REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #39: MACON
AND PIATT COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  September 30, 2020

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 1 -- 2
Category 2:  0 -- 0 -- 0
Category 3:  2 -- 0 -- 2
TOTAL:  3 -- 1 -- 4

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

• (19-1) The Regional Office of Education
#39 did not have sufficient internal
controls over the financial reporting
process.

• (19-2) The Regional Office of Education
#39 had inadequate controls over grant
compliance.

• (19-3) The Regional Office of Education
#39 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

• (19-4) The Regional Office of Education
#39 had inadequate controls over cash.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #39
(ROE) did not have sufficient internal
controls over the financial reporting
process. The ROE maintained its
accounting records on the cash basis of
accounting during the fiscal year and
posted year-end accrual entries for
financial statement purposes. While the
ROE maintained controls over the
processing of most accounting
transactions, there were not sufficient
controls over the preparation of the
generally accepted accounting principles
(GAAP) basis 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.

The ROE is required to maintain a system
of controls over the preparation of
financial statements in accordance with
GAAP. The ROE’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).

During review of the ROE’s accounting
records, auditors noted the ROE did not
have adequate controls over the
maintenance of complete records of cash,
receivables, revenue, and expenditures.
While the ROE did maintain records to
indicate the balances of these items, not
all entries were provided to properly
report the ROE’s balances and activity.
In addition, other adjustments were
required to present agency fund balances
in accordance with GAAP.

Regional Office management indicated a
new bookkeeper was hired at the end of
fiscal year 2019. This was the first time
the new bookkeeper went through the
process of closing the books. (Finding
19-001, pages 10a – 10b)

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

ROE Response: The ROE hired a new
bookkeeper at the end of fiscal year
2019. This was the first time the new
bookkeeper went through the process of
closing the books. The bookkeeper has
been working with an outside CPA firm to
remedy these issues going forward.

CONTROLS OVER GRANT COMPLIANCE

The Regional Office of Education #39
(ROE) had inadequate controls over grant
compliance. During the course of the
audit, auditors noted 7 of the 25 (28%)
quarterly expenditure reports required by
the Illinois State Board of Education
(ISBE) were not submitted timely. Five of
the quarterly expenditure reports were
submitted nine days late, one report was
submitted 54 days late, and one report
was submitted 109 days late.

As a recipient of federal, State, and
local funds from various grantor
agencies, the ROE must incorporate
certain procedures into its operations in
order to comply with the grant agreements
with these entities.

The ROE is responsible for establishing
and maintaining an internal control
system over the completion of timely
quarterly expenditure reports for grants
administered by ISBE. ISBE requires
expenditure reports to be filed within 20
days of the applicable end of each
quarter.

Regional Office management indicated the
ROE’s new bookkeeper was unaware that the
submission of expenditure reports to ISBE
requires two approvals. The bookkeeper
thought the expenditure reports were
submitted timely; however, the second
approval had not been completed. (Finding
19-002, page 10c)

The auditors recommended the ROE should
implement adequate internal controls to
ensure that expenditure reports are filed
timely.

ROE Response: The ROE’s new bookkeeper
was unware that the submission of
expenditure reports to ISBE requires two
approvals. The bookkeeper thought the
expenditure reports were submitted
timely; however, the second approval had
not been completed. The ROE has
implemented a monthly meeting between the
bookkeeper and the Regional
Superintendent to ensure that all
expenditure reporting requirements are
met.

DELAY OF AUDIT

The Regional Office of Education #39
(ROE) did not provide completed financial
statements in an auditable form by the
August 31 deadline.

The Regional Office is subject to 105
ILCS 5/2-3.17a which requires the Auditor
General’s office to cause an audit to be
made, as of June 30th of each year, of
the financial statements of all accounts,
funds, and other moneys in the care,
custody or control of the regional
superintendent of schools of each
educational service region in the State
and of each educational service center
established in the School Code. The audit
is to be conducted in accordance with
Generally Accepted Government Auditing
Standards (GAGAS).

In accordance with 105 ILCS 5/2-3.17a,
the Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor
General or his designee all books and
records deemed necessary to make and
complete the required audits. The records
shall be in auditable form by August 15
of the succeeding fiscal year. Financial
reports are to be available no later than
August 31 in order for the annual audit
to be completed by an independent auditor
selected by the Auditor General. Annual
financial statements are to be prepared
on an accrual basis of accounting in
accordance with generally accepted
accounting principles (GAAP).

In addition, prudent business practices
and transparency require timely
preparation and completion of financial
statements.

Regional Office management indicated that
staff did not get the necessary
information to the ROE’s hired CPA firm
timely. (Finding 19-003, pages 10d – 10e)

The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). Annual financial
statements should be compiled on an
accrual basis of accounting in accordance
with GAAP. These financial statements
need to be presented to the Auditor
General’s independent auditors for audit
by the August 31 deadline.

ROE Response: ROE staff did not get the
necessary information to the ROE’s hired
CPA firm timely. Management understands
the importance of meeting the August 31st
deadline and will work with the ROE’s
hired CPA firm to meet the deadline
beginning with fiscal year 2021.

CONTROLS OVER CASH

The Regional Office of Education #39
(ROE) had inadequate controls over cash.
The May and June bank reconciliations for
the ROE’s main operating account were not
complete when auditors began fieldwork on
September 30, 2019. The bank
reconciliations were completed November
22, 2019.

Sound internal control requires bank
reconciliations to be performed monthly
to ensure that all transactions have been
recorded. The bank reconciliation process
should include identifying and correcting
all discrepancies between the bank
records and the books on a timely basis.
Sound internal control over cash requires
bank reconciliations to be completed on a
monthly basis.

Regional Office management indicated a
new bookkeeper was hired at the end of
fiscal year 2019. This was the first time
the new bookkeeper went through the
process of reconciling the bank account.
(Finding 19-004, page 10f)

The auditors recommended the ROE should
reconcile all bank statements every month
and correct any discovered discrepancies
in a timely manner.

ROE Response: A new bookkeeper was hired
at the end of fiscal year 2019. This was
the first time the new bookkeeper went
through the process of reconciling the
bank account and therefore, the
reconciliations took more time than
normal. Management understands this issue
and believes it has been remedied as the
bookkeeper is reconciling the bank
accounts in a timely manner.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #39’s financial statements as
of June 30, 2019 are fairly presented in
all material respects.

This financial audit was conducted by the
firm of West & Company, LLC.

JOE BUTCHER
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:JMM