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Auditor of Public Accounts - RG 105 | Illinois State Archives

Name: Auditor of Public Accounts - RG 105

Historical Note:

The Office of the Auditor of Public Accounts was established in 1812 when Illinois became a territory of the second grade (Terr. L. 1812, p. 5). The Auditor's duties continued without interruption when Illinois became a state. Under the provisions of the Constitution of 1818 the General Assembly provided for an Auditor of Public Accounts. The enacting legislation specified that the Auditor was to be elected to a four-year term by a joint vote of the General Assembly (L. 1819, p. 240). In 1833 the term was shortened to two years (Rev. L. 1833, p. 103). Under the 1848 Constitution the office became a popularly elected one, again with a term of four years, and these basic provisions were retained in the Constitution of 1870. The 1970 Constitution abolished the Office of the Auditor of Public Accounts effective January 1, 1973. Most of the Auditor's functions were assumed by the newly created Comptroller who was designated as keeper of the state's central fiscal account (P.A. 78-592, pp. 1634-1808).

In 1819 the General Assembly passed legislation outlining the primary functions of both the Auditor and the State Treasurer (L. 1819, p. 240). The Auditor's duties included auditing and recording all accounts of the state, keeping accounts of taxes that had been received or were due, and maintaining a fair record of the issuance of all authorized warrants and certificates for disbursements. The State Treasurer could make payments out of the treasury only on an Auditor's warrant or certificate and was required to deliver a monthly account to the Auditor of all payments made. This system, first established during the territorial period, remains basically unchanged today in transactions conducted by the Comptroller and the Treasurer.

One of the Auditor's primary responsibilities was conducting audits of state officers and agencies. While records of formal audits began to appear in the 1940s, no statutory procedures were established for auditing state agencies until 1957 when the function was removed from the Auditor of Public Accounts and given to the newly created Auditor General (L. 1957, p. 2306). The Auditor also was made responsible in 1951 for conducting audits of municipalities with populations of less that 500,000; this function remained with the office until assumed by the Comptroller in 1973.

In addition to his principal duties the Auditor of Public Accounts was assigned numerous other functions over the years: he was the regulating official for insurance companies operating in Illinois from 1855 until 1893 when the function was transferred to the Superintendent of Insurance (L. 1855, p. 46; L. 1893, p. 107); he acted as one of the ex officio Commissioners of State Contracts from 1874 to 1915 (Rev. Stat. 1874, p. 903; L. 1915, p. 671); and he served as clerk to the Court of Claims from 1877 until succeeded by the Secretary of State in 1917 (L. 1877, p. 64; L. 1917, p. 325). He was authorized in 1874 to receive surveyors field notes for Illinois and other records deposited with the state by the U.S. Surveyor General (Rev. Stat. 1874, p.1051). Five years later he assumed also custody of the records of the ten federal land district offices that had operated in Illinois (L. 1879, p. 238).

An 1874 act required county clerks to file with the Auditor abstracts of reports relating to the establishment of townships and boundary or name changes (Rev. Stat. 1874, p. 1067). In addition the Auditor received annual inventories of all state property (L. 1913, p. 6), was a member of the State Officers Electoral Board (L. 1929, pp. 395, 403), was a trustee of the Illinois State Employees' Retirement System (L. 1943, vol. 2, p. 350), and was an ex officio member of a large number of other boards and commissions.

Tax duties. Among the earliest and most important functions assigned to the Auditor of Public Accounts were those related to taxation. In order to determine the extent of the state's real property tax base he was required to obtain periodic abstracts of sales from each of the federal land district offices operating in Illinois (L. 1819, p. 313). Nonresidents were required to register their land with the Auditor at Vandalia from 1819 until 1829 when a subsequent act allowed registration with the county clerks (L. 1829, p. 119). Any nonresident tracts which were not registered or on which taxes were not paid were subject to sale by county sheriffs from 1819 to 1821, by the Auditor from 1823 to 1833, or by county clerks and sheriffs after 1833 (L. 1819, p. 313; L. 1823, p. 203; L. 1833, p. 528). The Auditor received yearly reports from each county official conducting land tax sales. Tracts sold for taxes could be redeemed within a specified time limit by payment of delinquent taxes, accrued interest, and the cost of the sale. Each county clerk was required to file reports annually with the Auditor showing amounts received by the county tax collector, either personally or from town collectors, and amounts paid under protest. The Auditor also was responsible for approving collectors' bonds and for instituting legal action against delinquent collectors. These duties were transferred to the Department of Revenue in 1951 (L. 1951, p. 536).

After 1867 equalization of the assessment of property became the responsibility of the State Board of Equalization of which the Auditor was an ex officio member (L. 1867, p. 105). This responsibility continued until 1919 when the equalization function was transferred from the board to the State Tax Commission (L. 1919, p. 718). Under the Constitution of 1870 the legislature passed acts which instructed the Governor and Auditor of Public Accounts to compute the state tax rate annually (L. 1871, pp. 30, 670). The Auditor also was responsible for certifying the established rate to the county collectors each year. The annual rate currently is set by the Governor, State Treasurer, and the Comptroller.

Saline land. In 1818 U.S. Congress specified that all salt springs and saline reserves within the boundaries of Illinois would be granted to the state. There were four salines in Illinois for which reserves were established: the Gallatin (also known as the Ohio and Wabash saline), the Vermilion, the Shoal Creek (also known as the Bond County saline), and the Big Muddy (also known as the Jackson County saline). Congress authorized the state to sell parts of the Gallatin and Vermilion saline reserves in 1828 and 1831 respectively (U.S. Stat. at Large, IV, pp. 305, 451). The sales of the Gallatin Saline reserves were supervised by a board of commissioners which reported to the Auditor of Public Accounts semiannually and issued the final certificates of sale. A Register and Receiver, appointed to conduct the Vermilion sales, reported quarterly to the Auditor and issued receipts and final certificates. Upon presentation of final certificates for either saline, the Auditor prepared and countersigned patents which were signed by the Governor and sealed by the Secretary of State. Through a series of later acts Congress eventually authorized the sale of all saline land. The Big Muddy and the greater part of the Shoal Creek salines were donated to the counties in which they were located and each county conducted and received the proceeds from its sales. In 1854 the Auditor was instructed to take over all records related to the salines and to sell at public auction any remaining tracts in the Gallatin and Vermilion reserves (L. 1854, p. 17).

Vandalia lots. Under an act of Congress of March 3, 1819, the federal government donated four contiguous sections of land to the State of Illinois for the establishment of a seat of government. The legislature provided for a board of commissioners to select the land, lay out a town for a capital on the Kaskaskia River, sell 150 lots, and erect a state house (L. 1819, p. 361). Vandalia was declared the seat of government for twenty years beginning December 1, 1820 (L. 1821, p. 32). Sales of a portion of the grant began under the 1819 act but because of the difficulty many purchasers had in meeting their payments another act was passed in 1823 allowing for a more liberal system of ten installment payments (L. 1823, p. 137). This same act also gave responsibility for conducting the sales to the Auditor of Public Accounts.

Seminary land. In 1818 Congress granted two townships to the State of Illinois to be used for a seminary of learning (U.S. Stat. at Large, III, p. 428). Selections of land under the state's grant began in 1823 when the Governor appointed three commissioners to carry out the work. The first seminary land patent was issued to the state in 1826. The General Assembly authorized the Auditor to conduct the first sales of seminary land in 1829 (Rev. L. 1829, p. 158). The proceeds from these sales were deposited in a Seminary Fund in the State Treasury. The institutions that eventually benefited from the Fund were those at Normal and Carbondale, now Illinois State University and Southern Illinois University respectively.

School land. In 1804 Congress passed an act reserving section sixteen in every township for the support of common schools (U.S. Stat. at Large, II, p. 279). The State of Illinois inherited the rights to these school land tracts upon admittance to the Union. Provisions for the sale of school land were made by the General Assembly in 1829 and 1831 (Rev. L. 1829, p.150; L. 1831, p. 172). Sales were conducted by a commissioner appointed in each county who forwarded quarterly reports to the Auditor of Public Accounts. The Auditor then prepared and countersigned patents which were signed by the Governor and sealed by the Secretary of State. The provisions for sales of school land remained basically unchanged by later legislation.

Railroad land grant. In 1851 a federal land grant was made to the State of Illinois to aid in construction and operation of the Illinois Central Railroad (U.S. Stat. at Large, IX, p. 466). The state accepted the grant and chartered the Illinois Central Railroad in 1851 (Priv. L. 1851, pp. 61, 192). Records of all tracts and lots selected and subsequently sold by the railroad were filed with the Auditor of Public Accounts (L. 1851, p. 35). All proceeds from these sales went either to the railroad company or to its bondholders. When the railroad was found to be withholding tracts from sale in 1873 the General Assembly passed an act compelling the railroad's trustees to sell all remaining tracts on which two dollars or more per acre were bid (L. 1873, p. 115).

Swamp land. In 1850 the federal government authorized the donation of swamp and overflowed lands to the state for the purposes of drainage and reclamation (U.S. Stat. at Large, IX, p. 519). In 1852 the state granted all such tracts to the counties in which they were located (L. 1852, p. 178). Land was surveyed and appraised by county surveyors and sold by the county drainage commissioners. Deeds were issued by the county court. Reports of swamp land sales were filed annually with the Auditor of Public Accounts by the county clerks until 1951 when they were directed to report to the Department of Revenue instead (L. 1951, p. 536).

State bonds for internal improvements. To finance internal improvement projects of the 1820s and 1830s including the Illinois and Michigan Canal, railroads, and river improvements the State of Illinois issued a large number of state bonds. The issues were poorly regulated and by the mid-1840s the state could neither determine the exact extent of its indebtedness nor make accurate interest payments to legitimate bondholders. The first major attempt to solve the problem was made in 1847 when the legislature provided for the issuance of New Internal Improvement Stock (L. 1847, p. 161). This stock primarily was issued in exchange for equivalent amounts of old internal improvement bonds, scrip, or other evidences of state indebtedness. Interest Bonds were issued concurrently in amounts equivalent to the interest due on the old surrendered certificates. The Auditor of Public Accounts was responsible for keeping registers of the stock and bonds issued and records of all transfers made. All certificates were transferable either at Springfield or at the State of Illinois Transfer Office in New York City. Outstanding Illinois and Michigan Canal stock and scrip could not be exchanged for the 1847 New Internal Improvement Stock. However a separate issue of Illinois and Michigan Canal Bonds, which could be exchanged for the old stock and scrip, was authorized in 1847 (L. 1847, p. 165). In 1847 the General Assembly authorized issuance of Liquidation Bonds specifically designed to be exchanged for bonds originally issued to Charles Macalister and Henry Stebbins (L. 1847, p. 163). These earlier bonds had been issued under an act providing for payment of interest on the internal improvement debt (L. 1841, p. 167). In 1859 authorization was made for the issuance of Refunded Stock in exchange for all outstanding state indebtedness and the Governor was allowed to adopt such means as were necessary to procure timely conclusion of the exchanges (L. 1859, p. 192).

Other state bonds. Aside from settling the enormous debt contracted on behalf of internal improvements, the state issued bonds to finance a wide variety of other activities. In 1861 a War Fund was established to meet Civil War expenses. The fund principally was financed by the sale of 6 percent War Stock certificates. The Auditor was authorized to assess an additional amount of property tax to meet the interest payments on this stock. Later bonds included 1917 and 1923 issues for state highways (L. 1917, p. 696; L. 1923, p. 512), a 1921 issue to pay bonuses authorized for Illinois veterans by the World War I Service Recognition Board (L. 1921, p. 67), and an issue of $30 million in bonds in 1934 to pay for emergency relief (L. 1933, 1st Spec. Sess., p. 11).

Local bonds. In 1865 counties and cities were authorized to issue bonds in support of subscriptions to the capital stock of railroad companies or in aid of any public improvement (L. 1865, p. 44). In 1877 bonding authority also was extended to other local governmental units including towns, townships, school districts, and other municipal corporations (L. 1877, p. 158). Each bond issued by a local unit had to be registered with the Auditor. When the bonds for any one unit totaled $5,000 or more the Auditor was required to determine the rate at which assessed property located within the unit would have to be taxed to meet annual payments of principal and interest. Such taxes were placed in individual funds for each local unit and pledged to the payment of registered bonds. The Auditor was custodian of these funds and authorized all receipts and disbursements. Interest coupons or bonds paid from the funds were returned to the Auditor or State Treasurer to be canceled and destroyed.

Banking Act of 1851. An act of 1851 established a general system of banking and made the Auditor of Public Accounts a principal regulating officer for banking activities (L. 1851, p. 163). Under the act articles of association were recorded with the county recorder and filed with the Secretary of State and Auditor. The Auditor was empowered to issue circulating notes to banks after each bank had deposited a sufficient amount of securities with the Treasurer to cover the value of the notes. The Auditor, Treasurer, and individuals depositing securities all were responsible for keeping descriptive lists of such securities. In 1865 the duties of the Bank Commissioners, created in 1851, were transferred to the Auditor and the State Treasurer (L. 1865, p. 20). The commissioners had been responsible for conducting annual examinations of banks and for inspecting the securities deposited by each bank with the Auditor and State Treasurer. They also had been empowered to order banks to deposit additional securities or to surrender sufficient amounts of circulating notes to make up for any impairment in the value of securities on deposit (L. 1851, p. 171). An act passed in 1867 forbade the future organization of banks having the power to issue notes or bills to circulate as money (L. 1867, p. 49). The Auditor also was forbidden to issue any additional circulating notes.

Regulation of state banks. Another general banking law was not passed in Illinois until 1887 (L. 1887, p. 89). It provided that persons wishing to organize a state-chartered bank first make application to the Auditor of Public Accounts. After capital stock was paid in, directors elected, and a preliminary examination completed by the Auditor, a certificate authorizing the bank to commence business was issued. Each bank was examined at least once a year by the Auditor or his representative. Notices of changes such as a change in the number of directors, additional capital stock issues, or consolidation with another bank had to be filed with the Auditor. Only minor changes were made in the basic system of regulating state banks until the responsibility was transferred to the newly created Department of Financial Institutions in 1957 (L. 1957, p. 369).

Regulation of building and loan associations. In 1891 the Auditor assumed responsibility for the examination of building and loan associations and for receipt of their annual reports, duties previously exercised by the Secretary of State (L. 1891, p. 90). The Secretary continued to issue certificates of organization to such associations until 1899 when this function also was assumed by the Auditor (L. 1899, p. 112). The Auditor also was authorized to examine associations on request of nine or more stockholders. In 1893 annual examinations became mandatory (L. 1893, p. 83). At the same time the Auditor became responsible for supervising and regulating operations of foreign building, loan, and homestead associations operating in the state (L. 1893, p. 86). An act of 1919 replaced or clarified all earlier legislation relating to building and loan associations but the act had little effect on the Auditor's responsibilities (L. 1919, p. 297). The next major legislative revision took place in 1955 with the passage of the Illinois Savings and Loan Act (L. 1955, p. 849). The Auditor remained principally responsible for regulating the associations named in this act until replaced in 1957 by the newly created Department of Financial Institutions (L. 1957, p. 369). Also transferred to the new department in 1957 were the Auditor's responsibilities for the regulation of several other types of financial institutions and organizations. These included trust companies (L. 1887, p. 144), pawners' societies (L. 1899, p. 120), foreign exchanges (L. 1923, p. 277), credit unions (L. 1925, p. 255), and currency exchanges (L. 1943, vol. I, p. 233).

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