REPORT DIGEST OFFICE OF THE TREASURER – THE ILLINOIS FUNDS FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2021 Release Date: April 6, 2022 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 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 • (21-01) The Office had inadequate internal controls over the Office’s Illinois Funds Program financial statement preparation and review process, specifically the determination of proper financial reporting for the external portion of The Illinois Funds program. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE INTERNAL CONTROLS RELATED TO REVIEW OF FINANCIAL STATEMENTS The Office had inadequate internal controls over the Office’s Illinois Funds Program financial statement preparation and review process, specifically the determination of proper financial reporting for the external portion of The Illinois Funds program. During fiscal year 2021, the Office implemented Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities, to present only the external portion of the fund on the financial statements. During review of the financial statements, the following errors were noted: • To determine the external portion, the Office identified internal and external participant account values. The Office incorrectly included ten internal accounts within their calculation of the external portion, totaling $15,680,369. This error led to the misstatement of all accounts on the Statements of Fiduciary Net Position and the Statements of Changes in Fiduciary Net Position and resulted in various errors in the Notes to the Financial Statements and Supplementary Information. As of June 30, 2021, the Net Position Held in Trust for Pool Participants, including the internal and external participants, was $8,748,691,774. • In the Notes to the Financial Statements, Note 2. Deposits and Investments, the Office incorrectly stated fair value and carrying value of the repurchase agreements amounts as the total amount, including both internal and external portion. The incorrect carrying value reported was $650,000,000 and $600,000,000, for 2021 and 2020, respectively. The carrying value was overstated by $271,140,760 and $232,474,908 for 2021 and 2020, respectively. The incorrect fair value reported was $668,500,608 and $650,061,826 for 2021 and 2020, respectively. The fair value was overstated by $278,858,097 and $273,310,736 in 2021 and 2020, respectively. (Finding 1, pages 65-66) The Office corrected the errors noted above. We recommended the Office improve controls over the financial reporting process of the Illinois Funds Program, specifically: • Verify accuracy of all information reported. • Verify external account value agrees to underlying support. • Verify amounts reported agree between statements and note disclosures. The Office accepted the recommendations and stated the Office will examine financial statement and footnote support, preparation, and review procedures for improvement. AUDITOR’S OPINION The auditors stated the financial statements of the Agency as of and for the years ended June 30, 2021, and June 30, 2020, are fairly stated in all material respects. This financial audit was conducted by Crowe 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:sjs