REPORT DIGEST

STATE OF ILLINOIS

FINANCIAL AUDIT
FOR THE TWO YEAR ENDED JUNE 30, 2023

Release Date:  August 12, 2025

FINDINGS THIS AUDIT: 5

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  0 -- 4 -- 4
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 1 -- 1
TOTAL:  0 -- 5 -- 5

FINDINGS LAST AUDIT: 6

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, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

The Illinois Office of Comptroller prepares
the State of Illinois’ Annual Comprehensive
Financial Report.  The Annual Comprehensive
Financial Report is the State’s official
annual report, which provides the readers
with the financial position of the State as
of June 30, 2023, and its results of
operations during the fiscal year.

The financial section of the Annual
Comprehensive Financial Report includes the
Independent Auditor’s Report on the basic
financial statements, management’s
discussion and analysis, the basic financial
statements, required supplementary
information, and individual fund statements
and schedules.

AUDITOR’S OPINIONS

The auditors qualified their opinions on the
Unemployment Compensation Trust Fund and
Business-Type Activities opinion units of
the financial statements of the State of
Illinois.  All other opinion units of the
financial statements of the State of
Illinois are fairly presented in all
material respects.

The financial statements at June 30, 2023,
reflect the following:

• The net position of governmental
activities continued to improve and the
deficit decreased by $14.6 billion from June
30, 2022, to June 30, 2023.  Overall, the
net position of governmental activities is
reported as a deficit of $170.2 billion.
(Exhibit 1)
• The fund balance of the General Fund
improved by $1 billion from June 30, 2022,
to June 30, 2023.    The fund balance is
$2.5 billion. (Exhibit 2)

REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE

In accordance with Government Auditing
Standards, a report on our consideration of
the State of Illinois’ internal control over
financial reporting and our tests of its
compliance is also issued as part of our
financial statement audit.  This report is a
separate document and is summarized in this
document.  Our report noted the State’s
decentralized internal control system is not
adequate.  We also reported significant
financial reporting deficiencies at several
State agencies.

STATE OFFICIALS
As of June 30, 2023

Governor -- JB Pritzker
Comptroller -- Susana A. Mendoza
Speaker of the House -- Emanuel Chris Welch
President of the Senate -- Don Harmon
House Republican Leader -- Tony McCombie
Senate Republican Leader -- John Curran

FINANCIAL ANALYSIS OF THE STATE

The net position of the State’s governmental
activities improved $14.6 billion.  The
following condensed financial information
was derived from the government-wide
Statement of Net Position and reflects the
State’s governmental activities financial
position as of June 30 for Fiscal Years 2016
through 2023.
(Exhibit 1)
The deficits reflected in Exhibit 1 are
presented on an accrual basis and represent
the excess of total liabilities and deferred
inflows of resources over total assets and
deferred outflows of resources at a given
point in time.  These deficits represent the
deferral of current and prior year costs to
future periods.  ?

GENERAL FUND

Many programs are accounted for in the
General Fund.  The GAAP basis financial
position of the General Fund improved at
June 30, 2023, from June 30, 2022.  The fund
balance in the State’s General Fund improved
by $1 billion on a GAAP basis.  The June 30,
2023, balance was $2.5 billion.  Exhibit 2
reflects the General Fund balance for Fiscal
Years 2016 through 2023.
(Exhibit 2)

STATE COMPARISON

Exhibit 3 provides an analysis of the
State’s governmental activities net position
at June 30, 2023, compared to other States.
(Exhibit 3)

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE FINANCIAL REPORTING PROCESS

The State of Illinois’ (State) current
financial reporting process does not allow
the State to prepare a complete and accurate
Annual Comprehensive Financial Report (ACFR)
in a timely manner.  Reporting issues at
various individual agencies caused delays in
finalizing the financial statements.  The
lack of timely financial reporting limits
effective oversight of State finances.

Accurate and timely financial reporting
problems continue to exist even though the
auditors have (1) continuously reported
numerous findings on the internal controls
(material weaknesses and significant
deficiencies), (2) commented on the
inadequacy of the financial reporting
process of the State, and (3) regularly
proposed adjustments to the financial
statements year after year.  These findings
have been directed primarily towards major
State agencies under the organizational
structure of the Governor and towards the
Comptroller.

The Comptroller has made significant changes
to the system used to compile financial
information; however, the State has not
solved all the problems to effectively
remediate these financial reporting
weaknesses.  The State has a highly
decentralized financial reporting process
due to the use of numerous financial
reporting systems, many of which are not
interrelated and require manual intervention
to convert data.  The process is also overly
dependent on the post audit program, even
though the Office of the Auditor General has
repeatedly informed State agency officials
that the post audit function is not a
substitute for appropriate internal controls
at State agencies.

Annual financial reporting to the
Comptroller requires the State’s agencies to
prepare a series of financial reporting
forms (SCO forms) designed by the
Comptroller, which are utilized to prepare
the ACFR.  Although these SCO forms are
subject to review by the Comptroller’s
financial reporting staff during the ACFR
preparation process and there are
recommended minimum qualifications for all
new generally accepted accounting principles
(GAAP) coordinators who oversee the
preparation of the SCO forms, the current
process still lacks sufficient internal
controls at individual agencies
 (Finding 1, pages 7-9).  This finding has
 been reported since 2007.

We recommended the Governor and the
Comptroller continue to work together to
resolve the State’s inability to produce
timely and accurate GAAP-basis financial
information.

The Office of the Governor agreed with the
recommendation, and stated they will
continue to work with the Comptroller and
individual state agencies that have the most
pressing challenges to produce timelier and
more accurate GAAP-basis financial
information. The state agencies under the
Governor are completing the multi-year
implementation of an Enterprise Resource
Planning (ERP) system—an integrated
enterprise-wide system that includes a
financial accounting component. All state
agencies under the Governor’s purview are
using the financial accounting component of
the ERP system. Further, the Governor
anticipates that all state agencies subject
to the Grant Accountability and Transparency
Act will join the Statewide grants
management system currently under
development. The grants management system
will pull data from the ERP system,
promoting consistency across state systems.
Upon full implementation, the two systems
are expected to improve internal controls
and will better support the agencies’
production of accurate and timely financial
statements. The Governor notes that he has
no authority to direct or control the
financial reporting processes employed by
other constitutional offices. Finally, the
Governor has taken steps to increase
staffing of and training for agency fiscal
offices to improve processes.

The Comptroller accepted the recommendation
and stated the State still faces several
roadblocks in the timely completion of the
Annual Comprehensive Financial Report. The
General Assembly enacted Public Act 96-1501,
which extended the lapse period to October
31 for fiscal year 2021 and future fiscal
years for medical payments of the Department
of Veterans’ Affairs and medical, childcare,
and substance abuse treatment payments of
the Department of Human Services.  Public
Act 102-0291 extended lapse period from
August 31 to October 31 for fiscal year 2022
and future fiscal years for medical
assistance payments of the Department of
Healthcare and Family Services.  More
importantly, the Annual Comprehensive
Financial Report completion continues to be
delayed because of financial reporting
issues identified during individual State
agency financial and compliance audits.  The
report cannot be finalized until these
issues are resolved at the individual State
agency reporting level.

The Comptroller will continue to work with
the Governor’s Office, the Auditor General’s
Office, and agency GAAP coordinators to
improve the timeliness and quality of
reporting, including alternative options for
the completion of the financial reporting
process of the State.

FINANCIAL REPORTING WEAKNESSES

The State of Illinois (State) did not have
adequate controls to address the risk of
primary government agencies reporting
incorrect information or information
noncompliant with generally accepted
accounting principles (GAAP).  The Office of
the Auditor General performed 25 audits at
agencies of the primary government,
including the five pension systems and the
Illinois State Board of Investment.  During
these audits, we noted a total of 25
material weaknesses and 10 significant
deficiencies related to the internal
controls over the financial reporting
process at 14 of the agencies.

 Specifically, some of the more significant
 issues noted included the following:

• The Department of Healthcare and Family
Services and the Department of Human
Services failed to execute adequate internal
controls over the operation of the State of
Illinois’ Illinois Medicaid Program Advanced
Cloud Technology system (IMPACT).
• The Department of Healthcare and Family
Services and the Department of Human
Services lacked controls over eligibility
determinations and redeterminations for
Federal programs where such determination is
documented using the Integrated Eligibility
System (IES).
• The Department of Innovation and
Technology did not adequately review billing
rates utilized to bill agencies for
Information Technology and
Telecommunications services and its accounts
receivable.
• The Department of Transportation did not
have adequate controls for calculating its
net investment in capital assets and
unrestricted net position.

Material weaknesses and significant
deficiencies further extend financial
reporting timelines since additional
measurements and reporting are required.
Completion or substantial completion of
these audits is necessary for the Auditor
General to issue an opinion on the State’s
basic financial statements.

The Department of Healthcare and Family
Services, after the completion of their
agency audit, identified an error that
resulted in DHFS invoicing pharmaceutical
manufacturers for rebate payments for
Medicare Part D drugs that were ineligible
for such rebates. This error required a
restatement of the beginning balance for the
General Fund and Governmental Activities,
along with an adjustment for the Fiscal Year
2023 portion of the error.

In addition to the deficiencies noted above,
material misstatements were identified by
the auditors at six agencies.  The
adjustments totaled $1.1 billion for the
Governmental Activities and General Fund;
$69.8 million for the Business-Type
Activities and Unemployment Compensation
Trust Fund; and $18.8 million for Fiduciary
Funds (Finding 2, pages 10-14). This finding
has been reported since 2002.

We recommended the State continue its
efforts to improve internal control
procedures in order to assess the risk of
material misstatements to the financial
statements and to identify such
misstatements during the financial statement
preparation process.  We further recommended
the internal control procedures include a
formal evaluation of prior problems and
implementation of procedures to reduce the
risk of these problems reoccurring.

The Office of the Governor agreed with our
recommendation and stated they will continue
to work together with the Office of
Comptroller and the State agencies under its
jurisdiction to improve Statewide internal
control procedures and reduce the likelihood
of material misstatements to the financial
statements.  The state agencies under the
Governor are completing the multi-year
implementation of an Enterprise Resource
Planning (ERP) system—an integrated
enterprise-wide system that includes a
financial accounting component. All state
agencies under the Governor’s purview are
using the financial accounting component of
the ERP system. Agencies will continue to
assess how ERP can support them, assist in
assessing the risk of material
misstatements, and identify such
misstatements during the reporting process.
Agencies will continue to assess how ERP can
support them, assist in assessing the risk
of material misstatements, and identify such
misstatements during the reporting process.
Further, the Governor anticipates that all
agencies subject to the Grant Accountability
and Transparency Act will join the Statewide
grants management system, currently under
development. The grants management system
will pull data from the ERP system,
promoting consistency across state systems.
Upon full implementation, the two systems
are expected to improve internal controls
and will better support the ability of
agencies to avoid misstatements in the
financial reporting process. Further, the
Governor has taken steps to increase
staffing of and training for agency fiscal
offices to improve processes such as
accounts receivable and capital assets
documentation. Finally, the Governor will
work with DHFS and DHS to ensure necessary
interagency agreements are timely executed
and to strengthen internal controls over the
IMPACT system and IES. The Governor notes
that he has no authority to direct or
control the accounting policies and
processes employed by other constitutional
offices.

The Office of Comptroller accepted our
recommendation and stated they will continue
to assist the Governor’s Office in their
efforts to increase the quality of GAAP
packages by providing enhanced training and
technical assistance to State agencies and
encouraging more stringent internal controls
at the agency level.

OTHER FINDINGS

The remaining findings pertain to late
payment of statutorily mandated transfers,
inadequate controls over Pandemic
Unemployment Assistance, and failure to
implement adequate Information Technology
controls.  We will review the State’s
progress towards the implementation of our
recommendations in our next financial audit.

This financial audit was conducted by the
Office of the Auditor General’s staff.

COURTNEY DZIERWA
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:skm