REPORT DIGEST

DEPARTMENT OF EMPLOYMENT SECURITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  Aug. 15, 2024

FINDINGS THIS AUDIT: 8

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  3 -- 3 -- 6
Category 2:  1 -- 1 -- 2
Category 3:  0 -- 0 -- 0
TOTAL:  4 -- 4 -- 8

FINDINGS LAST AUDIT: 5

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, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

INTRODUCTION

This digest covers the financial statement
audit of the Unemployment Compensation Trust
Fund of the State of Illinois, Department of
Employment Security (Department) as of and
for the year ended June 30, 2023. A digest
covering the Department’s State Compliance
Examination for the two years ended June 30,
2023, will be released at a later date.

SYNOPSIS

• (23-1) The Department failed to maintain
accurate and complete Pandemic Unemployment
Assistance (PUA) claimant data.
• (23-5) The Department did not prepare its
year-end bank reconciliations timely and did
not record all reconciling items identified
in the reconciliation.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FAILURE TO MAINTAIN ACCURATE AND COMPLETE
PANDEMIC UNEMPLOYMENT ASSISTANCE CLAIMANT
DATA

The Department of Employment Security
(Department) failed to maintain accurate and
complete Pandemic Unemployment Assistance
(PUA) claimant data.

On March 27, 2020, the President of the
United States signed the Coronavirus Aid,
Relief, and Economic Security (CARES) Act
which provided states the ability to provide
unemployment insurance to individuals
affected by the pandemic, including those
who would not normally be eligible for
unemployment. Based on the Department’s
records, as of the year ended June 30, 2023,
2,828 claimants received payments totaling
$6,171,258.

In order to determine if claimants were
eligible for benefits, we requested claimant
data. Although the claimant data was
provided, the data required considerable
manipulation in order to make the data
auditable and organized. Therefore, we were
unable to determine if the data was complete
and accurate. As a result, we were unable to
conduct detailed testing to determine
whether the claimants were entitled to
benefits. (Finding 1, page 24)  This finding
has been reported since 2021.

We recommended the Department implement
controls to ensure the claimants’ data is
complete and accurate.

The Department accepted our recommendation.

FAILURE TO PERFORM TIMELY CASH
RECONCILIATIONS

The Department did not prepare its year-end
bank reconciliations timely and did not
record all reconciling items identified in
the reconciliation.

As part of our audit, we requested copies of
the June 30, 2023 bank reconciliations. The
reconciliations are between cash as recorded
in the Department’s general ledger, and cash
as reported by the bank for each account.
The Department did not have the
reconciliations prepared timely for audit
fieldwork and we received the final versions
of the June 2023 reconciliations on January
16, 2024. In addition, the Department did
not record all reconciling items identified
in the reconciliation which resulted in an
understatement of benefit expense by
$40,125,000, an overstatement of cash
reported by $32,414,000, and an
understatement of benefits payable by
$7,711,000. (Finding 5, page 30)  This
finding has been reported since 2020.

We recommended the Department prepare a
monthly reconciliation for every cash
account, reconciling the bank and general
ledger balances. We also recommended each
monthly bank reconciliation be timely
completed and reviewed and approved by a
supervisor.

The Department accepted our recommendations.

OTHER FINDINGS

The remaining findings pertain to weaknesses
over service providers and failure to
implement general information technology
controls over the Pandemic Unemployment
Assistance System, inadequate controls over
receivables and allowances, improper
classification of revenue transactions,
improper reporting of interest expense,
weaknesses in IBIS and BCS application, and
inadequate controls over GenTax access.  We
will review the Department’s progress
towards the implementation of our
recommendations in our next financial audit.

AUDITOR’S OPINION

The auditors qualified their opinion on the
statement of revenues, expenses, and changes
in net position and cash flows of the
Unemployment Compensation Trust Fund of the
Department of Employment Security
(Department). Except for this matter, the
auditors stated the financial statements of
the Unemployment Compensation Trust Fund of
the Department as of and for the year ended
June 30, 2023, are fairly stated in all
material respects.

This financial audit was conducted by RSM US
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

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