REPORT DIGEST

ILLINOIS WORKERS’ COMPENSATION COMMISSION —
SELF-INSURERS SECURITY FUND

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  February 15, 2024

FINDINGS THIS AUDIT: 2

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

FINDINGS LAST AUDIT:  2

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

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, 2023, and the findings arising from
the financial audit reported pursuant to
Government Auditing Standards.

SYNOPSIS

• (23-01) 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
($6,393,154) as of June 30, 2023. 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 initial testing, we noted the
following:

• The Fund 940’s balance of unearned
security deposit account reported on the
financial statements did not agree with the
balance in the supporting schedule. The
variance amounted to $14,880. In addition,
current unearned security deposits were
understated, while noncurrent unearned
security deposits were overstated, by
$92,457.

• The Fund 940’s deferred outflow of
resources pension and other postemployment
benefits accounts were understated by
$91,579 and $19,220, respectively.

• The Commission did not reverse the accrual
for an expense incurred in prior year upon
payment during the current fiscal year. The
error overstated the accounts payable
account by $14,924.

On October 11, 2023, the Commission provided
new set of supporting schedules. During this
process, some of the further problems found
in assessment receivable and application/
renewal fee receivable and related revenue
accounts, included the following:

• Assessment receivable and revenue
accounts.

– The Commission improperly recorded the
collection of prior year assessment
receivable as current year revenue, thereby,
overstating both assessment revenue and
receivable accounts by $38,180.
– The Commission made an erroneous entry to
record the already recorded deposit in
transit as assessment receivable, thereby,
overstating both assessment receivable and
revenue accounts by $12,325.
– The Commission had not accounted for the
assessment revenue earned through a credit
from a refund payable of $630, resulting to
understatement of revenue account and
overstatement of accounts payable account.
– The Commission deducted an erroneous debit
memo of $6,083 from the assessment revenue,
thereby, understating both assessment
revenue and receivable accounts.
– The Commission had not accounted for
$3,408 assessment receivable and revenue
thereby understating both assessment
receivable and revenue accounts.
– The Commission made several erroneous
entries to correct the prior year error of
recording a collection for Fund 685 as a
revenue of Fund 940. The errors resulted in
overstatement of both assessment receivable
and revenue accounts totaling $5,530.

• Application/renewal fee receivable and
revenue accounts.

– The Commission made an erroneous entry by
recording the already recorded deposit in
transit as receivable, thereby, overstating
both application/renewal receivable and
revenue accounts by $14,000.
– The Commission had not accounted for
$22,000 application/renewal receivable and
revenue accounts, thereby, understating both
application/renewal receivable and revenue
accounts.
– The Commission erroneously recorded the
transfer of the Self-Insurers Administration
Fund cash balance amounting to $24,452 to
the Fund 940’s application/renewal revenue
instead of recording the transaction to
unrestricted net position account.

• The Commission did not properly set up a
miscellaneous receivable account during the
year prior to crediting to the account its
collections from excess insurance carrier
for reimbursement of claim administration
and prorated fees; as a result, the
miscellaneous receivable account had a
negative ending balance of $3,754, and the
claims processing revenue account was
understated by the same amount.

We proposed, and the Commission posted,
adjusting entries to correct these errors in
Fund 940’s final financial statements.
(Finding 1, pages 52-54)

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.

OTHER FINDINGS

The remaining finding pertains to inaccurate
census data.  We will review the
Commission’s progress towards the
implementation of our recommendation in our
next financial audit.

AUDITOR’S OPINION

The auditors stated the financial statements
of the Self-Insurers Security Fund as of and
for the year ended June 30, 2023, are fairly
stated in all material respects.

This financial 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