FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
CHART OF ACCOUNTS
The Regional Office of Education #26’s system of accounts
did not correspond with the system of accounts promulgated by the Illinois
State Board of Education in the Regional Office of Education (ROE) Accounting
Manual. The Regional Office of
Education maintains its system of accounts based on the grants, awards and
contracts (Programs) it administers.
Each Program is maintained in a separate self-balancing fund and the
system of accounts is based on the specific reporting requirements of the
program. While a number of the
programs have similar requirements, not all of the reporting requirements are
consistent. In addition, revenues are
accounted for using a single revenue code, without regard to the source of
the revenue.
The Regional Superintendent of Schools is required to
maintain accurate financial records.
The financial records shall be maintained in accordance with the ROE
Accounting Manual, as applicable.
(Finding 03-1, pages 12 - 13).
The Regional Office of Education #26 accepted the
recommendation stating that effective July 1, 2004 the Regional Office
implemented a system of accounts in compliance with the Accounting Manual in
accordance with the Illinois Administrative Code.
INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT
The
Regional Office of Education did not have adequate controls over fixed
assets. For example, there were no
formal policies or procedures to monitor and control equipment and other
fixed assets. Fixed asset listings
had not been maintained or updated with acquisitions or disposals. Physical inventories were not consistently
performed and reconciled with the fixed asset listings. The balances in the General Fixed Asset
Account Group were not recorded in the general ledger. As a result, the General Fixed Asset
Account Group was omitted from the ROE’s financial statements in
non-conformity with generally accepted accounting principles.
The ROE Accounting Manual requires each ROE to maintain
detailed fixed asset records for both accounting purposes as well as
insurance purposes, for fixed assets costing $500 or more. In addition, sound internal controls
require that policies and procedures on fixed assets cover the acquisition
and tagging, recording and reporting, depreciation (if applicable), transfers
and dispositions, and physical inventory, and that they be formally
documented and consistently applied (Finding 03-2, pages 14 - 16).
The Regional Office of Education #26 accepted the
recommendation to develop a formal fixed asset policy and procedures manual
to effectively monitor property acquisitions, transfers and disposals, and
provide for accurate reporting of fixed asset balances. The Regional Office stated they are in the
process of developing procedures and documents that will effectively monitor
fixed assets.
CASH ACCOUNT NOT RECORDED IN THE ACCOUNTING SYSTEM
OR FINANCIAL STATEMENTS
The Regional Office of Education #26 did not account for
one of its cash accounts in the accounting system. The Illinois School Districts Liquid Asset Fund Plus money
market account, which had a balance of $84,772 at June 30, 2003, was excluded
from the accounting system and financial statements.
All cash accounts of the Regional Office of Education
#26 should be maintained in the accounting system and recorded in its financial
statements in order
to properly track all funds
maintained by the Regional Office (Finding 03-5, page 19).
The Regional Office of Education #26 accepted the
recommendation to include the Illinois School Districts Liquid Asset Fund
Plus account in the computerized accounting system and financial statements.
COST ALLOCATION PLAN FOR DIRECT FEDERAL AWARDS
The Regional Office of Education #26 does not allocate
indirect costs in accordance with OMB Circular A-87. The Regional Office invoices the various
grants and programs it administers for central service activities, including
support salaries and related benefits, accounting and secretarial services,
and space rent, based on the grant’s budgeted costs (rather than as part of a
Cost Allocation Plan). Such salaries
and benefits are allowable under Circular A-87, however, where employees work
on multiple activities or cost objectives, a distribution of their salaries
or wages is required to be documented in accordance with provisions of
Circular A-87 or be included in the ROE’s cost allocation plan. Rent costs are also an allowable
expenditure, subject to limitations included in Circular A-87.
Grants, cost reimbursement contracts and other agreements
with the federal government should bear their fair share of costs recognized
under principles established by the federal Office of Management and Budget
(OMB). Costs are allocable to federal
awards if the goods or services involved are chargeable or assignable to the
award in accordance with the relative benefits received. Where an accumulation of indirect costs
will ultimately result in charges to a federal award, a cost allocation plan
is required as described in OMB Circular A-87 (Finding 03-6, pages 20 – 22).
The Regional Office of Education #26 accepted the
recommendation to develop a cost allocation plan in accordance with OMB
Circular A-87. The Regional Office
stated they are in the process of developing a
cost allocation plan that
addresses allowable indirect costs to all applicable programs.
OTHER FINDINGS
The
remaining findings are reportedly being given attention by Regional Office of
Education #26. We will review
progress toward the implementation of our recommendations during the next
audit.
AUDITORS’ OPINION
Our auditors state Regional Office of
Education #26’s financial
statements as of June 30, 2003 are fairly presented in all material respects
except for the omission of the General Fixed Asset Account Group. The General Fixed Asset Account Group
should be included in order to conform with Generally Accepted Accounting
Principles.
___________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL
ASSISTANT AUDITORS
Our
special assistant auditors were Sikich Gardner & Co., LLP.
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