REPORT DIGEST REGIONAL OFFICE OF EDUCATION #27 HENDERSON,
MERCER AND WARREN COUNTIES FINANCIAL AUDIT (In Accordance with the 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
FINANCIAL AUDIT
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. |