BURRIS CALLS FOR AUDIT REFORM

Local government auditing procedures in the State of Illinois should be standardized and reformed in order to make the information more meaningful, Illinois State Comptroller Roland W. Burris said recently.

The current annual financial report filed by units of local government with the Office of the Comptroller should be reviewed and revised so auditors could detect fiscal difficulties more quickly, Burris said.

"School districts are required to file detailed financial information with the State Board of Education, and therefore the State Board is able to accurately grade the financial condition of each school district," Burris said. "When fiscal troubles arise, the State Board calls attention to the problem and offers assistance as needed in order to avoid more serious fiscal problems.

"Units of local government need the same early warning device. Laws regulating financial reporting for local government need to be strengthened so the Comptroller can accurately gauge their fiscal condition and call attention to problems."

Burris said the reforms would be included in the transition material submitted to Comptroller-elect Dawn Clark Netsch. Burris, who was elected Attorney General, and Netsch assume their new offices on Jan. 14.

The recommendations are based on a survey conducted by Wilkes, Besterfield & Co. entitled "A Study of Reporting Problems of Local Governmental Units in the State of Illinois."

The survey notes that Illinois has one of the largest number of local governmental units in the nation, approximately 6,500, and thus the state has a massive responsibility in overseeing local finances.

As of July 31, 221 local government units were delinquent in filing reports with the Office of the Comptroller, according to the survey.

"Many of these units were more than two years delinquent," according to the study. "The Comptroller has, in some cases, hired independent Certified Public Accounting firms to audit delinquent units, and this has resulted in some success in bringing these delinquent units up-to-date, but the number of units is too large to deal with in this manner."

Many of the delinquent units are very small units that lack the expertise in fiscal control and their records often are so inadequate as to make an audit almost impossible. The study suggests better training for local officials is necessary.

The study also called attention to the lack of enforcement available to state officials.

"While other oversight bodies, such as the State Board of Education, can statutorily withhold funds from its delinquent reporting units, the law does not provide for such leverage regarding those units reporting to the Comptroller."

The report says the State of Illinois should consider making funds available to financially-strapped communities to assist them in their accounting and reporting needs. Also, it notes that more fiscal education of local officials is needed.

Burris proposed three recommendations from the report be enacted:

—Financial penalties or sanctions be imposed on local government units that file untimely or unacceptable reports;

—Expand the staff of the Office of the Comptroller to provide stronger oversight. With more staff the office could detect areas of financial distress, including non-compliance with state statutes, and computerized data could be developed;

—Revise the annual report to make it more useful to both local government units and the OIC. The information in the reports could be analyzed and returned to the local level for utilization.

In most instances, the recommendations would require the approval of the Illinois General Assembly.

December 1990 / Illinois Municipal Review / Page 13