REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #16:

DEKALB COUNTY

 

FINANCIAL AUDIT
For the Year Ended June 30, 2010

 

Release Date: September 1, 2011

 

Summary of Findings:

Total this audit: 1

Total last audit:  1

Repeated from last audit: 1

 

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 are also available on the worldwide web at www.auditor.illinois.gov

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SYNOPSIS

 

• The Regional Office of Education #16 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 #16 is required to maintain a system of controls over the preparation of financial statements in accordance with generally accepted accounting principles (GAAP).  Regional Office internal controls over GAAP financial reporting should include adequately trained personnel with the knowledge and expertise to prepare and/or thoroughly review GAAP based financial statements to ensure that they are free of material misstatements and include all disclosures as required by the Governmental Accounting Standards Board (GASB).

 

The Regional Office of Education #16 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their accounting records on the cash basis of accounting.  While the Regional Office maintains controls over the processing of most accounting transactions, there are 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.  For example, auditors, in their review of the Regional Office’s accounting records, noted the following:

 

• The Regional Office did not have the ability to prepare accrual-basis financial reports, and numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles.

 

• The Regional Office did not have adequate controls over the maintenance of complete records of accounts receivable or accounts payable.

 

According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements.  (Finding 10-1, pages 9-10) This finding was first reported in 2007.

 

The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #16 should implement a comprehensive preparation and/or review procedure to ensure that the financial statements, including disclosures, are complete and accurate.  Such procedures should be performed by a properly trained individual(s) possessing a thorough understanding of applicable generally accepted accounting principles, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.

 

The Regional Office of Education #16 responded that it has engaged an accounting firm to prepare a program that allows for internal preparation and review of financial statements.  These procedures must be performed internally because the added expense of hiring properly trained individuals is cost prohibitive for a small entity such as the ROE.  The Regional Office noted that funding for ROE services is extremely tight, and paying for a service such as was noted would take away from the funds available to provide educational services for schools in the Region.  The Regional Office noted that it will continue to do the best it can with the limited resources available. (For previous Regional Office response, see Digest Footnote #1.)

 

AUDITORS’ OPINION

 

Our auditors state the Regional Office of Education #16’s financial statements as of June 30, 2010 are fairly presented in all material respects.

 

 

WILLIAM G. HOLLAND

Auditor General

 

WGH:KJM

 

AUDITORS ASSIGNED:  Wipfli LLP were our special assistant auditors. 

 

DIGEST FOOTNOTE

 

#1: Controls Over Financial Statement Preparation - Previous Regional Office Response

 

In its prior response in 2009, the Regional Office of Education #16 responded that it has engaged an accounting firm to prepare a program that allows for internal preparation and review of financial statements.  These procedures must be performed internally because the added expense of hiring properly trained individuals is cost prohibitive for a small entity such as the ROE.  The Regional Office noted that funding for ROE services is extremely tight, and paying for a service such as was noted would take away from the funds available to provide educational services for schools in the Region.  The Regional Office noted that it will continue to do the best it can with the limited resources available.