REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #41: MADISON
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2018

Release Date:  August 22, 2019

FINDINGS THIS AUDIT:  1

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

FINDINGS LAST AUDIT: 0

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

• (18-1) The Regional Office of Education
#41 did not comply with Governmental
Accounting Standards Board Statement No. 75
which requires disclosure of postemployment
benefits other than pensions.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

DEPARTURE FROM U.S. GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

The Regional Office of Education #41 (ROE)
did not comply with Governmental Accounting
Standards Board Statement (GASB) No. 75,
which requires an actuarial evaluation to
measure the cost of postemployment benefits
other than pensions (OPEB) for disclosure
in their financial statements and notes.

The ROE #41 participates in a defined
benefit plan, the Madison County Health
Plan, which provides postemployment
benefits other than pensions to its
employees in exchange for employee services
rendered. This plan is administered by the
Madison County government which obtains the
actuarial valuation of the postemployment
benefits other than pensions. The ROE is
included in this actuarial valuation.
However, due to the fact that the County
has a different fiscal year end (11/30)
than the Regional Office (6/30), the most
recent valuation obtained for the period
ended November 30, 2017, was prepared in
accordance with GASB Statement No. 45
rather than GASB Statement No. 75.

The Illinois Administrative Code (74 Ill.
Adm. 420.320 (c) (1) and (2)) requires that
each Regional Office of Education maintain
the accounting records necessary to prepare
financial statements in accordance with
U.S. generally accepted accounting
principles (GAAP).

GASB Statement No. 75 – Accounting and
Financial Reporting for Postemployment
Benefits Other Than Pensions (OPEB) -
requires that employers recognize and
disclose OPEB expense. Net OPEB
obligations, if any, should be reported as
liabilities (or assets if overfunded) in
the financial statements. For financial
reporting purposes, an actuarial valuation,
prepared in accordance with GASB Statement
No. 75, is required to measure and disclose
the annual OPEB cost. In certain
circumstances, an alternative measurement
method can be applied instead of obtaining
an actuarial valuation.

In the absence of an actuarial valuation
prepared in accordance with GASB Statement
No. 75, or the application of the
alternative measurement method, the
auditors could not reasonably determine the
amount by which this departure would affect
the assets, liabilities, deferred outflows
of resources, deferred inflows of
resources, and/or expenditures of the ROE
as of June 30, 2018.

Regional Office officials indicated the
Madison County government is not required
to implement GASB Statement No. 75 until
its fiscal year ended November 30, 2018.
Since the ROE relies on the actuarial
report prepared for the Madison County
government, the ROE will not have an
actuarial report prepared in accordance
with GASB Statement No. 75 until its fiscal
year ended June 30, 2019. (Finding 18-001,
pages 10a – 10b)

The auditors recommended the ROE should
discuss with the Madison County government
the requirements of GASB Statement No. 75
to ensure the County is having a new
actuarial valuation prepared in accordance
with GASB Statement No. 75 for its fiscal
year ended November 30, 2018. If not, the
ROE should consider having its own
actuarial valuation performed in accordance
with GASB Statement No. 75 for the year
ended June 30, 2019.

ROE Response: The Madison County
government’s actuarial valuation report as
of November 30, 2018 was performed in
accordance with GASB Statement No. 75.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #41’s financial statements as of
June 30, 2018 are fairly presented in all
material respects except for the effects of
not recognizing or disclosing
postemployment benefits other than pensions
for the Madison County Health Plan in the
Statement of Net Position and the Statement
of Activities.

This financial audit was conducted by the
firm of Kemper CPA Group, LLP.

JEANNE MICHAUD
Audit Manager

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

FRANK J. MAUTINO
Auditor General

FJM:JRB