FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING
SYSTEM
During the
past fiscal year, the Regional Office of Education #1 recorded all revenue
and expense transactions of the West Central Regional System #240 (WCR) in
its general ledger system. The WCR has
a separately elected board. It is a
legally separate entity and is fiscally independent. The WCR administers vocational education
services for the region, and Regional Office of Education #1 acts as a fiscal
agent for the WCR.
At June 30,
2006 the Regional Office of Education #1 had errantly deposited $22,640 of
its cash into the WCR bank account. If
the errant deposit had not been identified, the Regional Office may have failed
to recoup $22,640 of funding. (Finding
06-1, page 11). This finding was
first reported in 2003.
The Regional
Office of Education #1 accepted the recommendation, noting it has implemented
a new general ledger system for fiscal year 2007 in order to separately
record transactions of the West Central Regional System #240.
Although
each year the Regional Office has responded that corrective action will be
taken, commingling of funds has continued to occur. (For previous Regional Office response, see
Digest Footnote #1.)
DISBURSEMENT OF EXCESS GRANT FUNDS
The Regional
Office of Education #1 had two programs with excess cash balances at June 30,
2006 that had not been obligated, and the balances were not refunded to the
granting agencies by August 15, 2006.
The two grant-funded programs had period-end cash balances totaling
$41,217. In addition, the Regional
Office of Education #1 had interest income earned from federal funding in
excess of $100 that was due back to the grantor agency. The excess interest income earned totaled
$2,163.
The Illinois
Grant Funds Recovery Act requires that all grant funds that have not been
expended or obligated by the end of the grant period be returned to the
granting agency within 45 days after the end of the period. In addition, the Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments (34 Code of Federal Regulations Part 80.21) requires that
interest earned on federal fund balances in excess of $100 be remitted back
to the federal granting agency.
(Finding 06-2, pages 12, 13) This
finding was first reported in 2003.
The Regional
Office of Education #1 accepted the recommendation to prepare accurate
reconciled reports at year-end for its grant programs and will notify the
granting agencies of any excess grant funds at period end. (For previous Regional Office response, see
Digest Footnote #2.)
BANK
ACCOUNTS WERE NOT PROPERLY RECONCILED FOR FISCAL YEAR 2006
Eleven of
the twelve monthly bank reconciliations (July 2005 through May 2006) for the
projects account did not reconcile.
For example, the March reconciliation discrepancy was $25,564, the
April discrepancy was $23,704, and the May discrepancy was $18,037. The bank account was reconciled for June
2006.
The effect of not properly performing
reconciliations was to carry an incorrect cash balance on the books of the
ROE for nearly the entire fiscal year.
Sound
internal control requires bank reconciliations to be performed to ensure that
all transactions have been recorded.
The bank reconciliation process should include identifying and
correcting all discrepancies between the bank records and the books on a
regular basis. (Finding 06-3, page 14) This
finding was first reported in 2002.
The Regional
Office of Education #1 accepted the recommendation to perform a monthly
reconciliation of all bank accounts and correct any discovered discrepancies
in a timely manner. (For previous
Regional Office response, see Digest Footnote #3.)
CONTROLS OVER COMPLIANCE WITH
LAWS AND REGULATIONS
The Illinois School Code
(105 ILCS 5/3-14.11) requires the Regional Superintendent to examine at least
once each year all books, accounts, and vouchers of every school treasurer in
his educational service region, and if he finds any irregularities in them,
to report them at once, as directed by the School Code.
The Regional Office of Education #1 did not
examine at least once each year all books, accounts, and vouchers of every
school treasurer in the educational service region. Regional Office officials noted they
believe the mandate is outdated and that they are satisfying the intent of
the statute by other reviews they undertake.
This mandate has existed in its current form since at least 1953.
The Illinois School Code (105 ILCS 5/3-14.5) also
requires the Regional Superintendent to visit each public school in the
county at least once a year, noting the methods of instruction, the branches
taught, the textbooks used, and the discipline, government and general
condition of the schools. This mandate
has existed in its current form since at least 1953.
The Regional Superintendent performs compliance
inspections for each public school in his region annually. However, the
Regional Office of Education #1 performed compliance inspections for the
2005/2006 school year in September 2006.
No compliance inspections were performed during the period July 2005
through June 2006. The Illinois
Public School Accreditation Process Compliance Component document completed
at these visits includes many of the items delineated in 105 ILCS 5/3-14.5,
but does not include a review of the methods of instruction and the textbooks
used in the district.
The Illinois School Code (105 ILCS 5/3-5) requires
the Regional Superintendent to present under oath or affirmation to the
county board at its meeting in September and as nearly quarterly thereafter
as it may have regular or special meetings, a report of all his acts as
county superintendent, including a list of all the schools visited with the
dates of visitation. This mandate has
existed in its current form since at least 1953.
The Regional Office did not present
at the September county board meeting, and as nearly quarterly thereafter, a
report of all his acts including a list of all the schools visited and dates
of visitation. The Regional
Superintendent did attend a September board meeting and issue a report to the
board; however, the report did not include a list of all the schools visited
and dates of visitation.
The Illinois School Code (105 ILCS
5/3-14.17) requires the Regional Superintendent to notify the presidents of
the boards of trustees and the clerks and secretaries of school districts, on
or before September 30, annually, of the amount of money distributed by him
to the school districts.
The Regional Office did not notify
the presidents of the boards of trustees and the clerks and secretaries of
school districts, on or before September 30, 2005, of the dates of
distribution or amounts of money distributed by him to the school districts.
Finally, the Illinois School Code
(105 ILCS 5/3-7) states that each school district shall, as of June 30 each
year, cause an audit to be made of its accounts. Each school district shall on or before
October 15, or by extension date not to exceed 60 days of each year, submit
an original and one copy of such audit to the Regional Superintendent of
Schools.
The Regional Office was unable to
supply evidence that 8 of the 10 district financial statement audit reports
were submitted to the Regional Office of Education #1 by October 15, 2005 or
by the extension date. (Finding 06-4,
pages 15-17)
The
Regional Office of Education #1 accepted the recommendation to comply with
the statutory requirements. The
Regional Office responded that with regards to compliance with 105 ILCS
5/3-14.11 and 105 ILCS 5/3-14.5, the Illinois Association of Regional
Superintendents of Schools and the Illinois State Board of Education have
agreed to seek legislation to remove duplicative and/or obsolete sections of
the Illinois School Code. Both parties
believe that 105 ILCS 5/3-7 of the Illinois School Code and 23 Ill. Adm. Code
1.20, respectively, contain more current, thorough, and comprehensive
requirements concerning a public school district’s financial transactions and
visitation of public schools by the Regional Superintendent. As a result, the two parties working
together will seek legislation to repeal these two sections of the Illinois
School Code.
With
regards to 105 ILCS 5/3-5, the Regional Superintendent plans to present,
under affirmation to the county board, quarterly reports of all his acts as
Regional Superintendent, including a list of all the schools visited with the
dates of visitation. As for 105 ILCS
5/3-14.17, the Regional Office intends to start sending the distribution
report to every district each year by September. Finally, regarding 105 ILCS 5/3-7, the
Regional Office will begin logging evidence of receipt of the audits from the
school districts and also implement a system for monitoring whether or not
copies of audits are on hand.
EXPENDITURE
REPORT FOR EDUCATION FUND DID NOT AGREE TO GENERAL LEDGER
A comparison
of expenditure reports to the Regional Office of Education #1’s general
ledger revealed instances where the totals on the final 2006 expenditure
reports did not agree with the Regional Office of Education #1’s general
ledger by $13,959, resulting in inaccurate expenditure reports.
The Regional
Office of Education #1 personnel responsible for expenditure report
preparation used numbers that were not yet adjusted for bank reconciliation
differences or accounts payable items.
Expenditure
reports for education programs submitted to the Illinois State Board of
Education and Illinois Department of Human Services should agree with the
expenditures reported on the Regional Office of Education #1’s general
ledger. (Finding 06-5, page 18)
The Regional Office of Education #1
agreed with the recommendation to have personnel responsible for preparing
the expenditure reports use expenditures per the general ledger accounts
after all adjustments have been made and make necessary corrections to the
final reports.
AUDITORS’
OPINION
Our auditors state
the Regional Office of Education #1’s financial statements as of June 30,
2006 are fairly presented in all material respects.
____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:JRB
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were Fick,
Eggemeyer & Williamson, CPA’s.
DIGEST
FOOTNOTES
#1: TRANSACTIONS OF TWO ENTITIES ARE IN ONE ACCOUNTING SYSTEM– Previous
Regional Office Response
In its prior response in 2005,
the Regional Office stated that at the beginning of fiscal year 2006 it
implemented a new general ledger system in order to separately record
transactions of the West Central Regional System #240.
#2: DISBURSEMENT OF EXCESS GRANT FUNDS – Previous Regional Office Response
In its prior response in 2005,
the Regional Office stated it planned to obtain from bookkeeping, accurate
reconciled reports, at least annually, which consider: beginning fiscal year cash balances,
current fiscal year grant income, current fiscal year program expenses, current
fiscal year interest allocated to programs, and year end cash balances by
program. Also, granting agencies will
be notified of any excess grant funds at period end.
#3: BANK ACCOUNTS WERE NOT PROPERLY
RECONCILED—Previous Regional Office Response
In its prior response in 2005,
the Regional Office state it planned to perform a monthly reconciliation of
all bank accounts and correct any discovered discrepancies in a timely
manner.
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