REPORT DIGEST

ILLINOIS JOINING FORCES FOUNDATION

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  January 13, 2021

FINDINGS THIS AUDIT:  0

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

FINDINGS LAST AUDIT: 0

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
The auditors expressed an adverse opinion
on the Foundation’s basic financial
statements.  The Codification of
Statements on Auditing Standards (AU-C §
705.09) states auditors “should express
an adverse opinion when the auditor,
having obtained sufficient appropriate
audit evidence, concludes that
misstatements, individually or in the
aggregate, are both material and
pervasive to the financial statements.

This digest covers the Foundation’s
financial audit for the year ended June
30, 2019.  The Foundation’s compliance
examination covering the year ended June
30, 2019 will be released under a
separate cover.

SYNOPSIS

• (19-1) The Foundation did not maintain
adequate documentation and records to
facilitate accurate and proper financial
reporting.
• (19-2) The Foundation failed to present
adequate financial statements and related
note disclosures for Fiscal Year 2019.
• (19-4) The Foundation failed to retain
documentation and records to substantiate
compliance with grant agreements.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE FINANCIAL REPORTING AND
CONTROLS

The Illinois Joining Forces Foundation
(Foundation) did not maintain adequate
documentation and records to facilitate
accurate and proper financial reporting.
During testing, some of the more
significant issues we noted included the
following:

• The Foundation accounted for revenue on
a cash basis during Fiscal Year 2019
rather than an accrual basis in
accordance with Generally Accepted
Accounting Principles (GAAP).
Specifically, we noted the following:

– The Foundation received an
unconditional promise to give, totaling
$500,000 in the form of a grant agreement
during Fiscal Year 2019.  The Foundation
received $375,000 of the $500,000 grant
during Fiscal Year 2019.  As a result,
revenue and contributions receivable,
totaling $125,000, were improperly
excluded from the June 30, 2019,
financial statements.

– The Foundation received another
unconditional promise to give, totaling
$75,000 in the form of a grant agreement
during Fiscal Year 2019.  The Foundation
did not receive any funds related to this
grant during Fiscal Year 2019.  As a
result, revenue and contributions
receivable, totaling $75,000, were
improperly excluded from the June 30,
2019, financial statements.

– During the prior examination, we
identified one unconditional promise to
give related to a grant agreement, for
which revenue was improperly recognized
on a cash basis.  We noted Fiscal Year
2018 revenues and receivables were
understated by $21,732 due to the
improper accounting treatment.  During
Fiscal Year 2019, the Foundation received
$21,519 related to this unconditional
promise to give.  As a result, revenue,
totaling $21,519, was improperly included
and contributions receivable, totaling
$213, was improperly excluded from the
June 30, 2019, financial statements.

The cumulative effect of these
misstatements resulted in a $200,213
understatement of contributions
receivable and a $178,481 understatement
of revenues on the June 30, 2019,
financial statements.

• The Foundation failed to record
liabilities and expenses in the proper
period.  Specifically, we noted the
following:

– During the prior examination, we
identified a $61,579 understatement of
the Foundation’s June 30, 2018, accounts
payable balance due to an unrecorded
vendor invoice.  During Fiscal Year 2019,
the Foundation failed to make the proper
adjustment by restating the beginning
balance of accounts payable.  Instead,
the Foundation recorded the omitted
payable as a current year expense.  As a
result, expenses totaling $61,579, were
improperly included in the June 30, 2019,
financial statements.

– One of 60 (2%) disbursements tested,
totaling $4,238, was related to an
invoice received by the Foundation during
Fiscal Year 2018; however, the Foundation
recorded the disbursement as a current
year expense.  As a result, expenses,
totaling $4,238, were improperly included
in the June 30, 2019, financial
statements.

We also noted one of the Foundation’s
vendors agreed to write-down the balance
owed by $51,450 after June 30, 2019, but
prior to the date the financial
statements were available to be issued.
The amount of the write-down consisted
solely of expenses incurred prior to June
30, 2019.  The Foundation failed to
properly adjust its June 30, 2019,
accounts payable balance.  As a result,
accounts payable, totaling $51,450, we
improperly included and other income,
totaling $51,450, was improperly excluded
from the June 30, 2019, financial
statements.

In addition, we identified inadequacies
regarding support for disbursements and
receipts, untimely deposits, and other
financial reporting deficiencies.
(Finding 1, pages 22-26)  This finding
has been repeated since 2016.

We recommended the Foundation take
immediate action to:
• improve its recordkeeping and controls
over recognizing revenue and related
receivables in accordance with GAAP;
• improve its recordkeeping and controls
over recognizing accounts payable and
related expenses in accordance with GAAP;
• implement procedures to ensure relief
of debt is properly recognized;
• ensure complete supporting
documentation for disbursements and
receipts is maintained;
• ensure receipts are deposited timely
and revenue is recognized in the proper
period;
• perform periodic reviews of financial
information to detect and correct posting
and reporting errors; and,
• ensure Form 1099s are properly prepared
and filed in accordance with federal
regulations.

Foundation personnel generally agreed
with the issues identified and indicated
they have taken corrective action.

FAILURE TO PRESENT ADEQUATE FINANCIAL
STATEMENTS AND NOTES

The Foundation failed to present adequate
financial statements and related note
disclosures for Fiscal Year 2019.  Some
of the more significant deficiencies we
noted included the following:

The Foundation did not include all
required disclosures in its Notes to the
Financial Statements for Fiscal Year
2019:

• The Foundation did not include a
related party disclosure.  Related party
transactions include transactions with
entities whose officers or directors are
members of the Foundation’s Board of
transactions directly between the
Foundation and one of its board members.
We noted one of the Foundation’s Board
officers is also the Founder and
Executive Director of one of the
Foundation’s major funding organizations,
which remitted $23,000 to the Foundation
during Fiscal Year 2019.  In addition,
one of the Foundation’s board members is
also the Senior Vice President of
Philanthropy at one of the Foundation’s
major funding organizations, which
remitted $375,000 to the Foundation
during Fiscal Year 2019.

• The Foundation did not include a
disclosure regarding its restatement of
beginning net assets as noted on the
Statement of Activities.  The Foundation
restated its beginning Net Assets balance
by $71,155, due to an identified error in
its previously issued financial
statements.  However, we noted this prior
period adjustment did not account for all
material misstatements in its previously
issued financial statements.

In addition, the Foundation’s Fiscal Year
2019 note disclosures contained
inaccuracies and omissions:

• The Foundation did not provide a
reasonably accurate disclosure of its
methodology for classifying expenses
between its two major categories, Program
Services and Management and General as
noted on its Statement of Functional
Expenses.  The disclosure indicates
several expense categories were allocated
based on square footage; however this did
not appear reasonable due to the
Foundation’s historically frequent
changing of office locations.  Further,
the disclosure indicates depreciation,
interest expense, and insurance costs are
allocated between the two major
categories; however, these expenses were
wholly applied to the Management and
General category on the Statement of
Functional Expenses.  The Foundation was
unable to substantiate its classification
and allocation of expenses on the
Statement of Functional Expenses.  As a
result, we were unable to conclude as to
the reasonableness of the classifications
made.

• The Foundation’s initial disclosure
regarding its vulnerability resulting
from its concentration of limited revenue
sources only identified one grantor;
however, during testing, we identified an
additional grantor that qualified as a
significant contributor.  Together
$452,500 of $483,380 (94%) of the
Foundation’s total reported revenue
during Fiscal Year 2019 came from these
two identified grantors.  In addition,
the initial disclosure noted the
Foundation’s ability to generate
resources is dependent on the economic
health of the State; while partially
true, the Foundation’s ability to
generate resources is dependent on the
contributions from these significant
contributors.  The Notes to the Financial
Statements were corrected to fix these
errors.

• The Foundation’s initial fair value
measurements disclosure did not include a
description of the three-level hierarchy
used to value its assets and liabilities.
The Notes to the Financial Statements
were corrected to fix these omissions.
(Finding 2, pages 27-32)

We recommended the Foundation utilize
professional tools, such as checklists,
to improve the completeness and quality
of its financial statements and related
note disclosures.  Additionally, we
recommended the Foundation develop and
consistently apply a methodology for
classifying and allocating expenses on
its Statement of Functional Expenses.

Foundation personnel generally agreed
with the issues identified and indicated
they have taken corrective action.

LACK OF DOCUMENTATION TO SUBSTANTIATE
COMPLIANCE WITH GRANT AGREEMENTS

The Foundation failed to retain
documentation and records to substantiate
compliance with grant agreements.

We noted the Foundation was unable to
provide a signed grant agreement,
detailing the provisions regarding the
use of funds and any compliance reporting
requirements, for three of five (60%)
potential grants selected for testing.
For the other two (40%) grants selected
for testing, the Foundation was able to
provide a signed grant agreement;
however, the Foundation was unable to
provide further documentation to
substantiate compliance with the
provisions of the grant agreement.

The Foundation is heavily reliant upon
grant funds received to continue their
operations and mission.  During Fiscal
Year 2019, the Foundation received a
total of $483,380 in contributed monies.
Of these funds, $452,500 (94%) came from
two identified grantors.  This dependence
on a small number of funding
organizations makes it imperative the
Foundation retain all necessary records
and documentation to ensure compliance
with grant agreements and to prevent
situations where the Foundation may be
required to return grant funds to
providing organizations due to
noncompliance.  (Finding 4, pages 37-38)
This finding has been repeated since
2016.

We recommended the Foundation ensure full
records are maintained for each grant
received, including the completed
application, signed grant agreement,
expense records, and any progress reports
or other information required to be
submitted to the grantor.  Further, we
recommended the Foundation’s management
and Board of Directors perform ongoing
reviews to ensure all terms and
conditions within its grant agreements
are complied with by the Foundation.

Foundation personnel generally agreed
with the issues identified and indicated
they have taken corrective action.

OTHER FINDINGS

The remaining findings pertain to an
inadequate internal control structure and
incomplete and inconsistent board
membership information.  We will review
the Foundation’s progress towards the
implementation of our recommendations in
our next financial audit.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Foundation as of and
for the year ended June 30, 2019, are not
fairly stated in all material respects.

This financial audit was conducted by the
Office of the Auditor General’s staff.

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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