REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #8: CARROLL,
JO DAVIESS, AND STEPHENSON COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED: JUNE 30, 2016

Release Date:  June 29, 2017

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  0 -- 1 -- 1

FINDINGS LAST AUDIT: 2

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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

SYNOPSIS

• (16-1)  The Regional Office of Education
#8 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 #8 (ROE)
is required to maintain a system of
controls over the preparation of financial
statements in accordance with generally
accepted accounting principles (GAAP).
The Regional Office’s internal controls
over GAAP financial reporting should
include adequately trained personnel with
the knowledge, skills, and experience to
prepare GAAP based financial statements
and include all disclosures as required by
the Governmental Accounting Standards
Board (GASB).

The ROE did not have sufficient internal
controls over the financial reporting
process.  While the ROE maintains control
over the processing of most accounting
transactions, there were 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 and correct financial
statement misstatements and disclosure
omissions in a timely manner.

During review of the ROE’s financial
information, it was noted the ROE did not
have adequate controls to ensure financial
statement balances were accurate.  While
the ROE did maintain records to indicate
the balances of financial statement
accounts, numerous material audit
adjustments, including those required
under GASB Statements No. 34, No. 68, and
No. 71, were proposed in order to ensure
those balances were accurate.

Management did not effectively detect all
of the material adjustments, including
those required under GASB Statements No.
34, No. 68, and No. 71, needed in order to
present financial statements in accordance
with GAAP. (Finding 2016-001, pages 11-13)
This finding was first reported in 2010.

Auditors recommended that as part of
internal control over the preparation of
financial statements, including
disclosures, the ROE should implement a
comprehensive preparation and/or review
procedure to ensure that the financial
statements, including disclosures, are
complete and accurate.  These procedures
should be performed by a properly trained
individual possessing a thorough
understanding of applicable GAAP, GASB
pronouncements, and knowledge of the ROE’s
activities and operations.
The ROE responded that it understands the
nature of this finding and realizes that
this circumstance is not unusual in an
organization of this size.  The ROE
accepts the degree of risk associated with
this condition because the added expense
of seeking additional expertise to prepare
and/or review financial statements would
take away from the funds available to
provide educational services to students
and teachers.  The cost of hiring and
training additional staff or contracting
services outweighs the benefit.  If
additional resources are made available
through the State of Illinois, the
Regional Office will consider seeking the
services of an accountant to review the
financial statements and related
disclosures for completeness and accuracy.
(For previous Regional Office response,
see Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #8’s financial statements as of
June 30, 2016 are fairly stated in all
material respects.

This financial report was conducted by the
firm of Winkel, Parker & Foster, CPA PC.

AMEEN DADA
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:KJM

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation – Previous Regional Office
Response

 In its prior response in 2015, the ROE
 responded that it understands the nature
 of this finding and realizes that this
 circumstance is not unusual in an
 organization this size.  The Regional
 Office accepts the degree of risk
 associated with this condition because
 the added expense of seeking additional
 expertise to prepare and/or review
 financial statements would take away from
 the funds available to provide
 educational services to students and
 teachers.  The cost of hiring and
 training additional staff or contracting
 services outweighs the benefit.   If
 additional resources are made available
 through the State of Illinois, the
 Regional Office will consider seeking the
 services of an accountant to review the
 financial statements and related
 disclosures for completeness and
 accuracy.