REPORT DIGEST REGIONAL OFFICE OF EDUCATION #44 FINANCIAL AUDIT For the Year Ended: June 30, 2007 Summary of Findings: Total this audit 2 Total last audit 1 Repeated from last audit 0 Release Date: May 20, 2008
State of Office of the Auditor General WILLIAM G. HOLLAND AUDITOR GENERAL
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SYNOPSIS · The Regional Office of Education #44 does not have sufficient internal controls over the financial reporting process. · The Regional Office of Education #44 can strengthen controls over credit card transactions. {Expenditures and Revenues are summarized on the reverse page.} |
REGIONAL
OFFICE OF EDUCATION #44
FINANCIAL AUDIT
For
The Year Ended June 30, 2007
|
FY 2007 |
FY 2006 |
TOTAL REVENUES |
$1,287,105 |
$1,285,021 |
Local Sources |
$509,078 |
$517,854 |
% of Total Revenues |
39.55% |
40.30% |
State Sources |
$778,027 |
$767,167 |
% of Total Revenues |
60.45% |
59.70% |
Federal Sources |
$0 |
$0 |
% of Total Revenues |
0% |
0% |
|
||
TOTAL EXPENDITURES |
$1,225,127 |
$1,224,149 |
Salaries and Benefits |
$437,280 |
$443,811 |
% of Total Expenditures |
35.69% |
36.25% |
Purchased Services |
$194,461 |
$193,362 |
% of Total Expenditures |
15.87% |
15.80% |
All Other Expenditures |
$593,386 |
$586,976 |
% of Total Expenditures |
48.43% |
47.95% |
|
|
|
TOTAL NET ASSETS |
$282,842 |
$220,864 |
|
|
|
INVESTMENT IN
CAPITAL ASSETS |
$0 |
$0 |
|
||
Percentages may not add due to
rounding. |
REGIONAL
SUPERINTENDENT |
During Audit Period: Honorable Eugene T. Goeglein Currently: Honorable Eugene T. Goeglein |
The Regional Office of Education #44 does not have sufficient internal controls over the financial reporting process.
The Regional Office of Education #44 can strengthen controls over credit card transactions. |
FINDINGS, CONCLUSIONS AND RECOMMENDATIONSControls
Over Financial Statement Preparation
The Regional Office of Education #44
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 #44
does not have sufficient internal controls over the financial reporting
process. The Regional Office maintains
their accounting records on the cash basis of accounting. While the Regional
Office maintains controls over the processing of most accounting
transactions, there are 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 financial
statement misstatements and disclosure omissions in a timely manner. For
example, auditors, in their review of the Regional Office’s accounting
records, noted the following:
The auditors recommended that, as
part of its internal control over the preparation of its financial
statements, including disclosures, the Regional Office of Education #44
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 of Education’s activities
and operations. The Regional Office of Education #44
responded that it understands the nature of this finding and realizes that
this circumstance is not unusual in an organization of this size. The McHenry County Regional Office of
Education accepts the degree of risk associated with this condition because
the added expense of seeking additional expertise to prepare and/or review
financial statements would take away from the funds available to provide
educational services for the schools in the region. They note that the cost of hiring and
training of additional staff or contracting the service outweighs the
benefit. CONTROLS OVER
CREDIT CARD TRANSACTIONS In the auditors’ review of 25 credit card transactions in the amount of $2,214, 1 transaction, in the amount of $100, included personal expenses of $52. This amount was subsequently reimbursed to the Regional Office and deposited within one month of the transaction. Prudent business practices dictate that the expenditures charged to the Regional Office’s credit card meet all the criteria of an ROE business expense. The Regional Office of Education #44 had an informal policy in which personal expenses (mainly part of meals) were allowed to be charged on the Regional Office Credit card, as long as they are immediately reimbursed by the employee to the Regional Office. (Finding 07-02, pages 11-12) The auditors recommended that the Regional Office of Education formalize and revise credit card policies to prohibit personal expenses from being charged to the Regional Office’s credit card. The Regional Office of Education #44 responded that it accepts the recommendation that only business-related transactions be charged to the Regional Office’s credit card. They noted that only the Regional Superintendent and the Assistant Regional Superintendent have access to the Regional Office credit card and even though it had been the practice to reimburse the Regional Office for any and all personal expenses, this practice has ceased effective as of the date of this finding. AUDITORS’ OPINION Our auditors state the Regional
Office of Education #44’s financial statements as of June 30, 2007 are fairly
presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General WGH:JRB
SPECIAL ASSISTANT
AUDITORS Our special assistant auditors were
Prado & Renteria CPAs. |