REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #41: MADISON
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED: JUNE 30, 2015

Release Date:  August 18, 2016

FINDINGS THIS AUDIT:  1

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

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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
#41 did not properly record unearned
revenues.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

IMPROPER RECORDING OF UNEARNED REVENUES

Paragraph 19 of the Governmental
Accounting Standards Board (GASB)
Statement No. 33, Accounting and Financial
Reporting for Nonexchange Transactions,
states that providers of resources in
voluntary nonexchange transactions
frequently establish eligibility
requirements.  Eligibility requirements
are conditions established by the provider
that are required to be met before a
transaction (other than the provision of
cash in advance) can occur.  That is,
until those requirements are met, the
provider does not have a liability, the
recipient does not have a receivable, and
expenses or revenues for resources
transmitted in advance should not be
recognized until those eligibility
requirements are met.  Also, generally
accepted accounting principles (GAAP)
require the recognition of a liability for
revenues received in advance.

The ROE #41 recorded a total of $200,000
in revenues representing payments from a
grantor under the Venice Early Care
program, a new State grant in FY2015.  Of
this amount, only $64,808 was expended in
FY2015.  As of June 30, 2015, the total
unexpended amount of $135,192 represents
advances received from the grantor which
should have been recognized as a liability
rather than revenues at fiscal year-end.
Upon auditor’s notification, the ROE #41
made the necessary correction to its
financial statements.

According to management, ROE #41 received
a $200,000 grant that was determined to be
a voluntary nonexchange transaction during
fiscal year 2015.  Since ROE #41 felt the
eligibility requirements to receive the
grant were met, the revenue was
recognized, in what ROE #41 believed to
be, in accordance with GASB Statement No.
33.  (Finding 2015-001, pages 10-11)

The auditors recommended that the Regional
Office of Education #41 ensure all
transactions are properly accounted and
recorded for accurate financial reporting.
If necessary, accounting and reporting
guidance should be obtained from technical
resources to be in conformity with GAAP.

The ROE #41 responded that it agrees with
the finding.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #41’s financial statements as of
June 30, 2015 are fairly presented in all
material respects.

FRANK J. MAUTINO
Auditor General

FJM:JRB

AUDITORS ASSIGNED:  E.C. Ortiz & Co., LLP
were our special assistant auditors.