Illinois' Annual Comprehensive Financial Report for fiscal year 2023 is threatening to break California's record for latest audit, having recently passed 600 days since that fiscal year ended, according to data on audit times.
Illinois is currently tied with Nevada for the latest fiscal 2023 audit. The all-time high for state governments, which California set with its fiscal 2021 audit, is 631 days.
California released its fiscal 2023 audit at the 524-day mark on Dec. 5, 2024, according to data from Merritt Research Services. Merritt
"California was still late this year, but nowhere near as late as the other two are," said Richard Ciccarone, president emeritus at Merritt. "They got it done and that's the bottom line."
Ciccarone said late audits ultimately affect the efficient functioning of the municipal market.
"The fresher [an audit] is, the greater the ability to act with the existing players to catch something that you need to, or take some initiative for a new course," he said. "It's an oversight capability, of course, but it's more than that. It can help you with planning your financial management. It's also for overseers and investors — the ability to get timely information to make sure the bond is accurately and appropriately priced."
The Illinois comptroller releases the ACFR but has to wait for the auditor general to complete the work involved before sharing the final audit.
"It's pretty damn late this year," said Abdon Pallasch, spokesman for Comptroller Susana Mendoza. He stressed, "we can't put out the final" until all the reports from state agencies come in.
Pallasch said the comptroller's office doesn't want to throw the auditor general under the bus and is aware of some problems at certain departments that are slowing the auditor general's work.
The auditor general's office said it does not comment on audits that have not yet been released.
"The access to accurate and timely information that these reports provide is vital to keeping waste, fraud and abuse out of government," said Maurice Scholten, president of the Taxpayers' Federation of Illinois, a nonpartisan policy research and advocacy organization. "It's information that bondholders, taxpayers and the government itself rely on in order to make informed decisions."
Government services may suffer as a result of these delays, he said. Budget staff, for example, rely on the information.
"We think the delays are systemic," Scholten added.
In 2010, the auditor general determined that Illinois had 145 separate accounting systems, he noted. Despite the introduction of an enterprise resource planning system aimed at replacing the legacy systems and streamlining the process, some departments "still do not have the mechanisms they need to meet the deadlines," he said.
The Department of Human Services, the Illinois Department of Employment Security and the pension systems in particular seem to be struggling with audit timeliness, Scholten said.
The Taxpayers' Federation would like to see accounting systems in place at all agencies that allow for timely and accurate reporting of financial data, he said. It would also like to see the auditor general have the staff necessary to complete work more efficiently.
Mendoza has been releasing
"The rating agencies, when we started putting out the interim reports, said that they found that helpful" in evaluating the state's financial standing, Pallasch said.
"The interim reports are definitely better than no new information, but they're not a replacement for a full report," Scholten said, noting, the interim reports have not been subjected to the same thorough review as the final report.
He also noted the ERP system is owned by the state's Department of Central Management Services, not the comptroller's office, which is supposed to be the entity that establishes state accounting standards.
"So there have been some issues there," he said.
"The unaudited statement … shrinks in terms of information — it's only a portion of what they would have if they had the full audit," Ciccarone said. "The state of Illinois made a commitment to be more timely. … I don't understand the excuses from the agencies. It's not the first time this has ever happened."
Illinois' 2022 audit came in at 411 days, while Nevada's 2022 audit was delivered in 559 days, according to Merritt data. California's 2022 audit was released at the 617-day mark.
"They've done some very good things in the state of Illinois, but they're an important credit to be watched and analyzed," Ciccarone said. "Not only do investors deserve to have a timely audit, but so does the public, and legislators, who are supposed to be overseeing this."
In Nevada, the division of internal audits in the governor's finance office has released 2023 and 2024 annual reports which "summarize the division's accomplishments," but according to Merritt data, like Illinois, its official 2023 audit is still outstanding.
"One of them is going to take worst honors," Ciccarone said. "I guess it's a race to the bottom."
