REPORT DIGEST REGIONAL OFFICE OF EDUCATION #9: CHAMPAIGN AND FORD COUNTIES FINANCIAL AUDIT FOR THE YEAR ENDED JUNE 30, 2019 Release Date: February 27, 2020 FINDINGS THIS AUDIT: 1 CATEGORY: NEW -- REPEAT -- TOTAL Category 1: 1 -- 0 -- 1 Category 2: 0 -- 0 -- 0 Category 3: 0 -- 0 -- 0 TOTAL: 1 -- 0 -- 1 FINDINGS LAST AUDIT: 0 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 • (19-1) The Regional Office of Education #9 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 #9 (ROE) did not have sufficient internal controls over the financial reporting process in order to record and present the pension and other postemployment benefits other than pensions (OPEB) information in accordance with the Governmental Accounting Standards Board (GASB). The ROE maintained its accounting records on cash basis accounting during the fiscal year and posted year-end accrual and other applicable entries for financial statement purposes. While the ROE maintained controls over the processing of most accounting transactions and prepared its financial statements, there were not sufficient controls over the preparation of generally accepted accounting principles (GAAP) basis 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. The ROE is required to maintain a system of controls over the preparation of financial statements in accordance with GAAP. The ROE internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge, skills, and experience to prepare GAAP basis financial statements and include all disclosures as required by the GASB. Through inquiries and discussions with the ROE’s accounting personnel and Regional Superintendent, auditors noted the ROE did not have adequate controls to record and report the ROE’s net accrued pension liabilities/ assets, OPEB liabilities/assets, deferred outflows of resources, deferred inflows of resources, pension expense/income, and OPEB expense/income in accordance with GAAP. The Regional Office management indicated the complex requirements of GASB Statements No. 68, No. 71, and No. 75 will require additional time and training before the ROE can fully implement the requirements on its own. (Finding 19-001, pages 11a – 11b) The auditors recommended that as part of internal control over the preparation of financial statements, including disclosures, the ROE should implement comprehensive preparation and/or review procedures to ensure the financial statements, including disclosures, are complete and accurate. These procedures should be performed by a properly trained individual possessing a thorough understanding of the applicable GAAP, GASB pronouncements, and knowledge of the ROE’s activities and operations. ROE Response: The ROE has secured the services of an accounting firm that has significant experience with Regional Offices of Education to prepare a compilation of their financial statements and notes in accordance with GAAP for fiscal year 2020. AUDITORS’ OPINION Our auditors state the Regional Office of Education #9’s financial statements as of June 30, 2019 are fairly presented in all material respects. This financial audit was conducted by the firm of Kemper CPA Group LLP. JOE BUTCHER Division Director This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act. FRANK J. MAUTINO Auditor General FJM:BAO