REPORT DIGEST

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

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  March 31, 2021

FINDINGS THIS AUDIT:  2

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

• (20-1)  The Regional Office of
Education #21 lacked sufficient internal
controls over the financial reporting
process.

• (20-2) The Regional Office of Education
#21 had inadequate internal control
procedures.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #21
(ROE) lacked 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 most
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 the ROE did not have adequate
controls over the maintenance of complete
records of accounts receivable and
unavailable revenue. While the ROE did
maintain records to indicate the balances
of accounts receivable and unavailable
revenue, a misstatement was noted during
the audit process that required a
material adjustment to the accounts
receivable and unavailable revenue within
the Education Fund.

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.
(Finding 20-001, pages 11 – 12) This
finding was first reported in 2017.

The auditors recommended as part of its
internal control over the preparation of
financial statements, including
disclosures, the ROE should continue to
implement comprehensive preparation and/
or review procedures 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: The Regional Office will
continue to secure services of an
accounting firm to assist with the
preparation of the financial statements
as well as implement additional review of
the accounts receivable and unavailable
revenue preparations.

INADEQUATE INTERNAL CONTROL PROCEDURES

The Regional Office of Education #21
(ROE) did not have sufficient internal
controls over its cash disbursement
process. Auditors noted the individual
that records transactions within the
accounting system and prepares bank
reconciliations also has the ability to
prepare and generate checks with the
Regional Superintendent’s electronic
signature. Checks were written bearing
the Regional Superintendent’s electronic
signature prior to the Regional
Superintendent’s documented (manual)
approval on the payment authorization
form required for all invoices. Due to
the process in place, two checks were
issued and later determined not to be
legitimate expenses of the ROE.

The ROE is required to establish and
maintain a system of internal controls
over disbursements and reporting to
prevent errors and fraud. This includes
maintaining a review and approval process
over all disbursements issued during the
fiscal year.

Regional Office management indicated that
due to the COVID-19 pandemic,
modifications to the internal control
process were made for employees unable to
work at the Regional Office. The internal
control process was modified to include
the Regional Superintendent’s approval
through email correspondence with the
formal documentation completed when
individuals were onsite. The ability to
generate electronic signatures was
established with the implementation of a
new accounting system. (Finding 20-002,
pages 13 – 14)

The auditors recommended as part of its
internal control over the cash
disbursement process, the ROE should
implement and monitor its internal
controls to ensure no one individual has
access to all steps of the accounting
process. The ROE should make sure that
all checks have the appropriate
documented review and approval before
issued.

ROE Response: The ROE will review and
revise the system of internal controls to
include additional separation of duties
as well as appropriate crisis operating
standards.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #21’s financial statements as
of June 30, 2020 are fairly presented in
all material respects.

This financial audit was conducted by the
firm of Sikich LLP.

MICHAEL PAONI
Division Assistant Director

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

FRANK J. MAUTINO
Auditor General

FJM:RSH