REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #24: GRUNDY
AND KENDALL COUNTIES

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2019

Release Date:  September 17, 2020

FINDINGS THIS AUDIT:  4

CATEGORY:  NEW -- REPEAT -- TOTAL
Category 1:  2 -- 1 -- 3
Category 2:  0 -- 0 -- 0
Category 3:  0 -- 1 -- 1
TOTAL:  2 -- 2 -- 4

FINDINGS LAST AUDIT: 3

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
#24 did not have proper documentation for
salaries and benefits.

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

• (19-3) The Regional Office of Education
#24 had inadequate census data for
Illinois Municipal Retirement Fund
employees.


• (19-4) The Regional Office of Education
#24 did not have sufficient internal
controls over the financial reporting
process.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

SALARIES AND BENEFITS NOT SUPPORTED BY
PROPER DOCUMENTATION

The Regional Office of Education #24
(ROE) did not have any supporting
documentation for salaried employees who
worked solely on a single grant. Only
hourly employees and those paid out of
multiple grants were required to complete
timesheets.

The Illinois State Board of Education
State and Federal Grant Administration
Policy, Fiscal Requirements, and
Procedures requires periodic
certifications from employees who work
solely on a single grant or cost
objective to support the charges for
their salaries and benefits. These
certifications will be prepared at least
semiannually and will be signed by the
employee or supervisory official having
firsthand knowledge of the work performed
by the employee.

Regional Office officials indicated they
were aware of the requirement mentioned
above. They simply forgot to adjust their
timesheets to meet the requirement.
(Finding 19-001, page 11)

The auditors recommended the ROE require
certifications for employees who work
solely on a single grant at least
semiannually to support salary and
benefit costs.

ROE Response: This requirement has been
communicated to the appropriate personnel
and a process and procedure has already
been implemented.

DELAY OF AUDIT

The Regional Office of Education #24
(ROE) did not provide completed financial
statements in an auditable form by the
August 31 deadline. The preliminary draft
was provided to the auditors on March 9,
2020.

The ROE 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 (GAGAS).

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 officials indicated they
contracted with a local CPA firm to
assist them with preparing their
financial statements. The ROE submitted
the necessary information to the local
CPA shortly after the August 31 deadline.
The ROE then worked with the local CPA
firm’s timeline to finalize the financial
statements. (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 has addressed this
issue and has hired a part time
bookkeeper to help speed up the response.
The ROE has contracted with the same
local CPA Firm to prepare FY20 Financial
Statements that prepared financial
statements for FY19. The ROE is hopeful
that a consistent working relationship
will help speed up the process of the
financial preparation.

INADEQUATE CENSUS DATA FOR ILLINOIS
MUNICIPAL RETIREMENT FUND EMPLOYEES

During the audit of the Regional Office
of Education #24 (ROE), auditors noted
the actuarially determined pension report
for the ROE Illinois Municipal Retirement
Fund (IMRF) had census data that could
not be confirmed as reasonably accurate.

Management is responsible for the design,
implementation and maintenance of
internal control relevant to the
preparation and fair presentation of
financial statements that are free from
material misstatement, whether due to
error or fraud. Management of cost-
sharing and agent employer plans are also
responsible for the preparation and fair
presentation of the financial statements
in accordance with the applicable
financial reporting framework, including
completeness and accuracy of census data.

According to Regional Office officials, a
local special education cooperative
(cooperative) and the ROE previously paid
IMRF contributions using the same IMRF
employer number. This arrangement was
agreed upon several years ago by previous
governing bodies. Upon the cooperative
obtaining its own employer number in June
of 2016, IMRF, with cooperation from the
ROE, transferred the active employees of
the cooperative to the new employer
number. However, it cannot be determined
at this time if the inactive and retired
employees of the cooperative have been
properly transferred to the new IMRF
employer. (Finding 19-003, page 14)

The auditors recommended the ROE should
work with IMRF to determine all employees
associated with the ROE’s IMRF account
are actually employees of the ROE.

ROE Response: The Regional Office has,
and continues to, work with IMRF
regarding this finding.

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #24
(ROE) did not have sufficient internal
controls over the financial reporting
process. The ROE maintained its
accounting records on the cash basis of
accounting during the fiscal year and
posted year-end accrual entries for
financial statement purposes. While the
ROE maintained controls over the
processing of most accounting
transactions, 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. 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).

During review of the ROE’s financial
information prepared by the ROE, auditors
noted the ROE’s financial information
required material adjusting entries in
order to present its financial statements
in accordance with GAAP. Through
inquiries and discussions with the ROE’s
accounting personnel and Regional
Superintendent, auditors noted that the
ROE did not have adequate controls to
record and report the ROE’s financial
information in accordance with GAAP.
Proposed adjusting entries were approved
and accepted by Regional Office
management.

Regional Office management indicated
their personnel had complications
converting financial statements from a
cash basis to accrual basis in a timely
manner. (19-004, pages 15-16)

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

ROE Response: The ROE has addressed this
issue and has hired a part time
bookkeeper to help speed up our response.
In addition, the county of Grundy has
hired a licensed CPA to assist with their
finances and the ROE will use that person
as a training source for their staff.
Lastly, the ROE has contracted with the
same local CPA Firm to prepare FY20
Financial Statements that prepared
financial statements for FY19. The ROE is
hopeful that a consistent working
relationship will help speed up the
process of financial preparation.
AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #24’s financial statements are
fairly presented in all material
respects, except for the effect of not
recognizing or disclosing Illinois
Municipal Retirement Fund pension
activity in the governmental activities
as of June 30, 2019.

This financial audit was conducted by the
firm of West & Company, 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


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