REPORT DIGEST

ILLINOIS WORKERS’ COMPENSATION COMMISSION

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2019

Release Date:  March 19, 2020

FINDINGS THIS AUDIT:  13

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 1 -- 2
Category 2:  6 -- 5 -- 11
Category 3:  0 -- 0 -- 0
TOTAL:  7 -- 6 -- 13

FINDINGS LAST AUDIT: 10

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 Commission’s compliance
examination for the two years ended June 30,
2019.  A separate financial audit of the
Commission’s Self-Insurers Security Fund as of
and for the year ended June 30, 2019, was
previously released on November 21, 2019.  In
total, this report contains 13 findings, one
of which was reported in the Self-Insurers
Security Fund’s financial audit.

SYNOPSIS

• (19-03) The Commission did not exercise
adequate internal control over non-sufficient
funds checks and refunds.
• (19-06) The Commission did not exercise
adequate internal control over voucher
processing.
• (19-11) The Commission did not ensure
overpayments were recouped upon a claimant’s
death or when the claimant had reached a
settlement agreement.
• (19-12) The Commission Review Board
established within the Commission was not
functioning as intended.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROL OVER NSF CHECKS AND REFUNDS

The Illinois Workers’ Compensation Commission
(Commission) did not exercise adequate
internal control over non-sufficient funds
(NSF) checks and refunds.

During testing, we requested the Commission
provide us with the population of NSF checks
and refunds collected during the examination
period. During our review of these listings,
we noted several problems, including:

• Four of five (80%) refund receipts tested,
totaling $2,822, were not segregated from
other receipts on the Commission’s cash
receipts journal.

• One refund, totaling $3,860, related to the
Self-Insurer’s Security Fund was not on the
Commission’s list.

• Three of five (60%) NSF checks tested,
totaling $6,957, were not recorded as negative
adjustments in the Commission’s cash receipts
journal.

• Two NSF checks, totaling $3,328, related to
the Injured Workers’ Benefit Fund were not on
the Commission’s list.

• One of 40 (3%) receipts tested, totaling
$2,745, was the vendor’s refund of an
overpayment made by the Commission. We noted
this refund should have been processed as an
adjustment to the Commission’s available
appropriations balance in accordance with the
Statewide Accounting Management System.

Due to these conditions, we were unable to
conclude the Commission’s population records
were sufficiently precise and detailed under
the Professional Standards promulgated by the
American Institute of Certified Public
Accountants (AT-C § 205.35) to test the
Commission’s NSF checks and refunds.

Even given the population limitations noted
above which hindered our ability to conclude
whether selected samples were representative
of the population as a whole, we performed the
testing of NSF checks and refunds and noted
the following:

• The Commission did not timely initiate
appropriate collection action for one of eight
(13%) NSF checks tested. We noted the
Commission did not take action on the noted
NSF check until after auditor inquiry 472 days
after the Office of the State Treasurer
notified the Commission this was a NSF check.

• All seven (100%) refund receipts tested,
totaling $4,952, were incorrectly processed
using the Receipts Deposit Transmittal (Form
C-64) as opposed to the Expenditure Adjustment
Transmittal (Form C-63). (Finding 3, pages
19-20)

We recommended the Commission take action to
ensure NSF checks and refunds are segregated
within its cash receipt records.  Further, we
recommended the Commission timely establish an
account receivable for each NSF check and
begin collection activities.  Finally, we
recommended the Commission process refunds on
the Form C-63.

The Commission agreed with our recommendation.

INADEQUATE CONTROL OVER VOUCHER PROCESSING

The Commission did not exercise adequate
internal control over voucher processing.

During testing of 174 non-payroll, non-awards
and grants vouchers, we noted the Commission
did not consistently follow a process to
identify and record an invoice’s proper bill
date in accordance with the Illinois
Administrative Code (Code). The Commission’s
procedures call for all vendors to submit
invoices to its centralized fiscal office in
Chicago, which then routes vendor invoices to
other units within the Commission for review
and approval. After the unit approves an
invoice, it then sends the invoice back to the
centralized fiscal office for final review and
approval and submission to the Office of the
State Comptroller to pay the vendor. We noted
some instances where these dates and entities
involved were clearly indicated, while on
other invoices these dates and entities were
not recorded.

Within the State’s new enterprise resource
planning (ERP) accounting system, the
Commission will need to ensure the date when a
proper bill was received by the Commission,
and not the date when a bill was determined by
its staff to be proper, is recorded within
ERP. This critical date impacts the
determination of whether the Commission timely
submitted its invoices for payment to the
State Comptroller under the Code and the
amount of interest due to vendors under the
State Prompt Payment Act (Act).

In addition, we noted the following other
voucher-related problems:

• Nine of 174 vouchers tested (5%), totaling
$33,487, were paid late and we did not note
any interest paid to these vendors as required
by the Act. We calculated $538 in unpaid
interest had accrued and was due to the
vendors. In the event the Commission had not
recorded the proper bill date, we used the
vendor’s invoice date to calculate interest
due.

• One of 40 (3%) travel vouchers tested,
totaling $680, was submitted to the Commission
by the traveler 102 days after the last day
travel occurred.  (Finding 6, pages 25-27)
This finding has been repeated since 2013.

We recommended the Commission implement
controls to ensure the proper bill date is
recorded for all invoices, interest is accrued
and paid to vendors in accordance with the
Act, and travel vouchers are promptly
submitted by travelers.

The Commission agreed with our recommendation.

INADEQUATE CONTROL OVER OVERPAYMENTS

The Commission did not ensure overpayments
were recouped upon a claimant’s death or when
the claimant reached a settlement agreement.

During testing, we noted the Commission had
controls in place to timely identify and
terminate benefits paid from the Rate
Adjustment Fund and the Second Injury Fund
upon a claimant’s death or when the claimant
reached a settlement agreement. However, we
noted the Commission did not timely use this
information to recoup amounts overpaid to the
claimant, as noted below:

• Four of six (67%) benefit terminations paid
from the Rate Adjustment Fund that had an
overpayment, totaling $4,630, were not
identified for collection until after we
notified the Commission of this problem in
December 2019.

• Three of four (75%) benefit terminations
paid from the Second Injury Fund that had an
overpayment, totaling $3,169, were not
identified for collection until after we
notified the Commission of this problem in
December 2019.  (Finding 11, page 36).

We recommended the Commission implement
controls to immediately seek recovery of
amounts overpaid when it becomes aware of a
recipient’s death or settlement.

The Commission agreed with our recommendation.

COMMISSION REVIEW BOARD NOT FULLY FUNCTIONING

The Commission Review Board (Board)
established within the
Commission (Commission) was not functioning as
intended.

The Workers’ Compensation Act (Act) (820 ILCS
305/14.1), along with adopted rules in the
Illinois Administrative Code (Code) (50 Ill.
Admin. Code 9500.10(a)), created the Board to
receive complaints concerning the conduct of
the Commission’s commissioners and
arbitrators, investigate the complaints,
conduct hearings on the complaints, and
recommend to either (1) the commissioner or
arbitrator of necessary corrective action or
(2) the Governor not to reappoint the
commissioner or arbitrator for matters of
serious concern. The Board’s members consist
of seven members,
including the Commission’s Chair, the
commissioner with the most seniority of the
employer class, the commissioner with the most
seniority of the employee class, two
arbitrators with one from Cook County and one
from any other county elected by a vote of the
Commission’s arbitrators, and two members
appointed by the Governor who are not
commissioners, arbitrators, or employees of
the Commission.

During testing, we noted the Board’s members
did not receive notice of the two complaints
against a commissioner or arbitrator filed
with the Commission during the examination
period where the Commission’s General Counsel
determined the written communication did not
constitute a complaint setting forth
sufficient evidence that a commissioner or
arbitrator engaged in any misconduct.

In following up on this exception, Commission
officials indicated Board members were not
provided with this correspondence because the
Board did not hold regular meetings during the
examination period.

Thereafter, we followed up and noted the Board
did not hold a meeting during seven of eight
(88%) quarters during the examination period.

In response to our inquiry as to why the Board
was not holding quarterly meetings, Commission
officials indicated the requirement was only
to schedule, and not to hold, a meeting of the
Board each quarter. They indicated the Board’s
meetings are scheduled for each quarter, but
the meetings were cancelled because they could
not obtain a quorum of the Board’s members to
attend the meeting. We noted a quorum of the
Board’s members are individuals who work at
the Commission and, therefore, the Commission
should be able to schedule a convenient
meeting time when the Board would have been
able to obtain a quorum.  (Finding 12, pages
37-38)


We recommended the Commission’s Chair schedule
quarterly meetings of the Board when a quorum
of its membership can attend the scheduled
meeting. Further, we recommended the
Commission’s Executive Director disburse
copies of all correspondence from potential
complaints received to the Board’s members at
the Board’s next quarterly meeting.

The Commission agreed with our recommendation.

OTHER FINDINGS

The remaining findings pertain to (1)
inadequate control over State property,
receipts, workforce reporting, and performance
evaluations, (2) weaknesses in cybersecurity
programs and practices and change control, (3)
untimely monthly reconciliations, and (4)
failure to seek a judgment in Circuit Court.
We will review the Commission’s progress
towards the implementation of our
recommendations in our next compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a compliance
examination of the Commission for the two
years ended June 30, 2019, as required by the
Illinois State Auditing Act.  The accountants
qualified their report on State compliance for
Finding      2019-002 and Finding 2019-003.
Except for the noncompliance described in
these findings, the accountants stated the
Commission complied, in all material respects,
with the requirements described in the report.

This compliance examination was conducted by
E. C. Ortiz & Co., 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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