REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #22

FULTON AND SCHUYLER COUNTIES

FINANCIAL AUDIT

For the Year Ended:

June 30, 2007

Summary of Findings:

Total this audit                  1

Total last audit                  1

Repeated from last audit   0

Release Date:

February 26, 2008

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

AUDITOR GENERAL

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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 is also available on

the worldwide web at

http://www.auditor.illinois.gov

SYNOPSIS

·        The Regional Office of Education #22 did not have sufficient internal controls over the financial reporting process.

{Expenditures and Revenues are summarized on the reverse page.}

FY 2007

FY 2006

TOTAL REVENUES

$810,283

$844,696

Local Sources

$234,881

$243,493

% of Total Revenues

28.99%

28.83%

State Sources

$562,669

$548,371

% of Total Revenues

69.44%

64.92%

Federal Sources

$12,733

$52,832

% of Total Revenues

1.57%

6.25%

TOTAL EXPENDITURES

$812,563

$871,156

Salaries and Benefits

$658,695

$698,985

% of Total Expenditures

81.06%

80.24%

Purchased Services

$114,222

$134,206

% of Total Expenditures

14.06%

15.41%

All Other Expenditures

$39,646

$37,965

% of Total Expenditures

4.88%

4.36%

TOTAL NET ASSETS

$365,002

$367,282

INVESTMENT IN CAPITAL ASSETS

$40,143

$52,505

              Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT 

During Audit Period:  Honorable Alan Coleman

Currently:  Honorable Louise Bassett

The Regional Office of Education #22 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 #22 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 #22 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains its 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 sufficient 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 adequate controls over the maintenance of complete records of accounts receivable, accounts payable, or deferred revenues.  For example, at June 30, 2007, deferred revenue of $25,942 was not reflected in the Regional Office’s accounting records.

• The Regional Office did not maintain adequate internal controls over the processing of all financial transactions and numerous adjustments were required to present financial statements in accordance with generally accepted accounting principles.

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #22 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 and GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations. (Finding 07-1, pages 13-14)

         The Regional Office of Education #22 responded that it understands the nature of this finding and realizes that this circumstance is not unusual in an organization of this size.  The Regional Office accepts the degree of risk associated with this condition because the added expense of seeking additional accounting expertise to prepare and/or review financial statements would take away from the funds available to provide educational services for the schools in the region.

AUDITORS’ OPINION

         Our auditors state the Regional Office of Education #22’s financial statements as of June 30, 2007 are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:KJM

SPECIAL ASSISTANT AUDITORS

         Our special assistant auditors were Ginoli & Company, LTD.