REPORT DIGEST

ILLINOIS STATE BOARD OF EDUCATION

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2022

Release Date:  April 18, 2023

FINDINGS THIS AUDIT: 3

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

FINDINGS LAST AUDIT: 2

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

• (22-01) The Agency did not did not
maintain sufficient controls over
financial reporting to ensure its
financial statements and the generally
accepted accounting principles (GAAP)
Package reports prepared for the
Office of Comptroller utilized to
compile the State of Illinois’ Annual
Comprehensive Financial Report were
complete and accurate.
• (22-02) The Agency did not did not
exercise adequate internal control
over the State’s Evidence-Based
Funding Formula.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

FINANCIAL STATEMENT REPORTING ERROR

The Illinois State Board of Education
(Agency) did not maintain sufficient
controls over financial reporting to
ensure its financial statements and
the generally accepted accounting
principles (GAAP) Package reports
prepared for the Office of Comptroller
utilized to compile the State of
Illinois’ Annual Comprehensive
Financial Report were complete and
accurate.

During testing, we noted the Agency
did not perform a sufficient review of
all accounts and amounts recorded
within its financial statements and
GAAP Package reports. Specifically, we
noted the following issues while
testing the year-end financial
reporting process:

• The Agency improperly included a
$13.75 million future appropriation
for the Drivers Education Fund (Fund
031) as a liability in the General
Revenue Fund (Fund 001). The liability
was also properly recorded in Fund
031. This duplication caused total
liabilities and expenses in the
General Fund to be overstated by
$13.75 million. This material
adjustment was subsequently recorded
by the Agency in its final General
Fund and Governmental Activities’
financial statements.

• The Agency improperly included a
$305 million future appropriation for
the Education Assistance Fund (Fund
007) as a liability in Fund 001. The
liability was also not recorded in
Fund 007’s GAAP Package report. As
such, Fund 001’s liability and
expenses were overstated by $305
million, and Fund 007’s liability and
expenses were understated by the
corresponding amount. As both Fund 001
and Fund 007 are subaccounts of the
General Fund, this error had no net
effect on the overall General Fund and
Governmental Activities’ financial
statement presentation. However, this
material adjustment was subsequently
recorded by the Agency in the General
Fund’s combining schedules. (Finding
1, pages 62-63)

We recommended the Agency document
procedures for calculating future
appropriation liabilities, compare the
amounts on the financial reporting
forms to the appropriation bill, and
exercise due care during the financial
statement preparation and review
process to ensure accurate financial
reporting.

The Agency agreed with the
recommendation and stated it has
implemented corrective action by
developing a template for supporting
documentation for future year
appropriation liabilities that
includes the appropriation codes for
each future year liability and by
implementing a step in the process
that verifies the appropriation codes
and amounts using the Illinois Office
of the Comptroller’s website to ensure
that amounts recorded in GAAP
reporting packages are accurate.

FAILURE TO REASSESS CWI CONTAINED
WITHIN THE EBF FORMULA

The Agency did not exercise adequate
internal control over the State’s
Evidence-Based Funding Formula
(Formula). The Formula directs how the
Agency is to distribute Evidence-Based
Funding (EBF) to various Evidence-
Based Funding Organizational Units (E-
BFOUs) across the State, which
includes school districts, alternative
schools run by regional
superintendents of education, and two
laboratory schools.

With regards to ensuring the Formula’s
accuracy, during the Agency’s current
financial audit for the year ended
June 30, 2022, we noted the Agency
failed to re-determine the Comparable
Wage Index (CWI) used in the Formula
as required by the School Code.
Specifically, we noted the original
CWI was still being used in the
Formula even though, based on
statutory requirement, the State
Superintendent would have been
responsible for re-determining the CWI
in Fiscal Year 2021 or Fiscal Year
2022. (Finding 2, pages 64-65)

We recommended Agency management
implement adequate internal controls,
including hiring additional staff to
help with the prioritization of
Committee responsibilities, to re-
determine the CWI in line with the
requirements of the School Code.

The Agency agreed with the
recommendation and stated it is in the
process of corrective action and it is
collaborating with a third party
vendor to map and document the EBF
calculation process to improve
internal controls.

OTHER FINDING

The remaining finding pertains to
inadequate controls over change
management. We will review the
Agency’s progress towards the
implementation of our recommendations
in our next financial audit.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Agency as of and for
the year ended June 30, 2022 are
fairly stated in all material
respects.

This financial audit was conducted by
Kerber, Eck & Braeckel 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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