FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING
SYSTEM
During the past fiscal year, the Regional Office of
Education #1 recorded all revenue and expense transactions of the West
Central Regional System #240 (WCR) in its general ledger system. The WCR has a separately elected board. It is a legally separate entity and is
fiscally independent. The WCR
administers vocational education services for the region, and Regional Office
of Education #1 acts as a fiscal agent for the WCR.
The effect of including the WCR’s financial transactions
is to overstate the Regional Office of Education #1’s cash balances. According to governmental accounting
standards, transactions of two separate primary government units should not
be co-mingled in one general ledger system (Finding 05-1, page 11). This finding was first reported in
2003.
The Regional Office of Education #1 accepted the
recommendation to create a separate set of records for the WCR’s accounting
activity. The Regional Office plans
to implement a new general ledger system for fiscal year 2006 in order to
separately record transactions of the West Central Regional System #240. (For
previous Regional Office response, see Digest Footnote #1.)
DISBURSEMENT OF EXCESS GRANT FUNDS
The Regional Office of Education #1 had multiple programs
with excess cash balances at June 30, 2005 that had not been obligated, and
the balances were not refunded to the granting agencies by August 15,
2005. The grant-funded programs with
period-end cash balances in excess of $500 ranged from $547 for the Illinois
Tobacco Prevention program to $24,866 for the Standards Aligned Classrooms
program.
The Illinois Grant Funds Recovery Act requires that all
grant funds that have not been expended or obligated by the end of the grant
period be returned to the granting agency within 45 days after the end of the
period. (Finding 05-2, page 12) This
finding was first reported in 2003.
The Regional Office of Education #1 accepted the
recommendation to prepare accurate reconciled reports at year-end for its
grant programs and contact the granting agency to determine a proper means of
disposition of any excess grant funds.
(For previous Regional Office response, see Digest Footnote #2.)
BANK
ACCOUNTS WERE NOT PROPERLY RECONCILED FOR JUNE 2005
For June 2005 (fiscal year end), the Regional Office of
Education #1’s bank reconciliation for the general checking account included
$24,897 of net uncorrected discrepancies.
The Regional Office of Education #1 had errantly deposited $11,361 of
its cash into the West Central Regional System #240 (WCR) bank account and
had deposited $37,789 of WCR’s cash into the Regional Office of Education’s
bank account. The remaining $1,531 of
discrepancies consisted of various unrecorded transactions.
The Regional Office of Education #1 did not properly
identify and correct cash discrepancies on a monthly basis as part of the
bank statement reconciliation process.
(Finding 05-3, page 13)
The Regional Office accepted the recommendation to
perform a monthly reconciliation of all bank accounts and correct any
discovered discrepancies in a timely manner.
CONTROLS OVER COMPLIANCE WITH
LAWS AND REGULATIONS
The Illinois School Code (105 ILCS 5/3-14.11) requires the Regional
Superintendent to examine at least once each year all books, accounts, and
vouchers of every school treasurer in his educational service region, and if
he finds any irregularities in them, to report them at once, as directed by
the School Code.
The Regional Office
did not examine at least once each year all books, accounts, and vouchers of
every school treasurer in the educational service region. Regional Office officials noted they
believe the mandate is outdated and that they are satisfying the intent of
the statute by other reviews they undertake.
This mandate has existed in its current form since at least 1953.
The School Code (105 ILCS 5/3-14.17) also requires the Regional
Superintendent to notify the presidents of boards of trustees and the clerks
and secretaries of school districts, on or before September 30, annually, of
the amount of money distributed by him to the treasurer, with the dates of
distribution. The Regional Office did
not make the required notification. According to Regional Office management,
they have a policy of only preparing and submitting distribution reports to
the districts upon request of the districts’ external auditors. (Finding 05-4, pages 14-15)
The Regional Office accepted
the recommendation to comply with the statutory requirement (105 ILCS 5/3-14.11),
and if it believes the mandate is obsolete, to seek legislative action to
revise the statute accordingly. The
Regional Office responded it will seek a legislative solution to this and
other obsolete passages. The Regional
Office also responded that it intends to start sending the required
distribution report to every district each year by September 30 in order to
comply with 105 ILCS 5/3-14.17.
EXPENDITURE
REPORT FOR EDUCATION FUND DID NOT AGREE TO GENERAL LEDGER
A comparison of an expenditure report to the Regional
Office of Education #1’s general ledger revealed an instance where the totals
on the final 2005 expenditure report did not agree with the Regional Office
of Education #1’s books by $4,137, resulting in an inaccurate expenditure
report.
The expenditure report submitted to the Illinois State
Board of Education for the Title I-Reading First Part B SEA Funds program
incorrectly reported expenditures of $18,503, while the general ledger
contained the correct expenditure total of $22,640. (Finding 05-5, page 16)
The Regional Office of Education #1 agreed with the
recommendation to have personnel responsible for the report compare the
expenditures to the general ledger accounts and make necessary corrections before
filing the reports.
AUDITORS’
OPINION
Our auditors state the Regional Office of
Education #1’s financial statements as of June 30, 2005 are fairly presented
in all material respects.
____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JRB
SPECIAL ASSISTANT AUDITORS
Our special assistant
auditors were Fick, Eggemeyer & Williamson, CPA’s.
DIGEST
FOOTNOTES
#1: TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING SYSTEM– Previous
Regional Office Response
In its prior response in 2004,
the Regional Office stated it plans to implement a new general ledger system
at the start of the next fiscal year in order to separately record
transactions of the West Central Regional System #240.
#2: DISBURSEMENT OF EXCESS GRANT FUNDS – Previous Regional Office Response
In its prior response in 2004,
the Regional Office stated it planned to obtain from bookkeeping, accurate
reconciled reports, at least annually, which consider: beginning fiscal year cash balances,
current fiscal year grant income, current fiscal year program expenses,
current fiscal year interest allocated to programs, and year end cash
balances by program. Also, granting
agencies will be notified of any excess grant funds at period end.
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