The fiscal 2027 audit-in-lieu change

From fiscal year 2027, a township or district with under US$1.4 million in revenue may file an annual financial report with the Comptroller instead of paying for an audit every year. Until now the line was US$850,000. Here is what changed, who it covers and what your board has to do to use it.

What changed

Public Act 104-635 (Senate Bill 2836) took effect on July 24, 2026. It amends the Governmental Account Audit Act so that, beginning with fiscal year 2027, the revenue line for filing a report in place of a yearly audit rises from US$850,000 to US$1,400,000. Units at or above US$1.4 million keep the yearly audit and also file the annual financial report.

Before fiscal 2027 the old US$850,000 line still applies, including to any late years you are catching up. The report form itself does not change: by law it is designed so that it does not need professional accounting services to prepare.

Who it covers

The Governmental Account Audit Act covers townships and special districts: fire protection, park, library, road, sanitary, water, cemetery and similar districts. It does not cover school districts, counties under the County Auditing Law, or cities, villages and incorporated towns, which have their own rule (below).

The two routes under US$1.4 million

A unit under the line files the annual financial report every year and picks one of two routes:

1. An audit every 4 years. The unit has an audit made by a licensed CPA once every 4 years and files the annual financial report each year.
2. A board vote every year, with no audit. A copy of the annual financial report goes to each member of the elected board, it is presented at a public meeting, in person or by live phone or web connection, and the board approves it by a 3/5 majority vote.

The second route needs a Certified Copy of Vote filed with the report. Under the Comptroller's filing instructions it must show the unit's name and code, the fiscal year, that the report was approved by a 3/5 majority vote, the date of approval, the signature of the official record keeper, and a notary seal or the unit's official seal. The record keeper is the township clerk, or for a district the FOIA officer. The Comptroller supplies the form. Approval can take up to 5 business days, and a report filed with a faulty vote document is rejected and keeps drawing fees.

Which year is fiscal 2027

The Comptroller's own example labels a fiscal year by the year it ends. So the first year under the new line is the one that ends during 2027, and its report is due 180 days later:

For the vote route, the board meeting has to fall early enough for the vote document to be approved before the due date. We suggest at least two weeks.

Townships: the Township Code moved too

The same Act changed the Township Code, which sets how a township's own accounts are checked. Townships with revenue under US$1.4 million, adjusted each year for inflation, use an auditing committee of 3 township electors, plus a CPA audit at the end of each supervisor's term; townships above it have a CPA audit within 6 months of year end. The old line was US$850,000, not counting road funds.

Cities and villages: a population rule

Cities, villages and incorporated towns follow the Municipal Code instead. From fiscal 2027, under changes made by P.A. 104-167 and P.A. 104-852:

• Under 1,000 people, with no utility and no bonded debt: an annual financial report each year, no audit.
• Under 1,000 people, with a utility or bonded debt: an annual financial report each year and an audit every 4 years, or every year while the last audit carries an adverse opinion or a disclaimer.
• 1,000 people or more: an audit and an annual financial report every year.

Until fiscal 2027 the line for municipalities is 800 people. Counties still audit every year.

What is not settled yet

• Which revenue figure the Comptroller compares with US$1.4 million. Comptroller Connect decides the options from the revenue entered in the report; whether a component unit's revenue counts is not stated.
• Whether "3/5 majority" counts members elected or members present. The statute says only "approved by a 3/5 majority vote". Ask your attorney.
• Whether the Comptroller will change its vote form or instructions for fiscal 2027. The fiscal 2026 instructions still show the US$850,000 line, which is correct for fiscal 2026.

What it means for your unit

If your unit pays for a yearly audit today and its revenue is under US$1.4 million, your board can choose a route without a yearly audit from fiscal 2027. The board decides which route to take; if you are unsure which rule applies to you, ask your attorney or your auditor. Either route still needs a correct annual financial report every year, on time. That report is the part we prepare.