REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #16: DEKALB
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED: JUNE 30, 2016

Release Date:  August 22, 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: 1

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
#16 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 #16 (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.  The ROE maintains its accounting
records on the modified accrual basis of
accounting during the fiscal year and
prepares adjusting journal entries at
year-end to convert the financial
statements to the accrual basis of
accounting.  While the ROE maintains
controls over the processing of most
accounting transactions and reviews
revisions to the financial statements and
notes proposed by the auditor, there are
not sufficient controls over the
preparation of 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.

During review of the financial information
prepared by the ROE, auditors noted the
ROE did not have adequate controls to
ensure financial statement balances were
accurate.  While the ROE did maintain
records to indicate the balance of
financial statement accounts, numerous
material audit adjustments were proposed
in order to ensure those balances were
accurate.

According to ROE management, they made
year-end adjustments in order to maintain
the financial statements on a modified
accrual basis of accounting; however, they
did not effectively detect all of the
material adjustments needed in order to
present financial statements in accordance
with GAAP.  (Finding 2016-001, pages
10-11) This finding was first reported in
2007.

The auditors recommended that, as part of
internal control over the preparation of
financial statements, the ROE should
implement comprehensive procedures 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 the
applicable GAAP, GASB pronouncements, and
knowledge of the ROE’s activities and
operations.

The ROE responded that it received the
audit report for FY15 in October 2016
after the close of FY16. FY15 adjusting
journal entries were made in September
2016. To date, all journals entries have
been made to FY15 that needed to be made.
None are expected for FY16.  (For previous
Regional Office response, see Digest
Footnote #1 located at the end of the
digest.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #16’s financial statements as of
June 30, 2016 are fairly presented in all
material respects.

This financial report was conducted by the
firm of McGreal & Co., 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 journal entries from fiscal
year 2015 need to be recorded and posted
so it can act upon them prior to the close
of fiscal year 2016.  The current
bookkeeper has been at the DeKalb ROE for
the entire fiscal year 2016.  The current
bookkeeper understands the year-end
procedures and will record the proper
journal entries that need to be made to
ensure the General Ledger balance is
accurate