IBA Compliance Connection

Your go to source for compliance!

Under the Savings Bank Act, the Illinois Department of Financial and Professional Regulation (IDFPR) may require a savings bank to be audited if it has not already been audited at least once in the past year. If we undergo an annual director’s audit — which involves an examination of every account on our general ledger but is less extensive that an opinion audit — will this prevent the IDFPR from potentially requiring us to be audited?

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We believe that an annual director’s audit of every account on your general ledger likely would satisfy the Saving Bank Act’s criteria for avoiding the possibility of being required to undergo an independent audit.

The Savings Bank Act does not specify whether a director’s or opinion (or other) audit is required for a savings bank to avoid the possibility of the IDFPR requiring an audit. The law provides that the IDFPR may require an audit by an independent licensed public accountant if a savings bank, its holding company, or any of its corporate subsidiaries “has not been audited at least once” in the twelve months preceding the IDFPR’s examination, without defining what type of audit would qualify as having “been audited.”

The law also requires savings banks to maintain appropriate books and records in accordance with generally accepted accounting principles and the requirements of their insurer of accounts, and the books and records must be current, complete, organized, and accessible to the IDFPR, its agents, and the savings bank’s auditors and accountants.

Consequently, if your bank maintains its books and records in accordance with the law and undergoes an annual independent audit of these books and records with respect to every account on your general ledger, we believe this likely would be sufficient to avoid being ordered by the IDFPR to undergo an audit.

For resources related to our guidance, please see:

  • Savings Bank Act, 205 ILCS 205/9004(d) (“If a savings bank, its holding company, or any of its corporate subsidiaries has not been audited at least once in the 12 months prior to the Secretary’s examination, the Secretary may cause an audit of the savings bank’s books and records to be made by an independent licensed public accountant. The cost of the audit shall be paid for by the entity being audited.”)
  • Savings Bank Act, 205 ILCS 205/9011(a) (“Each savings bank is required to maintain appropriate books and records, as required by the Secretary, that are in accordance with generally accepted accounting principles and the requirements of its insurer of accounts. All books and records shall be current, complete, organized, and accessible to the Secretary, the Secretary’s agents and examiners, and to the savings bank’s auditors and accountants.”)