Upcoming Audit Rules that Might Affect Your Next Audit

Plus

A Free Expenditure Claim Excel Template!

Here are the latest GASB updates from your trusted audit team!

GASB 101: Compensated Absences

For the upcoming audit year, school districts and municipalities should recognize liabilities for vacation and sick leave when it is earned and not, as previously, for the amount expected to be paid out on termination. For employers with unlimited PTO, a leave liability should be recognized when leave is taken. This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specific types of compensated absences not be recognized until the leave is used. This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition, governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. The requirements of this Statement are effective for fiscal years beginning after December 15, 2023, and all reporting periods thereafter.

GASB 102: Risk Disclosures

The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not often provided. The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact. As a result, users will have better information to understand and anticipate certain risks to a government’s financial condition. The requirements of this Statement are effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter.

GASB 103: Financial Reporting Model Improvements

For financial reporting periods beginning after June 15, 2025, certain required tables in the MD&A section will be combined and eliminated. The MD&A section of the financial statements will include discussion of demographic and economic factors. This Statement requires that the proprietary fund statement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses are defined as revenues and expenses other than nonoperating revenues and expenses. Nonoperating revenues and expenses are defined as: (1) subsidies received and provided; (2) contributions to permanent and term endowments; (3) revenues and expenses related to financing; (4) resources from the disposal of capital assets and inventory; and (5) investment income and expenses. This Statement requires governments to present each major component unit separately in the reporting entity’s statement of net position and statement of activities if it does not reduce the readability of the statements. This Statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present: (1) variances between original and final budget amounts; and (2) variances between final budget and actual amounts. An explanation of significant variances is required to be presented in notes to RSI.

GASB 104: Disclosures about Capital Assets

For financial reporting periods beginning after June 15, 2025, lease assets will be shown in greater category detail by on the financial statements. Infrastructure assets like roads, bridges, tunnels, drainage and water systems, dams, and communications networks will be subject to impairment testing every three years. Infrastructure that does not reach the minimum standard for infrastructure set out in the rules should have its value on the balance sheet be reduced. Further information about this new standard will be discussed as we get closer to implementation.

IL School Code Public Act 103-0394 (Miller Effect)

In the 2024 – 2025 school year and in subsequent school years, the school board of any school district that does not receive federal impact aid funding shall calculate combined, annual average expenditures of operational funds for the previous three fiscal years and present these annually in a written report at a board meeting. School districts whose cash balances are 2.5 times their average annual expenditures for the previous three years must file a plan with ISBE to reduce their cash reserves. These plans will be posted on the ISBE website.

School District Tips, Tricks, and Best Practices

Inventory Compliance

In recent years, we have noticed problems related to compliance with inventory rules on the single audit. As a reminder, recipients of ESSER and other federal grants should keep records of all equipment or real property purchased with grant funds including purchase date, cost, vendor and intended use. Failure to do so may result in findings.

Reconciliation of Student Activity Funds

School districts should ensure that their student activity funds are reconciled with their bank statements at least annually (we recommend monthly). They should work with their Treasurer’s office to post the balance activity by June 30 to the Educational Fund in Infinite Visions.

Grant Compliance – Free Excel Template!

In order to ensure a clean single audit, we recommend the following:

Keep all original and amended copies of the grant agreements.
Keep detailed budget with grant folders, this helps to make sure what you plan to claim agrees with the approved budget from ISBE.
With each claim, keep the Infinite Visions expenditure report that agrees with the expenses claimed.
Give enough time for the claim to be reviewed, approved and submitted by the due date.

For further assistance with claims, we have enclosed an Excel that could help with your claims under grants. The template can be changed for the dates of your claim. This will also track cumulative expenditures and help prevent “double dipping of expenditures.”

How to Use:

You will fill in the account in which you budgeted under column A, and add the expenditure you plan to claim for the certain period under columns C-M. The claimed amount under columns C-O should agree with what was submitted to ISBE. These should also agree with the expenditures on the general ledger (unless you claimed less than what is on the general ledger). We added the budget in addition to make sure you are within the ISBE guidelines.

Click Here to Download Your Free Expenditure Claim Template

Municipalities can also use the Excel above to assist with grant claims, you just need to change the expenditure account lines under column A and the dates of the claims.

Looking for new grants?

Illinois State Board of Education

The link above takes you to the ISBE page that provides the Funding Opportunities Planning Calendar and a chart that identifies RFPs and RFAs that are currently available along with their proposed due dates.

State of Illinois Weekly Grant Digest

You can subscribe to a weekly email distribution with Notice of Funding Opportunities by sending a blank (Subject and Body) email to subscribe-omb-gata-grants@lists.illinois.gov .

Illinois Department of Commerce & Economic Opportunity

The link above takes you to the Apply for Funding page for DCEO Grant Opportunities and also included deadlines to apply.

Lastly, we look forward to seeing you at the IASBO 2025 Annual Conference in Schaumburg from April 30 – May 2. Come by Booth 602 and say hello!