REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #49

 

ROCK ISLAND COUNTY

 

FINANCIAL AUDIT

(In Accordance with the
Single Audit Act and OMB Circular A-133)

 

For the Year Ended:

June 30, 2007

 

Summary of Findings:

 

Total this audit                   5

Total last audit                   1

Repeated from last audit    0

 

Release Date:

November 20, 2008

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

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  is also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

SYNOPSIS

 

 

  • The Regional Office of Education #49 did not have sufficient internal controls over the financial reporting process.

 

·        During testing of Regional Office credit card expenditures and employee travel documents, several exceptions were noted.

 

  • The Regional Office paid $255 in finance charges and over limit fees on its credit cards in fiscal year 2007.

 

  • There were several instances where meals were purchased for ROE staff in the Rock Island area who were not on travel status.

 

·        In 5 out of 25 items tested, the Regional Office of Education reimbursed expenditures to various school districts without obtaining and reviewing supporting documentation (invoices, billings, etc.) for disbursements relating to the Title IV program.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             {Expenditures and Revenues are summarized on the reverse page.}

       


 

                                                                  

REGIONAL OFFICE OF EDUCATION #49

ROCK ISLAND COUNTY

 

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For The Year Ended June 30, 2007

 

 

 

FY 2007

FY 2006

TOTAL REVENUES

$4,728,306

$4,122,958

Local Sources

$979,508

$890,953

% of Total Revenues

20.72%

21.61%

State Sources

$2,818,200

$2,006,749

% of Total Revenues

59.60%

48.67%

Federal Sources

$930,598

$1,225,256

% of Total Revenues

19.68%

29.72%

 

TOTAL EXPENDITURES

$4,682,757

$4,081,760

Salaries and Benefits

$1,701,724

$1,469,135

% of Total Expenditures

36.34%

35.99%

Purchased Services

$2,551,737

$2,086,143

% of Total Expenditures

54.49%

51.11%

All Other Expenditures

$429,296

$526,482

% of Total Expenditures

9.17%

12.90%

 

 

 

TOTAL NET ASSETS

$928,645

$883,096

 

 

 

INVESTMENT IN CAPITAL ASSETS

 

$87,614

 

$108,018

 

              Percentages may not add due to rounding.

 

REGIONAL SUPERINTENDENT

During Audit Period:  Honorable Joseph Vermeire

Currently:  Honorable Joseph Vermeire


 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #49 did not have sufficient internal controls over the financial reporting process.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During testing of Regional Office credit card expenditures and employee travel documents, several exceptions were noted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office paid $255 in finance charges and over limit fees on its credit cards in fiscal year 2007.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


There were several instances where meals were purchased for ROE staff in the Rock Island area who were not on travel status.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


In 5 out of 25 items tested, the Regional Office of Education reimbursed expenditures to various school districts without obtaining and reviewing supporting documentation (invoices, billings, etc.) for disbursements relating to the Title IV program.

 

 

 

 

 

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

Controls Over Financial Statement Preparation

 

The Regional Office of Education #49 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 #49 did 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. 

 

        In their review of the Regional Office’s accounting records, auditors noted that the Regional Office did not maintain adequate internal controls over the processing of all financial transactions and numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles.  According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements.  (Finding 07-01, pages 12-13)

 

The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #49 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 #49 responded that it will: hire a new bookkeeper with vast experience in all aspects of financial matters; ensure staff with financial oversight is adequately trained to use the full range of current financial technology; institute and integrate regularly scheduled review of financial statements and policy; and review the possibility of contracting professional financial audit preparation services.

 

 

EMPLOYEE TRAVEL AND USE OF ROE CREDIT CARDS

 

During testing of Regional Office credit card expenditures and employee travel documents, the following exceptions were noted:

 

·        Lack of coordination of out-of-State travel.  Four Regional Office employees attended the same conference.  The employees flew into three different airports and three incurred rental car charges.  Regional Office policies require that travel be coordinated.  However, the decision was made that everyone would secure their own travel arrangements.

·        Lack of documentation on meal purchases.  Receipts from restaurants often lacked detail needed to determine what was purchased, the purpose of the meal, or for whom the meals were purchased.

·        Lack of receipts.  For three of the expenses tested, there were no receipts provided.

·        Use of credit cards for personal expenses.  Regional Office officials used the ROE credit card for personal expenses.  In most instances, the personal charges were reimbursed by the employees by writing a check to the Regional Office or credit card company. 

 

 The Regional Office also reimburses employees’ actual travel expenses, rather than using a per diem reimbursement method.  The policy handbook does not set any maximum for expenses; rather, it notes that the traveler is expected to keep expenses “within reasonable limits”.

 

Internal controls should ensure that expenses incurred by the Regional Office are adequately documented, incurred for a business purpose, and represent economical and effective use of Regional Office resources.  (Finding 07-2, pages 14-16)

 

The Regional Office of Education #49 accepted the auditors’ recommendation to address the exceptions detailed in the finding, responding it will: establish a policy to ensure that each meal expenditure receipt is documented to individual, program, and purpose of expenditure; establish a policy for a per diem meal reimbursement when traveling on ROE business; strengthen internal controls over the reimbursement of travel expenses with multiple reviews of expenditures; establish a policy prohibiting the use of Regional Office credit cards for personal expense; establish a policy that ensures that employees coordinate travel to same events; and have employees reimburse the Office for any personal expenses made.

 

 

PAYMENT OF FINANCE CHARGES AND SALES TAXES

 

The Regional Office paid $255 in finance charges and over limit fees on its credit cards in fiscal year 2007.  On five of the twelve monthly statements reviewed, the Regional Office did not make a payment on the Regional Superintendent’s credit card bill and those charges carried over to the next month.  In addition, auditors noted three purchases where the Regional Office paid sales tax, totaling $79. 

 

Internal controls should exist to ensure that bills are paid in a timely fashion.  In addition, controls should be in place to ensure that sales taxes are not paid by the Regional Office.  (Finding 07-3, pages 17-18)

 

The Regional Office of Education #49 accepted the auditors’ recommendation and responded that it will develop, with the credit card carrier, a single monthly billing to ensure that payment may be made timely and without penalty on all credit cards.  The Regional Office also noted that it will review past purchases with sales tax charges to ensure that documentation can be established to ensure that sales taxes are not incurred on goods purchased by the Regional Office.

 

 

MEAL PURCHASES

 

There were several instances where meals were purchased for ROE staff in the Rock Island area who were not on travel status.   The following expenditures were noted: 

 

·        $622 for meals for Early Childhood staff and team members/collaborative partners on 8 occasions at local restaurants.  ROE officials noted the purpose of the meals is to introduce new team members with current staff, review expectations for the new staff and job responsibilities, and share ideas.

·        $1,527 at a restaurant on December 16, 2006.  ROE officials stated it was an end-of-year goal setting staff function, which reviewed the year’s accomplishments and looked at opportunities and needs assessment.

·        $166.70 for a secretary’s day luncheon at a local restaurant. 

 

The Regional Office did not have a policy for the payment of meals for ROE staff when they are not on travel status.  Policies should delineate the instances or occasions where ROE funds can be used to pay for employee meals in the headquartered city (i.e., when employees are not on travel status).  (Finding 07-4, pages 19-20)

 

The Regional Office of Education #49 accepted the auditors’ recommendation and responded it will develop a policy delineating and documenting meal reimbursement use while not on travel status and detail the benefits of said previous policy within the policy and documentation of said expenditure.

 

 

INADEQUATE INTERNAL CONTROL OVER DISBURSEMENTS

 

In 5 out of 25 items tested, the Regional Office of Education reimbursed expenditures to various school districts without obtaining and reviewing supporting documentation (invoices, billings, etc.) for disbursements relating to the Title IV program.  Without obtaining and reviewing supporting documentation for expenditures, payments that are unallowable, duplicate, or incorrect may be made.

 

The Regional Office is responsible for establishing and maintaining an internal control system over disbursements and reimbursements to prevent errors and fraud.  (Finding 07-5, pages 21-22)

 

The Regional Office of Education #49 accepted the auditors’ recommendation, responding it will require adequate documentation for all payments from the ROE to other entities and review the documentation submitted.

 

 

AUDITORS’ OPINION

 

Our auditors state the Regional Office of Education #49’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 Clifton Gunderson, LLP.