REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #21:
FRANKLIN, JOHNSON, MASSAC AND WILLIAMSON
COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  July 30, 2020

FINDINGS THIS AUDIT:  2

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  0 -- 0 -- 0
Category 3:  1 -- 0 -- 1
TOTAL:  1 -- 1 -- 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
#21 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

• (19-2) The Regional Office of Education
#21 did not have sufficient internal
controls over the financial reporting
process.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

DELAY OF AUDIT

The Regional Office of Education #21
(ROE) did not provide completed financial
statements or financial records in the
form of a general ledger trial balance in
an auditable form by the August 31, 2019
deadline. An outside accounting firm was
hired by the ROE to assist in the
preparation of the government-wide
financial statements and the Governmental
Accounting Standards Board (GASB)
Statement No. 68 and GASB Statement No.
75 calculations and disclosures, but not
until after the submission deadline of
August 31, 2019. Financial statements
were not submitted to Special Assistant
Auditors until December 5, 2019.

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 of 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 Governmental 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 they
did not have adequate time to hire and/or
train their accounting personnel in order
to meet the August 31 deadline for Fiscal
Year 2019. (Finding 19-001, pages 11 –
12)

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: Due to an unexpected
bookkeeper transition taking place, mid-
financial statement preparation, the
Regional Office was unable to complete or
secure the necessary services needed to
obtain complete books and records prior
to the August 2019 deadline. However, the
issue of timely reporting has been
rectified by the Regional Superintendent
securing the services of an accounting
firm to prepare financial records in
auditable form along with complete
financial statements and reports. All
necessary records will be available to
auditors prior to the Auditor General
Administrative Rules and Regulations.

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #21
(ROE) did not have sufficient internal
controls over the financial reporting
disclosure process. The ROE maintained
its accounting records on the cash basis
of accounting during the fiscal year and
posted year end accrual entries for audit
purposes. While the ROE maintained
controls over the processing of most
accounting transactions, including
providing information for several
reconciling items between the
governmental fund financial statements
and the statement of net position and
statement of activities, there were not
sufficient controls over the preparation
of generally accepted accounting
principles (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.

The ROE is required to maintain a system
of controls over the preparation of
financial statements in accordance with
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).

During review of the financial
information prepared by the ROE, it was
noted that the ROE did not have adequate
controls over the maintenance of complete
records of accounts receivable,
unavailable revenue, and fund balance.
While the ROE did maintain records to
indicate the balances of accounts
receivable, unavailable revenue, and fund
balance, misstatements were noted during
the audit process that required material
adjustments to the accounts receivable,
unavailable revenue, and fund balances
within the Education Fund.

Regional Office management indicated the
accounting staff is still in the process
of obtaining training over applicable
GAAP and GASB pronouncements,
specifically the new GASB Statements
requiring extensive disclosures and
additional reporting requirements.
(Finding 19-002, pages 13 – 14) This
finding was first reported in 2017.

The auditors recommended as part of its
internal control over the preparation of
financial statements, including
disclosures, the ROE should continue to
implement a comprehensive preparation
and/or review procedures to ensure that
the financial statements, including
disclosures, are complete and accurate.
Such procedures should be performed by an
individual(s) possessing a thorough
understanding of applicable GAAP, GASB
pronouncements, and knowledge of the
ROE’s activities and operations.

ROE Response: The Regional Superintendent
recognizes the FY19 bookkeeper’s
inability to obtain the necessary
financial statement training which led to
misstatements. However, the issue of
accurate reporting has been rectified by
securing the services of an accounting
firm to prepare financial records and
statements. The Regional Superintendent
will continue to obtain accounting firm
services as necessary.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #21’s financial statements as
of June 30, 2019 are fairly presented in
all material respects.

This financial audit was conducted by the
firm of Sikich LLP.

MICHAEL PAONI
Division Assistant Director

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

FRANK J. MAUTINO
Auditor General

FJM:JMM