Trustees of public pension funds in the State of Illinois have a fiduciary duty to act solely in the best interest of the pension fund and its participants and beneficiaries, as detailed in the Illinois Pension Code. An audit of the pension fund helps trustees to fulfill these fiduciary duties. The following is Part 1 of the series.
Part 1 – What is an Audit?

A financial statement audit is conducted by an independent certified public accountant (CPA). Auditors plan and perform their audit to obtain reasonable assurance (which is a high, but not absolute, level of assurance) that the financial statements are fairly presented, in all material respects. A financial statement audit helps protect the financial integrity of the Fund.

The auditor provides a second set of eyes in the event that management has inadvertently (or intentionally) omitted or misstated material financial statement information. Additionally, the audit process tends to strengthen management’s discipline towards improving internal control over financial reporting.

For a Trustee, an audit may help to improve Fund operations by evaluating the strength of the Fund’s internal controls and identifying weaknesses in those controls. The audit also helps the Trustees ensure the Fund’s compliance with the Illinois Pension Code.

A Trustee should also be aware that if a CPA is providing a lesser level of service on Fund financial statements, such as a compilation, the CPA provides NO assurance that the financial statements are fairly presented and have no responsibility to communicate internal control weaknesses or matters of non-compliance.

An understanding of and insight into the independent audit of the financial statements of a public pension fund is key to fulfilling Trustee responsibilities. We are happy to discuss any questions you may have.

Click here to view the rest of the series.

Legacy News Flash Issued 7/7/2016