Illinois Public Act 98-0738 – Disclosure of Audited Financial Statements and the Management Letter

On July 16, 2014, Governor Quinn signed Public Act 98-0738 related to new requirements concerning the audit of  annual financial statements. The effective date of this act is January 1, 2015. This Act is added to the Counties Code and Illinois Municipal Code and requires the auditor to perform the following within sixty days after the issuance of audited financial statements:

  • Provide a copy of the management letter and audited financial statements to the County Board or Municipality’s Corporate Authorities. If the county or municipality maintains a website, these reports shall be posted to the website.
  • Present the information from the audit to the County Board or Municipality’s Corporate Authorities either in person or by a live phone or web connection during a public meeting.

Currently, two Auditing Standards require the issuance of communications following the audit of your financial statements. Statement on Auditing Standards No. 114: The Auditor’s Communication With Those Charged With Governance requires the communication of the auditor’s responsibilities under generally accepted auditing standards, the communication of an overview of the planned scope and timing of the audit, and the communication of significant findings from the audit. Statement on Auditing Standards No. 115: Communicating Internal Control Related Matters Identified in an Audit requires the communication of deficiencies in internal control that meet the definition of a material weakness or a significant deficiency. In addition to the two required communications, the auditor may communicate other matters to those charged with governance that are not required by US Auditing Standards if the auditor feels such matters are of importance to the local government. These communications may be combined into one report or delivered in separate reports.

We would encourage you to discuss these communications with your auditor and to discuss the term “management letter” with your legal counsel to see which communications meet the definition. You may also want to consider discussing with your legal counsel which forum is appropriate for these discussions. This will assist in your compliance with Public Act 98-0738.

For more information on this topic, or to learn how Baker Tilly state and local government specialists can help, contact our team.