinion on the
TANF Cluster program.

We recommended IDHS review its current
process for calculating beneficiary
payments and consider changes necessary
to ensure payments are properly
calculated and paid.

The Department accepted the
recommendation and stated that during the
testing period, TANF grant levels
changed. To ensure the proper calculation
and issuance of benefits, the process of
reviewing case actions that do not
qualify for systematic updates is
communicated and reinforced on an ongoing
basis with staff and management.

FAILURE TO PROVIDE ADEQUATE DOCUMENTATION
FOR THE SAPT MOE REQUIREMENT

IDHS was unable to provide adequate
documentation to substantiate the
Maintenance of Effor (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, the US
Department of Health and Human Services
(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 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, 2019 of $103,322,412. IDHS
reported actual aggregate State
expenditures for State fiscal year June
30, 2019 of $130,252,827.  However, IDHS
could not provide detailed supporting
documentation for managed care
organization expenditures totaling
$63,104,919.  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.

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 9, pages
66-67) 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.

The Department accepted the
recommendation and stated that they
developed protocol which was approved by
Substance Abuse and Mental Health
Services Administration (SAMHSA) and
Center for Substance Abuse Treatment
(CSAT) and that there was a request by
SAMHSA/CSAT for the Department to clarify
the start date of the protocol and
provide an example report related to the
protocol.  The Department further stated
their response to SAMHSA/CSAT was
submitted on August 6, 2020 and
confirmation from SAMHSA/CSAT is pending.

INADEQUATE PROCEDURES TO DETERMINE AND
DOCUMENT BENEFICIARY ELIGIBILITY

DHFS does not have adequate procedures to
determine and document eligibility for
beneficiaries of the Children’s Health
Insurance Program (CHIP) and the Medicaid
Cluster programs.

During our testing of medical payments
made on behalf of CHIP and Medicaid
Cluster beneficiaries, we noted one CHIP
case file (with a medical payment sampled
of $43) for which the initial presumptive
eligibility period was not discontinued
on the last day of the month following
the initial application.  Medical
payments made on behalf of this
beneficiary during the year ended June
30, 2019 were $1,087 for the CHIP
program.

Upon further discussion, we noted DHFS
identified a system defect in September
2019 in which the eligibility status of
certain Medicaid presumptive eligibility
cases was not being updated at the end of
the initial presumptive eligibility
period.  As a result of this system
defect, 3,056 cases were not closed at
the end of the Medicaid presumptive
eligibility period which resulted in
$374,731 in unallowable medical payments
made on behalf of these beneficiaries
being claimed during the year ended June
30, 2019.  Upon review of the population
of claims data provided during our audit,
we noted there were 48,202 Medicaid
presumptive eligibility cases with
$8,077,431 medical payments claimed
during the year ended June 30, 2019.

We also noted one CHIP case file (with a
medical payment sampled of $95) for which
DHFS could not locate adequate
documentation evidencing income
verification procedures were performed.
Medical payments made on behalf of this
beneficiary during the year ended June
30, 2019 were $4,662 for the CHIP
program.

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

Major Program -- # of Cases -- Payments
for Cases Sampled -- Beneficiary Payments
in FY 2019 -- Total FY19 Program
Expenditures
CHIP -- 100 -- $286,783 -- $368,849,000
-- $386,959,000
Medicaid Cluster -- 100 -- 112,812 --
10,844,109,000 -- 11,545,096,000

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
finding 2019-003, deficiencies in general
information technology controls were
identified in IES which affected the
reliability of source documentation
maintained in IES for eligibility
determinations performed for the SNAP
Cluster, TANF Cluster, CHIP and Medicaid
Cluster programs.

DHFS does not have adequate resources to
perform and document eligibility
determinations.  Additionally, DHFS 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
19, pages 92-94)

As a result of DHFS’ failure to maintain
client applications for benefits and/or
source documentation for redetermination/
income verification procedures performed,
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.

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

The Department accepted the
recommendation and stated they are
working to improve staff training
materials and communication as well as
better documentation through use of
electronic case records.

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, 2019, DCFS
identified and reported 115 increasing
and 90 decreasing adjustments to the
Foster Care program.  DCFS also
identified and reported 27 increasing and
37 decreasing adjustments to the Adoption
Assistance program.  Increasing and
decreasing adjustments reported on
quarterly claims pertaining to the year
ended June 30, 2019 totaled as follows:

(Please see table in PDF version of this
digest)

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, 2019, we noted DCFS did not properly
report adjustments on a gross basis.
Accordingly, increasing and decreasing
adjustments reported by DCFS were
understated because they were reported
net.

Additionally, in our testing of 40
individual adjusting transactions (32
from Foster Care totaling $39,915 and 8
from Adoption Assistance totaling
$4,092), we noted that DCFS could not
provide the reason the adjustment was
made or documentation supporting the
adjustment for one increasing adjustment
totaling $606 sampled from a decreasing
adjustment (of $189,477) for the Foster
Care program. Additionally, we noted that
DCFS could not provide the reason the
adjustment was made or documentation
supporting the adjustment for one
decreasing adjustment totaling $945 and
for one increasing adjustment totaling
$471 sampled from a decreasing adjustment
(of $55,278) for the Adoption Assistance
program.  The amounts reported as
questioned costs include both the federal
participation and the required state
matching amount.

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 27, pages 112-114) This
finding was first reported in the
Statewide Single Audit in 2016.

As a result of DCFS failing to properly
report adjustments on a gross basis to
USDHHS, the auditors 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.  DCFS
should also consider implementing
additional monitoring controls to ensure
the adjustments are reported in
accordance with program requirements.

The Department agreed with the auditor
recommendation and state they will be
implementing system changes so that they
can meet the CB-496 requirements to post
adjustments on a gross basis beginning
with the September 2020 quarter's claim.

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
$60,059), 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 33 foster
care beneficiary payments sampled
(totaling $42,582) related to 16 child
care service providers and 25 foster
family homes 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 and/or evidence of
completed background checks and results
were not maintained. In reviewing
supporting documentation, we also noted
DCFS does not maintain documentation of
the background check results after the
information is manually input into its
information systems.  As a result, while
background checks may have been performed
prior to the service date for the
assistance payments we sampled,
supporting documentation was not
maintained to evidence the timing of the
background checks or the accuracy of the
information input into DCFS’ information
systems.

DCFS claimed reimbursement for foster
care maintenance payments made to these
providers on behalf of these children
totaling $241,031 during the year ended
June 30, 2019.  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,
supervisory review and other monitoring
controls were not established to ensure
licensing procedures were being followed
and background check results were
accurately documented or maintained.

Foster care maintenance payments during
year the ended June 30, 2019 totaled
$65,372,000.

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 28, pages
115-117) This finding was first reported
in the Statewide Single Audit in 2016.

As a result of DCFS failing 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, 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.  We also 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. In addition,
we recommended DCFS evaluate its control
procedures relative to provider
background checks and implement
additional changes as considered
necessary to ensure results are
accurately documented and supported.

The Department accepted the
recommendation and stated the Department
takes every precaution available to
ensure the safe placement of all youth in
care and that the Department continues to
look for ways to ensure the safe
placement of its youth in care, comply
with State and federal requirements and
improve title IV-E claiming.

FAILURE TO PERFORM REQUIRED RISK
ASSESSMENT AND ADEQUATELY MONITOR
SUBRECIPIENTS OF AGING CLUSTER PROGRAM

The Department on Aging (IDOA) did not
perform risk assessments and on-site
reviews of fiscal compliance requirements
for subrecipients of the Aging Cluster
program.
IDOA passed through approximately
$48,443,000 of federal funding under the
Aging Cluster program to 13 area agencies
on Aging (subrecipients) during the year
ended June 30, 2019. IDOA’s monitoring
policy requires IDOA to evaluate each
subrecipient on their risk of
noncompliance with Federal and State
statutes, regulations, and the terms and
conditions of the subaward for purposes
of determining the appropriate level of
ongoing monitoring.  Additionally, it
requires IDOA to monitor subrecipients to
determine that each establishes and
operates its fiscal system according to
the conditions of the award document and
to ensure that funds are requested and
expended according to the Area Agency on
Aging needs for eligible costs.
During our review of monitoring
procedures performed by IDOA for the
Aging Cluster program during the year
ended June 30, 2019, we noted IDOA risk
assessment and on-site monitoring
procedures only covered programmatic
risks and compliance requirements and did
not consider any risks related to fiscal
requirements. A separate risk assessment
and on-site monitoring procedures were
not performed for any subrecipients
during the year ended June 30, 2019.

Failure to perform 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 38, pages
140-141) This finding was first reported
in the Statewide Single Audit in 2016.

As a result of IDOA failing to perform
required risk assessments and to
adequately monitor subrecipients, the
auditors qualified their opinion on the
Aging Cluster program.

We recommended IDOA implement procedures
to ensure risk assessments and on-site
reviews are appropriately performed and
completed for fiscal compliance
requirements.

IDOA agreed with the finding and stated
they are working on implementing
procedures to ensure risk assessments and
on-site monitoring reviews are completed
timely and appropriately.  They further
stated they are also attempting to hire
staff and provide the staff with adequate
training to complete the on-site
monitoring.

INADEQUATE REVIEW OF SUBRECIPIENT SINGLE
AUDIT REPORTS

IDOA did not adequately review single
audit reports received from its
subrecipients for the Aging Cluster
program on a timely basis.

The State of Illinois established the
Grant Accountability Transparency Unit
(GATU) to implement the provisions of the
State’s Grant Accountability and
Transparency Act (GATA) on a centralized
basis.  GATU has established standardized
reporting requirements for subrecipients
of the various Federal programs
administered by the State through its
various departments.  Subrecipients of
the State are required to certify whether
they expended more than $750,000 in
federal awards during the fiscal year and
submitted their single audit reporting
packages to the Federal Audit
Clearinghouse (if required).  GATU is
then responsible for obtaining the single
audit reporting package, verifying the
report meets the single audit
requirements, and assigning, to the
applicable state agency, any findings
attributable to amounts passed through to
the subrecipient(s) by the State.

IDOA staff are responsible for reviewing
the reports assigned to them by GATU and
determining whether: (1) federal funds
reported in the schedule of expenditures
of federal awards (SEFA) reconcile to
IDOA records and (2) issuing management
decisions on findings reported within
required time frames.

During our testing of a sample of single
audit desk review files for 6
subrecipients (with expenditures of
$33,094,427), we noted IDOA did not
reconcile the SEFAs to IDOA records and
did not issue management decision letters
to each subrecipient as of the date of
our testwork (January 31, 2020).
IDOA’s subrecipient expenditures under
the Aging Cluster program for the year
ended June 30, 2019 were $48,443,000.

Failure to complete and document reviews
of subrecipient single audit reports in a
timely manner may result in federal funds
being expended for unallowable purposes
and subrecipients not administering the
federal programs in accordance with laws,
regulations and the grant agreement.
(Finding 39, pages 142-143) This finding
was first reported in the Statewide
Single Audit in 2017.

As a result of IDOA failing to complete
and document reviews of subrecipient
single audit reports in a timely manner,
the auditors qualified their opinion on
the Aging Cluster program.

We recommended IDOA establish procedures
to ensure subrecipient single audit
report reviews are completed and
documented in a timely manner.
Additionally, IDOA should ensure
procedures will permit issuance of
management decisions within required
timeframes.

IDOA agreed with the finding and state
they have established procedures to
ensure subrecipient single audit report
reviews are completed and documented in a
timely manner and will establish
procedures to issue management decision
within the required timeframes.

INADEQUATE MONITORING OF SPECIAL
EDUCATION AND CTE SUBRECIPIENTS

Illinois State Board of Education (ISBE)
did not perform adequate monitoring
procedures over subrecipients of the
Special Education Cluster (IDEA) (Special
Education) and Career and Technical
Education (CTE) programs.

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 higher risk
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, 2019,
ISBE’s programmatic monitoring procedures
only included requirements pertaining to
the Title I and Title II federal
programs, as well as select fiscal
requirements applicable to certain
federal programs.  Accordingly, program
requirements pertaining to the Special
Education and CTE programs were not
included in the on-site reviews, desk
reviews, or analytical procedures
performed for ISBE’s higher risk
subrecipients during the year ended June
30, 2019.

While we noted ISBE may have performed
additional monitoring procedures for a
sample of subrecipients of the Special
Education and CTE, those procedures were
not based upon ISBE’s risk assessment
described above or other formally
documented risk assessment procedures.

In addition, ISBE did not establish
adequate controls to ensure its
subrecipient risk assessment procedures
properly addressed each of ISBE’s federal
programs as required by the Uniform
Guidance.

ISBE’s payments to subrecipients of the
Special Education and CTE programs during
the year ended June 30, 2019 totaled
$532,766,000 and $22,837,000,
respectively.

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 41, pages
146-148) This finding was first reported
in the Statewide Single Audit in 2017.

As a result of ISBE failing to implement
required risk assessments and to
adequately monitor subrecipients, the
auditors qualified their opinion on the
Special Education Cluster (IDEA) and the
Career and Technical Education – Basic
Grants to States programs.

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

ISBE agreed with the finding and stated
that for CTE, in conjunction with the
reauthorization of Perkins V, ISBE’s CTE
and Innovation Department has initiated
the rewriting of monitoring procedures
for CTE grants.  They stated the
procedures will be implemented in state
fiscal year 2021 and will include an
evaluation of each subrecipient’s risk of
noncompliance for the purposes of
determining appropriate monitoring.  For
Special Education, ISBE stated management
continues to move forward with developing
an expanded special education risk-based
accountability and support system as
scheduled, with implementation planned
for the Fall of 2020.

FAILURE TO MAINTAIN ADEQUATE
DOCUMENTATION FOR EARMARKING REQUIREMENTS
OF THE CRIME VICTIM ASSISTANCE PROGRAM

ICJIA did not maintain adequate
documentation to substantiate the
earmarking requirements of the Crime
Victim Assistance Program were met during
the year ended June 30, 2019.

ICJIA is required to earmark a portion of
its Crime Victim Assistance award to fund
activities relative to victims of crimes
in three priority areas designated by
USDOJ (10% for each priority area) and to
underserved victims (10%).  The three
priorities designated by USDOJ include
sexual assault, domestic and family
violence, and child abuse.  Additionally,
USDOJ has identified underserved victims
to include: victims of federal crimes,
survivors of homicide victims, or victims
of assault, robbery, gang violence, hate
and bias crimes, intoxicated drivers,
bank robbery, economic exploitation and
fraud, and elder abuse.

During our testing of the Illinois State
Annual Performance Report for the federal
fiscal year ended September 30, 2018
(filed in State fiscal year 2019), we
noted ICJIA reported the following
amounts for each of the earmarking
requirements in the 2018 Illinois State
Annual Performance Report for the 2015
Crime Victim Assistance Award (2015-VA-
GX-0049):

(Please see table in PDF version of this
digest)

ICJIA was unable to provide documentation
to support the amounts reported to meet
the three priority area earmarking
requirements and the underserved victims
earmarking requirements.  Accordingly, we
were unable to obtain sufficient and
appropriate audit evidence to conclude on
the earmarking compliance requirement
applicable to the Crime Victim Assistance
program.  In addition, as noted above,
the amounts reported for the child abuse
priority area and underserved victims did
not meet the 10% minimum requirement.

ICJIA has not established appropriate
internal controls to ensure earmarking
requirements are met and supported in
accordance with federal requirements.

Failure to maintain supporting
documentation for the earmarking
requirements prohibits the completion of
an audit and prevents the Department of
Justice from monitoring the Crime Victim
Assistance Program earmarking
requirements.  (Finding 55, pages
184-185)

As a result of ICJIA failing to maintain
supporting documentation for the
earmarking requirements, the auditors
qualified their opinion due to a Scope
Limitation on the Crime Vicitim
Assistance program.

We recommended ICJIA implement procedures
to ensure supporting documentation is
maintained for the earmarking requirement
applicable to its federal programs.
Additionally, procedures should be
implemented to ensure earmarking
requirements are met by the State.

ICJIA accepted the recommendation and
state that, while there has been no
finding from OVC of our accounting for
these funds for Federal fiscal year 2015,
they will implement procedures to ensure
supporting documentation is maintained
for the earmarking requirement applicable
to its federal, and when applicable
State, programs.

FAILURE TO PROVIDE SUPPORTING
DOCUMENTATION FOR PAYROLL AND RELATED
COSTS

IDES could not provide adequate
supporting documentation to substantiate
payroll and related costs claimed for
federal reimbursement under the
Employment Service Cluster program.

The Employment Service Cluster program is
an administrative grant program which
primarily funds personal service costs,
fringe benefit expenditures, and indirect
costs which are allocated to its Federal
and State programs through the use of
cost centers established for each of
IDES’ activities and programs. On a bi-
weekly basis, IDES employees complete and
sign manual effort reports (time sheets)
to report and certify their time
according to the appropriate cost
centers. These effort reports are then
reviewed and approved by the employee’s
immediate supervisor.  Time sheets are
manually entered in the time reporting
system which is used to accumulate the
costs related to each cost center. Cost
center data from the time reporting
system is used to identify personal
service expenditures attributable to
IDES’ State and federal programs and to
calculate and allocate the related fringe
benefit charges and indirect costs.

During our testing of 25 direct payroll
expenditures charged to the Employment
Service Cluster program (totaling
$74,900) during the year ended June 30,
2019, we noted effort reports (supporting
payroll expenditures sampled of $21,550)
for nine Employment Service Cluster
employees could not be provided for
testing. IDES personnel stated they were
unable to physically access their offices
to locate the files as of the date of our
testing (July 29, 2020) and were unable
to provide a date on which they would be
able to physically access the files. As a
result, we were unable to determine
whether the payroll and fringe benefit
expenditures, as well as related indirect
costs, were appropriately supported in
accordance with federal requirements.
Accordingly, we were unable to determine
if the payroll, fringe benefits, and
indirect costs were allowable or met
earmarking requirements, if applicable.

Personal service expenditures, fringe
benefits, and indirect costs charged to
the ES Cluster program for the year ended
June 30, 2019 were as follows:

Expenditure Type -- Employment Service
Cluster
Direct payroll -- $13,257,000
Fringe benefits -- $11,558,000
Indirect costs	 -- $9,547,000
Total -- $34,362,000

Failure to provide adequate documentation
for payroll and related costs inhibits
our ability to perform an audit in
accordance with professional standards
and may result in the federal funds being
expended for unallowable purposes.
(Finding 60, pages 197-199)

As a result of IDES’s failure to provide
adequate documentation for payroll and
related costs, the auditors were unable
to issue an opinion (Disclaimer) on the
Employment Service Cluster program.

We recommended IDES review its current
procedures and consider any changes
necessary to ensure supporting
documentation for payroll and related
costs is maintained in accordance with
the applicable federal regulations.

The Department accepted the audit finding
and stated they will confer with senior
management to implement a process to
require timely submission of required
timesheets.

FAILURE TO ESTABLISH ADEQUATE CONTROLS
OVER INFORMATION SYSTEMS USED TO DOCUMENT
COMPLIANCE WITH CERTAIN ADMINISTRATIVE
GRANTS

IDES has not established adequate
controls over the Enterprise Resource
Planning (ERP) system used to document
its compliance with certain requirements
of administrative grants of the
Employment Service Cluster and
Unemployment Insurance (UI) programs.

Certain compliance requirements for the
UI program are dependent on queries and
other reports generated from data
recorded within the State’s ERP
application. During our audit, we noted
IDES was unable to provide a Service
Organization Control (SOC) report
covering the ERP application or the
general information technology controls
relevant to the ERP. As a result, we were
unable to obtain sufficient and
appropriate audit evidence relative to
several direct and material compliance
requirements as follows:


• IDES management was unable to provide
supporting documentation which agreed to
or could be reconciled to UI
administrative cash draw requests made
during the year ended June 30, 2019.
• 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 for the Employment Service
Cluster and UI programs were based upon
queries of ERP data which could not be
reperformed or tested for completeness
and accuracy.

Additionally, we noted indirect costs are
calculated within the ERP and are
automatically recorded in the applicable
program general ledger account. While we
were able to recalculate a sample of
indirect charges, we were not able to
test the general information technology
controls to rely on the application
controls and IDES has not established any
other manual controls over the
calculation of indirect costs.

IDES reported total Employment Service
Cluster and UI administrative
expenditures of approximately $41,197,000
and $131,450,000, respectively, in the
SEFA as of and for the year ended June
30, 2019.

Failure to establish effective internal
controls over information systems results
in noncompliance and may inhibit the
completion of the single audit. (Finding
61, pages 200-201)

As a result of IDES’s failure to
establish effective internal controls
over information systems, the auditors
were unable to issue an opinion
(Disclaimer) on the Employment Service
Cluster program and qualified their
opinion (Scope Limitation) on the
Unemployment Insurance program.

We recommended IDES implement adequate
internal control procedures over
information systems used to document
compliance with requirements applicable
to its federal programs.

The Department accepted the finding and
stated they will continue to pursue the
development of accurate federal reports
and the remediation of the asset data in
the ERP system with DoIT.

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, 2020.

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, 2019 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