TITLE 92: TRANSPORTATION
CHAPTER I: DEPARTMENT OF TRANSPORTATION
SUBCHAPTER h: PUBLIC TRANSPORTATION
PART 653 STATE OPERATING ASSISTANCE TO DOWNSTATE AREAS
SECTION 653.410 INDEPENDENT AUDIT REQUIREMENTS AND PROCEDURES
Section 653.410 Independent Audit Requirements and Procedures
a) Deadline for Submission of Audit
No later than 180 days following the last day of the fiscal year, the participant shall provide the Department with an independent audit prepared by a licensed certified public accountant. This deadline may be changed, at the discretion of the Department, to accommodate the participant's fiscal year periods or due to unforeseen circumstances. (See Section 2-7(c) of the Act.)
b) Selection of Auditor
The selection of the licensed certified public accountant shall be made by the participant. However, any licensed certified public accountant selected by the participant shall be independent and shall not have a relationship with the participant that would create a conflict of interest. A conflict of interest will be deemed by the Department to exist where the licensed certified public accountant serves the participant in any capacity other than that of auditor for the participant or where the licensed certified public accountant has a relationship, contractual or otherwise, with the participant that would inhibit the ability to perform an independent audit.
c) Audit Requirements
1) The independent auditor shall review the following materials in preparing the audit report:
A) the Act;
B) the grant contract between the Department and participant;
C) this Part and pertinent forms prescribed by the Department; and
D) the appropriation legislation relating to the operating assistance grant.
2) The independent auditor shall examine the systems of internal control, systems established to ensure compliance with laws and regulations affecting the expenditure of State funds, financial transactions and accounts, and financial statements and reports of the participant. "Examine" means all that is necessary for the auditor to make the determinations required in this subsection (c)(2). These examinations are to determine whether:
A) There is effective control over and proper accounting for revenues, expenditures, assets, and liabilities.
B) The financial statements are presented fairly in accordance with generally accepted accounting principles adopted by AICPA.
C) The financial reports contain accurate and reliable financial data.
D) State funds are being expended in accordance with the terms of the grant contract and those applicable provisions of state law and regulations.
3) Compliance with Audit Standards
The audit shall be made in accordance with generally accepted auditing standards established by AICPA.
d) Requirements for Independent Audit Reports
1) Audit Report Elements
The audit report shall contain the following elements:
A) Scope of audit
B) A description of audit procedures used
F) Financial statements and analyses
G) On forms prescribed by the Department, a schedule of operating revenues and expenses for the participant's grant contract period. (See Section 2-4 of the Act.)
2) Contents of Report
The audit report shall consist of the following:
A) Financial statements, including footnotes, of the participant.
B) The auditor's comments on the financial statements, which:
i) Identify the statements examined and the period covered.
ii) Express an opinion as to whether the financial statements are fairly presented in accordance with generally accepted accounting principles. If an unqualified opinion cannot be expressed, the nature of the qualification shall be stated.
C) Calculations, assurances (i.e., positive or negative assurances that something has been done) and certifications (i.e., statements by which it is declared that a fact is true or a requirement has been met), stating whether the requirements of subsection (c)(2) have been met by the Department, including, but not limited to, the following:
i) A determination and calculation of eligible and ineligible operating expenses.
ii) A determination and calculation that the State operating assistance, when added to the federal operating assistance, does not exceed the total operating deficit. Operating deficit shall be calculated as eligible expenses less revenues. In determining deficit, the definition of eligible expenses in the Act and this Part and the definition of revenue in the Act shall govern.
D) The auditor's assurances that:
i) The financial statements of the participant were prepared in accordance with generally accepted accounting principles adopted by the AICPA.
ii) Applicable laws were complied with by the participant.
iii) The participant's system of internal accounting controls and procedures were adequate relating to funds received and costs chargeable to the grant contract.
iv) State funds were expended in accordance with the grant contract.
E) The auditor's comments on compliance and internal control, which shall include:
i) Comments on weaknesses in and noncompliance with the systems of internal control, separately identifying material weaknesses.
ii) Identification of instances of noncompliances with the terms of the grant contract, State law or this Part, and the effect of the noncompliance, if any, on the reliability or accuracy of the financial statements and reports filed under this Part.
F) Comments on the accuracy and completeness of financial reports and claims for advances or reimbursement.
G) Comments on corrective action taken or planned by the participant relative to the audit findings of the previous year and recommendations for current year corrective action.
e) Access to and Retention of Auditor's Records
1) The participant shall require the independent auditor, in the letter of engagement or other contract for services document between the participant and the independent auditor, to give authorized representatives of the Department access to the independent auditor's working papers pertaining to the audit of the participant at reasonable times convenient to the Department and the independent auditor.
2) Work papers and reports shall be retained by the auditor for a minimum of three years from the date of the audit report unless the auditor is notified in writing by the Department of the need to extend the retention period. The three year period will be extended under the following conditions:
A) When the State audit is not conducted within the three year period; and
B) When there is litigation involving the provision of funds to the grantee.
(Source: Amended at 34 Ill. Reg. 13142, effective August 24, 2010)