REPORT DIGEST

DEPARTMENT OF REVENUE

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2022

Release Date:  July 27, 2023

FINDINGS THIS AUDIT: 3

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

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

• (22-01)  The Department did not
properly reflect the reporting for
federal operating grant activity in its
financial statements.
• (22-02)  The Department did not have
adequate internal controls over access
to the enterprise tax system (GenTax).

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

WEAKNESSES IN INTERNAL CONTROLS OVER
REPORTING FOR FEDERAL OPERATING GRANTS

The Department of Revenue (Department)
did not properly reflect the reporting
for federal operating grant activity in
its financial statements.

During our review of the Department’s
draft financial statements, audit
adjustments were proposed for two of
the Department’s governmental funds;
Fund 0286 (Illinois Affordable Housing
Trust) and Fund 0324 (State Coronavirus
Urgent Remediation Emergency) to
properly reflect revenue and
expenditure recognition requirements
for federal operating grants that are
being administered by the State and
passed through to a component unit of
the State.

• Fund 0286: An adjustment of
$204,700,000 to reduce federal
operating grant revenue and increase
unearned revenue due to revenue
recognition requirements related to the
fact that the ultimate grantee did not
incur qualifying expenditures as of
fiscal-year end.
• Fund 0324: Three adjustments as
follows:
– An adjustment of $585,394,000 to
remove the debit balance posted to the
federal operating grants revenue
account in error, the corresponding
adjustment removed the same balance
reported as a SAMS transfer out within
other financing sources.
– An adjustment of $73,306,000 to
record federal operating grant revenue
associated with the grant program for
amounts that passed through the
Department to the ultimate grantee
during the year.
– An adjustment of $49,729,000 to
reduce federal operating grant revenue
and increase unearned revenue due to
revenue recognition requirements
related to the fact that the ultimate
grantee did not incur qualifying
expenditures as of fiscal-year end.
(Finding 1, pages 64-66)

We recommended the Department
strengthen its internal controls to
ensure its financial reporting is
complete and accurate and in accordance
with GAAP as it relates to its
financial statements.

The Department accepted the
recommendation.

INADEQUATE CONTROL OVER ACCESS TO
GENTAX

The Department did not have adequate
internal controls over access to the
enterprise tax system (GenTax).

During our testing, we requested the
Department provide the populations of
individuals hired and terminated from
employment during the audit period.  In
response to our request, the Department
provided the populations; however, we
noted the populations were not timely
updated to reflect the changes in the
activity for new hires and terminations
in Fiscal Year 2022. Therefore, we were
unable to conclude whether the
populations were complete and accurate
under the Professional Standards
promulgated by the American Institute
of Certified Public Accountants (AU-C §
500.08 and AT-C § 205.36).

Even given the population limitations
noted above, we performed testing over
the security controls of GenTax noting:

• 2 of 23 (9%) individuals' GenTax
access were activated six and eight
days before the employment start date.
• 4 of 14 (29%) individuals' GenTax
access were not terminated upon
separation, and we were unable to
determine when those separated
employees' access were terminated.
• 1 of 14 (7%) individual’s GenTax
access was not terminated timely upon
separation. The access was terminated
five days after separation. (Finding 2,
pages 67-68)

We recommended the Department
strengthen its internal controls over
the records maintained related to
hiring and terminations. We further
recommended the Department strengthen
its internal controls to ensure users’
access are immediately terminated in
accordance with Department policy and
new hires are not granted access prior
to their start dates.

The Department accepted the
recommendation.

OTHER FINDINGS

The remaining finding pertains to
inadequate controls over services
providers. We will review the
Department’s progress towards the
implementation of our recommendations
in our next financial audit.

AUDITOR’S OPINIONS

The auditors stated the financial
statements of the Department as of and
for the years ended June 30, 2022 are
fairly stated in all material respects.

This financial audit was conducted by
RSM US 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

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