REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #31
KANE COUNTY

FINANCIAL AUDIT
For the Year Ended: June 30, 2012


Release Date:   July 11, 2013

Summary of Findings:
Total this audit: 2
Total last audit:  2
Repeated from last audit: 2

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
www.auditor.illinois.gov

SYNOPSIS

• The Regional Office of Education #31 did not
have sufficient internal controls over the
financial reporting process.

• The Regional Office of Education #31 did not
have accurate expenditure reports.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT PREPARATION

The Regional Office of Education #31 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 based 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 #31 did not
have sufficient internal controls over the
financial reporting process.  While the
Regional Office maintains controls over the
processing of most accounting transactions,
there were 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 and correct
financial statement misstatements and
disclosure omissions in a timely manner.

Auditors, in their review of the Regional
Office’s accounting records, noted numerous
adjustments were required to present financial
statements in accordance with generally
accepted accounting principles.  (Finding 12-1,
pages 12-13) This finding was first reported in
2010.

The auditors recommended that, as part of
internal control over the preparation of
financial statements, including disclosures,
the Regional Office of Education #31 should
implement a comprehensive preparation and/or
review procedure to ensure that the financial
statements, including 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’s activities and
operations.

The Regional Office of Education #31 responded
that the Business Office will provide financial
statements on a regular and ongoing basis to
the Superintendent and all required regulatory
agencies in a timely manner.  Grant managers
will be involved on a regular basis in the
review of their respective grant expenditure
reports and submissions to ISBE.  The Regional
Office stated that the new Finance Director is
a CPA and will schedule training as necessary
to best serve the ROE and the grants that
support the ROE. (For previous Regional Office
response, see Digest Footnote #1.)
INACCURATE EXPENDITURE REPORTS

Good business practices dictate that proper
internal controls, such as management review
and approval of expenditure reports submitted
to granting agencies, should be in place.
Amounts submitted on grant expenditure reports
to granting agencies should be in agreement and
reconcile with the general ledger.

The Regional Office of Education # 31 does not
have adequate controls in place to ensure
amounts submitted on grant expenditure reports
are in agreement and reconcile with the general
ledger.  During review of expenditure reports,
auditors noted the following

• The expenditure report submitted for the
grant period ending June 30, 2012, for the
Technology for Success grant, which was
received from the Illinois State Board of
Education, was inaccurately reported.  When
compared to expenditures recorded in the
general ledger, all categories were
inaccurately reported.  In total, actual
expenditures recorded in the general ledger
were $1,964 less than the amount reported in
the expenditure report.

• The expenditure report submitted for the
grant period ending June 30, 2012, for the
ROE/ISC Operations grant, which was received
from the Illinois State Board of Education, was
inaccurately reported.  When compared to
expenditures recorded in the general ledger,
all categories were inaccurately reported.  In
total, actual expenditures recorded in the
general ledger were $8,457 less than the amount
reported in the expenditure report.

• The expenditure report submitted for the
grant period ending June 30, 2012, for the
Truants Alternative Optional Education Program
grant, which was received from the Illinois
State Board of Education, was inaccurately
reported.  In total, actual expenditures
recorded in the general ledger were in excess
of the amounts reported in the expenditure
report.

• The expenditure report submitted for the
grant period ending June 30, 2012, for the
Regional Safe Schools grant, which was received
from the Illinois State Board of Education, was
inaccurately reported.  When compared to
expenditures recorded in the general ledger,
all categories were inaccurately reported.  In
total, actual expenditures recorded in the
general ledger were $7,366 less than the amount
reported in the expenditure report.

• The total of expenditure reports submitted
for fiscal year 2012 for the Title I-School
Improvement & Accountability grant, which was
received from the Will County Regional Office
of Education #56, was inaccurately reported.
In total, actual expenditures recorded in the
general ledger were $33,244 less than the
amounts reported in the expenditure report.

According to Regional Office officials,
adjustments were made to the general ledger
subsequent to the submission of expenditure
reports.  Therefore, expenditure reports
submitted did not agree and reconcile with
amounts recorded in the general ledger.
(Finding 12-2, pages 14-16).

The auditors recommended that the Regional
Office of Education #31 should contact granting
agencies and reimburse excess funds due to the
inaccurate expenditure reports.  In the future,
the Regional Office of Education #31’s
management should review expenditure reports
and supporting documentation prior to
submission to granting agencies to ensure that
expenditures were actually incurred, allowable,
and properly classified.  Supporting
expenditure documentation and indication of
management’s review should be included with a
copy of the report and available for subsequent
internal and external review and analysis.  If
adjustments are made to the general ledger
subsequent to submission of the expenditure
reports, the Regional Office of Education
should contact the granting agencies to
determine the need to amend its expenditure
reports.

The Regional Office of Education #31 responded
that the Business Office will provide financial
statements on a regular and ongoing basis to
the Superintendent and all required regulatory
agencies in a timely manner.  The Regional
Office stated that grant managers will be
involved on a regular basis in the review of
their respective grant expenditure reports and
submissions to ISBE.  Submissions to granting
agencies will match the general ledger and be
filed with the confirmation reports as
supporting documentation.  The ROE noted that
year-end reporting will include additional
review of expenditures for proper allocation of
expenditures between grant years.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #31’s financial statements as of June
30, 2012 are fairly presented in all material
respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Winkel, Parker & Foster,
CPA PC 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 #31 responded that the
Finance Office under the direction of the
Financial Director will be responsible to
provide accurate and complete financial
statements.  The Regional Office noted that
working with the ROE Superintendent and
appropriate personnel, a regular and ongoing
review of financial statements will be
conducted periodically during each fiscal year.
The ROE noted that the goal will be to insure
that financial statements are accurate and
completed on a timely basis.  Grant Managers
and Project Managers will be involved in the
review of their respective financial documents.
The Regional Office noted that the audit will
be scheduled at a time when the final fiscal
year reports have been completed and reviewed
by the appropriate staff and necessary
materials prepared for auditors review.  The
Regional Office also noted that the appropriate
Financial Office personnel, including the
Financial Director, will be scheduled to
receive training necessary to effectively
incorporate GAAP into daily operations.