REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #16: DEKALB
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  November 17, 2020

FINDINGS THIS AUDIT:  2

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

FINDINGS LAST AUDIT: 2

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

• (19-1) The Regional Office of Education
#16 did not have sufficient internal
controls over financial statement
preparation.

• (19-2) The Regional Office of Education
#16 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #16
(ROE) did not have sufficient internal
controls over the preparation of
generally accepted accounting principles
(GAAP) basis 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.

The Regional Office is required to
maintain a system of controls over the
preparation of financial statements in
accordance with GAAP. The ROE’s internal
controls over GAAP financial reporting
should include adequately trained
personnel with the knowledge, skills, and
experience to prepare GAAP basis
financial statements and include all
disclosures as required by the
Governmental Accounting Standards Board
(GASB).

The following issues were noted in the
ROE’s draft financial statements
submitted to the auditors, which were
subsequently corrected:

• The ROE’s restated beginning net
position amount was not accurate due to
omission of the IMRF liabilities and
related deferred items.
• The ROE’s Statement of Net Position
included an error in the calculation of
deferred outflows related to pensions and
omitted deferred outflows related to
other post-employment benefits (OPEB),
OPEB liabilities and deferred inflows
related to OPEB.
• The ROE’s Required Supplementary
Information Schedule of Employer
Contributions – Teachers’ Health
Insurance Security Fund (THIS) omitted
fiscal year 2018 amounts.
• The ROE’s Reconciliation of the
Governmental Funds Balance Sheet to the
Statement of Net Position omitted OPEB
deferred outflows and inflows and the net
OPEB liability.
• The ROE’s Reconciliation of the
Statement of Revenues, Expenditures and
Changes in Fund Balances to the Statement
of Activities omitted the change in
deferred items – OPEB and additions to
net OPEB liability.
• The ROE’s Teacher’s Retirement System
of the State of Illinois and THIS
footnote disclosures included the wrong
amounts for numerous required
disclosures.
Regional Office management indicated the
ROE’s financial statements for FY19 were
prepared by a CPA firm. (Finding 19-001,
pages 10 – 11)

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

ROE Response: Communication with the CPA
firm for FY20 will improve in order to
clarify requirements.

DELAY OF AUDIT

The Regional Office of Education #16
(ROE) did not provide completed financial
statements in an auditable form by the
August 31 deadline. An outside accounting
firm was hired by the ROE to assist in
the preparation of financial statements
and related disclosures. Financial
statements were not submitted to the
Special Assistant Auditors until March 6,
2020.

The Regional Office is subject to 105
ILCS 5/2-3.17a which requires the Auditor
General’s office to cause an audit to be
made, as of June 30th each year, of the
financial statements of all accounts,
funds and other moneys in the care,
custody or control of the regional
superintendent of schools of each
educational service region in the State
and of each educational service center
established in the School code. The audit
is to be conducted in accordance with
Generally Accepted Government Auditing
Standards.

In accordance with 105 ILCS 5/2-3.17a,
the Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor
General or his designee all books and
records deemed necessary to make and
complete the required audits. The records
shall be in auditable form by August 15
of the succeeding fiscal year. Financial
reports are to be available no later than
August 31 in order for the annual audit
to be completed by an independent auditor
selected by the Auditor General. Annual
financial statements are to be prepared
on an accrual basis of accounting in
accordance with generally accepted
accounting principles (GAAP).

In addition, prudent business practices
and transparency require timely
preparation and completion of financial
statements.

Regional Office management indicated
there was a delay in a CPA firm accepting
the project and a delay in hiring a CPA
firm to prepare the required financial
statements for FY19. (Finding 19-002,
pages 12 – 13)

The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). Annual financial
statements should be compiled on an
accrual basis of accounting in accordance
with GAAP. These financial statements
need to be presented to the Auditor
General’s independent auditors for audit
by the August 31 deadline.

ROE Response: The ROE will be contacting
a CPA firm for preparation of their
financial statements. When their books
are closed, the hired firm will be sent
their FY20 financial statements. The ROE
will be asking the CPA firm to have the
required financial reports to them prior
to the deadline date for review.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #16’s financial statements as
of June 30, 2019 are fairly presented in
all material respects.

This financial audit was conducted by the
firm of McGreal & Co., PC.

JOE BUTCHER
Division Director

This report is transmitted in accordance
with Section 3-14 of the Illinois State
Auditing Act.

FRANK J. MAUTINO
Auditor General

FJM:BAO