REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #3: BOND,
FAYETTE AND EFFINGHAM COUNTIES

FINANCIAL AUDIT (In accordance with the
Single Audit Act and OMB Circular A-133)
For the Year Ended June 30, 2015

Release Date:  March 10, 2016

FINDINGS THIS AUDIT:  1

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  1 -- 0 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 0 -- 0
TOTAL:  1 -- 0 -- 1

FINDINGS LAST AUDIT: 0

Category 1:	Findings that are material
weaknesses in internal control and/or a
qualification on compliance with State
laws and regulations (material
noncompliance).
Category 2:	Findings that are
significant deficiencies in internal
control and noncompliance with State laws
and regulations.
Category 3:	Findings that have no
internal control issues but are in
noncompliance with State laws and
regulations.

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, 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 are
also available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (15-1)  The Regional Office of Education
#3 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 #3 is
required to maintain a system of controls
over the preparation of financial
statements in accordance with generally
accepted accounting principles (GAAP).
Regional Office of Education #3's internal
controls over GAAP financial reporting
should include adequately trained
personnel with the knowledge, skills and
experience to prepare GAAP based financial
statements and include all disclosures as
required by the Governmental Accounting
Standards Board (GASB).

The Regional Office of Education #3 did
not have sufficient internal controls over
the financial reporting process in order
to record and present the pension
information in accordance with these
standards. The Regional Office maintains
its accounting records on cash basis
accounting during the fiscal year and
posts year-end accrual and other
applicable entries for financial statement
purposes. While the Regional Office of
Education #3 maintains controls over the
processing of most accounting transactions
and prepares its financial statements,
there were 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.

Auditors noted the Regional Office did not
have adequate controls to record and
report the Office’s net pension
liabilities/assets, deferred outflows of
resources, deferred inflows of resources,
and pension expenses in accordance with
GAAP.  (Finding 2015-001, pages 12-13)

According to Regional Office management,
the complex requirements of GASB
Statements No. 68 and No. 71 were new for
fiscal year 2015 and will require
additional time and training before the
ROE can fully implement the requirements
on its own.

The auditors recommended that, as part of
its internal control over the preparation
of financial statements, the Regional
Office of Education #3 should implement
comprehensive preparation procedures to
ensure that the financial statements are
complete and accurate.  These procedures
should be performed by a properly trained
individual possessing a thorough
understanding of the applicable GAAP, GASB
pronouncements, and knowledge of the ROE’s
activities and operations.

The Regional Office of Education #3
responded that it was unable to complete
the reports needed for the audit largely
due to the timing of the receipt of needed
documents from both TRS and IMRF.  The ROE
further responded that the timing of the
receipt of necessary information to
implement the new GASB Statements No. 68
and No. 71 did not allow sufficient time
for the Office to address the needs of the
new requirements.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #3’s financial statements as of
June 30, 2015 are fairly presented in all
material respects.

FRANK J. MAUTINO
Auditor General

FJM:KJM

AUDITORS ASSIGNED:  West & Company, LLC
were our special assistant auditors.