Summary as Introduced
Creates the Government Reporting Enhancement and Transparency Act. Provides that, beginning fiscal year 2028, the annual cash receipts from all external sources of a local government shall determine if the local government is a Category 1 government, Category 2 government, Category 3 government, or Category 4 government. Provides that, each fiscal year, the responsible officials of a Category 1 local government shall appoint an auditing committee composed of 3 independent electors to inspect the local government's records using the template for that fiscal year published by the Comptroller. Provides that, each fiscal year, the responsible officials of a Category 2 local government shall enter into agreed upon procedures with an independent CPA. Requires the agreed upon procedures to align with the minimum agreed upon procedures published by the Comptroller. Provides that the responsible officials of a Category 3 local government shall oversee management's preparation of the local government's draft financial statements following the cash basis of accounting. Provides that the responsible officials of a Category 4 local government shall oversee management's preparation of the local government's draft financial statements following GAAP. Provides that, upon completion of the Category 3 local government's or Category 4 local government's draft financial statements, management shall furnish the draft financial statements to the local government's independent CPA firm for audit. Limits home rule powers. Makes other and conforming changes to various Acts. Effective immediately.
Staff Analysis
Bill as Introduced (Opposed)
Creates the Government Reporting Enhancement and Transparency Act. Provides that, beginning fiscal year 2028, the annual cash receipts from all external sources of a local government shall determine if the local government is a Category 1 government, Category 2 government, Category 3 government, or Category 4 government. Provides that, each fiscal year, the responsible officials of a Category 1 local government shall appoint an auditing committee composed of 3 independent electors to inspect the local government's records using the template for that fiscal year published by the Comptroller. Provides that, each fiscal year, the responsible officials of a Category 2 local government shall enter into agreed upon procedures with an independent CPA. Requires the agreed upon procedures to align with the minimum agreed upon procedures published by the Comptroller. Provides that the responsible officials of a Category 3 local government shall oversee management's preparation of the local government's draft financial statements following the cash basis of accounting. Provides that the responsible officials of a Category 4 local government shall oversee management's preparation of the local government's draft financial statements following GAAP. Provides that, upon completion of the Category 3 local government's or Category 4 local government's draft financial statements, management shall furnish the draft financial statements to the local government's independent CPA firm for audit. Limits home rule powers. Makes other and conforming changes to various Acts. Effective immediately.
House Amendment 1 (No Position)
House Amendment 1 to House Bill 5391 serves as a comprehensive replacement for the original legislation, fundamentally reshaping the GREAT Act to address various concerns raised by local government stakeholders. While the amendment maintains the core mission of standardizing financial reporting across Illinois, it introduces a more nuanced classification system for local governments. This refined system more precisely defines "external source" revenue thresholds to ensure that intergovernmental transfers or internal fund shifts do not unfairly push a county into a higher, more expensive audit category. Furthermore, the amendment provides significant relief for the smallest taxing bodies by introducing a de minimis threshold, which allows entities with very low annual receipts to seek waivers or utilize simplified self-inspection checklists rather than being forced to form a formal auditing committee.
The administrative burden on counties is further mitigated through several key procedural changes and timeline extensions. The amendment officially pushes back the "transition fiscal year" deadlines, granting county officials and staff more time to modernize their accounting software and internal processes before the new standards become mandatory. For medium-sized entities classified under Category 2, the amendment shifts the responsibility of defining "agreed-upon procedures" from the local level to the State Comptroller. By requiring the Comptroller to develop these templates in consultation with the Illinois CPA Society, the legislation ensures statewide uniformity and reduces the legal and professional fees counties would otherwise spend negotiating the scope of work with private auditors.
Regarding the procurement of professional services, the amendment relaxes the strict Request for Qualifications (RFQ) requirements found in the original bill. Under this new version, only the largest Category 4 entities—such as Cook County and other major regional hubs—are mandated to follow the rigorous, multi-step RFQ process. Smaller categories are granted more flexibility in how they engage CPA firms, provided those firms meet basic professional standards. Additionally, to aid in the recruitment of local volunteers for Category 1 audit committees, the amendment explicitly clarifies that these citizen members are shielded from personal liability for their good-faith service. Despite these concessions and clarifications, the amendment maintains the critical provision that these reporting standards are a matter of statewide concern, ensuring that the preemption of home rule powers remains a central feature of the Act.
Why House Amendment 1 Improves the Bill For Counties
House Amendment 1 is significantly more favorable for counties because it introduces a tiered compliance structure that scales with a county’s actual financial capacity. By refining the definitions of "external source" revenue and creating a "de minimis" threshold for the smallest taxing bodies, the amendment ensures that smaller, rural counties are not forced into expensive, high-level audits for minimal budgets. This version replaces a "one-size-fits-all" mandate with a flexible system that allows smaller entities to utilize simplified self-inspection checklists or waivers, effectively preventing the administrative costs of the Act from eclipsing the actual tax revenue being monitored.
The amendment also provides critical operational relief by extending the "transition fiscal year" deadlines, giving county boards and clerks the necessary runway to update legacy accounting software and train personnel. For mid-sized Category 2 and 3 counties, the shift toward state-standardized "agreed-upon procedures" developed by the Comptroller is an improvement. By removing the need for individual counties to negotiate complex audit scopes with private CPA firms, the amendment lowers legal and professional service fees and ensures that the audit process is uniform across the state, making the transition far more predictable and manageable.
Finally, the amendment addresses the practical challenge of professional recruitment and local liability. By narrowing the strict, multi-step Request for Qualifications (RFQ) procurement process to only the largest Category 4 entities, the amendment reduces "red tape" for the majority of Illinois counties. Furthermore, it provides a vital legal shield for the citizen volunteers who serve on Category 1 auditing committees, protecting them from personal liability for their good-faith oversight. This protection is essential for maintaining local participation in government, as it ensures that qualified residents are not discouraged from serving their communities due to the fear of legal exposure.