REPORT DIGEST

CAPITAL DEVELOPMENT BOARD

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  June 2, 2022

FINDINGS THIS AUDIT:  2

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


This digest covers the Capital
Development Board’s (CDB) financial
audit as of and for the year ended
June 30, 2021.

SYNOPSIS

• (21-01) The Capital Development
Board (CDB) failed to provide
appropriate oversight over certain
accounts for which it has fiduciary
responsibility.
• (21-02) The CDB did not have
adequate internal control over
reporting its census data and did not
have a reconciliation process to
provide assurance census data
submitted to its pension and other
postemployment benefits (OPEB) plans
was complete and accurate.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

INADEQUATE FIDUCIARY OVERSIGHT

The CDB failed to provide appropriate
oversight over certain accounts for
which it has fiduciary responsibility.

During the audit of CDB’s June 30,
2021 financial statements, we noted
CDB allows contractors for projects
that meet certain criteria to
establish a trust agreement in which
the retainage withheld for that
project is deposited into a bank
account that can only be accessed by
CDB. Through testing, we noted
approximately $326,724 in retainage
related to two projects had been
erroneously deposited into the
contractor’s operating account rather
than the retention trust account. The
retention trust accounts are reported
on CDB’s financial statements as cash
and cash equivalents in the nonmajor
governmental funds. CDB determined
these errors immaterial and did not
revise its financial statements.
(Finding 1, pages 54-55)

We recommended the CDB implement
procedures to ensure GAAP reporting
packages and financial statements are
prepared in a complete and accurate
manner. These procedures should
address all elements of CDB financial
reporting process, including its
fiduciary responsibilities over the
retention trust accounts.

The CDB accepted our recommendation
and stated it continues to make every
effort to ensure that retention trust
account balances are accurate.  The
CDB also stated the discrepancies have
been addressed and CDB is now
performing retention trust
confirmations on a quarterly basis to
ensure accounts reconcile.

INADEQUATE INTERNAL CONTROLS OVER
CENSUS DATA

The CDB did not have adequate internal
control over reporting its census data
and did not have a reconciliation
process to provide assurance census
data submitted to its pension and
other postemployment benefits (OPEB)
plans was complete and accurate.

Census data is demographic data (date
of birth, gender, years of service,
etc.) of the active, inactive, or
retired members of a pension or OPEB
plan. The accumulation of inactive or
retired members’ census data occurs
before the current accumulation period
of census data used in the plan’s
actuarial valuation (which eventually
flows into each employer’s financial
statements), meaning the plan is
solely responsible for establishing
internal controls over these records
and transmitting this data to the
plan’s actuary. In contrast,
responsibility for active members’
census data during the current
accumulation period is split among the
plan and each member’s current
employer(s). Initially, employers must
accurately transmit census data
elements of their employees to the
plan. Then, the plan must record and
retain these records for active
employees and then transmit this
census data to the plan’s actuary.

We noted the CDB’s employees are
members of both the State Employees’
Retirement System of Illinois (SERS)
for their pensions and the State
Employees Group Insurance Program
sponsored by the State of Illinois,
Department of Central Management
Services (CMS) for their OPEB. In
addition, we noted these plans have
characteristics of different types of
pension and OPEB plans, including
single employer plans and cost-sharing
multiple-employer plans.

During testing, we noted the CDB had
not performed an initial complete
reconciliation of its census data
recorded by SERS and CMS to its
internal records to establish a base
year of complete and accurate census
data. We noted the CDB had not
performed a Fiscal Year 2019
reconciliation. A partial
reconciliation was performed of Fiscal
Year 2020, but because CDB utilized
the SERS data as of September 15,
2020, not all categories were
reconciled. A full reconciliation was
performed for Fiscal Year 2021.
(Finding 2, pages 56-57)

We recommended the CDB continue to
work with SERS on reconciling its
census data from its underlying
records to a report from each plan of
census data submitted to the plan’s
actuary.

The CDB accepted our recommendation
and stated it continues to work with
SERS toward reconciliation.

AUDITOR’S OPINION

The auditors stated the financial
statements of the CDB, as of and for
the year ended June 30, 2021, 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

FJM:MEG