REPORT DIGEST ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2016 Release Date: January 24, 2017 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 0 -- 0 Category 2: 1 -- 0 -- 1 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 0 -- 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 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 • (16-2) The Department did not have adequate controls over financial reporting to ensure the requirements of GASB Statement No. 72 were implemented in fiscal year 2016. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER REPORTING The Department did not have adequate controls over financial reporting to ensure the requirements of GASB Statement No. 72 were implemented in fiscal year 2016. Auditors were provided draft financial statements that did not reflect the reporting requirements of GASB Statement No. 72, Fair Value Measurement and Application. These requirements were applicable for the $129 million money market investment. (Finding 1, pages 48). We recommended the Department improve controls over financial reporting to ensure that all new applicable GASB pronouncements are properly implemented when required. Department officials agreed with the recommendation and stated that prior to the preparation of their financial statements the Department will search current government accounting publications, including GASB pronouncements, for reporting requirements and seek guidance from authorized sources for their correct application. AUDITOR’S OPINION Our auditors stated the financial statements present fairly, in all material respects, the financial position of the Non-shared Funds of the Illinois Department of Employment Security as of June 30, 2016, and the changes in financial position and cash flows, where applicable, thereof for the year then ended. FRANK J. MAUTINO Auditor General FJM:JGR SPECIAL ASSISTANT AUDITORS Our Special Assistant Auditors for this audit were RSM US, LLP.