REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #33: KNOX
COUNTY

FINANCIAL AUDIT
For the Year Ended: June 30, 2015

Release Date:  May 12, 2016

FINDINGS THIS AUDIT:  0

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  0 -- 1 -- 1

FINDINGS LAST AUDIT: 1

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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

• (15-1) The Regional Office of Education
#33 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 #33 is
required to maintain a system of controls
over the preparation of financial
statements in accordance with generally
accepted accounting principles (GAAP).
The Regional Office’s internal controls
over GAAP financial reporting should
include adequately trained personnel with
the knowledge, skills, and experience to
prepare GAAP based financial statements
and include all disclosures as required by
the Governmental Accounting Standards
Board (GASB).

The Regional Office of Education #33 did
not have sufficient internal controls over
the financial reporting process.  The
Regional Office maintains its accounting
records on the cash basis of accounting
during the fiscal year.  While the
Regional Office maintains controls over
the processing of most accounting
transactions, there are not sufficient
controls over the preparation of 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.

During review of the Regional Office of
Education #33’s financial information
prepared by the Regional Office of
Education #33, auditors noted there were
not adequate controls over the maintenance
of complete records of accounts
receivable, accounts payable, or unearned
revenue.  While the Regional Office did
maintain records to indicate the balances
of accounts receivable, accounts payable,
and unearned revenue, not all entries were
provided to reconcile the Regional Office
of Education #33’s grant activity, such as
posting grant receivables.

Through inquiries and discussions with the
Regional Office’s accounting personnel and
Regional Superintendent, auditors noted
the Regional Office did not have adequate
controls to record and report the Regional
Office of Education #33’s net accrued
pension liabilities/assets, deferred
outflows of resources, deferred inflows of
resources, and pension expenses in
accordance with GAAP.  (Finding 2015-001,
pages 11-13)  This finding was first
reported in 2007.

According to the Regional Office of
Education #33 management, they did not
have adequate funding to hire and/or train
their accounting personnel in order to
maintain a system of internal control over
the preparation of financial statements in
accordance with GAAP.  Also, the complex
requirements of GASB Statements No. 68 and
71 were new for fiscal year 2015 and will
require additional time and training
before the Regional Office can fully
implement the requirements on its own.

The auditors recommended that as part of
internal control over the preparation of
financial statements, the Regional Office
of Education #33 should implement
comprehensive preparation procedures to
ensure that the financial statements are
complete and accurate.  These procedures
should be performed by a properly trained
individual(s) possessing a thorough
understanding of the applicable GAAP, GASB
pronouncements, and knowledge of the
Regional Office of Education #33’s
activities and operations.

The Regional Office of Education #33
responded that it understands the nature
of this finding and realizes that this
circumstance is not unusual in an
organization of this size.  The Regional
Office management is confident with the
accounting staff and the preparation of
financial information.  When fiscally
possible, additional training or hiring of
additional staff will be pursued.  (For
previous Regional Office response, see
Digest Footnote #1 shown at the end of the
digest.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #33’s financial statements as of
June 30, 2015 are fairly presented in all
material respects.

FRANK J. MAUTINO
Auditor General

FJM:JRB


AUDITORS ASSIGNED:  Sulaski and Webb, CPAs
were our special assistant auditors.

DIGEST FOOTNOTE

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

In its prior response in 2014, the
Regional Office of Education #33 responded
that it is not able to hire and train any
accounting personnel to perform all of the
procedures necessary to ensure that the
financial statements are complete and
accurate due to very limited funds.  The
Regional Office stated that it will
continue to try, as funds allow, to employ
someone qualified who can prepare the
financial statements in accordance with
generally accepted accounting principles.