REPORT DIGEST

ILLINOIS HOUSING DEVELOPMENT AUTHORITY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  March 29, 2022

FINDINGS THIS AUDIT:  2

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

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

INTRODUCTION

This digest covers the Illinois
Housing Development Authority
(Authority) Financial Audit as of and
for the year ended June 30, 2021.  The
Authority’s Compliance Examination
(including the Single Audit) covering
the year ended June 30, 2021 will be
issued in a separate report at a later
date.

SYNOPSIS

• (21-1) 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 our review of the Authority’s
interim financial statements, we noted
the Authority was initially recording
all federal funding for the Emergency
Rental Assistance Program Fund and the
Coronavirus Urgent Remediation
Emergency Fund as program revenue
without having incurred any expenses.
Program revenue not earned should have
been recorded as a liability and
recorded as revenue once earned.

Due to these errors in the recording
of these program revenues during the
year, the Authority’s major
governmental fund determinations were
impacted which resulted in the
Authority not identifying the Build
Illinois Bond Program Fund as a major
governmental fund. Upon review of the
final trial balance, the Authority
attempted to correct the balances but
did not make the correct entries to
appropriately recognize the program
revenue to match the Authority’s
program expenses. The Authority made
correcting entries increasing program
revenue in the Emergency Rental
Assistance Program Fund by $7,729,993
and decreasing program revenue in the
Coronavirus Urgent Remediation
Emergency Fund by ($6,185,872)
respectively.

Some of the other errors noted during
the audit that were corrected by the
Authority after we brought them to
their attention are as follows:
• The Authority did not properly
classify parts of cash and cash
equivalents and investments as
restricted and unrestricted in the
Statement of Net Position resulting in
a reclassification of $99.8 million of
cash to unrestricted and a
reclassification of $2.1 million of
investments to non-current
unrestricted.
• The Authority did not properly
classify the fair market value
adjustments between the Administrative
Fund and the Single Family Fund
resulting in a reclassification of
$2.1 million from the Single Family
Fund to the Administrative Fund.

Within the Statement of Cash Flows,
the Authority incorrectly reported the
following amounts:
• In the Administrative Fund,
purchases of investments was
overstated by $1,776,521,000, proceeds
from sales and maturities of
investments was understated by
$147,563,000 and interest received on
investments was overstated by
$1,924,084,000.
• In the Mortgage Loan Program Fund,
purchases of investments was
overstated by $472,266,000, proceeds
from sales and maturities of
investments was overstated by
$471,879,000 and interest received on
investments was overstated by
$387,000.
• In the Single Family Program Fund,
purchases of investments were
understated by $385,640,000 and
proceeds from sales and maturities of
investments was understated by
$385,640,000.

Additionally, the following were some
of the errors noted within the
Management Discussion and Analysis
(MD&A) and footnote disclosures of the
financial statements which were all
corrected by the Authority:
• The Authority failed to present
condensed financial information within
the MD&A as required by governmental
reporting standards including items
such as total assets, distinguishing
between capital and other assets;
total liabilities, distinguishing
between long-term liabilities and
other liabilities; total net assets,
distinguishing among amounts invested
in capital assets, net of related
debt; restricted amounts; and
unrestricted amounts, program
revenues, by major source, general
revenues, by major source, total
revenues, program expenses, at a
minimum by function, total expenses,
transfers, and change in net assets.

• Within footnote 3 of the financial
statements, the Authority:

-- Did not disclose total cash and
cash equivalents of $1.15 billion
consisting of cash equivalents held in
investments of $882 million and cash
of $269.5 million.
-- Incorrectly reported cash and cash
equivalents held in investments over
interest rate risk by
including cash as part of the sweep
accounts resulting in an error of
$617.3 million, an error of $334.9
million for restricted cash
equivalents held in sweep accounts,
and an error of $12.9 million in
unrestricted cash equivalents held in
sweep accounts.
-- Incorrectly reported the cash
carrying value and bank balance
resulting in an error of $348 million
and $333 million.

• Within footnote 5 of the financial
statements, the Authority:

-- Incorrectly reported beginning net
program receivables for governmental
funds and loan repayments made during
the year resulting in an error of $5
million and $30 thousand,
respectively.
-- Incorrectly reported the total
amounts of Risk Sharing loans financed
through Multi-Family Revenue Bonds and
Administrative Fund resulting in an
error of $1.6 million for each fund.
-- Did not disclose 17 loans for a
total amount of $121 million for sold
beneficial ownership interests in
mortgage loans originated by housing
finance agencies and insured under the
FHA- HFA Risk Sharing Program.

• Within footnote 8 of the financial
statements, the Authority:

-- Incorrectly reported debt activity
resulting in an error of $1.2 billion
for Single Family Program    Fund for
other debt.
-- Did not disclose that the 2020
Series D totaling $1.7 million under
Multifamily Revenue Bonds was a
taxable bond.
-- Incorrectly reported debt service
reserves resulting in an error of $2
million for Housing Bonds, an error of
$2.5 million for Multifamily Revenue
Bonds, and error of $740 thousand for
Homeowner Mortgage Revenue Bonds.

• Within footnote 14 of the financial
statements, the Authority did not
disclose subsequent bond issuances for
two Revenue Bonds for a combined total
of $144.3 million, and one Multifamily
Revenue Bond for $78 million.
(Finding 1, pages 87-93) 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
related to the preparation of its
financial statements.

OTHER FINDING

The remaining finding pertains to
inadequate controls over investments.
We will review the Authority’s
progress towards the implementation of
our recommendation in our next
financial audit.

AUDITOR’S OPINION

Our auditors stated the financial
statements of the Authority as of June
30, 2021, 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