The Fiscal Control and Internal Auditing Act (FCIAA) was overwhelmingly enacted into law during the fall of 1989 to modernize internal auditing within the State of Illinois. The provisions of the new law followed similar guidelines previously established by the United States Congress, thereby recognizing the importance of internal controls within government. 

A brief summary of FCIAA is provided below: 

Article 1 – General Provisions:

As a State of Illinois public policy, each chief executive officer of every State agency is responsible for effectively and efficiently managing the agency and establishing and maintaining an effective system of internal control. 

Designated State agencies include the offices of the Secretary of State, the State Comptroller, the State Treasurer, and the Attorney General, the State Board of Education, the State colleges and universities, the Illinois Toll Highway Authority, the Illinois Housing Development Authority, the public retirement systems, the Illinois Student Assistance Commission, the Illinois Finance Authority, the Environmental Protection Agency, the Capital Development Board, the Department of Military Affairs, the State Fire Marshal, and each Department of State government created in Article 5, Section 5-15 of the Civil Administrative Code of Illinois. 

Article 2 – Internal Auditing:

Each designated State agency, as identified above, is required to maintain a full-time program of internal auditing. In the event that a designated State agency is merged, abolished, reorganized, or renamed, the successor State agency is also defined as a designated State agency. The chief executive officer of a State agency is not relieved from the responsibility for maintaining an effective internal control system merely because that State agency is not designated and required to have a full-time program of internal auditing. Agencies which do not have full-time internal audit programs may have internal audits performed by the Department of Central Management Services. 

The Supreme Court, in accordance with FCIAA, is required to establish by its rulemaking authority or by administrative order a full-time program of internal auditing of State funded activities of the judicial branch, which is consistent with the intent of FCIAA’s Article 2. 

The chief executive officer of each designated State agency is required to appoint a chief internal auditor with a bachelor's degree, who is either:

1. A certified internal auditor by examination or a certified public accountant and who has at least 4 years of progressively responsible professional auditing experience; or 
2. An auditor with at least 5 years of progressively responsible professional auditing experience. 

The chief internal auditor is required to report directly to the chief executive officer and shall have direct communications with the chief executive officer and the governing board, if applicable, in the exercise of auditing activities. All chief internal auditors and all full-time members of an internal audit staff are required to be free of all operational duties. Effective July 1, 2010, each appointed chief internal auditor shall serve a five-year term and may be removed only for cause after a hearing before the Executive Ethics Commission. Chief internal auditors may be reappointed for successive five-year terms. 

The chief executive officer of each designated agency is responsible for ensuring that the internal auditing program includes: 

1. A two-year plan, identifying audits scheduled for the pending fiscal year, approved by the chief executive officer before the beginning of each fiscal year; and a written report submitted by the chief internal auditor by September 30th detailing how the audit plan for that year was carried out, the significant findings, and the extent in which recommended changes were implemented. 
2. Audits of major systems of internal and accounting administrative controls conducted on a periodic basis so that all major systems are reviewed at least once every two years. Such audits should include:
   1. The obligation, expenditure, receipt, and the use of public funds of the State and of funds held in trust to determine whether those activities are in accordance with applicable laws and regulations;
   2. Grants received or made by the designated State agency to determine that the grants are monitored, administered, and accounted for in accordance with applicable laws and regulations;
   3. Reviews of the design of major new information systems and major modifications of those systems before their installation to ensure the systems provide for adequate audit trails and accountability; and
   4. Special audits of operations, procedures, programs, information systems, and activities as directed by the chief executive officer or governing board, if applicable. 

Each chief internal auditor is required to have, in addition to all other powers or duties authorized by law, required by professional ethics or standards, or assigned consistent with FCIAA, the powers necessary to carry out the duties required. 

Each chief internal auditor may consult with the Auditor General, the Department of Central Management Services, the Commission on Government Forecasting and Accountability, the appropriations committees of the General Assembly, the Governor’s Office of Management and Budget, or the Internal Audit Advisory Board on matters affecting the duties or responsibilities of the chief internal auditor. 

Section 2005 of FCIAA created an 11 member Illinois Internal Audit Advisory Board (SIAAB) that includes the following:

• The Chief Internal Auditor of Department of Central Management Services;
• The Chief Internal Auditor of Office of the State Comptroller;
• The Chief Internal Auditor of Office of the Secretary of State;
• The Chief Internal Auditor of Office of the State Treasurer;
• The Chief Internal Auditor of Office of the Attorney General; and
• Six Chief Internal Auditors appointed by the Governor. 

At least one of the members appointed by the Governor must be an employee of a State college or university or university governing board. The Governor is required by FCIAA to make his/her appointments by February 1st, and the appointee shall serve a three-year term until either reappointed or replaced by the Governor. SIAAB members receive no additional compensation for their services, but are reimbursed by their employing agency for expenses necessarily incurred in the performance of their duties as Board members. 

SIAAB is responsible for:

• Promulgating a uniform set of professional standards and a code of ethics (based on the standards and ethics of the Institute of Internal Auditors, the General Accounting Office, and other professional standards as applicable) to which all State internal auditors must adhere;
• Serving as a clearinghouse for the correlation of internal audit training needs and training designed to meet those needs; and
• Coordinating external quality assurance review (peer review) activities among the State’s internal audit units. 

Article 3 – Fiscal Controls:

All State agencies are required to establish and maintain a system, or systems, of internal fiscal and administrative controls which provide assurance that:

1. Resources are utilized efficiently, effectively, and in compliance with applicable law;
2. Obligations and costs are in compliance with applicable law;
3. Funds, property, and other assets and resources are safeguarded against waste, loss, unauthorized use, and misappropriations;
4. Revenues, expenditures, and transfers of assets, resources, or funds applicable to operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over State’s resources; and
5. Funds held outside the State Treasury are managed, used, and obtained in strict accordance with the terms of their enabling authorities and that no unauthorized funds exist. 

The Comptroller, in consultation with the Director of Central Management Services, is required to establish guidelines for:

1. The evaluation by State agencies of their systems of internal fiscal and administrative controls to determine whether the systems comply with the requirements of Section 3001; and
2. The certification by the chief executive officers required by Section 3003. 

The guidelines must be approved by the Legislative Audit Commission and may be modified, as needed, with the Legislative Audit Commission’s approval. 

By May 1st of each year, each chief executive officer of all State agencies shall, on the basis of an evaluation conducted in accordance with guidelines approved by the Legislative Audit Commission, prepare and transmit to the Auditor General a certification that:

1. The systems of internal fiscal and administrative controls of the State agency fully comply with the requirements of FCIAA; or
2. The systems of internal fiscal and administrative controls of the State agency do not fully comply with the requirements of FCIAA. 

If the systems do not fully comply with the requirements of FCIAA, the certification shall include a report describing any material weaknesses in the systems of internal fiscal and administrative controls and the plans and schedule for correcting the weaknesses, or a statement of the reasons why the weaknesses cannot be corrected.

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