REPORT DIGEST

ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY

FINANCIAL AUDIT
For the Year Ended June 30, 2014

Release Date:  February 5, 2015

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 1

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
WILLIAM G. HOLLAND, 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

• (14-1) The Department did not have adequate
controls over financial close and reporting to
allow management or employees in the normal
course of performing their assigned functions
to prevent or detect financial statement
misstatements in a timely manner.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

NEED TO IMPROVE CONTROLS OVER FINANCIAL CLOSE
AND REPORTING

The Department did not have adequate controls
over financial close and reporting to allow
management or employees in the normal course
of performing their assigned functions to
prevent or detect financial statement
misstatements in a timely manner.

During our audit, we noted the following
errors that required audit adjustments to the
financial statements:

• A Transfer In to the Title III Social
Security and Employment Services Fund of $11
million was recorded as Other Revenues in the
Fund resulting in an overstatement of revenues
in the Fund.  An adjusting entry was recorded
to reclassify it from Other Revenues to
Transfer In for the Fund.

• A Transfer Out from the Unemployment
Compensation Special Administration Fund of
$11 million was recorded as Employment and
Economic Development Expenditures in the Fund
resulting in an overstatement of expenditures
in the Fund.  An adjusting entry was recorded
to reclassify it from Expenditures to Transfer
Out for the Fund.

• The Department wrote off $4.4 million of
unamortized bond issuance costs in the current
year interest expense.  An adjusting entry in
the amount of $4.4 million was recorded to
restate opening net position and to reduce
interest expense for the current fiscal year.
Also, the restatement was not properly
disclosed in the financial statements.
(Finding 1, pages 48-49)

We recommended the Department improve controls
over yearend financial closure and reporting
to ensure accurate presentation and disclosure
of the Department’s financial statements.

Department officials agreed with the
recommendation and stated they will continue
training staff and will review yearend
financial closure procedures to ensure
accurate presentation of the Department’s
financial statements.

AUDITOR’S OPINIONS

Our auditors stated the financial statements
present fairly, in all material respects, the
financial position of the Non-shared Funds of
the Department of Employment Security as of
June 30, 2014, and the changes in financial
position and cash flows, where applicable,
thereof for the year then ended.

WILLIAM G. HOLLAND
Auditor General

WGH:TLK

SPECIAL ASSISTANT AUDITORS

Our Special Assistant Auditors for this audit
were McGladrey LLP.