REPORT DIGEST
REGIONAL OFFICE OF EDUCATION #51:
SANGAMON COUNTY
FINANCIAL AUDIT (In accordance with the Single Audit Act and
OMB Circular A-133)
For the Year Ended: June 30, 2011
Release Date: February 28, 2012
Summary of Findings:
Total this audit: 1
Total last audit: 3
Repeated from last audit: 1
State of Illinois, Office of the Auditor General
WILLIAM G. HOLLAND, AUDITOR GENERAL
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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
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SYNOPSIS
• The Regional Office of Education #51 did not have
sufficient internal controls over the financial reporting process.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
CONTROLS OVER FINANCIAL STATEMENT PREPARATION
The Regional Office of Education #51 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 #51 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. For example, auditors, in their review of the
Regional Office’s accounting records, noted the following:
• The Regional Office’s financial information required
numerous adjusting entries to present the financial statements in accordance
with generally accepted accounting principles.
• The Regional Office did not have adequate controls over
the maintenance of complete records of accounts receivable, accounts payable,
or deferred revenue. While the Regional
Office did maintain records to indicate the balances of accounts payable,
accounts receivable, and deferred revenue, no entries were provided to reconcile
the Regional Office of Education #51’s grant
activity, such as posting grant receivables and deferred revenue.
According to ROE officials, they did not have adequate
funding to hire and/or train their accounting personnel in order to comply with
these requirements. (Finding 11-01, pages 12a-12b)
This finding was first reported in 2007.
The auditors recommended that, as part of its internal
control over the preparation of its financial statements, including
disclosures, the Regional Office of Education #51 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 #51 responded that it
understands the nature of this finding and realizes that this circumstance is
not unusual in an organization of this size.
The Regional Office of Education staff has a reasonable understanding of
the financial statements and can determine that the information in the financial
statements is accurate, however, they lack the ability
to prepare the notes to the financial statements. The recommendation that “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,” has been noted by the Regional
Office. The ROE noted that they will
continue to work with the other Regional Offices of Education to determine the
most effective method of ensuring that its employees possess the knowledge
required to compile the necessary GAAP based
financial statements. (For previous Regional Office response, see Digest
Footnote #1.)
AUDITORS’ OPINION
Our auditors state the Regional Office of Education #51’s financial statements as of June 30, 2011 are fairly
stated in all material respects.
WILLIAM G. HOLLAND
Auditor General
WGH:JRB
AUDITORS ASSIGNED:
Kemper CPA Group LLP were our special assistant auditors.
DIGEST FOOTNOTES
#1: Controls Over Financial Statement Preparation —Previous
Regional Office Response
In its prior response in 2010, the Regional Office of Education #51 responded that it understands the nature of this finding and realizes that this circumstance is not unusual in an organization of this size. The Regional Office of Education staff has a reasonable understanding of the financial statements and can determine that the information in the financial statements is accurate, however, lacks the ability to prepare the notes to the financial statements. The recommendation that “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,” has been noted by the Regional Office. The ROE noted that they will continue to work with the other Regional Offices of Education to determine the most effective method of ensuring that its employees possess the knowledge required to compile the necessary GAAP based financial statements.