REPORT DIGEST

ILLINOIS STATE BOARD OF EDUCATION

FINANCIAL AUDIT AND COMPLIANCE EXAMINATION

For the Year Ended:

June 30, 2008

Summary of Findings:

Total this audit                  3

Total last audit                  2

Repeated from last audit   2

Release Date:

April 23, 2009

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

To obtain a copy of the Report contact:

Office of the Auditor General

Iles Park Plaza

740 E. Ash Street

Springfield, IL 62703

(217) 782-6046 or TTY (888) 261-2887

This Report Digest and the Full Report are also available on

the worldwide web at

http://www.auditor.illinois.gov

SYNOPSIS

¨      The Agency did not have adequate procedures to ensure proper identification and recording of all financial information, such as accruals.

¨      The Agency did not comply with certain duties mandated by State statute.

¨      The Agency did not comply with provisions of the Fiscal Control and Internal Auditing Act.    

{Expenditures and Activity Measures are summarized on the reverse page.}

Current year expenditures overstated by approximately $7.9 million

Noncompliance with various School Code requirements

Testing of all major systems not completed during fiscal year 2008

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

INADEQUATE CONTROL OVER THE FINANCIAL REPORTING PROCESS

      The Agency did not have adequate procedures to ensure proper identification and recording of all financial information, such as accruals.

      We noted the current year expenditures were overstated approximately $7.9 million due to an accrual that should have been recognized in the prior year’s financial statements.  The State Finance Act and the School Code allows reimbursement claims that exceed the current year’s appropriation to be paid from future year’s appropriations.  While the proper adjustment was made during fiscal year 2008, it was noted in fiscal year 2007 the proper accrual was not made.  (Finding 1, page 12)

      We recommended the Agency establish and maintain effective controls over the financial reporting process to ensure the accurate submission of financial data.

      Agency officials stated they have enhanced the controls already in place and developed an addendum to the current checklist to help ensure the accuracy of the financial data. 

NONCOMPLIANCE WITH MANDATED DUTIES

      The Agency did not comply with duties mandated by State statute.  We noted the Agency did not:

·        maintain or appoint members to the Sex Education Advisory Board.

·        grant certificates of recognition to normal schools for all school districts or counties;

·        appoint seven members to the Advisory Council on Compensatory Education, adopt rules and regulations to carry out its duties or issue a report to the General Assembly on the Councils programs and claims by January 20 of the odd numbered year;

·        establish and implement an alternative math-science certification program;

·        appoint its member to represent school administrators to the Social Security Number Protection Task Force timely;

·        submit the Physical Education Report to the General Assembly and Governor timely;

·        submit the annual progress report timely;

·        submit the Annual Statistical Report to the Governor and the General Assembly timely; or

·        comply with several requirements of the Private Business and Vocational Schools Act.  (Finding 2, pages 13-16)  This finding was first reported in 2000.     

      We recommended the Agency develop a system to identify all mandates and develop procedures to ensure compliance.   

      Agency officials stated they have either included the statutes for repeal or are working toward implementation.    (For previous agency response, see Digest Footnote #1.)

NONCOMPLIANCE WITH THE FISCAL CONTROL AND INTERNAL AUDITING ACT

            The Agency’s Internal Audit Division did not comply with provisions of the Fiscal Control and Internal Auditing Act (Act). 

We noted the Internal Audit Division did not audit all of the Agency’s major systems over the last two years.  The Internal Audit performed 5 audits but only issued 2 reports during Fiscal Year 2008.  In addition, appropriate processes were not in place to ensure Internal Audit was involved in all major systems development/modification projects. (Finding 3, pages 17-18)

We recommended the Agency allocate adequate resources to the Internal Audit Division to ensure audits of major systems are performed at least once every two years.  Further, the Agency should ensure adequate procedures are established to ensure Internal Audit involvement in all major systems development and modifications of existing systems.   

      Agency officials stated they have hired an additional auditor to assist the Agency in meeting the requirements of the Fiscal Control and Internal Auditing Act.    

AUDITORS’ OPINION

      Our special assistant auditors stated that the Agency’s financial statements of the governmental activities, the major fund, and the aggregate remaining fund information of the Agency, as of and for the year ended June 30, 2008, are fairly stated in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JSC:pp

SPECIAL ASSISTANT AUDITORS

      Our special assistant auditors for this audit were Washington, Pittman & McKeever, LLC.

DIGEST FOOTNOTES

#1 – NONCOMPLIANCE WITH MANDATED DUTIES - Previous Agency Response

2007:  The Agency is considering development and implementation of an automated system that will allow for tracking of all mandates to which the Agency is subject and identification of the areas in the Agency responsible for compliance.  See prior year report for complete response.