REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #21:  FRANKLIN,
JOHNSON, MASSAC, AND WILLIAMSON COUNTIES

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
UNIFORM GUIDANCE)
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  November 21, 2019

FINDINGS THIS AUDIT:  2

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

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

• (18-1) The Regional Office of Education
#21 did not have sufficient internal
controls over the financial reporting
process.

• (18-2) The Regional Office of Education
#21 did not have sufficient internal
controls over restricted cash.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #21 (ROE)
did not have sufficient internal controls
over the financial reporting disclosure
process. The ROE maintained its accounting
records on the cash basis of accounting
during the fiscal year and posted year end
accrual entries for audit purposes. While
the ROE maintained controls over the
processing of accounting transactions,
including providing information for several
reconciling items between the governmental
fund financial statements and the statement
of net position and statement of activities,
there were not sufficient controls over the
preparation of generally accepted accounting
principles (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.

The ROE is required to maintain a system of
controls over the preparation of financial
statements in accordance with 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).

During review of the financial information
prepared by the ROE, it was noted that while
the ROE provided financial information for
the required disclosures, additional
assistance was needed for required
disclosures supporting the financial
information. Specifically, additional
assistance was needed for the disclosures
and required supplementary information
relating to GASB Statements No. 68, 71, and
75.

Regional Office management indicated the
accounting staff is still in the process of
obtaining training over applicable GAAP and
GASB pronouncements, specifically the new
GASB Statements requiring extensive
disclosures and additional reporting
requirements. The accountant prepared the
majority of the financial statement
information for the first time this year and
will continue to improve on the financial
reporting process. (Finding 18-001, pages 14
– 15)

The auditors recommended as part of its
internal control over the preparation of
financial statements, including disclosures,
the ROE should continue to 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 an individual(s)
possessing a thorough understanding of
applicable GAAP, GASB pronouncements, and
knowledge of the ROE’s activities and
operations.

ROE Response: As governmental accounting and
reporting standards continue to shift
rapidly, the ROE will monitor and identify
trainings in order for our current staff to
have the most up-to-date training and be
able to accurately prepare the financial
information. The ROE will secure the
services of an individual or accounting firm
possessing the understanding of applicable
GAAP, GASB pronouncements, and knowledge of
the ROE’s activities and operations until
the ROE is trained in the preparation of
such financial statements.

INTERNAL CONTROLS OVER RESTRICTED CASH

The Regional Office of Education #21 (ROE)
pools most of its cash into one operating
bank account. With such an account, funds
with deficit cash balances are considered to
have borrowed cash from other funds to cover
their expenditures. At June 30, 2018, the
ROE reported a deficit cash balance in
several of its funds. Cash totaling $20,001
from the Technology Institute Fund was
reduced to cover these deficit balances.
Loans to other funds are an unauthorized use
of restricted fund monies.

Illinois statute (105 ILCS 5/3-12) restricts
the use of Institute Fund monies to defray
expenses associated with the work of the
regional professional development review
committees; to defray expenses connected
with improving the technology necessary for
the efficient processing of licenses; to
defray all costs associated with the
administration of teaching licenses; to
defray expenses incidental to teachers’
institutes, workshops or meetings of a
professional nature that are designed to
promote the professional growth of teachers;
or to defray the expense of any general or
special meeting of teachers or school
personnel of the region, which has been
approved by the regional superintendent.

Regional Office management indicated that
several of the ROE’s programs operate on a
reimbursement basis, creating a period
during which the program has paid
expenditures for which it has not received
funding. The unrestricted funds available to
cover these expenditures were not sufficient
to cover the deficit cash balances. (Finding
18-002, pages 16 – 17)

The auditors recommended the ROE should
initiate procedures to monitor cash and
ensure that restricted funds are only
expended for their restricted purposes. In
addition, the ROE should make transfers from
funds with unrestricted cash and/or seek
lines of credit to pay expenditures for
reimbursable programs that have insufficient
cash.

ROE Response: The ROE understands the
finding. With limited financial resources,
the Regional Superintendent will work with
the accounting department to closely monitor
available funds in each account and ensure
that only unrestricted funds are used to
cover programs that have insufficient cash
when payments are delayed by the State or
other funding source.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #21’s financial statements as of
June 30, 2018 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of Sikich 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:JMM