REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #27

 

HENDERSON, MERCER AND WARREN COUNTIES

 

FINANCIAL AUDIT

(In Accordance with the
Single Audit Act and OMB Circular A-133)

For the Year Ended:

June 30, 2005

 

Summary of Findings:

 

Total this audit                          5

Total last audit                          8

Repeated from last audit           4

 

Release Date:

June 1, 2006

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

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

http://www.state.il.us/auditor

 

 

 

 

SYNOPSIS

 

 

·        The Regional Office of Education #27 did not examine at least once each year all books, accounts, and vouchers of every school treasurer in its educational service region.

 

·        The Regional Office of Education #27 did not have adequate controls over property and equipment.

 

·        The Regional Office of Education #27 did not record four bank accounts, with balances totaling $125,632, in the general ledger.

 

·        The Regional Office of Education #27 did not have employment contracts or formal documentation of rates of pay for several salaried and hourly rate employees tested.

 

·        The Regional Office of Education #27’s system of accounts does not report funding sources in accordance with the ROE Accounting Manual.

 

 

 

 

 

 

 

 

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           {Expenditures and Revenues are summarized on the reverse page.}

 


 

                                                                                   

REGIONAL OFFICE OF EDUCATION #27

HENDERSON, MERCER AND WARREN COUNTIES

 

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For The Year Ended June 30, 2005

 

 

 

 

FY 2005

FY 2004

TOTAL REVENUES

$1,575,394

$1,224,405

Local Sources

$667,061

$391,267

% of Total Revenues

42.34%

31.96%

State Sources

$531,837

$434,004

% of Total Revenues

33.76%

35.45%

Federal Sources

$376,496

$399,134

% of Total Revenues

23.90%

32.60%

 

TOTAL EXPENDITURES

$1,570,144

$1,162,610

Salaries and Benefits

$990,616

$782,255

% of Total Expenditures

63.09%

67.28%

Purchased Services

$310,825

$320,863

% of Total Expenditures

19.80%

27.60%

All Other Expenditures

$268,703

$59,492

% of Total Expenditures

17.11%

5.12%

 

 

 

TOTAL NET ASSETS

$315,624

$310,374

 

 

 

INVESTMENT IN CAPITAL ASSETS

$0

$0

 

 

Percentages may not add due to rounding.

 

 

REGIONAL SUPERINTENDENT 

During Audit Period: Honorable Glen W. Braden

Currently: Honorable Glen W. Braden

 

 


 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #27 did not examine at least once each year all books, accounts, and vouchers of every school treasurer in its educational service region.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #27 did not have adequate controls over property and equipment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #27 did not record four bank accounts, with balances totaling $125,632, in the general ledger. These accounts were included in the cash balances recorded in the financial statements but the adjustments were not recorded in the general ledger.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #27 did not have employment contracts or formal documentation of rates of pay for several salaried and hourly rate employees tested.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #27’s system of accounts does not report funding sources in accordance with the ROE Accounting Manual.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

CONTROLS OVER COMPLIANCE WITH LAWS AND REGULATIONS

 

           The Illinois School Code (105 ILCS 5/3-14.11) requires the Regional Superintendent to examine at least once each year all books, accounts, and vouchers of every school treasurer in his educational service region, and if he finds any irregularities in them, to report them at once, as directed by the School Code.

 

           The Regional Office did not examine at least once each year all books, accounts, and vouchers of every school treasurer in the educational service region.  Regional Office officials noted they believe the mandate is outdated and that they are satisfying the intent of the statute by other reviews they undertake.  This mandate has existed in its current form since at least 1953. (Finding 05-1, page 12-13)

 

           The Regional Office accepted the recommendation, noting it will seek a legislative solution to this and other obsolete passages.   

 

 

INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT

 

       The Regional Office of Education #27 did not have adequate controls over fixed assets.  For example, two items on the fixed asset listing were not signed out in the log-out sheet.  The fixed asset listing for the Progressive Alternative Secondary School (PASS) did not have complete information as to the function and activity; reference to the acquisition source document; acquisition date; acquisition cost; vendor; unit charged with custody; location; fund and account from which purchased; and method of acquisition.  Also, PASS equipment items were not tagged with fixed asset tag numbers that clearly indicated they were the property of the Regional Office.  Some items had numbers written in permanent ink.

 

       The Regional Office of Education (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 05-2, pages 14-16)  This finding was first reported in 2003.

 

       The Regional Office of Education #27 accepted the recommendation stating that the sign-out sheet has been updated to allow for numerous sign-outs.  Also, inventory will be tested semi-annually to increase control.  PASS will obtain permanent labels to be affixed to all equipment and an inventory will be taken annually.  In addition, a spreadsheet will be created that includes item descriptions, ID number, funding source, cost, disposal date, and reason for and method of disposal. (For previous Regional Office response, see Digest Footnote #1.)   

 

 

UNRECORDED AND UNRECONCILED BANK ACCOUNTS

 

        The Regional Office of Education #27 did not record four bank accounts, with balances totaling $125,632, in the general ledger. These accounts were opened in prior years and were included in the cash balances reported in the financial statements but the adjustments were not posted in the general ledger.  Also, one bank account’s June 30 balance had an unreconciled difference of $1,378.

        

        Sound internal controls require that accounting records accurately and completely record all transactions of the entity.  Balances in the general ledger accounts should be reconciled with the statement of accounts on a regular basis and adjustments recorded timely and correctly in the book of accounts. (Finding 05-3 pages, 17-18)  This finding was first reported in 2003.

 

        The Regional Office of Education #27 accepted the recommendation, responding that it will establish the required accounts not currently set-up and recorded.  (For previous Regional Office response, see Digest Footnote #2.) 

        

 

INADEQUATE DOCUMENTATION OF SALARY RATES

 

       The Regional Office of Education #27 did not have employment contracts or formal documentation of rates of pay for several salaried and hourly rate employees tested.  A list of salaries by person is prepared and given to the bookkeeper but the listing does not indicate the person authorizing the salary rates or their effective dates.

 

       The Regional Office of Education (ROE) Accounting Manual general policies concerning payroll procedures state that a master record should be maintained on each employee or contractor for federal and State reporting purposes.  The master payroll record should contain at least the following:  employee name, social security number, address, date of hire, and rate and terms of contract/agreement.  In addition, sound internal controls require that payroll rates and amounts be properly authorized and formally documented.  (Finding 05-4, pages 19-20)  This finding was first reported in 2003.

 

       The Regional Office of Education #27 agreed with the recommendation stating that an excel spreadsheet with all the staff, rates, and effective dates will be established.  This will be signed by the Regional Superintendent.  Individual staff payroll information will be signed by the staff member and the coordinator.  Individual staff files will be established with current monthly payroll information and paperwork indicating additional funds for special work services given to staff.  (For previous Regional Office response, see Digest Footnote #3.) 

INADEQUATE CHART OF ACCOUNTS

      

       The system of accounts maintained by the Regional Office of Education #27 does not correspond with the system of accounts promulgated by the Illinois State Board of Education in the Illinois Program Accounting Manual and ROE Accounting Manual.  The Regional Office maintains its system of accounts based on the grants, awards and contracts (programs) it administers.  Programs are not maintained in individual separate self-balancing funds.  Instead, programs are set-up as cost centers that track only revenues and expenditures by program.  The Regional Office has started to revise its account coding to comply with the Illinois Program Accounting Manual and ROE Accounting Manual but had not completed it in fiscal year 2005.  (Finding 05-5, pages 21-22)

 

          The Regional Office of Education #27 accepted the recommendation, stating that the ROE Accounting Manual will be used to create new titles and expense accounts with the line item, object codes, and funding sources.  

              

             

AUDITORS’ OPINION

 

      Our auditors state the Regional Office of Education #27’s financial statements as of June 30, 2005 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KJM:ro

 

 

 

SPECIAL ASSISTANT AUDITORS

 

        Our special assistant auditors were E.C. Ortiz & Company, LLP.

 

 

 

DIGEST FOOTNOTES

 

#1: INADEQUATE CONTROLS OVER PROPERTY AND EQUIPMENT -  Previous Regional Office Response

 

In its prior response to the June 30, 2004 audit, the Regional Office of Education #27 accepted the recommendation stating that tags have been purchased and will be attached for each item on the inventory list.  A log will be maintained with item name, number, location, fund used for purchase and sign out area for transportation to another location.  The log will also include a disposal date.  The Regional Office will prepare a fixed asset policy and determine a capital outlay threshold.

 

#2 UNRECORDED AND UNRECONCILED BANK ACCOUNTS – Previous Regional Office Response

 

In its prior response to the June 30, 2004 audit, the Regional Office of Education #27 accepted the recommendation stating that even though these accounts have not been on the QuickBooks general ledger, they have always been presented to auditors. Accounts will be set up in QuickBooks.  Unreconciled differences will be resolved.

 

 

#3: INADEQUATE DOCUMENTATION OF SALARY RATES – Previous Regional Office Response

 

In its prior response to the June 30, 2004 audit, the Regional Office of Education #27 accepted the recommendation stating that the Regional Office will prepare contracts for all employees.

 

 

Complete Regional Office responses to prior findings are available upon request from the Auditor General’s Office.