093_SB0794ham001

 










                                     LRB093 02814 MKM 18859 a

 1                    AMENDMENT TO SENATE BILL 794

 2        AMENDMENT NO.     .  Amend Senate Bill 794  by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.   The Illinois State Auditing Act is amended
 5    by changing Sections 1-12, 1-13, 1-14, 1-16, 2-11, 3-2,  3-3,
 6    and 3-6 and by adding Section 1-13.5 as follows:

 7        (30 ILCS 5/1-12) (from Ch. 15, par. 301-12)
 8        Sec.  1-12.  Post audit or audit. "Post audit" or "audit"
 9    means a post facto examination of books, documents,  records,
10    and  other  evidence  relating  to  the  obligation, receipt,
11    expenditure or use of public funds of  the  State,  including
12    governmental operations relating to such obligation, receipt,
13    expenditure,  or  use.  A  post audit is a financial audit, a
14    compliance  audit  or  other  attestation  engagement,  or  a
15    performance audit a management audit or a program  audit,  as
16    those  terms are defined in this Article, or some combination
17    thereof.
18    (Source: P.A. 78-884.)

19        (30 ILCS 5/1-13) (from Ch. 15, par. 301-13)
20        Sec.  1-13.  Compliance  audit.  "Financial   audit"   or
21    "Compliance  audit"  means  an  attestation  engagement  that
 
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 1    either  examines,  reviews, or entails performing agreed-upon
 2    procedures on a  subject  matter  or  an  assertion  about  a
 3    subject  matter  and reporting on the results. The compliance
 4    audit,  as  appropriate,  may   address   agency   management
 5    representations,    assertions,   and   supporting   evidence
 6    regarding a post audit which determines:
 7             (a)  whether  the  audited  agency  has   obligated,
 8        expended,  received and used public funds of the State in
 9        accordance with the purpose for  which  such  funds  have
10        been appropriated or otherwise authorized by law;
11             (b)  whether   the  audited  agency  has  obligated,
12        expended, received and used public funds of the State  in
13        accordance with any limitations, restrictions, conditions
14        or   mandatory   directions  imposed  by  law  upon  such
15        obligation, expenditure, receipt or use;
16             (c)  in the case of  a  State  agency,  whether  the
17        audited  agency  has  generally  complied with applicable
18        laws  and  regulations,  including  the   State   uniform
19        accounting   system,   in   its   financial   and  fiscal
20        operations;
21             (d)  in the case of  a  State  agency,  whether  the
22        records,   books  and  accounts  of  the  audited  agency
23        accurately reflect its financial and fiscal operations;
24             (e)  in the case  of  a  local  or  private  agency,
25        whether  the  records,  books and accounts of the audited
26        agency fairly and accurately reflect  its  financial  and
27        fiscal  operations  relating  to the obligation, receipt,
28        expenditures and use of public funds of the State to  the
29        extent  such operations must be reviewed to complete post
30        audit determinations under paragraphs (a) and (b) of this
31        Section;
32             (f)  in the case of  a  State  agency,  whether  the
33        audited agency is maintaining effective internal controls
34        accounting    control    over    revenues,   obligations,
 
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 1        expenditures, assets and liabilities;
 2             (g)  whether  collections  of  State  revenues   and
 3        receipts  by  the  audited  agency are in accordance with
 4        applicable  laws  and   regulations   and   whether   the
 5        accounting  and  record  keeping  of  such  revenues  and
 6        receipts is fair, accurate and in accordance with law;
 7             (h)  in the case of a State agency, whether money or
 8        negotiable  securities  or  similar assets handled by the
 9        audited agency on behalf of the State or held in trust by
10        the  audited  agency  have  been  properly  and   legally
11        administered,  and  whether  the  accounting  and  record
12        keeping  relating  thereto  is  proper,  accurate  and in
13        accordance with law; and
14             (i)  whether  financial,  program  and   statistical
15        reports of the audited agency contain useful data and are
16        fairly presented.
17        Compliance  audits are to be performed in accordance with
18    attestation standards issued by  the  American  Institute  of
19    Certified   Public   Accountants   (AICPA),   related   AICPA
20    Statements  on  Standards  for  Attestation  Engagements, and
21    generally  accepted  government  auditing  standards  (GAGAS)
22    current at the time the audit is commenced.
23    (Source: P.A. 78-884.)

24        (30 ILCS 5/1-13.5 new)
25        Sec. 1-13.5.  Financial audit. "Financial audit" means  a
26    post  audit  primarily  concerned  with  providing reasonable
27    assurance about whether financial  statements  are  presented
28    fairly  in all material respects in conformity with generally
29    accepted   accounting   principles   (GAAP),   or   with    a
30    comprehensive  basis  of  accounting  other  than GAAP. Other
31    objectives of financial audits, which provide  for  different
32    levels  of  assurance  and entail various scopes of work, may
33    include, as appropriate:
 
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 1             (1)  providing   special   reports   for   specified
 2        elements, accounts, or items of a financial statement;
 3             (2)  reviewing interim financial information;
 4             (3)  issuing letters for  underwriters  and  certain
 5        other requesting parties;
 6             (4)  reporting  on the processing of transactions by
 7        service organizations; and
 8             (5)  auditing compliance with  regulations  relating
 9        to  federal  award  expenditures  and  other governmental
10        financial  assistance  in  conjunction  with  or   as   a
11        by-product of a financial statement audit.
12        Financial  audits  are to be performed in accordance with
13    generally accepted auditing standards issued by the  American
14    Institute  of  Certified Public Accountants (AICPA) for field
15    work and reporting, generally  accepted  government  auditing
16    standards (GAGAS), and AICPA Statements on Auditing Standards
17    (SAS) current at the time the audit is commenced.

18        (30 ILCS 5/1-14) (from Ch. 15, par. 301-14)
19        Sec.  1-14.  Performance audit. "Performance audit" means
20    an objective and systematic examination of evidence in  order
21    to  provide  an independent assessment of the performance and
22    management  of  a   program   against   objective   criteria.
23    Performance  audits  provide  information  to improve program
24    operations and facilitate  decision-making  by  parties  with
25    responsibility  to oversee or initiate corrective action, and
26    improve public accountability.
27        Performance audits include management audits,  which  are
28    also  called  economy  and  efficiency  audits,  and  program
29    audits.  A  program  audit  addresses  the effectiveness of a
30    program and typically measures the extent to which a  program
31    is  achieving  its  goals  and  objectives.  An  economy  and
32    efficiency  audit  concerns  whether  an agency is acquiring,
33    protecting, and using its resources in  the  most  productive
 
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 1    manner  to  achieve  program  objectives.  Program audits and
 2    economy and efficiency audits may include an assessment of:
 3             (1)  the extent to which legislative, regulatory, or
 4        organizational goals and objectives are being achieved;
 5             (2)  the relative ability of alternative  approaches
 6        to  yield better program performance or eliminate factors
 7        that inhibit program effectiveness;
 8             (3)  the  relative  cost  and   benefits   or   cost
 9        effectiveness of program performance;
10             (4)  whether  a program produced intended results or
11        produced effects that were not intended by the  program's
12        objectives;
13             (5)  the   extent   to   which  programs  duplicate,
14        overlap, or conflict with other related programs;
15             (6)  whether the audited entity is  following  sound
16        procurement practices;
17             (7)  the  validity  and  reliability  of performance
18        measures concerning program effectiveness and results  or
19        economy and efficiency; and
20             (8)  the  reliability,  validity,  or  relevance  of
21        financial  information  related  to  the performance of a
22        program.
23        Performance audits may also encompass objectives  related
24    to  internal  control  and  compliance  with  legal  or other
25    requirements. Performance  audits  are  to  be  performed  in
26    accordance   with   generally  accepted  government  auditing
27    standards (GAGAS) current at the time the audit is commenced.
28        "Management audit", or "efficiency audit"  means  a  post
29    audit which determines with regard to the purpose, functions,
30    and duties of the audited agency:
31        (a)  whether  the audited agency is managing or utilizing
32    its  resources,  including  public  funds   of   the   State,
33    personnel, property, equipment and space in an economical and
34    efficient manner; and
 
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 1        (b)  causes  of inefficiencies or uneconomical practices,
 2    including inadequacies  in  management  information  systems,
 3    internal   and   administrative   procedures,  organizational
 4    structure,  use  of  resources,  allocation   of   personnel,
 5    purchasing policies and equipment.
 6    (Source: P.A. 78-884.)

 7        (30 ILCS 5/1-16) (from Ch. 15, par. 301-16)
 8        Sec.   1-16.  Special  audit.  "Special  audit"  means  a
 9    financial audit, a compliance  audit,  or  other  attestation
10    engagement of limited scope.
11    (Source: P.A. 78-884.)

12        (30 ILCS 5/2-11) (from Ch. 15, par. 302-11)
13        Sec. 2-11.  Special assistant auditors.
14        (a)  The  Auditor  General  may  contract  with certified
15    public accountants licensed and registered public accountants
16    certified or registered  in  Illinois,  qualified  management
17    consultants,   attorneys  licensed  in  Illinois,  and  other
18    persons or firms necessary to carry out his duties.  For  the
19    purpose  of  assisting  in  performance  program  audits, the
20    Auditor General may contract  with  any  State  agency.   The
21    Auditor General may contract with other governmental agencies
22    for  the  conduct  of  joint  audits  of  a State agency or a
23    portion thereof.
24        (b)  The Auditor General shall adopt  rules  establishing
25    qualifications  for  nonlicensed  persons  with  whom  he may
26    contract.
27        (c)  The Auditor General may designate  any  person  with
28    whom  he  contracts  as  a  special assistant auditor for the
29    purpose of conducting a post audit or investigation under his
30    supervision. The Auditor General may delegate his powers  and
31    authority   respecting  post  audits  and  investigations  to
32    special assistant auditors other than the power of  subpoena,
 
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 1    but  any  delegation of authority to administer oaths or take
 2    depositions  must  be  made  in  writing  and  limited  to  a
 3    particular audit or investigation.
 4    (Source: P.A. 80-533.)

 5        (30 ILCS 5/3-2) (from Ch. 15, par. 303-2)
 6        Sec.  3-2.   Mandatory  and  directed  post  audits.  The
 7    Auditor General shall conduct a financial audit, a compliance
 8    audit, or other attestation engagement, as is appropriate  to
 9    the  agency's  operations under generally accepted government
10    auditing standards, of each State agency except  the  Auditor
11    General  or  his  office at least once during every biennium,
12    except as is otherwise provided in regulations adopted  under
13    Section  3-8.  The  general  direction and supervision of the
14    financial  audit  program  may  be  delegated  only   to   an
15    individual who is a Certified Public Accountant and a payroll
16    employee of the Office of the Auditor General. In the conduct
17    of financial audits, compliance audits, and other attestation
18    engagements,  the Auditor General may inquire into and report
19    upon matters properly  within  the  scope  of  a  performance
20    management or program audit, provided that such inquiry shall
21    be  limited  to matters arising during the ordinary course of
22    the financial audit.
23        In any year the Auditor General shall conduct any special
24    audits as  may  be  necessary  to  form  an  opinion  on  the
25    financial statements report of this State, as prepared by the
26    Comptroller,  and  to  certify  that  this presentation is in
27    accordance with generally accepted accounting principles  for
28    government.
29        Simultaneously  with  the  biennial  compliance financial
30    audit of  the  Department  of  Human  Services,  the  Auditor
31    General  shall conduct a program audit of each facility under
32    the jurisdiction of that  Department  that  is  described  in
33    Section 4 of the Mental Health and Developmental Disabilities
 
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 1    Administrative  Act.   The  program  audit  shall  include an
 2    examination  of  the  records  of  each  facility  concerning
 3    reports of suspected abuse  or  neglect  of  any  patient  or
 4    resident  of  the facility.  The Auditor General shall report
 5    the findings of the program audit to  the  Governor  and  the
 6    General  Assembly,  including findings concerning patterns or
 7    trends relating to abuse or neglect of facility patients  and
 8    residents.   However,  for  any  year for which the Inspector
 9    General submits a report to the Governor and General Assembly
10    as required under Section 6.7 of  the  Abused  and  Neglected
11    Long  Term Care Facility Residents Reporting Act, the Auditor
12    General need not conduct the program audit otherwise required
13    under this paragraph.
14        The  Auditor  General   shall   conduct   a   performance
15    management  or  program  audit  of  a  State  agency  when so
16    directed by the Commission, or by either house of the General
17    Assembly, in a resolution identifying  the  subject,  parties
18    and scope.  Such a directing resolution may:
19             (a)  require  the  Auditor  General  to  examine and
20        report upon  specific  management  efficiencies  or  cost
21        effectiveness proposals specified therein;
22             (b)  in  the  case  of  a  program  audit, set forth
23        specific program objectives, responsibilities  or  duties
24        or  may  specify  the  program  performance  standards or
25        program evaluation standards  to  be  the  basis  of  the
26        program audit;
27             (c)  be   directed   at   particular  procedures  or
28        functions  established  by  statute,  by   administrative
29        regulation or by precedent; and
30             (d)  require  the  Auditor  General  to  examine and
31        report upon specific proposals relating to state programs
32        specified in the resolution.
33        The Commission may by resolution clarify, further direct,
34    or limit the scope of any audit directed by a  resolution  of
 
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 1    the  House  or  Senate,  provided that any such action by the
 2    Commission must be consistent with the terms of the directing
 3    resolution.
 4    (Source: P.A. 89-427, eff. 12-7-95; 89-507, eff. 7-1-97.)

 5        (30 ILCS 5/3-3) (from Ch. 15, par. 303-3)
 6        Sec. 3-3.  Discretionary audits.
 7        The Auditor General may initiate and  conduct  a  special
 8    audit whenever he determines it to be in the public interest.
 9        The  Auditor  General may initiate and conduct an economy
10    and efficiency audit of a State agency  or  program  whenever
11    the findings of a post audit indicate that such an efficiency
12    audit is advisable or in the public interest, if he has given
13    the  Commission  at  least  30  days'  prior  notice  of  his
14    intention  to conduct the efficiency audit and the Commission
15    has not disapproved of that audit.
16        The Auditor General  may,  at  any  time,  make  informal
17    inquiries  of  any agency concerning its obligation, receipt,
18    expenditure or use of State funds, but such  an  inquiry  may
19    not be in the nature of an investigation or post audit.
20    (Source: P.A. 78-884.)

21        (30 ILCS 5/3-6) (from Ch. 15, par. 303-6)
22        Sec.  3-6.   Audit  Standards.   The  Auditor General may
23    adopt   regulations   establishing   post   audit   standards
24    consistent with Sections 1-13, 1-13.5, and 1-14 and  1-15  of
25    this Act and in accordance with generally accepted government
26    governmental auditing standards.  The regulations may specify
27    separate or particular standards applicable only to audits of
28    federal  grants,  aid  or  trust  funds administered by State
29    agencies  in  order  to  comply   with   applicable   federal
30    regulations.   Post  audit  standards  established under this
31    paragraph shall govern  all  post  audits  conducted  by  the
32    Auditor General.
 
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 1        The  Auditor  General  may  adopt regulations making such
 2    standards applicable to financial audits, compliance  audits,
 3    and   other   attestation  engagements   conducted  by  State
 4    agencies of local governmental agencies or  private  agencies
 5    which are grantees or recipients of public funds of the State
 6    or  of  federal  funds  not  constituting public funds of the
 7    State through projects administered  by  that  State  agency.
 8    Notwithstanding  any  other  statute  to  the contrary, those
 9    regulations  shall  govern  the  audits  to  which  they  are
10    expressly applicable.
11        The Auditor General may make  regulations  providing  for
12    the  ordinary  use  of  compliance  audits conducted by State
13    agencies or  by  certified  public  accountants  as  part  of
14    financial  audits,  if such compliance audits comply with the
15    standards and regulations applicable under this Act.
16    (Source: P.A. 82-368.)

17        (30 ILCS 5/1-15 rep.)
18        Section 10.  The Illinois State Auditing Act  is  amended
19    by repealing Section 1-15.

20        Section  99.  Effective date.  This Act takes effect upon
21    becoming law.".