REGIONAL OFFICE OF EDUCATION #3
BOND, FAYETTE AND EFFINGHAM COUNTIES
Financial Audit (In accordance with the Single Audit Act and OMB Circular A-133)
For the Year Ended June 30, 2010
Summary of Findings:
Total this audit: 1
Total last audit: 1
Repeated from last audit: 1
Release Date: March 10, 2011
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 Full Report are also available on the worldwide web at www.auditor.illinois.gov
The Regional Office of Education #3 did not have sufficient internal controls over the financial reporting process.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
CONTROLS OVER FINANCIAL STATEMENT PREPARATION
The Regional Office of Education #3 is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). Regional Office internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).
The Regional Office of Education #3 did not have sufficient internal controls over the financial reporting process. The Regional Office maintains their accounting records on the cash basis of accounting. While the Regional Office maintains controls over the processing of most accounting transactions, there are not sufficient controls over the preparation of the GAAP based financial statements for management or employees in the normal course of performing their assigned functions to prevent or detect financial statement misstatements and disclosure omissions in a timely manner. In their review of the Regional Office’s accounting records, auditors noted that:
• The Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable, capital assets, or deferred revenues.
• Numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles.
• The Regional Office did not post all the prior year audit adjusting entries, which resulted in inaccurate financial statements during the course of the year.
According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements. (Finding 10-1, pages 13-14) This finding was first reported in 2007.
The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #3 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate. Such review procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.
The Regional Superintendent responded that he does not have funds available to hire a certified public accountant to prepare or review financial statements. The Regional Superintendent noted the he will continue to seek training for the current bookkeeping staff to improve their understanding of accepted accounting principles and GASB pronouncements. (For previous Regional Office response, see Digest Footnote #1.)
Our auditors state the Regional Office of Education #3’s financial statements as of June 30, 2010 are fairly presented in all material respects.
WILLIAM G. HOLLAND
AUDITORS ASSIGNED: West & Company, LLC, were our special assistant auditors.
#1: Controls Over Financial Statement Preparation —Previous Regional Office Response
In its prior response in 2009, the Regional Superintendent responded that he agreed with the finding, but believed that the hiring or training of an individual with a thorough understanding of applicable generally accepted accounting principles and GASB pronouncements would be too costly. However, the Regional Office of Education #3 will continue to seek improvement within their internal controls system.