Public Act 93-0630

SB794 Enrolled                       LRB093 02814 RCE 02830 b

    AN ACT concerning State audits.

    Be it  enacted  by  the  People  of  the  State  of  Illinois,
represented in the General Assembly:

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

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

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

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

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

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

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

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

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

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

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

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