REPORT DIGEST

STATE OF ILLINOIS STATEWIDE SINGLE
AUDIT REPORT

SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  September 9, 2021

FINDINGS THIS AUDIT:  29

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  4 -- 14 -- 18
Category 2:  6 -- 5 -- 11
Category 3:  0 -- 0 -- 0
TOTAL:  10 -- 19 -- 29

FINDINGS LAST AUDIT: 69

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

• The State expended approximately
$38.4 billion from federal awards in
FY20.

• A total of 28 programs or program
clusters were classified and audited
as major programs at 16 State
agencies. These programs constituted
approximately 89.5% of all federal
spending, or about $34.3 billion. In
addition, 52 State agencies expended
federal financial assistance in FY20.
Twelve State agencies accounted for
about 99.1% of federal dollars spent.

Significant Agency Findings Classified
as Material Noncompliance Resulting in
an Auditor Qualification

The Department of Healthcare and
Family Services:
• Did not perform eligibility
redeterminations for individuals
receiving benefits under the
Children’s Health Insurance Program
(CHIP) in accordance with timeframes
required by the State Plan.
• Does not have adequate procedures to
determine eligibility for
beneficiaries of the Children’s Health
Insurance Program (CHIP) and Medicaid
Cluster programs.

The Department of Human Services:
• Could not locate case file
documentation supporting eligibility
determinations and special test
requirements for beneficiaries of the
Temporary Assistance for Needy
Families (TANF) program.
• Did not perform eligibility
decisions for individuals receiving
benefits under the Temporary
Assistance for Needy Families (TANF)
Cluster, SNAP Cluster (SNAP), and
Medicaid Cluster programs in
accordance with timeframes required by
the respective State Plans.
• Was unable to provide adequate
documentation to substantiate the
maintenance of effort (MOE)
requirements were met for the Block
Grants for Prevention and Treatment of
Substance Abuse (SAPT) program for
award year 2018 that closed during
State fiscal year 2020.
• Did not adequately review single
audit reports received from its
subrecipients for the Temporary
Assistance for Needy Families (TANF)
Cluster, CCDF Cluster (Child Care or
CCC), Social Services Block Grant
(Title XX or SSBG), and Block Grants
for Prevention and Treatment of
Substance Abuse (SAPT).
• Did not follow its established
program monitoring policies and
procedures for subrecipients of the
Temporary Assistance for Needy
Families (TANF) Cluster, CCDF Cluster
(Child Care), Social Services Block
Grant (Title XX), and Block Grants for
Prevention and Treatment of Substance
Abuse (SAPT) programs.

The Illinois Criminal Justice
Information Authority:
• Created a risk assessment policy but
did not execute the risk assessment of
subrecipients of the Crime Victim
Assistance (CVA) program as required
by the Uniform Guidance during fiscal
year 2020.  Additionally, the
Authority did not perform programmatic
and fiscal on-site visits in
accordance with its established
monitoring procedures, did not
adequately review single audit
reports, and did not include
identifying information with
disbursements made to subrecipients.

The Illinois Department of Employment
Security:
• Does not have adequate controls in
place over determining fringe benefits
to be charged to the Employment
Service Cluster program.
• Does not have adequate procedures to
determine and document eligibility for
veteran beneficiaries of the
Employment Service Cluster program.
• Did not perform required wage
verifications for Pandemic
Unemployment Assistance (PUA) program
claimants in accordance with program
requirements during the year ended
June 30, 2020.  Additionally, the
Department did not have controls to
ensure wage verification requirements
were performed.
• Did not implement Federal
requirements to improve program
integrity and reduce overpayments.

The Illinois State Board of Education:
• Did not perform adequate monitoring
procedures over subrecipients of the
Special Education Cluster (IDEA)
(Special Education) program.

 INTRODUCTION

The Illinois Office of the Auditor
General conducted a Statewide Single
Audit of the FY20 federal grant
programs.  The audit was conducted in
accordance with the Uniform Guidance
(Title 2 U.S. Code of Federal
Regulation Part 200, Uniform
Administration Requirements, Cost
Principles, and Audit Requirements for
Federal Awards).

The Statewide Single Audit includes
State agencies that are a part of the
primary government and expend federal
awards.  In total, 52 State agencies
expended federal financial assistance
in FY20. A separate supplemental
report has been compiled by the
Governor’s Office of Management and
Budget and provides summary
information on federal spending by
State agency.  The Statewide Single
Audit does not include those agencies
that are defined as component units
such as the State universities and
finance authorities.  The component
units continue to have separate single
audits when required.

The Schedule of Expenditures of
Federal Awards (SEFA) reflects total
expenditures of approximately $38.4
billion for the year ended June 30,
2020.  Overall, the State participated
in 312 different federal programs;
however, 10 of these programs or
program clusters accounted for
approximately 90.7% of the total
federal award expenditures.  (See
Exhibit I in the pdf version of this
digest.)

The funding for the 312 programs was
provided by 23 different federal
agencies.  Exhibit II shows that five
federal agencies provided Illinois
with the vast majority of federal
funding in FY20. (See Exhibit II in
the pdf version of this digest.)

 A total of 28 federal programs or
 program clusters were identified as
 major programs in FY20.  A major
 program was defined in accordance
 with the Uniform Guidance as any
 program with federal awards expended
 that meets certain criteria when
 applying the risk-based approach.
 Exhibit III provides a brief summary
 of the number of programs classified
 as “major” and “non-major” and
 related federal award expenditures.

Exhibit III
Classification of Federal Programs
“Major vs. Non-Major” and Related
Federal Award Expenditures for the
year ended June 30, 2020

Audit Coverage – No. – Expenditures in
Millions -- %
Major Programs or Clusters – 28 --
$34,334.1 – 89.5%
Non-Major Programs or Clusters – 284
-- $4,035.1 – 10.5%
Total – 312 -- $38,369.2 – 100%

Twelve State agencies accounted for
approximately 99.1% of all federal
dollars spent during FY20 as depicted
in Exhibit IV. (See Exhibit IV in the
pdf version of this digest.)



AUDITORS’ REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT
AND MATERIAL EFFECT ON EACH MAJOR
PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE

The auditors’ report contained
qualifications on compliance as
summarized below.  The complete text
of the Auditors’ Report may be found
on pages 16-19 of the audit.

Qualifications

The auditors qualified their report on
major programs for the following
noncompliance findings: (See chart in
the pdf version of this digest.)

Internal Control Over Compliance

We noted certain matters involving
internal control over compliance that
were considered to be significant
deficiencies.  A control deficiency in
an entity’s internal control over
compliance exists when the design or
operation of a control over compliance
does not allow management or
employees, in the normal course of
performing their assigned functions,
to prevent, or detect and correct,
noncompliance with a type of
compliance requirement of a federal
program on a timely basis.  A
significant deficiency in internal
control over compliance is a
deficiency, or combination of
deficiencies, in internal control over
compliance with a type of compliance
requirement of a federal program that
is less severe than a material
weakness in internal control over
compliance, yet important enough to
merit attention by those charged with
governance.  Overall, 11 of the 29
findings reported in the single audit
were classified as compliance
significant deficiencies.

Material weaknesses were also
disclosed in our report.  A material
weakness in internal control over
compliance is a deficiency, or
combination of deficiencies, in
internal control over compliance, such
that there is a reasonable possibility
that material noncompliance with a
type of compliance requirement of a
federal program will not be prevented,
or detected and corrected, on a timely
basis.  Overall, 18 of the 29 findings
reported in the single audit were
classified as material weaknesses.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

Exhibit V summarizes the number of
report findings by State agency,
identifies the number of repeat
findings, and references the findings
to specific pages in the report.

Exhibit VI summarizes the total number
of findings, number of repeated
findings and the percentage of
repeated findings for the past ten
years.  (See chart in the pdf version
of this digest.) (See chart in the pdf
version of this digest.)

FAILURE TO PERFORM ELIGIBILITY
REDETERMINATIONS WITHIN PRESCRIBED
TIMEFRAMES

DHFS did not perform eligibility
redeterminations for individuals
receiving benefits under the
Children’s Health Insurance Program
(CHIP) in accordance with timeframes
required by the State Plan.

The State Plan for CHIP requires the
State to perform eligibility
redeterminations on an annual basis.
During our testing of 80 case files
(with payments sampled of $127,732),
evidence was not provided to
substantiate redeterminations were
performed within required time frames
for five CHIP cases (with payments
sampled of $6,548).  Delays in
performing redeterminations ranged
from 30 to 362 days greater than one
year.  Total medical payments made on
behalf of these five beneficiaries
during the year ended June 30, 2020,
were $34,778 for the CHIP Program.

Payments made to beneficiaries of the
CHIP program totaled approximately
$461,117,000 during the year ended
June 30, 2020.

Failure to properly perform
eligibility redetermination procedures
in accordance with the State Plans may
result in federal funds being awarded
to ineligible beneficiaries, which are
unallowable costs.  (Finding 7, pages
38-39)

As a result of DHFS failing to perform
eligibility redeterminations within
prescribed timeframes, the auditors
qualified their opinion on the CHIP
program.

We recommended DHFS review its current
process for performing eligibility
redeterminations and consider changes
necessary to ensure all eligibility
decisions are performed within the
timeframes prescribed within the State
Plan.  More specifically, we
recommended DHFS determine how to
address what should occur when a
returned redetermination is not
completed by the time another would
normally be sent.

DHFS accepted the recommendation.


INADEQUATE PROCEDURES TO DETERMINE
BENEFICIARY ELIGIBILITY

DHFS does not have adequate procedures
to determine eligibility for
beneficiaries of the Children’s Health
Insurance Program (CHIP) and Medicaid
Cluster programs.

DHFS permits certain beneficiaries of
the CHIP and Medicaid Cluster programs
to begin receiving medical services
based upon a presumption of
eligibility.  The individuals for
which CHIP and Medicaid CHIP
presumptive eligibility is permitted
are usually children and pregnant
women.  The initial CHIP and Medicaid
CHIP presumptive eligibility period
generally begins on the date of the
decision and ends the last day of the
following month but can also be
extended 90 days starting with the
date of application for ongoing
benefits.

DHFS identified a system defect in
September 2019 in which the
eligibility status of certain CHIP and
Medicaid CHIP presumptive eligibility
cases was not being updated at the end
of the initial presumptive eligibility
period.  Beginning in February 2020,
DHFS created a monthly process to
identify and close presumptive
eligibility cases that did not
properly close at the end of the
presumptive eligibility period.
During our testing of medical payments
made on behalf of CHIP and Medicaid
CHIP beneficiaries, we noted three of
40 CHIP case files (with medical
payments sampled of $227) and two of
40 Medicaid CHIP case files (with
medical payments sampled of $3,746)
for which the initial presumptive
eligibility period was not
discontinued on the last day of the
month following the initial
application. All five cases were prior
to February 2020.  Total medical
payments made on behalf of the three
CHIP beneficiaries and two Medicaid
CHIP beneficiaries during the year
ended June 30, 2020 were $991 for the
CHIP program and $5,072 for the
Medicaid Cluster program,
respectively. Total CHIP beneficiary
payments and Medicaid Cluster
beneficiary payments for the year
ended June 30, 2020, were
approximately $461,117,000 and
$13,669,891,000, respectively.

DHFS was able to quantify that 6,079
cases prior to February 2020 were not
closed at the end of the CHIP and
Medicaid CHIP presumptive eligibility
period which resulted in $561,459 in
unallowable medical payments made on
behalf of these beneficiaries being
claimed during the year ended June 30,
2020.

Failure to identify and close
presumptive eligibility cases at the
end of the presumptive eligibility
period may result in federal funds
being awarded to ineligible
beneficiaries, which are unallowable
costs.  (Finding 8, pages 40-41)

As a result of DHFS failing to
identify and close presumptive
eligibility cases at the end of the
presumptive eligibility period, the
auditors qualified their opinion on
the CHIP and Medicaid Cluster
programs.

As described in the condition above,
DHFS corrected the situation noted by
implementing a monthly process to
identify and close presumptive
eligibility cases.  We recommended
DHFS continue this monthly process to
identify and close presumptive
eligibility cases.

DHFS officials accepted the
recommendation and stated they are
working to rectify the system defect
regarding the communication of
presumptive eligibility denials
between the two systems so the monthly
process can be discontinued.

MISSING DOCUMENTATION IN BENEFICIARY
FILES

IDHS could not locate case file
documentation supporting eligibility
determinations and special test
requirements for beneficiaries of the
Temporary Assistance for Needy
Families (TANF) program.

Details of the beneficiary payments
selected in our samples for the TANF
program are as follows:

Case Type -- Number of Cases Tested --
Total Amount of Payments for Cases
Tested -- Total Amount of Payments
Made on Behalf of Beneficiaries for
Fiscal Year 2020
TANF Cluster – 50 -- $23,644 --
$43,659,000

During our test work, we selected
eligibility files to review for
compliance with eligibility
requirements of the related benefits
provided.  We noted in 4 of 50 TANF
cases (with payments sampled of
$2,241), IDHS could not locate the
Responsibility Service Plan (RSP)
completed and signed by the
beneficiary covering the payment date.
TANF cash assistance paid to these
beneficiaries during the year ended
June 30, 2020 totaled $21,134.

Further, we noted that the control to
ensure the RSPs are collected (i.e.
completeness) in accordance with
policy is not effectively designed.

During our test work, we also selected
Child Support Non-Cooperation (Non-
Cooperation) and Penalty for Refusal
to Work (Refusal to Work) files to
review for compliance with the
respective special tests and
provisions.  We noted the following
exceptions:

• In 8 of 40 TANF Non-Cooperation
special test cases, IDHS could not
provide evidence that the beneficiary
was sanctioned after the beneficiary’s
failure to cooperate.  TANF cash
assistance paid to these beneficiaries
during the year ended June 30, 2020
totaled $45,451.  In addition, in 1 of
40 TANF Non-Cooperation special test
cases, IDHS did not take timely action
on the case.

• In 1 of 40 TANF Penalty for Refusal
to Work special test cases, IDHS could
not provide evidence of the RSP or
subsequent evidence of sanction.  TANF
Cluster cash assistance paid to this
beneficiary during the year ended June
30, 2020 totaled $4,454.

In addition, we noted controls for
ensuring completeness of the data
needed to access Non-Cooperation and
Refusal to Work are not effectively
designed.  Also, the application of a
sanction or documentation of why the
sanction is not applicable is not
consistently applied.

Failure to maintain RSPs may result in
inadequate documentation of a
recipient’s eligibility and in federal
funds being awarded to ineligible
beneficiaries.  Inability to
demonstrate if a sanction has been
appropriately applied also may result
in federal funds being awarded to an
ineligible beneficiary.  (Finding 10,
pages 44-46)  This finding was first
reported in the Statewide Single Audit
in 2001.

As a result of IDHS not maintaining
RSPs and inability to demonstrate if a
sanction has been appropriately
applied, the auditors qualified their
opinion on the TANF program.

We recommended IDHS review its current
process for collecting and maintaining
RSPs and documentation to support the
appropriate application of sanctions.

IDHS accepted the recommendation and
noted the current process for creating
and maintaining RSPs and creating and
documenting sanctions will be reviewed
and revised to ensure that process
steps are addressing all needed areas
for accurate documentation.

FAILURE TO PERFORM ELIGIBILITY
DECISIONS WITHIN PRESCRIBED TIMEFRAMES

IDHS did not perform eligibility
decisions for individuals receiving
benefits under the Temporary
Assistance for Needy Families (TANF)
Cluster, SNAP Cluster (SNAP), and
Medicaid cluster programs in
accordance with timeframes required by
the respective State Plans.

Each of the State Plans for the TANF
Cluster, SNAP, and Medicaid Cluster
programs require the State to perform
eligibility redeterminations on an
annual basis.  For Medicaid, the
determination may not exceed 90 days
for disability basis and 45 days for
all other reasons.  During our test
work over eligibility, we noted the
State was late (overdue) in performing
initial and redetermination
eligibility decisions for individuals
receiving benefits under the TANF
Cluster, SNAP, and Medicaid cluster
programs.

Evidence was not provided to document
redeterminations were performed within
required time frames for 4 TANF/SNAP
cluster cases and 6 Medicaid Cluster
cases (with payments sampled of $2,193
and $3,006 respectively).
Additionally, there were 2 Medicaid
cases not meeting the initial
determination time frames (with
payments sampled of $4,011).

Details of the beneficiary payments
selected in our samples for the TANF/
SNAP Cluster and Medicaid Cluster
programs are as follows.  The Medicaid
Cluster amounts include both IDHS and
DHFS as beneficiary eligibility is
primarily the responsibility of IDHS
while the beneficiary expenses are
recorded in both agencies depending on
the type of claim.

Major Program -- Number of Cases
Sampled -- Total Amount of Payments
for Cases Sampled -- Total Beneficiary
Payments in Fiscal Year 2020
TANF/SNAP Cluster – 50 -- $26,408 --
$3,283,004,000
Medicaid Cluster – 100 -- $201,498 --
$10,844,109,000

IDHS does not have adequate resources
to perform and document initial
eligibility or redeterminations within
the required timeframes.

Failure to properly perform
eligibility decisions in accordance
with the State Plans may result in
federal funds being awarded to
ineligible beneficiaries, which are
unallowable costs.  (Finding 11, pages
47-49)  This finding was first
reported in the Statewide Single Audit
in 2003.

As a result of IDHS failing to
properly perform eligibility
decisions, the auditors qualified
their opinion on the SNAP Cluster,
TANF Cluster, and Medicaid Cluster.

We recommended IDHS review its current
process for performing eligibility
decisions and consider changes
necessary to ensure all initial and
redetermination decisions are
performed within the timeframes
prescribed within the State Plans for
each affected program.

IDHS accepted the recommendation and
noted to ensure case processing within
required timeframes, statewide
processing management will be utilized
to review and assign outstanding
requests coming due to certification.
IDHS noted they have worked to improve
their processing timeliness by adding
two statewide processing centers and
increasing caseworker headcount and
are in the process of adding a third
statewide processing center.

FAILURE TO PROVIDE ADEQUATE
DOCUMENTATION FOR THE SAPT MOE
REQUIREMENT

IDHS was unable to provide adequate
documentation to substantiate the
maintenance of effort (MOE)
requirements were met for the Block
Grants for Prevention and Treatment of
Substance Abuse (SAPT) program for
award year 2018 that closed during
State fiscal year 2020.

As a condition of receiving federal
funding under the SAPT program, USDHHS
requires the State to maintain the
level of State and locally funded
expenditures for substance abuse
prevention and treatment activities at
an amount that is at least equal to
the average level of these same
amounts for the prior two years.

During the current fiscal year, we
noted IDHS was required to maintain
aggregate State expenditures for State
fiscal year June 30, 2018 (SFY18) of
$86,140,868.  IDHS reported actual
aggregate State expenditures for State
fiscal year June 30, 2018 of
$112,550,165.  However, included in
the total MOE reported expenditures
were $38,792,743 of managed care
organization (MCO) billings in SFY18.
The MCO billings represented MCO
encounter data amounts, and IDHS could
not provide evidence or reconcile MCO
encounter data to actual State paid
expenditures.  Accordingly, these
expenditures are not allowable for
purposes of meeting the maintenance of
effort requirement.  IDHS appears to
be approximately $12.4 million short
of the required $86 million MOE
requirement.

Failure to maintain required State
expenditure levels for MOE and
maintain adequate supporting
documentation to support expenditures
used to meet the MOE requirement
results in noncompliance with program
requirements.  (Finding 12, pages
50-51)  This finding was first
reported in the Statewide Single Audit
in 2014.

As a result of IDHS’s failure to
maintain required State expenditure
levels for MOE and maintain adequate
supporting documentation to support
expenditures to meet the MOE
requirement, the auditors qualified
their opinion on the SAPT program.

We recommended IDHS review its process
for identifying allowable expenditures
to achieve the SAPT MOE, including
receiving input from the Substance
Abuse and Mental Health Services
Administration (SAMHSA) regarding the
applicability of MCO encounter data
expenditures.

IDHS accepted our recommendation and
indicated they have developed a
protocol which has been approved by
SAMHSA and the Center for Substance
Abuse Treatment (CSAT), pending
resolution of some clarifying matters.

INADEQUATE REVIEW OF SINGLE AUDIT
REPORTS

IDHS did not adequately review single
audit reports received from its
subrecipients for the Temporary
Assistance for Needy Families (TANF)
Cluster, CCDF Cluster (Child Care or
CCC), Social Services Block Grant
(Title XX or SSBG), and Block Grants
for Prevention and Treatment of
Substance Abuse (SAPT) programs.

The State of Illinois established the
Grant Accountability Transparency Unit
(GATU) to implement the provisions of
the State’s Grant Accountability and
Transparency Act (GATA) on a
centralized basis.  GATU has
established standardized reporting
requirements for subrecipients of the
various Federal programs administered
by the State through its various
departments.  Subrecipients of the
State are required to certify whether
they expended more than $750,000 in
federal awards during the fiscal year
and submitted their single audit
reporting packages to the Federal
Audit Clearinghouse (FAC), if
required.  IDHS staff are responsible
for ensuring single audit reports are
received from subrecipients and
reviewing the reports to determine the
need for issuing management decision
letters (MDL) within required time
frames and receiving corrective action
plans (CAP).

During our review of a sample of 156
subrecipient single audit desk review
files, we noted IDHS did not notify 5
subrecipients of the results of single
audit desk reviews or issue management
decisions on reported findings within
6 months of acceptance of the single
audit report by the FAC as required.
Also, the required CAP was not
collected within the required time
frame.

Desk Review Period -- Number of
Subrecipients	 -- Type of Funding
180-210 days after FAC acceptance – 1
-- CCC
210-240 days after FAC acceptance -- 1
-- SSBG
240+ days after FAC acceptance -- 3 --
CCC, SSBG, SAPT

We also noted the single audit desk
reviews for June 30, 2019 are still in
process and have not been finalized as
of the date of our test work (March 1,
2021) for 3 subrecipients with CCC,
SAPT, TANF, and SSBG.

Further, we noted 2 CCC subrecipients
with fiscal year-ends December 31,
2018 and later who did not submit
their reporting package within 9
months of their fiscal year end in
accordance with GATU policies.  No
documentation was available to
demonstrate follow-up, waivers being
granted, or sanctions imposed on these
subrecipients by IDHS.

IDHS’ subrecipient expenditures under
the federal programs for the year
ended June 30, 2020 were approximately
as follows:

Program -- Total Fiscal Year 2020
Subrecipient Expenditures -- Total
Fiscal Year 2020 Program Expenditures
-- %
TANF Cluster -- $16,396,000 --
$501,507,000 -- 3.3%
CCDF Cluster -- $120,311,000 --
$432,781,000 -- 27.8%
Title XX -- $42,998,000 -- $61,421,000
-- 70.0%
SAPT -- $58,112,000 -- $62,404,000 --
93.12%

Failure to obtain and review
subrecipient single audit reports in a
timely manner could result in federal
funds being expended for unallowable
purposes and subrecipients not
properly administering the federal
programs in accordance with laws,
regulations, and the grant agreement.
(Finding 14, pages 54-56)  This
finding was first reported in the
Statewide Single Audit in 2011.

As a result of IDHS’s failure to
obtain and review subrecipient single
audit reports in a timely manner, the
auditors qualified their opinion on
the TANF Cluster, CCDF Cluster, Title
XX program, and SAPT program.

We recommended IDHS establish controls
to ensure single audit reports are
received timely and to ensure desk
reviews are completed and documented
in a timely manner to evidence whether
MDLs should be issued by IDHS within
six months.  In addition, we
recommended IDHS establish controls to
ensure any required CAP is also
received.

IDHS agreed with our recommendation
and indicated they will continue to
work to establish controls to ensure
single audit reports are received and
processed timely, CAPs are received,
and desk reviews are completed and
documented timely within the Audit
Report Review Management System
(ARRMS) in order to ensure MDLs are
issued within the required timeframe.

FAILURE TO FOLLOW ESTABLISHED PROGRAM
SUBRECIPIENT MONITORING PROCEDURES AND
TO NOTIFY SUBRECIPIENTS OF FEDERAL
FUNDING

IDHS did not follow its established
program monitoring policies and
procedures for subrecipients of the
Temporary Assistance for Needy
Families (TANF) Cluster, CCDF Cluster
(Child Care), Social Services Block
Grant (Title XX), and Block Grants for
Prevention and Treatment of Substance
Abuse (SAPT) programs.

IDHS has implemented procedures
whereby program staff perform periodic
program on-site and desk reviews of
IDHS subrecipient compliance with
regulations applicable to the federal
programs administered by IDHS.
Generally, these reviews are formally
documented and include the issuance of
a report of the review results of the
subrecipient summarizing the
procedures performed, results of the
procedures, and any findings or
observations for improvement noted.
IDHS’s policies require the
subrecipient to respond to each
finding by providing a written
corrective action plan. Additionally,
IDHS program staff perform reviews of
expenditure reports submitted by
subrecipients.  IDHS subrecipient
monitoring procedures are subject to
the review and approval of a
supervisor.

During our test work over program on-
site review procedures performed for
141 subrecipients of the TANF Cluster,
CCDF Cluster, Title XX, and SAPT
programs, we noted IDHS did not follow
its established program monitoring
procedures as follows:

• During our test work performed, we
noted that IDHS did not perform on-
site monitoring reviews of
subrecipients in fiscal year 2020 in
accordance with IDHS’ planned
monitoring schedule and/or could not
provide support for the review.
Specifically, we noted the following
exceptions:

Federal Program -- Number of Reviews
Not Performed	 -- Number of
Subrecipients Tested
TANF Cluster – 1 -- 14
CCDF Cluster – 5 -- 43
Title XX -- 1 -- 42
SAPT – 18 -- 42

• IDHS did not provide timely
notification (within 60 days) of the
results of the programmatic on-site
reviews.  We noted the following
exceptions:

Federal Program -- Number of Late
Communications -- Number of
Subrecipients Tested -- Number of Days
Late (Range)
TANF Cluster – 1 – 14 -- 3
Title XX -- 3 -- 42 -- 9 – 46
SAPT -- 9 -- 42 -- 3 – 273

• IDHS did not receive corrective
action plans (CAPs) on a timely basis
(within 60 days) after communicating
programmatic review findings or follow
up with subrecipients on delinquent
CAPs.  We noted the following
exceptions:

Federal Program -- Number of Late CAPs
-- Number of Subrecipients Tested --
Number of Days Late
CCDF Cluster -- 2 -- 43 -- 62 – 77
Title XX – 1 – 42 -- 69
SAPT -- 9 -- 42 -- 5 – 199

For the Title XX program, IDHS
personnel were unable to provide
support for one of 27 expenditure
reports reviewed for payment for
$36,092.

Additionally, for three Title XX
subrecipients and 31 CCDF Cluster
subrecipients sampled, IDHS did not
communicate the required assistance
listing number (CFDA number) to the
subrecipients at the time of
disbursement.

IDHS’s subrecipient expenditures under
the federal programs for the year
ended June 30, 2020, were
approximately as follows:

Program -- Total Fiscal Year 2020
Subrecipient Expenditures -- Total
Fiscal Year 2020 Program Expenditures
-- %
TANF Cluster -- $16,396,000 --
$501,507,000 -- 3.3%
CCDF Cluster	120,311,000 --
432,781,000 -- 27.8%
Title XX -- 42,998,000 -- 61,421,000
-- 70.0%
SAPT -- 58,112,000 -- 62,404,000 --
93.12%

Failure to adequately perform and
document program on-site monitoring
reviews of subrecipients and notify
subrecipients of findings in a timely
manner may result in subrecipients not
properly administering the Federal
programs in accordance with laws,
regulations, and the grant agreement.
Failure to communicate CFDA numbers at
time of disbursement can hamper the
subrecipients’ ability to correctly
prepare their schedule of federal
awards.  (Finding 15, pages 57-60)
This finding was first reported in the
Statewide Single Audit in 2011.

As a result of IDHS’s failure to
adequately perform and document
program on-site monitoring reviews of
subrecipients and notify subrecipients
of findings in a timely manner, the
auditors qualified their opinion on
the TANF Cluster, CCDF Cluster, SSBG
program, and SAPT program.

We recommended IDHS ensure
programmatic on-site and expenditure
report reviews are performed and
documented for subrecipients in
accordance with established policies
and procedures.  In addition, we
recommended IDHS review its process
for reporting and following up on
program findings relative to
subrecipient on-site reviews to ensure
timely corrective action is taken.
Further, we recommended IDHS add to
their warrant description the CFDA
number for each disbursement made to
subrecipients.

IDHS accepted the recommendation and
noted they continue to work to ensure
that monitoring reviews of grantees
are performed timely and appropriately
documented and will continue to review
procedures to ensure IDHS is following
the required guidelines for reviews.
In addition, IDHS will review the
requirement for ensuring the CFDA
number is communicated to the
subrecipients when payments are
issued.

FAILURE TO EXECUTE RISK ASSESSMENT AND
ADEQUATELY MONITOR SUBRECIPIENTS

The Illinois Criminal Justice
Information Authority (ICJIA) created
a risk assessment policy but did not
execute the risk assessment of
subrecipients of the Crime Victim
Assistance (CVA) program as required
by the Uniform Guidance during fiscal
year 2020.  Additionally, ICJIA did
not perform programmatic and fiscal
on-site visits in accordance with its
established monitoring procedures, did
not adequately review single audit
reports, and did not include
identifying information with
disbursements made to subrecipients.

The Uniform Guidance requires pass-
through agencies to perform a risk
assessment to establish appropriate
monitoring procedures based upon the
risks inherent at each subrecipient.
ICJIA is required to monitor
subrecipients to determine whether
they establish and operate their
fiscal system according to the
conditions of the award document and
to ensure that funds are requested and
expended according to the
subrecipient’s cash needs and eligible
costs.  ICJIA’s monitoring procedures
for all subrecipients consisted of
performing single audit report desk
reviews, reviewing fiscal and data
reports submitted by subrecipients,
and performing periodic program and
fiscal site visits.

ICJIA created a risk assessment policy
during fiscal year 2020 but did not
perform the risk assessments and
document related conclusions for
subrecipients as specified in the
policy.  Accordingly, we could not
determine if the 30 program and 1
fiscal on-site reviews conducted
correlated with the risk criteria set
forth in the policy.

In reviewing the on-site program
monitoring procedures performed by
ICJIA for seven subrecipients (with
expenditures totaling $3,146,878), we
noted the following exceptions:

• ICJIA’s program on-site monitoring
reviews included completing a brief
checklist to determine whether certain
program-specific compliance
requirements (including activities
allowed, matching, and maintenance of
effort requirements) and select fiscal
activities were being performed in
accordance with the grant award.  The
procedures performed appeared to
primarily consist of inquiries of
personnel responsible for
administering the program at the
subrecipient location.

• ICJIA did not consistently document
the supervisory review of the site
visit reports or supervisory review of
communications of on-site monitoring
results to subrecipients in accordance
with ICJIA’s policies for three
subrecipients tested.  Specifically:

• Two of the seven site visit reports
contained no evidence of review by the
supervisor.
• For one of the seven reviews, there
was no evidence of the follow up
letter.
• For two of the seven reviews, the
follow up letter was sent without
evidence of supervisor review.

• ICJIA’s fiscal on-site monitoring
review included more detailed
procedures over the various fiscal
processes (payroll, procurement, and
reporting) impacting compliance
requirements applicable to most
federal programs.  The review also
included sampling of transactions
across multiple awards provided by
ICJIA.  For the one sample, evidence
of the corrective action plan and file
closure were not available.  In
addition, no evidence of supervisory
review of the file was provided.

Additionally, ICJIA did not adequately
review single audit reports for
subrecipients of the CVA program.  The
State of Illinois established the
Grant Accountability Transparency Unit
(GATU) to implement the provisions of
the State’s Grant Accountability and
Transparency Act (GATA) on a
centralized basis.  GATU has
established standardized reporting
requirements for subrecipients of the
various Federal programs administered
by the State through its various
departments.  Subrecipients of the
State are required to certify whether
they expended more than $750,000 in
federal awards during the fiscal year
and submitted their single audit
reporting packages to the Federal
Audit Clearinghouse (if required).

ICJIA staff are responsible for
reviewing the reports of their
subrecipients and issuing management
decisions on findings reported within
required time frames.  During our test
work of a sample of single audit desk
review files for 16 CVA program
subrecipients, we noted ICJIA did not
have appropriate internal controls in
place to ensure receipt of single
audit reports or issuance of
management decisions within required
time frames.

Finally, all pass-through entities
must identify the dollar amount made
available under each Federal award and
the assistance listing number (or CFDA
number) at the time of disbursement
per 2 CFR 200.332(a)(1)(xii).  ICJIA
did not provide any notification of
CFDA numbers to its subrecipients when
funds were disbursed during fiscal
year 2020.

We noted ICJIA passed through
approximately $68,765,000 to
subrecipients of the CVA program
during the year ended June 30, 2020.

Failure to execute required risk
assessments and adequately monitor
subrecipients including review of
single audit reports may result in
subrecipients not properly
administering the federal programs in
accordance with laws, regulations, and
the terms and conditions of the award.
Not communicating CFDA numbers can
hamper the subrecipients’ ability to
correctly prepare their schedule of
federal awards.  (Finding 18, pages
66-69)

As a result of ICJIA’s failure to
execute required risk assessments,
adequately monitor subrecipients, and
communicate CFDA numbers, the auditors
qualified their opinion on the Crime
Victim Assistance program.

We recommended ICJIA perform and
document risk assessments of each
subrecipient and ensure monitoring
visits are performed in accordance
with the results of such risk
assessments.  We also recommended
ICJIA ensure adequate documentation is
retained for all program and fiscal
reviews. In addition, we recommended
ICJIA establish controls to ensure
single audit reports and any CAP are
received timely and desk reviews are
completed and documented in a timely
manner to substantiate whether MDLs
should be issued by ICJIA within six
months.  Lastly, ICJIA should add to
their warrant description the CFDA
number associated with each
disbursement.

ICJIA concurred with our
recommendation and noted they will
ensure preliminary MDLs within the
required timeframe.  Additionally,
ICJIA will implement a process for
ensuring financial oversight of
grantees based on assessed risk and
adequately document the internal
review.  ICJIA noted they have
incorporated and communicated more
changes to their policy and procedures
(and will continuously update as
needed) to more comprehensively
oversee and update their grantee files
on a timely basis and to ensure
appropriate and complete documentation
is maintained and updated monthly or
more regularly as needed.  ICJIA has
begun adding the CFDA number to each
disbursement.

INADEQUATE SUPPORT FOR FRINGE BENEFIT
COSTS CHARGED TO FEDERAL PROGRAMS

The Illinois Department of Employment
Security (IDES) does not have controls
in place over determining fringe
benefits to be charged to the
Employment Service Cluster program.

The Employment Service Cluster Program
is an administrative grant program
which primarily funds personal service
costs, fringe benefit expenditures,
and indirect costs which are allocated
to its federal and state programs
through the use of cost centers
established for each of IDES’
activities and programs.  On an annual
basis, the Department of Central
Management Services (DCMS) establishes
rates for group insurance fringe
benefit charges (including health
insurance, dental insurance, and life
insurance) to be used by all State
agencies to determine the insurance
premiums to be paid for State
employees.

During our testing of 40 fringe
benefit expenditures charged to the
Employment Service Cluster program
(totaling $214,000), we noted that for
37 of the 40 samples, we were unable
to recalculate benefit amounts such as
social security, Medicare, and group
insurance.  Differences noted ranged
from $1 to $252.  As a result, we were
unable to determine whether the fringe
benefit expenditures were
appropriately supported in accordance
with federal requirements due to the
lack of established internal control
procedures to ensure fringe benefit
amounts are complete and accurate.

Fringe benefit costs charged to the
Employment Services Cluster program
for the year ended June 30, 2020 were
approximately $10,775,000.

Failure to establish effective
internal control over the completeness
and accuracy of fringe benefit
expenditures claimed may result in the
unallowable costs being charged to
federal programs.  (Finding 20, pages
72-73)

As a result of IDES’s lack of adequate
controls to determine fringe benefits
to be charged to the program, the
auditors qualified their opinion on
the Employment Services Cluster
program.

We recommended IDES identify the
calculation discrepancies for fringe
benefits and implement corrective
action.

IDES officials accepted our
recommendation and indicated they
would work actively with CMS in
designing a new statewide payroll
application which they believe will
address the deficiencies identified.

INADEQUATE PROCEDURES TO DETERMINE AND
DOCUMENT VETERAN BENEFIT ELIGIBILITY

IDES does not have adequate procedures
to determine and document eligibility
for veteran beneficiaries of the
Employment Service Cluster program.

The Employment Service Cluster program
provides career services to meet the
employment needs of eligible veterans
of the Disabled Veterans’ Outreach
Program (DVOP).  Services are provided
to eligible veterans based upon
priority and maximum emphasis
requirements established by Veterans’
Program Letter 03-14 and Training and
Employment Guidance Letter (TEGL)
19-13.  In accordance with the
statute, USDOL directives specify the
following order of priority in the
provision of services:  (1) special
disabled veterans; (2) other disabled
veterans; and (3) other eligible
veterans with significant barriers to
employment (SBE).  As part of IDES’
process to determine eligibility of
program beneficiaries, a Veteran
Intake Form (VIF) is completed by each
veteran and reviewed b a program
manager to verify the veteran
qualifies for services.

During our testing of 40 veterans who
received services from the Employment
Services Cluster program, we noted
that the VIF for 18 veterans was
unable to be provided by IDES.  Of
these 18 veterans with missing VIFs,
DVOP services were provided to 2
veterans who were ineligible as they
did not meet the established criteria
to receive such services.  The
remaining 16 were determined to be
eligible for services based on the
information in each veteran’s file;
however, the VIF could not be located
to validate the control evidence.
There are no questioned costs noted as
there are no direct monetary benefits
received by the veterans who are
receiving reemployment services.

Failure to properly document and
perform eligibility determinations in
accordance with internal policy and
federal regulations may result in
federal funds being awarded to
ineligible beneficiaries, which are
unallowable costs.  (Finding 21, pages
74-75)

As a result of IDES’s failure to
ensure eligibility for services was
fully documented, the auditors
qualified their opinion on the
Employment Service Cluster program.

We recommended IDES review its current
procedures and consider any changes
necessary to ensure eligibility
determinations are documented and
performed in accordance with internal
policy and federal regulations,
including evidence of review.

IDES accepted the finding and
indicated they will institute changes
to their process to ensure compliance.

INADEQUATE PROCESS OVER DETERMINING
ELIGIBILITY FOR THE PANDEMIC
UNEMPLOYMENT ASSISTANCE PROGRAM

IDES did not perform required wage
verifications for Pandemic
Unemployment Assistance (PUA) program
claimants in accordance with program
requirements during the year ended
June 30, 2020.  Additionally, IDES did
not have controls to ensure wage
verification requirements were
performed.

The PUA program was established by the
Coronavirus Aid, Relief, and Economic
Security Act (CARES) enacted on March
27, 2020.  The main provisions of the
PUA program include providing up to 39
weeks of benefits to qualifying
individuals who were otherwise able to
work and available for work within the
meaning of applicable state law,
except that they were unemployed,
partially unemployed, or unable or
unavailable to work due to COVID-19
related reasons, as defined in the
CARES Act.  Benefit payments under PUA
were retroactive, for weeks of
unemployment, partial unemployment, or
inability to work due to COVID-19
reasons starting on or after January
27, 2020 and through December 31,
2020.

During our audit of PUA recipients
through June 30, 2020, we noted IDES
did not perform wage verifications for
any PUA claimants who received amounts
greater than the standard $198 weekly
benefit amount (WBA).  For the PUA
claimants, IDES is required to perform
wage verifications within 21 days of
the application being submitted.  IDES
management stated that benefits paid
to PUA claimants as of June 30, 2020
who received greater than $198 WBA and
did not have the required wage
verification performed within 21 days
were approximately $155,083,000.

Total PUA payments were approximately
$378,422,000, or 4% of the total $9.5
billion CARES Unemployment Insurance
programs including PUA, Pandemic
Emergency Unemployment Compensation
(PEUC), and Federal Pandemic
Unemployment Compensation (FPUC)
included in the Schedule of
Expenditures of Federal Awards during
the year ended June 30, 2020.

Additionally, IDES did not establish
processes and controls for wage
verifications during the year ended
June 30, 2020.

Failure to establish adequate
processes and internal controls may
result in noncompliance with program
regulations and payments to ineligible
recipients.  (Finding 22, pages 76-78)

As a result of IDES not performing
required wage verifications and not
having controls to ensure wage
verification requirements were
performed, the auditors qualified
their opinion on the Unemployment
Insurance Program.

We recommended IDES review its current
procedures and consider any changes
necessary to ensure adequate processes
are established to compete wage
verification for all PUA recipients
within 21 days based on the
regulations change dated January 2021
requiring all wages to be verified.
In addition, IDES should continue to
perform wage verifications and send
recoupment letters for those who
received erroneous or excessive
benefits from May to December 2020.

IDES officials accepted the finding
and indicated they have made two
procedural changes to address this
finding, including engaging an outside
contractor to provide additional
staffing to assist with the massive
PUA workflows and starting all claims
at the minimum WBA, pending income
verification, beginning in January
2021.

FAILURE TO IMPLEMENT UI PROGRAM
INTEGRITY AND OVERPAYMENT REDUCTION
REQUIREMENTS

IDES did not implement Federal
requirements to improve program
integrity and reduce overpayments.

The State is required to establish
written procedures for:  (1)
identifying overpayments, (2)
classifying overpayments into
categories based on the reason the
overpayment occurred (i.e. employer
error, non-response from employers,
beneficiary fraud, etc.), and (3)
establishing appropriate methods for
following up on each category of
overpayment.  In establishing these
procedures, the State is required to
enter into three agreements prior to
commending recoveries.  The first
agreement permits the State to offset
State unemployment insurance (UI) from
Federal UI overpayments (Cross Program
Offset and Recovery Agreement).  The
second agreement permits the State to
recover overpayments from benefits
being administered by another State
(Interstate Reciprocal Overpayment
Recovery Agreement).  The third
agreement permits the State to utilize
the Treasury Offset Program to recover
overpayments that remain uncollected
one year after the debt was determined
to be due.  Additionally, the State is
(1) required to impose a monetary
penalty (not less than 15 percent) on
claimants whose fraudulent acts
resulted in overpayments, and (2)
prohibited from providing relief from
charges to an employer’s UI account
when overpayments are the result of
the employer’s failure to respond
timely or adequately to a request for
information.

During our test work, we noted that
while IDES has developed the written
procedures relative to overpayments
and has entered into the required
agreements described in the previous
paragraph, the written procedures did
not address the requirement to impose
a monetary penalty on fraud
overpayments.  Additionally, we noted
the policies do not address the
prohibition of providing employers
relief resulting from an employer
failing to provide timely or adequate
information.

Failure to implement federal
requirements could result in
noncompliance with laws, regulations,
and the grant agreement.  (Finding 24,
pages 82-83)  This finding was first
reported in the Statewide Single Audit
in 2015.

As a result of IDES not implementing
Federal requirements to improve
program integrity and reduce
overpayments, the auditors qualified
their opinion on the Unemployment
Insurance Program.

We recommended IDES develop and
implement written procedures to
improve UI program integrity and
reduce overpayments that incorporate
the required monetary penalty on fraud
overpayments and prohibit providing
relief to employers who fail to
provide timely and adequate responses
to information requests.

IDES accepted the finding and
indicated written procedures regarding
the 15% penalty will be incorporated
into established procedure(s) covering
overpayments.  IDES also indicated in
Calendar Year 2021, they will
implement its identified process on
the prohibition of non-charging due to
employer fault.

INADEQUATE MONITORING OF SPECIAL
EDUCATION SUBRECIPIENTS

The Illinois State Board of Education
(ISBE) did not perform adequate
monitoring procedures over
subrecipients of the Special Education
Cluster (IDEA) (Special Education)
program.

ISBE selects subrecipients of certain
USDE programs to perform on-site
fiscal and administrative monitoring
procedures using a risk-based
approach.  ISBE’s risk assessments are
based on the funding level received by
the entity, the financial status, the
improvement status, any past audit
findings, and the type of entity.
Once the higher risk subrecipients are
selected for monitoring, ISBE selects
programs and individual locations
within each subrecipient for
additional reviews which may consist
of on-site reviews, desk reviews, or
analytical procedures.

During the year ended June 30, 2020,
ISBE’s programmatic monitoring
procedures only included requirements
pertaining to the Title I and Title II
federal programs, as well as select
fiscal requirements applicable to
certain federal programs.
Accordingly, program requirements
pertaining to the Special Education
program were not included in the on-
site reviews, desk reviews, or
analytical procedures performed for
ISBE’s higher risk subrecipients
during the year ended June 30, 2020.
ISBE has represented that certain
monitoring procedures were performed;
however, the procedures are not
correlated with the risk assessment
nor consistently applied to the
subrecipients based on risk ratings.

In addition, ISBE did not establish
adequate controls to ensure its
subrecipient risk assessment
procedures properly addressed each of
ISBE’s federal programs as required by
the Uniform Guidance.

ISBE’s payments to subrecipients of
the Special Education program during
the year ended June 30, 2020 totaled
$535,716,000.

Failure to execute approved risk
assessments such that program
monitoring is performed based on the
risk assessment could result in
subrecipients not properly
administering the federal programs in
accordance with laws, regulations, and
the terms and conditions of the award.
(Finding 29, pages 93-94)   This
finding was first reported in the
Statewide Single Audit in 2017.

As a result of ISBE not performing
adequate monitoring procedures over
subrecipients, the auditors qualified
their opinion on the Special Education
Cluster.

We recommended ISBE execute the
Special Education risk assessment and
perform the program monitoring as
denoted in the risk assessment.

ISBE agreed with the finding and noted
local education agency (LEA)
performance on compliance indicators
included in the LEA Determinations
served as the foundation for the risk-
based approach in FY20 in determining
those higher risk subrecipients in
need of further monitoring and
support.  ISBE officials also
indicated the special education risk-
based accountability and support
system being developed for FY21
expands the factors considered for
determining higher risk subrecipients
under LEA Determinations by using both
compliance and results (outcomes)
indicators.

OTHER FINDINGS

The remaining findings pertain to
other compliance and internal control
matters.  We will follow up on the
status of corrective action on all
findings in our next Statewide Single
Audit for the year ended June 30,
2021.

AUDITORS’ OPINION

The auditors stated the Schedule of
Expenditures of Federal Awards for the
State of Illinois as of and for the
year ended June 30, 2020, is presented
fairly in all material respects.

This single audit was conducted by the
firm of KPMG 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:CMD