REPORT DIGEST

ILLINOIS HOUSING DEVELOPMENT AUTHORITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  December 22, 2020

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 3

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

INTRODUCTION
This digest covers the Illinois Housing
Development Authority (Authority)
Financial Audit as of and for the year
ended June 30, 2020.  The Authority’s
Compliance Examination (including the
Single Audit) covering the year ended
June 30, 2020 will be issued in a
separate report at a later date.

SYNOPSIS

• (20-1) The Authority has not
established adequate internal controls
over the financial reporting process and
the recording of financial transactions
within its books and records.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS


INACCURATE FINANCIAL REPORTING

The Illinois Housing Development
Authority (Authority) has not established
adequate internal controls over the
financial reporting process and the
recording of financial transactions
within its books and records.

During the year ended June 30, 2020, the
Authority made a number of changes in the
financial reporting process.  While doing
so, the Authority failed to establish
additional oversight and monitoring
procedures to ensure the financial
statements were properly prepared and
presented.  As a result, the draft
financial statements prepared by
management and provided to the auditors
contained errors which required
adjustment to the financial statements.
The following are some of the matters
noted during the audit:

• The Authority incorrectly reported
their Ambac Assurance Corporation loans
outstanding within footnote 5.  The
originally reported amount was
$55,579,568 while the correct amount was
$5,579,568 resulting in a difference of
($50,000,000). A proposed adjustment for
these differences was recorded by the
Authority.

• The Authority incorrectly reported the
bonds and notes outstanding related to
conduit debt obligations within footnote
8(e) of the financial statements as
$1,175,921,664 while the correct amount
was $1,147,626,343 resulting in a
difference of ($28,295,231). A proposed
adjustment for these differences was
recorded by the Authority.

• The Authority incorrectly reported
accrued liabilities and other liabilities
for the Administrative Fund, Mortgage
Loan Program Fund, Home Program Fund and
the Hardest Hit Fund in the Statement of
Net Position and the Balance Sheet which
required numerous adjustment to these
accounts.  The proposed adjustments were
recorded by the Authority.

• Within the Statement of Net Position
and the Statement of Revenues, Expenses
and Changes in Net Position for the
Business-Type Activities, the Authority
incorrectly reported amounts in the
Administrative Fund.  The Authority
understated Due from Other Funds by
$13,399,832 and understated Due To Other
Funds by the same amount on the financial
statements.

• Journal entry adjustments were also
proposed and made by the Authority to
correct differences noted within the
Administrative Fund for the following
accounts:  Deposits held in Escrow,
Accrued Liabilities and Other, Interest
and Other Investment Income, Service
Fees, Development Fees, Other Revenue,
Professional Fees, Other General and
Administrative expenses and Financing
Costs.

• For the Authority’s Single Family
Program Fund, we noted the financial
statements understated the Derivative
Instrument Liability by ($9,132,010) and
overstated the Accumulated increase in
the fair value of hedging derivative by
$9,132,010.  A proposed adjustment for
these differences was recorded by the
Authority. (Finding 1, pages 84-90) This
finding has been repeated since 2015.

We recommended the Authority review its
internal control policies and procedures
to ensure financial transaction are
accurately reported in the general ledger
and accurately reported in the financial
statements and footnote disclosures.

Authority officials accepted the
recommendation and stated they will
continue to enhance its internal control
policies and procedures to address the
conditions noted within this finding.


AUDITOR’S OPINION

Our auditors stated the financial
statements of the Authority as of June
30, 2020, and for the year then ended,
are fairly stated in all material
respects.

The financial audit was conducted by
CliftonLarsonAllen 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:TLK