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Illinois’ unmodified modified audit opinion on its financial statements

November 16, 2021

Today, Truth in Accounting released “Financial Transparency Score 2021,” our annual report scoring the 50 state governments on financial transparency. We survey the audit opinions for all 50 states as part of the scoring process, and only 37 states earned clean audit opinions, 10 fewer than last year. All states had to overcome special factors impacting information processing with the pandemic and interruptions to normal operating practices, and more than a few states apparently struggled in particular with financial reporting for unemployment insurance programs.

Illinois was one of the states that failed to achieve a clean, or “unmodified,” opinion. Issues associated with acccounting for unemployment insurance benefits was part of the problem, but Illinois also had new issues in accounting for retirement benefits for the state tollway authority.

You can view Illinois’ Comprehensive Annual Financial Report for 2020 here. The “Independent Auditor’s Report” starts on page 11 of that report. Frank Mautino, Auditor General of the State of Illinois, listed eight different audit opinions for different “opinion units” within the overall report. Five of the eight units received unmodified opinions, while three received “qualified” opinions, relating to the unemployment insurance and tollway retirement benefit issues.

Yet in her letter of transmittal for the overall report, Illinois State Comptroller Susana Mendoza stated, quite bluntly:

The Illinois Auditor General has performed an audit of the accompanying basic financial statements in accordance with generally accepted auditing standards in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. His unmodified opinion appears at the beginning of the financial section of this report.

Maybe getting unmodified opinions on five out of eight opinions makes an overall opinion unmodified. Majority rules! This is democracy, after all.

On the other hand, this could be negligence, or worse. Maybe it was just an oversight. But if three qualified opinions mean an overall opinion should not be called “unmodified,” well, the lead accounting officer for a state government should have been a little more careful.

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