FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
STATE EXPENDITURE REPORTS AND CASH MANAGEMENT
The Regional
Office of Education #9’s expenditure reports to the Illinois State Board of
Education (ISBE) reported estimated expenditures as obligated funds even
though the related services or goods had not been received, ordered, or
otherwise obligated as defined in ISBE’s State
and Federal Grant Administration Policy and Fiscal Requirements and
Procedures. The Regional Office
indicated this method of expenditure reporting prevented cash shortfalls due
to slow reimbursements from the State.
Generally Accepted Accounting
Principles require that expenditures be reported when either the funds have
been obligated or the disbursement has been made. The Illinois State Board of Education’s State and Federal
Grant Administration Policy and Fiscal Requirements and Procedures
provides guidance on what constitutes a valid obligation. (Finding 04-1, page
12a) This finding was first reported in our Fiscal Year 2002 audit.
The Regional Office of Education #9
disagreed with the recommendation to report only liabilities actually
incurred but not paid as obligated funds on Illinois State Board of Education
expenditure reports. The Regional
Office stated it will continue to use the estimated method until funding from
the State is prompt for all programs.
(For previous Regional Office response, see Digest Footnote #1.)
WORKING CASH IN INTERNAL SERVICE FUND
Cash on hand in
the administrative internal service fund at June 30, 2004, totaled $63,767
representing approximately 190 days of average expenses. In comparison, at June 30, 2003, the
internal service fund’s working cash totaled $13,670 representing 37 days of
average expenses.
The Regional Office anticipated a substantial reduction
in grant funding for the year.
Consequently, the Regional Office reduced planned expenses from the
internal service fund and increased the rate each program paid into the fund
by one-half of one percent of revenues.
When the shortfall in grant funding was not realized, a significant
increase in working cash resulted.
During the year-ended June 30, 2004, programs paid approximately
$50,097 more than actual, allowable administrative expenses. Expenditure reports for two programs that
will not continue in 2004-2005 were overstated by 30%. (Finding 04-2, page 12b)
The Regional Office of Education #9 accepted the recommendation to
amend the expenditure reports for the two programs that paid expenses during
2003-2004 that will not continue in 2004-2005. Those programs’ expenditure reports will be amended to reflect
the approximately 30% reduction in administrative expenses and any excess
paid to the administrative internal service fund will be refunded to
ISBE. The administrative expenses
charged to the other continuing programs for 2004-2005 will be reduced by the
estimated overcharge for 2003-2004.
AUDITORS’ OPINION
Our
auditors state the Regional Office of Education #9’s financial statements as
of June 30, 2004 are fairly presented in all material respects.
_____________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL
ASSISTANT AUDITORS
Our
special assistant auditors were Kemper CPA Group, LLP.
DIGEST FOOTNOTES
#1: STATE
EXPENDITURE REPORTS AND CASH MANAGEMENT – Previous Regional Office Response
In its prior response in 2003, the
Regional Office disagreed with the finding.
The Regional Office stated they completed expenditure reports using
the stated formula at the suggestion of the Illinois State Board of Education
and would continue to use the formula until funding from the State was prompt
for all programs.
Complete Regional Office responses to prior findings are available
upon request from the Auditor General’s Office.
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