FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
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 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noted they believe the mandate is outdated and that they are satisfying the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. For example, the Regional Superintendent has
been examining school district financial statements and audit reports on an
annual basis. This mandate has existed
in its current form since at least 1953.
The Illinois School Code (105 ILCS
5/3-5) also 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 present at
the September county board meeting but did not report, as nearly quarterly
thereafter, a report of all his acts including a list of all the schools visited
and the dates of visitation.
Finally, the Illinois School Code
(105 ILCS 5/3-14.5) 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 on a rotational
basis every three years instead of annually.
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. (Finding 06-1, pages
9-11)
The
Regional Office 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.
In
addition, the Regional Office stated in regards to 105 ILCS 5/3-14.5 that it
does conduct a Health/Life Safety inspection for each school building in the
region annually.
With regards to 105 ILCS 5/3-5, the
Regional Superintendent stated he currently submits an annual report to the
county board. In order to comply with
the statute, the Regional Superintendent stated he would present the affirmed
report on a quarterly basis.
INADEQUATE CONTROLS OVER CASH
The Regional Office of Education #16
recorded receipts for local-source funds, namely the Institute Fund, the Bus
Permit Fund and the General Educational Development Fund, received by the ROE
in a daily cash receipts log. However,
receipts totaling $21,425 were neither posted to the general ledger nor
deposited in the bank in a timely manner.
Instead, cash receipts were kept in the office, unsecured, and in many
cases, without the source documentation.
The undeposited checks were as many as 15 months old.
The untimely deposit of these
receipts greatly increases the risk of loss and also delays the use of
available funds. Also, because the
source documents were many times separated from the cash, it is very likely
that receipts would not be posted to the proper general ledger fund. According to ROE officials, this situation
occurred due to the small number of staff within the office and increased
workload.
Sound internal controls over cash
receipts require that receipts be adequately supported to identify the date,
nature, and source of the receipt in order to monitor timeliness and accuracy
of deposits as well as the accuracy of revenue recording. Receipts should be deposited intact and on
a timely basis. (Finding 06-2, pages
12-13)
The Regional Office of Education
accepted the recommendation and stated that it will purchase a new accounting
software package that will enable the bookkeeper, the Regional
Superintendent, and the Assistant Regional Superintendent to monitor and keep
track of all transactions. Also, the
Regional Office will hire two additional part-time staff to assist with the
duties and relieve the workload on the existing bookkeeper. The Regional Superintendent and Assistant
Regional Superintendent will: monitor and review all receipts in the cash
receipts log; verify that all receipts are posted to the general ledger
correctly and in a timely manner; and deposit all receipts with the bank on a
weekly basis.
INADEQUATE SEGREGATION OF DUTIES
The Regional Office of Education #16
does not have proper segregation of duties in the accounting function and is
not adequately safeguarding all assets.
In the accounting function, the same person is responsible for opening
the mail, recording receipts, accepting cash receipts, preparing deposit
slips, reconciling deposit slips to the receipts log, preparing and recording
cash disbursements, and reconciling bank statements. In addition, the bank reconciliation is not
reviewed by an individual independent of the accounting function. The Regional Office is also not adequately
safeguarding its assets by:
·
allowing large amounts of cash and checks to
be in the office in unsecured locations;
·
not depositing cash receipts in a timely
manner; and
·
not having proper supporting documentation for
all cash disbursements.
The Regional Office of Education
(ROE) Accounting Manual requires each ROE to be responsible for establishing
and maintaining a system of internal controls that provides reasonable
assurance about the reliability of its GAAP financial statements, operational
compliance with legal and contractual provisions, safeguarding of ROE assets,
and the effectiveness and efficiency of ROE operations. (Finding 06-3, pages
14-15)
The Regional Office agreed with the
finding and responded that it will do the following:
·
Mail will be opened by an employee not
responsible for accounting, such as the Regional Superintendent or his
assistant, or other available staff.
The accounting staff person will receive cash and complete the cash
receipts log as well as prepare deposits. The Regional Superintendent or his
assistant will double check these deposits against the cash receipts log to
verify, and will initial and date all paperwork. The deposit will be taken to the bank by
the Regional Superintendent or his assistant on a timely basis.
·
Bank statements and cancelled checks will be
received by the Regional Superintendent or his assistant. Such items will be periodically reviewed by
the Regional Superintendent or Assistant Regional Superintendent prior to them
being reconciled, and he will initial and date them. Unusual items noted during the review will
be investigated promptly.
·
Signed checks will be mailed by an employee
not responsible for accounts payable.
·
Journal entries will be approved by the
Regional Superintendent or his assistant.
·
Supporting documentation will be submitted
with checks for appropriate approval and signature by the Regional
Superintendent or Assistant Regional Superintendent.
AUDITORS’ OPINION
Our auditors state the Regional
Office of Education #16’s financial statements as of June 30, 2006 are fairly
presented in all material respects.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
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SPECIAL
ASSISTANT AUDITORS
Our special assistant auditors were
Clifton Gunderson, LLP.
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