Illinois Auditor General Issues Report on Department of Central Management Services – Community College Health Insurance Security Fund-Financial Audit

SPRINGFIELD, Illinois, Feb. 22 -- Illinois Auditor General Frank J. Mautino issued the following audit report digest on Department of Central Management Services - Community College Health Insurance Security Fund-financial audit:

INTRODUCTION

This digest covers our financial audit of the Community College Health Insurance Security Fund for the year ended June 30, 2017. At June 30, 2017 the Net Position reflected a deficit of $50,818,000. Further, the Schedule of Changes in Net OPEB Liability reflects a Net OPEB Liability of $1,823,636,960.

SYNOPSIS

* (17-1) The Department's year-end financial reporting to the Office of the State Comptroller contained errors in the determination of certain year-end account balances.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

The Department's year-end financial reporting in accordance with generally accepted accounting principles (GAAP) to the Illinois Office of the State Comptroller contained errors in the determination of certain year- end account balances for the Community College Health Insurance Security Fund.

During the audit of the June 30, 2017 financial statements we noted the following errors for which the Department revised their financial statements:

* The Department understated accrued liabilities in the Community College Health Insurance Security Fund by $199 thousand due to the exclusion of certain prescription drug benefit liabilities.

* In the prior fiscal year, the Department understated their accrued liabilities and benefit payments by $8.853 million in the Community College Health Insurance Security Fund due to a mathematical error when calculating the accrued liability. The Department restated its financial statements as of July 1, 2016 to correct for these errors.

* The Department overstated accounts receivable in the Community College Health Insurance Security Fund by $215 thousand due to including a deposit in transit in accounts receivable and cash. It should not have been included in accounts receivable. (Finding 1, pages 24-25).

We recommended the Department implement procedures and cross-training measures throughout the Department to ensure required financial information is submitted to those responsible for financial reporting in a timely, accurate and complete manner. This should include allocating sufficient staff resources and the implementation of formal procedures to ensure adequate and reliable financial information is prepared and submitted to the Office of the State Comptroller. These procedures should address all elements of the Department's financial reporting process including, but not limited to, accruals for liabilities and receivables and supervisory review of supporting spreadsheets for data accumulation.

The Department agreed with the finding and stated they will strive to implement cross- training measures and financial reporting procedures to ensure timeliness, accuracy, reliability and reasonableness of data utilized to perform financial reporting. Additionally, the Department stated they will continue to work diligently to fill key positions to ensure an independent, internal analytical review of calculations is documented and completed timely.

AUDITOR'S OPINION

The auditors stated the financial statements of the Department of Central Management Services, Community College Health Insurance Security Fund as of and for the year ended June 30, 2017, are fairly stated in all material respects.

This financial audit was conducted by Sikich, 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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