REPORT DIGEST REGIONAL OFFICE OF EDUCATION #8 CARROLL, JO DAVIESS, AND FINANCIAL AUDIT (In Accordance with the For the Year Ended: June 30, 2007 Summary of Findings: Total this audit 2 Total last audit 1 Repeated from last audit 0 Release Date: May 8, 2008
State of Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
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SYNOPSIS
·
The
Regional Office of Education #8 did
not have sufficient internal controls over the financial reporting process.
·
The
Regional Office of Education #8 did
not have adequate controls over approval of employee timesheets or control
over approval and documentation of changes to employees’ contracted pay
rates.
{Expenditures and Revenues
are summarized on the reverse page.} |
REGIONAL
OFFICE OF EDUCATION #8
FINANCIAL AUDIT
For
The Year Ended June 30, 2007
|
FY 2007 |
FY 2006 |
TOTAL REVENUES |
$3,863,126 |
$3,415,537 |
Local Sources |
$734,562 |
$733,688 |
% of Total Revenues |
19.01% |
21.48% |
State Sources |
$2,482,085 |
$2,049,866 |
% of Total Revenues |
64.25% |
60.02% |
Federal Sources |
$646,479 |
$631,983 |
% of Total Revenues |
16.73% |
18.50% |
|
||
TOTAL EXPENDITURES |
$3,898,924 |
$3,391,342 |
Salaries and Benefits |
$1,655,940 |
$1,322,439 |
% of Total Expenditures |
42.47% |
38.99% |
Purchased Services |
$1,300,772 |
$989,413 |
% of Total Expenditures |
33.36% |
29.17% |
All Other Expenditures |
$942,212 |
$1,079,490 |
% of Total Expenditures |
24.17% |
31.83% |
|
|
|
TOTAL NET ASSETS |
$139,664 |
$175,462 |
|
|
|
INVESTMENT IN
CAPITAL ASSETS |
$14,416 |
$19,435 |
|
||
|
REGIONAL SUPERINTENDENT |
During Audit Period: Honorable Marie Stiefel Currently: Honorable Marie Stiefel |
The Regional
Office of Education #8 did not
have sufficient internal controls over the financial reporting process.
The Regional Office of Education #8 did
not have adequate controls over approval of employee timesheets or control
over approval and documentation of changes to employees’ contracted pay
rates.
|
FINDINGS, CONCLUSIONS AND RECOMMENDATIONSControls
Over Financial Statement Preparation
The Regional Office of Education #8 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 #8 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 sufficient 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. For example, auditors noted that the
Regional Office did not maintain adequate internal controls over the
processing of all financial transactions.
Consequently, numerous adjustments were required to present financial
statements in accordance with generally accepted accounting principles. The auditors recommended that, as
part of its internal control over the preparation of its financial
statements, including disclosures, the Regional Office of Education #8 should
implement a comprehensive preparation and/or review procedure to ensure that
the financial statements, including disclosures, are complete and
accurate. Such 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. (Finding 07-1, pages 11-12) The Regional Office of Education #8
responded that it understands the nature of this finding and realizes that
this circumstance is not unusual in small organizations such as theirs. They note that Regional Office staff are
knowledgeable regarding accounting principles, however, and the Regional
Office feels that there is minimal risk associated with this condition. Nonetheless, they will look into the cost
and feasibility of seeking additional accounting expertise or providing
existing staff with additional training necessary to prepare and/or review
financial statements. Controls
Over PAYROLL FUNCTION
The Regional Office of Education #8 did
not have adequate controls over approval of employee timesheets or control
over approval and documentation of changes to employees’ contracted pay
rates. Regional Office of Education #8
requires timesheets to be signed by the appropriate supervisor and
documentation of employees current pay rates to be kept in personnel files.
Auditors noted that an employee’s
time sheet was not signed by the appropriate supervisor for 3 of 25 pay
checks examined. Also, in 4 instances,
amendments were made to employees’ original contracted pay rates without
proper approval and documentation.
According to Regional Office officials, controls over timesheet approval and personnel file documentation had been implemented but did not function properly. Regional Office personnel did not verify that employee personnel files included the required information. Auditors recommended that Regional
Office of Education #8 work to ensure that controls over payroll are
functioning properly. Personnel should
verify, before processing payroll, that all time sheets have been properly
approved and that all pay rate documentation is current and present in
personnel files. (Finding 07-2, page 13)
The Regional Office accepted the
recommendation and has informed the bookkeeping staff that employee pay
should not be adjusted until a signed amended contract has been received and
placed in the employee’s personnel file.
In addition, bookkeepers have been instructed not to pay hourly
employees for hours reported unless a supervisor has signed the time sheet to
indicate approval. AUDITORS’ OPINION Our auditors state the Regional
Office of Education #8’s financial statements as of June 30, 2007 are fairly
presented in all material respects. ___________________________________ WILLIAM
G. HOLLAND, Auditor General WGH:KJM SPECIAL ASSISTANT AUDITORS Our special assistant
auditors were Clifton Gunderson, LLP. |