REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #31

 

KANE COUNTY

 

FINANCIAL AUDIT

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

 

For the Year Ended:

June 30, 2006

 

Summary of Findings:

Total this audit                          3

Total last audit                          3

Repeated from last audit           1

 

Release Date:

May 24, 2007

 

 

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.auditor.illinois.gov

 

 

 

 

 

 

 

SYNOPSIS

 

·        The Regional Office of Education #31 did not comply with certain statutory administrative requirements.

 

·        The Regional Office of Education #31 did not have adequate controls over disposal of fixed assets.

 

·        The Regional Office of Education #31 did not properly record certain transactions. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


 

 

                                                                                   

REGIONAL OFFICE OF EDUCATION #31

KANE COUNTY

 

FINANCIAL AUDIT

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

For The Year Ended June 30, 2006

 

 

 

FY 2006

FY 2005

TOTAL REVENUES

$5,616,249

$4,877,245

Local Sources

$837,009

$737,968

% of Total Revenues

14.90%

15.13%

State Sources

$2,964,456

$1,883,706

% of Total Revenues

52.78%

38.62%

Federal Sources

$1,814,784

$2,255,571

% of Total Revenues

32.31%

46.25%

 

TOTAL EXPENDITURES

$6,658,046

$4,875,093

Salaries and Benefits

$1,728,518

$1,761,056

% of Total Expenditures

25.96%

36.12%

Purchased Services

$2,826,750

$2,390,440

% of Total Expenditures

42.46%

49.03%

All Other Expenditures

$2,102,778

$723,597

% of Total Expenditures

31.58%

14.84%

 

 

 

TOTAL NET ASSETS

$2,447,138

$3,488,935

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$276,283

 

$258,122

 

             Percentages may not add due to rounding.

 

REGIONAL SUPERINTENDENT 

During Audit Period: Honorable Clem Mejia

Currently:  Honorable Clem Mejia

 

 

 


 

 

 

 

The Regional Office of Education #31 did not comply with certain statutory administrative requirements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #31 did not have adequate controls over disposal of fixed assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Regional Office of Education #31 did not properly record certain transactions.

 

 

 

 

 

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 per 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.  For example, the Regional Superintendent has been examining school district financial statements on an annual basis.  This mandate has existed in its current form since at least 1953. 

 

         The Illinois School Code 105 ILCS 5/3-14.5 also requires the Regional Superintendent to visit each public school in the county at least once a year, noting the methods of instruction, the branches taught, the textbooks used, and the discipline, government and general condition of the schools.  This mandate has existed in its current form since at least 1953.

        

         The Regional Superintendent performs compliance inspections for each school district in his region annually but not each public school.  The Illinois Public School Accreditation Process Compliance Component document completed at these visits includes many of the items delineated in 105 ILCS 5/3-14.5, but does not include a review of the methods of instruction and the textbooks used in the district. (Finding 06-1, pages 12-14)

        

         The Regional Office responded that with regards to compliance with 105 ILCS 5/3-14.11 and 105 ILCS 5/3-14.5, the Illinois Association of Regional Superintendents of Schools and the Illinois State Board of Education have agreed to seek legislation to remove duplicative and/or obsolete sections of the Illinois School Code.  Both parties believe that 105 ILCS 5/3-7 of the Illinois School Code and 23 Ill. Adm. Code 1.20, respectively, contain more current, thorough, and comprehensive requirements concerning a public school district’s financial transactions and visitation of public schools by the Regional Superintendent.  As a result, the two parties working together will seek legislation to repeal these two sections of the Illinois School Code. 

 

       

CONTROLS OVER DISPOSAL OF PROPERTY AND EQUIPMENT

     

         The Kane County Regional Office of Education #31 did not have adequate controls over disposal of fixed assets.  Proper forms were not used to document the disposal or retirement of 24 equipment items, capital asset/fixed asset disposal forms were not signed or approved by the Regional Superintendent, and current fixed asset inventory records were not updated to reflect the disposal of two equipment items.

 

         The Regional Office’s Fixed Assets Inventory Management Policy states that when property or equipment is removed from inventory for any reason, the Asset Inventory Disposal form is to be filled out and signed by the person requesting the disposal, the finance department, and the Regional Superintendent.  In addition, sound internal controls require that disposals or transfers be formally documented and approved by authorized personnel before the disposition.  Upon disposal/transfer of property and equipment, the fixed asset inventory records should be updated to reflect movement or deletion.  (Finding 06-2, pages 15-16)

 

         The Regional Office of Education responded that it does have a system and forms in place for disposal of property and equipment and acknowledged that the forms in question were not completely processed since the Regional Superintendent had not yet signed them.  With the purchase of the new software system in place and a redesigned form to be used for the disposal of fixed assets and checks and balances put in place by the new Finance Director, this problem should not happen again.     

 

 

 

ACCOUNTING OF TRANSACTIONS

     

         The Kane County Regional Office #31 did not properly record the following transactions:

 

·      Rather than recording $564,165 in revenue in the Youth Home Education Fund, as was done in prior years, the ROE recorded the revenue under the Regional Program Development Fund. 

 

·      The ROE purchased computer related items for school districts as an added service.  Purchases totaling $23,747 were recorded as expenses upon purchase and payment to the vendors and as revenues in the Local Technology Fund upon billing and collection from the school districts, instead of recognizing these purchases as advances (receivables). 

 

·      Purchases for school districts totaling $62,100 paid from the Local Technology Fund were recorded as purchased service expenses and their reimbursements for these purchases were recorded as deduction of software expenses instead of a reduction of purchased services expenses.

 

         The Regional Superintendent of Schools in each Regional Office of Education is required to maintain accurate financial records in accordance with 23 Illinois Administrative Code 110 Program Accounting Manual and Regional Office of Education (ROE) Accounting Manual, as applicable.  The Manual requires that the ROE accounting system be organized and operated on a fund basis.  The transactions and balances of each fund and each source of funds are to be accounted for separately.  Generally accepted accounting principles also require that disbursements made as an advance be accounted for with no net asset effect. (Finding 06-3, pages 17-20)

 

         The Regional Office of Education No. 31 agrees with the findings and has addressed safeguards and improvements to ameliorate these situations. 

 

         With regards to the Youth Home Education Fund, a new finance system was installed on July 1, 2006 that has added controls and features which will aid in notifying multiple people and approve financial entries.  In the future, the funds will be put into the Youth Home Program Fund and then at the end of the year, any excess funds will be transferred to the Regional Program Development Fund.

 

         The Regional Office stated that the incorrect recording of expenses and reimbursements associated with purchases for school districts were caused by a misunderstanding between the manager preparing the requisition and the Finance Department entering it into the finance system.  The Regional Office stated that with the installation of the new finance system on July 1, 2006, these types of coding errors should not occur because it is done electronically rather than from a paper description, with various levels of approvals.

 

        

AUDITORS’ OPINION

 

         Our auditors state the Regional Office of Education #31’s financial statements as of June 30, 2006 are fairly stated in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KJM:ro

 

 

 

SPECIAL ASSISTANT AUDITORS

 

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