REPORT DIGEST DEPARTMENT OF TRANSPORTATION FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2019 Release Date: March 19, 2020 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 0 -- 1 -- 0 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 0 -- 1 -- 0 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 • (19-1) The Illinois Department of Transportation’s internal controls over financial reporting were insufficient to prevent misstatements. FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS INADEQUATE CONTROLS OVER FINANCIAL REPORTING The internal controls over financial reporting of the Illinois Department of Transportation (Department) were insufficient to prevent misstatements. During our audit of the significant balances comprising the Department’s financial statements, we noted the following errors and deficiencies related to financial statement classification and presentation: • Duplication of Assets in the Government-wide and Governmental Funds Financial Statements The Department’s underlying support for accounts receivable at the end of the fiscal year inappropriately allocated amounts to accounts receivable and revenue for Fund 011, Road Fund. The effect of this misstatement in the Department’s government-wide and governmental funds financial statements was an overstatement of accounts receivable and revenue of $12,131,241 as of June 30, 2019. The Department posted an audit adjustment to correct this duplication error in its financial statements as of and for the year ended June 30, 2019. • Classification of Net Position in the Government-wide Financial Statements The Department’s underlying calculations used to determine the net position at the end of the fiscal year inappropriately allocated amounts to net investment in capital assets instead of unrestricted net position. The effect of this misstatement in the Department’s government-wide financial statement was an overstatement of net investment in capital assets and an understatement of unrestricted net position of $15,046,000 as of June 30, 2019. The Department posted an audit adjustment to correct this classification error in its financial statements as of and for the year ended June 30, 2019. • Completeness of Assets and Revenues in the Government-wide and Governmental Funds Financial Statements The Department failed to record revenue and a corresponding receivable for certain federally reimbursable payroll costs for Fund 011, Road Fund, incurred during the year ended June 30, 2019. The effect of this misstatement in the Department’s government-wide and governmental funds financial statements was an understatement of accounts receivable and revenue of $35,467,990 as of June 30, 2019. The Department posted an audit adjustment to correct this omission in its financial statements as of and for the year ended June 30, 2019. (Finding 1, pages 62-64) We recommended the Department enhance and improve its controls over financial reporting to ensure amounts reported within the Department’s annual financial statements are accurate and presented in accordance with accounting principles generally accepted in the United States. Department officials agreed with the finding and stated in order to avoid duplication on the financial statements, the Department will continue to implement cross-training and make enhancements to its review process. Department officials also stated, as each staff member learns about additional pieces of the Department’s financial statements, duplications will be avoided, and the clerical error in the calculation of net positon has been fixed. Department officials further stated the Department will continue to expand review processes to avoid such errors. AUDITOR’S OPINION The auditors stated the financial statements of the Department as of and for the year ended June 30, 2019 are fairly stated in all material respects. This financial audit was conducted by CliftonLarsonAllen 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:PH