REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #28 - BUREAU,
HENRY, AND STARK COUNTIES

FINANCIAL AUDIT
For the Year Ended: June 30, 2012


Release Date:   August 21, 2013

Summary of Findings:
Total this audit: 1
Total last audit:  5
Repeated from last audit: 1

State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL

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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

• The Regional Office of Education #28 did not
have sufficient internal controls over the
financial reporting process.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT PREPARATION

The Regional Office of Education #28 is required
to maintain a system of controls over the
preparation of financial statements in
accordance with generally accepted accounting
principles (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 financial statements to
ensure that they are free of material
misstatements and include all disclosures as
required by the Governmental Accounting
Standards Board (GASB).

The Regional Office of Education #28 did not
have sufficient internal controls over the
financial reporting process.  The Regional
Office maintains its accounting records on the
accrual basis of accounting for disbursements
and the cash basis of accounting for receipts.
While the Regional Office maintains controls
over the processing of most accounting
transactions, there are not sufficient controls
over the preparation of the 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.

In their review of the Regional Office’s
accounting records, auditors noted the
following:

• The Regional Office did not have adequate
controls over the maintenance of complete
records of accounts receivable, accounts payable
and deferred revenue.
• Several adjustments were required to present
financial statements in accordance with
generally accepted accounting principles.

• Cash was not tracked on a program/fund basis.

According to Regional Office officials, they did
not have adequate funding to hire and/or train
their accounting personnel in order to comply
with these requirements.  (Finding 12-1, page
12-12a) This finding was first reported in 2007.

The auditors recommended that, as part of its
internal control over the preparation of
financial statements, including disclosures, the
Regional Office of Education #28 should
implement a comprehensive preparation and/or
review procedure to ensure that the financial
statements, including note disclosures, are
complete and accurate.  Such procedures should
be performed by a properly trained individual(s)
possessing a thorough understanding of
applicable generally accepted accounting
principles, GASB pronouncements, and knowledge
of the Regional Office of Education’s activities
and operations.

The Regional Office of Education #28 responded
that it understands the nature of this finding
and realizes that this circumstance is not
unusual in an organization this size.  The
Regional Office noted that it accepts the degree
of risk associated with this condition because
the added expense of seeking additional
expertise to prepare and/or review financial
statements would take away from the funds
available to provide educational services to
students and teachers.  The Regional Office
noted that the cost of hiring and training
additional staff or contracting services
outweighs the benefit.  The Regional Office also
noted that if additional resources are made
available through the State of Illinois, the
Regional Office will consider seeking the
services of an accountant to review the
financial statements and related disclosures for
completeness and accuracy.  (For previous
Regional Office response, see Digest Footnote
#1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #28’s financial statements as of June
30, 2012 are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Wipfli LLP were our special
assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation - Previous Regional Office Response

In its prior response in 2011, the Regional
Office of Education #28 responded that it
understands the nature of this finding and
realizes that this circumstance is not unusual
in an organization this size.  The Regional
Office noted that it accepts the degree of risk
associated with this condition because the added
expense of seeking additional expertise to
prepare and/or review financial statements would
take away from the funds available to provide
educational services to students and teachers.
The Regional Office noted that the cost of
hiring and training additional staff or
contracting services outweighs the benefit.  The
Regional Office also noted that if additional
resources are made available through the State
of Illinois, the Regional Office will consider
seeking the services of an accountant to review
the financial statements and related disclosures
for completeness and accuracy.