REPORT DIGEST

ILLINOIS WORKERS’ COMPENSATION COMMISSION --
SELF-INSURERS SECURITY FUND

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2024

Release Date:  February 20, 2025

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: 1

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, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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 financial audit of
the Illinois Workers’ Compensation
Commission (Commission) - Self-Insurers
Security Fund as of and for the year ended
June 30, 2024, and the finding arising from
the financial audit reported pursuant to
Government Auditing Standards.

SYNOPSIS

• (24-01) The Commission did not ensure all
events and transactions impacting the Self-
Insurers Security Fund were appropriately
recorded in its internal accounting records
and presented fairly in its financial
statements.

EMPHASIS OF MATTER

As discussed in Note 13 to the financial
statements, the Self-Insurers Security Fund
has a total net position (deficit) of
($4,213,875) as of June 30, 2024. This
deficit, which is presented on an accrual
basis, is the excess of total liabilities
and deferred inflows of resources over total
assets and deferred outflows of resources.
Management of the Commission stated that,
subject to approval by the Self-Insurers
Advisory Board established within the
Commission, future assessments will be used
to meet Fund’s obligations in the future
(Independent Auditor’s Report on page 6 and
Note 13 on page 44).

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

ACCOUNTING AND FINANCIAL REPORTING PROBLEMS

The Illinois Workers’ Compensation
Commission (Commission) did not ensure all
events and transactions impacting the Self-
Insurers Security Fund (Fund 940) were
appropriately recorded in its internal
accounting records and presented fairly in
its financial statements.

During testing, we noted the following:

• The Commission improperly deducted the
advances made to the third-party
administrator, amounting to $100,000,
resulting in an understatement of the
prepaid third-party administrator claims
account by $200,000. In addition, a $80
refund collected by the third-party
administrator was incorrectly recorded to
unearned security deposits instead of
recording the transaction to unpaid claims.
These errors ultimately resulted in an
overstatement of the benefits claims account
by $100,080 and an understatement of the
unearned security deposits account by
$99,920.

• The Commission had not accounted for
$95,642 claims adjustor fees charged against
self-insured companies, resulting in an
understatement of claims processing revenue
and an overstatement of the unearned
security deposits accounts.

• The Commission had directly adjusted the
financial statements provided to the
auditors without recording journal entries
to reflect the adjustments in the trial
balance. These adjustments resulted in
discrepancies in the unearned security
deposits by $4,269, unpaid claims by
$17,897, and compensated absences by
$22,166.

• The Commission’s supporting schedule for
excess insurance receivable account had a
discrepancy in the beginning balance of
$2,750. Five benefit payments totaling
$4,669 were not posted and a benefit payment
of $1,009 was posted twice.

• The Commission had not accounted for $267
assessment receivable and revenue accounts,
thereby, understating both assessment and
revenue accounts.

We proposed, and the Commission posted,
adjusting entries to correct these errors in
Fund 940’s final financial statements.
(Finding 1, pages 51-53)

We recommended the Commission ensure all
transactions and events impacting Fund 940
are recorded and reported in strict
adherence with the generally accepted
accounting principles applicable to Fund
940. Additionally, we recommended the
Commission ensure an independent supervisory
review by an individual with sufficient
skills, knowledge, and experience to
identify and correct errors is performed
during the preparation of Fund 940’s
supporting schedules, journal entries, and
financial statements.

Commission officials agreed with our
recommendation.

AUDITOR’S OPINION

The auditors stated the financial statements
of the Self-Insurers Security Fund as of and
for the year ended June 30, 2024, are fairly
stated in all material respects.

This financial audit was conducted by Roth &
Co., LLP.

COURTNEY DZIERWA
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JGR