Sen. Dale Righter (R-Mattoon) wants municipalities to have an easier option when filing their annual audits.
Righter is sponsoring Senate Bill 2258 to allow municipalities to use cash-basis accounting rather than the more complicated accrual basis that has been required. The latter method is also more costly, Righter said in a press release.
In a cash-basis method, revenues are recorded only when money is received and does not take into account anticipated revenue.
Sen. Dale Righter (R-Mattoon)
The accrual method tracks revenues reported at the time of being earned and when expenses occurred instead of when they are paid. This can force municipalities to hire experienced – and costly – accountants.
Righter's legislation comes as a June letter from the Illinois comptroller’s office that required municipalities to stick with the accrual basis accounting practice only.
“What the comptroller is mandating is the equivalent to someone having to hire a certified public accountant with 30 years’ experience to do their college kid’s taxes,” Righter said.
Many municipalities in Righter’s district utilize the cash-basis accounting because of their modest budgets, he said. The choice of cash- or accrual-basis accounting techniques will enable many smaller municipalities to do what is most time-effective and economically feasible, advocates of the law said.
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