REPORT DIGEST

ILLINOIS STATE TOLL HIGHWAY AUTHORITY

FINANCIAL AUDIT
FOR THE YEAR ENDED DECEMBER 31, 2022

Release Date:  November 16, 2023

FINDINGS THIS AUDIT: 2

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

FINDINGS LAST AUDIT: 4

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 Illinois State Toll
Highway Authority’s (Tollway) Financial
Audit as of and for the year ended December
31, 2022.

SUBSEQUENT DISCOVERY OF FACTS

Subsequent to the original issuance of the
financial statements an error was
discovered in the methodology used to
calculate the Other Post Employment Benefit
Expense Recovery resulting in a material
misstatement to the Tollway’s financial
statements as is described in footnote 21,
which has since been corrected by this
reissuance.

SYNOPSIS

• 22-01 The Tollway did not have adequate
internal controls in place to ensure
transactions over Intergovernmental
Agreements were properly recorded for
financial reporting purposes.

• 22-02 The Tollway did not have adequate
internal controls in place to ensure other
post-employments benefits expense, and the
related deferred inflows of resources and
deferred outflows of resources, were
properly recorded in the financial
statements.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE INTERNAL CONTROLS OVER
INTERGOVERNMENTAL AGREEMENTS

The Illinois State Toll Highway Authority
(Tollway) did not have adequate internal
controls in place to ensure transactions
over Intergovernmental Agreements (IGA)
were properly recorded for financial
reporting purposes.

The Tollway enters into intergovernmental
agreements with other governments and
municipalities for cost sharing on
construction projects that impact both the
Tollway and other entities’ property. The
intergovernmental agreements itemize the
estimated costs to each party. The Tollway
utilizes percentage of completion reports
to calculate the estimated amount due from
each entity at a given point in time. The
amount due from the other entity is
recorded as a receivable and as a reduction
of Assets Under Construction (capital asset
– construction in progress). IGA revenue
and expense are recognized for the same
amount. Upon completion of the project,
final actual costs are determined, and the
final receivable is adjusted to the earned
amount. The net effect is no impact to the
Tollway’s Net Position.

During our testing of Intergovernmental
Receivables, we noted the Tollway
improperly recorded receivable balances
from two entities within an IGA resulting
in an overstatement of Intergovernmental
Receivables of $4,971,539, an
understatement of Capital Assets of
$4,971,539, and an overstatement of both
Revenue and Expense of $4,971,539. All
errors net to a zero effect on the
Statement of Net Position and the Statement
of Revenue, Expenses and Changes in Net
Position.

After extrapolating the known errors over
the sample population of $12,829,216, the
estimated projected impact of these errors
is an overstatement of Intergovernmental
Receivables of $8,100,807, an
understatement of Capital Assets –
Construction in Progress of $8,100,807, and
an overstatement of both Revenues and
Expenses under IGA’s of $8,100,807. The net
effect of this error on net position is $0.
Management elected not to record the
proposed adjusting entry for this error.
(Finding 1, pages 78-79)

We recommended the Tollway implement
controls to ensure Intergovernmental
Agreements are reviewed and accurately
accounted for to reduce the risk of future
potential misstatements.

Tollway officials concurred with the
recommendation and stated they have
enhanced their verification procedures for
Intergovernmental agreement accounting to
include additional verifications of payment
terms and balances with Tollway staff
involved in drafting and administering the
agreements.

INADEQUATE INTERNAL CONTROLS OVER THE
FINANCIAL REPORTING OF OTHER POST-
EMPLOYMENT BENEFITS

The Illinois State Toll Highway Authority
(Tollway) did not have adequate internal
controls in place to ensure other post-
employment benefits (OPEB) expense, and the
related deferred inflows of resources
and deferred outflows of resources, were
properly recorded in the financial
statements.

The Tollway relies on the audited Report on
the Allocation of Other Post Employment
Benefit Amounts provided by Central
Management Services in order to recognize
its OPEB liability, OPEB expense, and
related deferred inflows of resources and
deferred outflows of resources. The Tollway
did not properly utilize the information in
the report, causing deferred inflows of
resources to be understated by
$35,851,131, deferred outflows of resources
to be overstated by $411,495,847, and OPEB
expense recovery to be overstated by
$447,346,978.

Failure to accurately record financial
transactions resulted in a material
misstatement of the Tollway’s financial
statements. The audited financial
statements for the year ended December 31,
2022 were
required to be recalled and reissued.
(Finding 2, pages 80-81)

We recommended the Tollway implement
controls to ensure its OPEB liability, OPEB
expense, and related deferred inflows of
resources and outflows of resources are
reviewed and accurately accounted for to
reduce the risk of future potential
misstatements.

Tollway officials concurred with the
recommendation.

AUDITOR’S OPINION

The auditors stated the financial
statements of the Tollway as of and for the
year ended December 31, 2022 is fairly
stated in all material respects.

This financial audit was conducted by
CliftonLarsonAllen 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:TLK