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 her
educational service region, and if she 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Regional Office officials noted they believe the mandate is outdated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. This mandate has existed
in its current form since at least 1953.
(Finding 05-1, pages 12-13)
The Regional Office accepted the recommendation, noting it
will seek a legislative solution to this and other obsolete passages.
BANK RECONCILIATIONS NOT
COMPLETED PROPERLY AND TIMELY
The Regional Office of Education #19 has
not been preparing bank reconciliations on a timely basis for 13 bank
accounts totaling $2,411,382 for fiscal year 2005. The June 2005 bank reconciliations were completed on November
4, 2005. Additionally, a $44,004
certificate of deposit was not recorded in the general ledger as of June 30,
2005.
The Regional Office noted
that a lack of staff and loss of the Business Manager in January 2004, whose
position was not filled until October 2004, resulted in a backlog in many
functions, including bank reconciliations and the information on the
certificate of deposit. Also, the
computerized general ledger system used for general fund bank accounts
crashed and could not be restored until the second quarter of fiscal year
2005.
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. (Finding 05-2, pages 14-15) This finding was first reported in 2003.
The Regional Office of
Education #19 agreed with auditor’s recommendation noting that it will
aggressively approach the problem to ensure that monthly bank reconciliations
are prepared accurately and on time.
A plan will be implemented to ensure that this finding does not repeat
itself. In addition to training other
personnel to perform the bank reconciliations, provisions have been made to
use outside sources to perform this task on a monthly basis if needed.
The Finance Department
suffered a computer crash during the fiscal years 2003-2004 and not all data
could be restored. The documentation
of the $44,000 certificate of deposit was missing as a result of the computer
crash. The certificate of deposit was
reflected in the general ledger accordingly upon notification of the renewal
of the investment from the bank. (For
previous Regional Office response, see Digest Footnote #1.)
INCORRECT ACCOUNTING OF PROGRAM REVENUES AND EXPENSES
The Regional Office of
Education #19 incorrectly accounted for program revenues and expenses by
netting indirect program costs with grant revenues instead of recording them
as expenses for the Partnership in Character Education grant. This resulted in program costs and
revenues being understated by the allocable indirect costs totaling
$4,533. Instead, the cost reimbursement
revenues were recorded directly as revenues of the Institute Fund. Accordingly, amounts reported in federal
drawdown requests do not agree with the accounting records. (Finding 05-3, pages 16-17)
The federal Office of
Management and Budget (OMB) Circular A-87, Cost Principles for State,
Local and Indian Tribal Governments defines allocable costs as goods and
services that are chargeable or assignable to a particular cost objective in
accordance with the relative benefits received. OMB Circular A-87 states that the total cost of Federal awards
is comprised of the allowable direct cost of the program, plus its
allocable portion of allowable indirect costs, less applicable credits.
The Regional Office of
Education #19 agreed with the recommendation noting it will in the future
comply with OMB Circular A-87. The
Finance Department has completed a full review of this finding and all
members of the Department are now aware of the correct steps that need to be
taken regarding the drawdown of allowable indirect cost amounts.
AUDITORS’ OPINION
Our
auditors state the Regional Office of Education #19’s financial statements as
of June 30, 2005 are fairly presented in all material respects.
___________________________________
WILLIAM
G. HOLLAND, Auditor General
WGH:KJM:ro
SPECIAL ASSISTANT AUDITORS
Our special assistant
auditors were E. C. Ortiz & Co., LLP.
DIGEST FOOTNOTE
#1: BANK
RECONCILIATIONS NOT COMPLETED TIMELY – Previous Regional Office Response
In its prior response in 2004, the Regional Office
agreed with finding and stated that the finance office had upgraded their
computer hardware, begun using the latest version of its financial software
package, put into place a new tape backup system, as well as, cross-trained
finance staff.
Complete Regional Office responses to prior findings are available
upon request from the Auditor General’s Office.
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