REPORT DIGEST

ILLINOIS INDEPENDENT TAX TRIBUNAL

COMPLIANCE EXAMINATION
FOR THE TWO YEARS ENDED JUNE 30, 2023

Release Date:  June 25, 2024

FINDINGS THIS AUDIT: 8

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  2 -- 0 -- 2
Category 2:  1 -- 5 -- 6
Category 3:  0 -- 0 -- 0
TOTAL:  3 -- 5 -- 8

FINDINGS LAST AUDIT: 6

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

SYNOPSIS

• (23-01) The Illinois Independent Tax
Tribunal (Tribunal) did not handle filing
fees received with incorrectly filed
petitions in accordance with State laws and
regulations.
• (23-03) The Tribunal had not implemented
adequate internal controls over its service
providers.
• (23-07) The Tribunal’s internal controls
over its voucher processing function were
not operating effectively during the
examination period.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROL OVER FILING FEES

The Tribunal did not handle filing fees
received with incorrectly filed petitions in
accordance with State laws and regulations.

During testing, we noted the Tribunal
occasionally receives petitions that are
incorrectly filed. The incorrectly filed
petitions are either immediately dismissed
or dismissed with the ability to amend and
refile. In either scenario, the Tribunal
returns the petitioner’s original $500 check
or money order to the taxpayer through the
mail. The Tribunal’s records indicated this
occurred 8 times during Fiscal Year 2022,
totaling $4,000, and 10 times during Fiscal
Year 2023, totaling $5,000.

We noted the following noncompliance related
to this process:

• The Tribunal did not process refunds,
defined as repayments of fees paid in excess
or in error to the State, through the
standard voucher-warrant process.

• The Tribunal did not have appropriation
authority within the Illinois Independent
Tax Tribunal Fund to pay refunds due to
taxpayers in either Fiscal Year 2022 or
Fiscal Year 2023. (Finding 1, pages 9-10)
This findings has been reported since 2015.

We recommended the Tribunal pay necessary
refunds through the State’s voucher-warrant
process and request an appropriation to pay
refunds due. We also recommended, if the
Tribunal continues to disagree with our
position, the Tribunal should seek a formal
opinion from the Office of the Attorney
General or seek a legislative remedy.

Tribunal officials stated:

We do not agree with the Special Assistant
Auditors’ finding. The Tax Tribunal cannot
deposit filing fee checks for petition
filings that are legally deficient, or for
filings completely misdirected to the Tax
Tribunal, as those filings cannot legally be
accepted under the Tax Tribunal statute. The
Tax Tribunal has a written policy for when a
filing is initially and immediately rejected
for being deficient and not acceptable. If a
filing cannot be accepted, any accompanying
check is naturally not accepted as well and
is immediately returned to the filer or
destroyed with the filer’s permission. Any
petition filing fee check not accepted is
noted in the publicly available case order
dismissing the case as well as in our
internal docket system and our internal
monthly fee/deposits reconciliation
spreadsheet and/or our archived email
system.

In an accountant’s comment, we stated the
issue within the finding is when a receipt
is considered received under the State
Officers and Employees Money Disposition Act
as opposed to when the Tribunal can accept a
petition given its limited jurisdiction
under the Illinois Independent Tax Tribunal
Act of 2012. Currently, the State Officers
and Employees Money Disposition Act requires
the Tribunal to deposit the entire
remittance into the State Treasury.

If the Tribunal continues to disagree with
our position, the Tribunal should seek a
formal written opinion from the Attorney
General or a legislative remedy as noted
options in our recommendation.

LACK OF ADEQUATE CONTROLS OVER THE REVIEW OF
INTERNAL CONTROLS FOR SERVICE PROVIDERS

The Tribunal had not implemented adequate
internal controls over its service
providers.

In order to carry out its mission, the
Tribunal utilized a service provider for
hosting services and software as a service,
which is the Department of Innovation and
Technology (DoIT). During the current
examination, we noted that the Tribunal
obtained and reviewed the System and
Organization Control (SOC) Reports of DoIT;
however, they did not document an assessment
of the impact of the deviations, subservice
organizations, and complementary user entity
controls to the
Tribunal’s operations. (Finding 3, pages
13-14)

We recommended the Tribunal:

• Monitor and document the operation of the
Complementary User Entity Controls (CUECs)
related to the Tribunal’s operations.

• Review SOC reports for subservice
organizations or perform alternative
procedures to satisfy itself that the
existence of the subservice organization
would not impact its internal control
environment.

• Document its review of the SOC reports and
review all significant issues with
subservice organizations to ascertain if a
corrective action plan exists and when it
will be implemented, any impact to the
Tribunal, and any compensating controls.

Tribunal officials stated:

We do not agree with the Special Assistant
Auditors’ finding. DoIT is our sole service
provider. We do monitor DoIT’s System and
Organization Controls reports and will
continue to monitor SOCs and any
Complementary User Controls contained
therein on an annual basis for any impact on
our internal control environment and to
determine whether any compensating controls
should be put in place. The Director does
document the annual SOC review with an email
to the Chief Administrative Officer (CAO).
The Auditor General has repeatedly found
DoIT’s internal controls to be deficient in
its published reports. The Tax Tribunal is
in no position to direct DoIT to implement
any recommendations made to it by the
Auditor General nor are there any
compensating controls that were found
necessary to implement at the Tax Tribunal
level.

In an accountant’s comment, we stated the
Director’s annual SOC review over email did
not document an assessment of the impact of
the deviations, subservice organizations,
and CUECs to the Tribunal’s operations as
noted in the finding.
Further, the finding does not direct the
Tribunal to hold position over DoIT, but to
adequately document risk assessment of
DoIT’s internal controls deficiencies on the
Tribunal’s operations.

VOUCHER PROCESSING CONTROLS NOT OPERATING
EFFECTIVELY

The Tribunal’s internal controls over its
voucher processing function were not
operating effectively during the examination
period.

Due to our ability to rely upon the
processing integrity of the Enterprise
Resource Planning System (ERP) operated by
DoIT, we were able to limit our voucher
testing at the Tribunal to determine whether
certain key attributes were properly entered
by the Tribunal’s staff into ERP. In order
to determine the operating effectiveness of
the Tribunal’s internal controls related to
voucher processing and subsequent payment of
interest, we selected a sample of key
attributes (attributes) to determine if the
attributes were properly entered into the
State’s Enterprise Resource Planning (ERP)
based on supporting documentation.

During tested, it was noted the Tribunal
does not enter actual invoice approval date
into the ERP, but rather the approval date
recorded in the ERP is the date the invoice
was entered into the ERP. The Tribunal
processed 72 and 49 vouchers during the
Fiscal Year 2022 and 2023, respectively.

Due to this condition, we qualified our
opinion because we determined the Tribunal
had not complied, in all material respects,
with applicable laws and regulations,
including the State uniform accounting
system, in its financial and fiscal
operations.

Even given the limitations noted above, we
then conducted an analysis of the Tribunal’s
expenditures data for fiscal years 2022 and
2023 to determine compliance with the
Illinois Administrative Code (Code) (74 Ill.
Admin. Code 900.70). We noted the Tribunal
did not timely approve 52 of 121 (43%)
vouchers processed during the examination
period, totaling $81,708. We noted these
late vouchers were approved between 1 and
140 days late.  (Finding 7, pages 22-23)

We recommended the Tribunal approve proper
bills within 30 days of receipt and record
actual approval date into the ERP.

Tribunal officials agreed with the
recommendations stating the vouchers and
underlying source documentation were
properly entered in QuickBooks. Tribunal
officials further stated they will properly
process vouchers through ERP going forward.

OTHER FINDINGS

The remaining findings pertain to census
data reconciliation, failure to fully
implement the Illinois Independent Tax
Tribunal Act of 2012, weaknesses in
cybersecurity programs, disaster recovery
planning weaknesses, and receipt processing
internal controls not operating effectively.
We will review the Tribunal’s progress
towards the implementation of our
recommendations in our next compliance
examination.

ACCOUNTANT’S OPINION

The accountants conducted a State compliance
examination of the Tribunal for the two
years ended June 30, 2023, as required by
the Illinois State Auditing Act.  The
accountants qualified their report on State
compliance for Findings 2023-007 and
2023-008. Except for the noncompliance
described in those findings, the accountants
stated the Tribunal complied, in all
material respects, with the requirements
described in the report.

This State compliance examination was
conducted by Roth & 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

FJM:JGR