REPORT DIGEST

INTERMEDIATE SERVICE CENTER #4

SOUTH COOK

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                 1

Total last audit                 1

Repeated from last audit  1

Release Date:

December 4, 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

• Expenditure reports filed with the Illinois State Board of Education by Intermediate Service Center #4 were based on estimated costs, rather than actual costs incurred for the Title I – School Improvement and Accountability Program.

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

Expenditure reports filed with the Illinois State Board of Education by Intermediate Service Center #4 were based on estimated costs, rather than actual costs incurred for the Title I – School Improvement and Accountability Program.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

INACCURATE REPORTING OF EXPENDITURES OF FEDERAL AWARDS

         As a subrecipient of federal Title I – School Improvement and Accountability funds from the Illinois State Board of Education (ISBE), South Cook Intermediate Service Center #4 (the Center) is required to submit quarterly expenditure reports.  These expenditure reports are required to reflect, by budget line item, the actual costs incurred as a result of administering the programs.  The Center is also required to expend the federal funds for only allowable costs.

         Expenditure reports filed with ISBE by the Center were based on estimated costs, rather than actual costs incurred for the Title I – School Improvement and Accountability Program (Program).  These estimated costs were invoiced by the Center’s Local Accounts to the Program.  The auditors concluded that these estimated costs were significantly higher than the costs actually incurred by the Center on the Program.  Consequently, ISBE’s reimbursements to the Center, which were based on the quarterly reports, were greater than the costs incurred.  The Center did not have a mechanism in place to accurately accumulate the actual costs incurred by this Program.  The amounts charged in excess of the actual costs remain in the Local Accounts.

         The Center reported total costs of $2,139,918 for the Title I – School Improvement and Accountability Program on ISBE expenditure reports for fiscal year 2007.  The Center was reimbursed that amount by ISBE.  However, a qualified independent party and the auditors determined that actual costs of approximately $1,716,000 were incurred.  The amount of costs over charged to the program is estimated to be $424,000.

         The Center materially overstated the costs charged to the Title I – School Improvement and Accountability Program to ISBE.  Therefore, the Center was not in compliance with the requirements of ISBE and OMB Circular A-133.  

         As a result of the audit finding, the Center has increased “due to other governments” by $424,041 for this Program in the current year and will need to reimburse ISBE for the funds overcharged to the Title I-School Improvement and Accountability Program.  (Finding 07-1, pages 8-9)

         Auditors recommended that the Center charge actual costs of administering the Title I – School Improvement and Accountability Program directly to the program accounts.  The Center should apply the new procedures to the accounting records in order to provide ISBE with an updated expenditure report for the year ended June 30, 2007 and reimburse ISBE for the overcharged funds.

         The Center responded that it will charge actual costs of administering the Title I – School Improvement and Accountability Program directly to the program accounts going forward.  The Center noted that as a result of this finding it had recognized an amount due to other governments for all amounts received for this Program in excess of the actual costs incurred.  The Center also noted that it is working with the Illinois State Board of Education to develop a system that will better track actual costs of the Program on the Center’s financial statements and will tie the financial statements to the completion reports.  The year ended June 30, 2008 grant has been amended and approved and reflects the appropriate changes based on the results of this audit.

AUDITORS’ OPINION

         Our auditors state the Intermediate Service Center #4’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

         Lindgren, Callihan, Van Osdol & Co., LTD were our special assistant auditors in this audit.