New House Bills Attempt To Prevent Financial Corruption

april 11, 2014

On April 1, 2014, House Bill 5503 (found here) passed the House by a vote of 113-0. The bill amends both the Counties and Municipal Codes and requires that within 60 days of the close of an audit, the auditor must (1) provide a copy of any management letter and a copy of audited financial statements to each member of the county board or city council; and (2) present the information from the audit to the county board or city council either in person or by a live phone or web connection during a public meeting. The bill also provides that if the county or city maintains an Internet website, the information contained in any management letter or financial statements must be posted to the public body's website.

The sponsor of the bill is Representative Tom Demmer, who is from Dixon, Illinois. Rita Crundwell, the former City of Dixon comptroller, is currently serving an almost 20-year prison sentence for embezzling $54 million dollars of tax funds from Dixon. Dixon recently settled a lawsuit for $40 million dollars with the accountants, auditors and financial institution who did not detect the Comptroller's fraud.

Many counties and municipalities already follow this procedure, as auditors generally communicate the audit results with "those charged with governance" pursuant to the Statements on Auditing Standards (SAS 114). The proposed legislation would be additional safeguard for those public bodies that present the audit and internal weaknesses only to management rather than a public presentation to the corporate board.

The bill has now been sent to the Senate for action.

In another effort to promote transparency and financial accountability, House Bill 4983 (found here) has been placed on the calendar for a third reading and is expected to pass the House. This bill would amend the Township Code by requiring a co-signer, in addition to the supervisor, on all township accounts, withdrawals and deposits. The co-signer must be designated by the township board in a resolution. While this bill works its way through the legislature, it is not too early for townships to begin identifying those individuals who should be designated co-signers, and to consider whether more than one person should be designated as a co-signer to cover absences due to illness, vacations or in an emergency situation.