REPORT DIGEST

OFFICE OF THE TREASURER - FISCAL OFFICER
RESPONSIBILITIES

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION
FOR THE YEAR ENDED JUNE 30, 2016

Release Date:  March 9, 2017

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 0

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

•  (16-1)  The draft financial statements
prepared by the Office of the Illinois
Treasurer were delayed and required
Governmental Accounting Standards Board
Statement No. 72, Fair Value Measurement
and Application related adjustments and
additional disclosures.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

FINANCIAL REPORTING ADJUSTMENTS AND
DISCLOSURES

The draft financial statements prepared by
the Office of the Illinois State Treasurer
(IST) were delayed and required
Governmental Accounting Standards Board
(GASB) Statement No. 72, Fair Value
Measurement and Application related
adjustments and additional disclosures.

The IST was not fully prepared for the
implementation of GASB. 72 when it
prepared the Fiscal Officer
Responsibilities’ financial statements.
The IST did not adopt a comprehensive
policy to implement GASB 72 until after
the end of the fiscal year.   A draft of
the policy was provided to the auditors on
November 9, 2016 more than three weeks
after the draft financial statements were
due to the Illinois Office of the
Comptroller (Comptroller) and the external
auditors for review on October 15, 2016.

Draft financial statements were provided
to the auditors on October 31, 2016.  On
November 21st and December 5th adjustments
to the Technology Development Investment
(TDA) accounts I and II, respectively were
made by the IST and updated trial balances
and financial statements were provided to
the auditors.  When these revised draft
financial statements were provided on
December 5, 2016, five weeks after the
original draft financial statements were
provided, they were missing required
disclosures for investments measured using
the net asset value (NAV) per share (or
its equivalent) as a practical expedient,
required by GASB 72.  In addition, $119
million of time deposits were improperly
classified as Level 2 investments.

IST officials stated that the Fiscal
Officer Responsibilities’ draft financial
statements were delayed, a GASB policy was
not formally approved and footnote
disclosures were inadvertently omitted due
to the complexity of the new industry
standard for the application of fair value
measurements.  (Finding 1, pages 10-11)

We recommended the IST formally adopt
written policies and procedures to
implement new GASB standards to ensure
they are implemented timely.  In addition,
we recommended the IST should update its
GASB 72 policy to address deposits and
investments measured at cost, alternative
investments measured using NAV per share,
and the required disclosures pertaining to
each.

IST officials accepted the auditor’s
recommendation.

AUDITOR’S OPINION

Our auditors stated the Office of the
Treasurer, Fiscal Officer Responsibilities
financial statements as of June 30, 2016
and for the year then ended were presented
fairly in all material respects.  The
auditors noted the financial statements
have been prepared by the Treasurer on the
basis of the financial reporting
provisions determined by the Office of the
State Comptroller, which is a basis of
accounting other than accounting
principles general accepted in the United
States of America, to meet the
requirements of the State of Illinois.
The auditor’s opinion was not modified
with respect to this matter.

ACCOUNTANT’S OPINION

We conducted a compliance examination of
the Office of the Treasurer, Fiscal
Officer Responsibilities for the year
ended June 30, 2016, as required by the
Illinois State Auditing Act.  The
accountants stated the Treasurer complied,
in all material respects, with the
requirements described in the report.

This financial audit and State compliance
examination was conducted by the firm of
RSM US LLP.

BRUCE L. BULLARD
Division Director

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

FRANK J. MAUTINO
Auditor General

FJM:JAF