A storm has been brewing between local governments and the Illinois Office of Comptroller Local Government Division over financial reporting. With an estimated 8,900 units of local government still operating under an outdated reporting framework, audit firm capacity has been stretched thin to meet statutory financial reporting requirements.
That pressure is now intensifying as the Local Government Division is exercising statutory fines for delinquent financial filings—something it hasn’t done since 2017. Units of local government with delinquent financial reports for fiscal year 2025 have received notices and calculated fines. The intent of exercising this authority is to achieve compliance for local government transparency and accountability.
Here’s what certified public accountants (CPAs) and local governments can expect as enforcement unfolds.
Units of local government delinquent on statutorily required financial filings will receive three delinquency notices, each including calculated fines based on the number of days the filings are overdue.
Importantly, communication with the comptroller’s office will be critical throughout the process. Written communications will be accepted from a local government’s CPA regarding compliance efforts; however, the local government representative should be copied on all communications. This provides the comptroller’s office assurance that the government is actively engaged, prioritizing compliance, and working collaboratively with its CPA to resolve the delinquency. Additionally, creating a documented record of good-faith efforts to achieve compliance may prove beneficial if the local government later requests an abatement of fines.
Local governments should be aware that the 60-day filing extension isn’t automatic following the first notice of delinquency. Instead, extensions must be requested through the Comptroller Connect Internet Filing application and may be requested any time up to 240 days after the close of the fiscal year. Overall, the process is straightforward and can be completed from the online portal’s main web page.
If a government hasn’t achieved compliance after receiving the three delinquency notices, the comptroller’s office may place it into a forced-audit process where collection activities will be paused (although interest may continue to accrue). While in this phase, local governments may still achieve compliance by submitting the required financial reports.
As I’ve previously stated, communication with the comptroller’s office remains essential. If a local government has engaged an auditor or has already begun a voluntary audit, that information should be shared. Ultimately, the comptroller’s office may arrange for an audit to be performed at the local government’s expense. However, if meaningful steps are being taken to cure the delinquency, a forced audit may be avoided.
If a local government remains out of compliance, it’ll receive three fine notifications. The debt may be certified no sooner than 30 days after receipt of the third notification and no later than 45 days after receipt. If the government comes into compliance at any time before the debt is certified, it may request an abatement of fines for good cause shown. When an abatement request is submitted, certification of the debt is deferred until the comptroller’s office issues a determination on the request.
After a debt is certified, the local government will receive three separate invoices from the comptroller’s office before collection action is initiated through the state’s intercept/warrant process. During this stage, governments still have opportunities to communicate with the comptroller’s office, satisfy the outstanding obligation, seek an abatement or a reduction of fines, or utilize the protest process to dispute the debt.
If the invoiced debt remains outstanding, the certification and collection process may proceed. Once the debt certification process is complete, the comptroller’s office may initiate interest collections or withholding procedures to recover certified obligations from eligible state payments otherwise payable to the local government until the debt is satisfied.
Of course, throughout the due process, it should be noted that the comptroller’s office will provide detailed information on the abatement and protesting of debt processes.
To support CPAs and local governments through this process, the Illinois CPA Society (ICPAS) has posted a regulatory update, FAQ, and sample CPA communication letter to the comptroller’s office on its Government Relations Legislative and Regulatory News Updates web page.
On a separate but related topic is House Bill 5391, known as the Government Reporting Enhancement and Transparency Act, which will help move the above-mentioned financial reporting model for local governments into a modern framework. While ICPAS has been successful in advancing this legislation with the help of its legislative sponsors, stakeholder input is being solicited to refine the initial proposal. The bill will hopefully move forward during the upcoming fall legislative session. Similarly, ICPAS’ Government Executive Committee and Government Report Review Committee are reinstituting local government audit training sessions for local government officials.
As local governments work through this process, ICPAS will continue helping CPAs and local governments understand their options, communicate effectively with the comptroller’s office, and push for improvements that’ll make Illinois’ local government financial reporting system more practical, transparent, and sustainable.
