REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #16:
DEKALB COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2020

Release Date:  July 14, 2021

FINDINGS THIS AUDIT:  0

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

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

• (20-1) The Regional Office of
Education #16 did not have sufficient
internal controls over financial
statement preparation.

• (20-2) The Regional Office of
Education #16 had inadequate controls
over the bank reconciliation process.

• (20-3) 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-based financial statements and
include all disclosures as required by
the Governmental Accounting Standards
Board (GASB).

The Illinois State Board of
Education’s State and Federal Grant
Administration Policy, Fiscal
Requirements, and Procedures require
the ROE to design a good internal
control process to provide reasonable
assurance regarding reliability and
accuracy of reporting for internal and
external use. The ROE is required to
implement a process to ensure that
transactions are properly recorded and
accounted for to permit the
preparation of accurate and reliable
financial statements and reports.

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

• The ROE improperly reported Evidence
Based Funding received totaling
$202,391 as Agency Fund transactions.
These funds are available to finance
the government’s programs and should
be excluded from fiduciary fund
reporting and reported as General Fund
transactions. Accordingly, the
Statement of Activities did not
properly report the transactions
related to this funding received and a
material adjustment was required.
• The ROE did not disclose the
information required about long-term
liabilities.
• The following errors were noted on
the originally submitted financial
statements and notes to financial
statements:
–  Unearned revenues totaling $50,701
were reported as unavailable revenues.
–  Due to other government agencies
amounting to $10,379 were reported as
unavailable revenues.
–  Grant receivables totaling $13,011
which were not expended were reported
with a corresponding amount in
unavailable revenues.
–  The bank balance amount reported in
the notes regarding deposits and
investments was $650,816, but the
actual amount should be $761,425.
–  State on-behalf revenues and
expenses for post-employment benefits
amounting to $1,692 were included in
the governmental fund financial
statements.
–  State on-behalf revenues and
expenses for pensions amounting to
$74,382 were not included in the
government-wide financial statements.
–  Budget amounts reported in the
budgetary schedules did not agree to
the appropriate supporting budgets.
–  Information on some required
supplementary information for pensions
and post-employment benefits did not
agree to the underlying support.
–  A restatement of beginning net
position for fiscal year 2020 was
reported and disclosed when there was
no restatement that occurred.

Regional Office management indicated
the ROE’s financial statements were
prepared by a CPA firm. The funding
received was distributed in full to a
school district for which the ROE
holds other agency funds and the ROE
overlooked the proper reporting of
this funding as general fund
transactions. Other errors noted were
due to oversight. (Finding 20-001,
pages 11 – 13)

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.

The ROE should also implement
procedures to ensure proper analysis
of Fund activities are made when
transactions are recorded for proper
classification and reporting in
accordance with GASB Statement No. 34.

Lastly, the auditor’s recommended
internal review by the ROE be included
in its procedures, including use of
financial reporting and disclosure
checklists as a method to identify and
correct errors prior to the submission
of financial information to other
external parties.

ROE Response: Communication with the
CPA Firm for FY21 will improve in
order to clarify requirements.

INADEQUATE CONTROLS OVER BANK
RECONCILIATION PROCESS

The Regional Office of Education #16
(ROE) maintained 6 bank accounts.
During the audit, auditors noted that
in 4 bank accounts, monthly
reconciliations were not performed
timely for 7 out of 12 months. Fifteen
of 60 monthly bank reconciliations (25
percent) were reconciled more than a
month late.

Effective internal control policies
require complete and accurate
accounting records of all transactions
of the entity. Sound internal controls
require bank reconciliations to be
performed accurately and promptly.
Reconciling items should be
investigated immediately, and
adjustments made to the general
ledger. Bank reconciliations should
also be reviewed and approved by a
person independent of the preparer in
a timely manner.

Regional Office officials indicated
that the delay was due to time
constraints and prioritization of
duties. (Finding 20-002, page 14)

The auditors recommended the ROE
should prepare monthly bank
reconciliations on a timely basis.
This would ensure that the cash
balance per ledger is correct and cash
transactions are fully accounted for.

ROE Response: The ROE will prepare
monthly bank reconciliations on a
timely basis.

DELAY OF AUDIT

The Regional Office of Education #16
(ROE) did not provide completed
financial statements in an auditable
form by the August 31st due date. The
financial statements were provided on
November 17, 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
the information was provided to the
CPA firm by the August deadline, but
not in time for them to produce the
financial statements. (Finding 20-003,
pages 15 – 16)

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: These financial
statements will be presented to the
Auditor General’s independent auditors
for audit by August 31 deadline to the
best of our ability.

AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #16’s financial
statements as of June 30, 2020 are
fairly presented in all material
respects.

This financial audit was conducted by
the firm of Adelfia LLC.

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