REPORT DIGEST

 

REGIONAL OFFICE OF EDUCATION #25

 

HAMILTON AND JEFFERSON COUNTIES

 

FINANCIAL AUDIT

(In Accordance with the
Single Audit Act and OMB Circular A-133)

 

For the Year Ended:

June 30, 2008

 

Summary of Findings:

 

Total this audit                   2

Total last audit                   5

Repeated from last audit    1

 

Release Date:

January 29, 2009

 

 

State of Illinois

Office of the Auditor General

WILLIAM G. HOLLAND

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 is also available on

the worldwide web at

http://www.auditor.illinois.gov

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNOPSIS

 

 

  • The Regional Office of Education #25 did not have sufficient internal controls over the financial reporting process. 

 

  • The Regional Office of Education #25 classified $137,028 of federal grant revenue in its general ledger system incorrectly as State and local source revenue.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

REGIONAL OFFICE OF EDUCATION #25

HAMILTON AND JEFFERSON COUNTIES

 

 

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For The Year Ended June 30, 2008

 

 

 

FY 2008

FY 2007

TOTAL REVENUES

$4,142,220

$4,129,749

Local Sources

$1,396,035

$1,422,390

% of Total Revenues

33.70%

34.44%

State Sources

$2,390,087

$2,227,148

% of Total Revenues

57.70%

53.93%

Federal Sources

$356,098

$480,211

% of Total Revenues

8.60%

11.63%

 

TOTAL EXPENDITURES

$4,060,762

$3,928,842

Salaries and Benefits

$2,552,132

$2,455,737

% of Total Expenditures

62.85%

62.51%

Purchased Services

$1,278,422

$1,117,048

% of Total Expenditures

31.48%

28.43%

All Other Expenditures

$230,208

$356,057

% of Total Expenditures

5.67%

9.06%

 

TOTAL NET ASSETS

$610,184

$528,726

 

INVESTMENT IN CAPITAL ASSETS

$32,865

$58,480

 

Percentages may not add due to rounding.

 

 

REGIONAL SUPERINTENDENT 

During Audit Period:  Honorable Bryan Cross

Currently:  Honorable Bryan Cross

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #25 did not have sufficient internal controls over the financial reporting process. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The Regional Office of Education #25 classified $137,028 of federal grant revenue in its general ledger system incorrectly as State and local source revenue.

 

 

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

 

 

Controls Over Financial Statement Preparation

 

         The Regional Office of Education #25 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 #25 did not have sufficient internal controls over the financial reporting process.  The Regional Office maintains their 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 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.  The Regional Office’s financial information required numerous adjusting entries to present the financial statements in accordance with generally accepted accounting principles.

  • The Regional Office did not post prior year audit adjusting entries timely in fiscal year 2007.  This resulted in the Regional Office’s fund balances rolling forward to fiscal year 2008 incorrectly and not in accordance with GAAP. 

         According to Regional Office officials, they did not have adequate funding to hire and/or train their accounting personnel in order to comply with these requirements. (Finding 08-01, pages 12a – 12b)

 

         The auditors recommended that, as part of its internal control over the preparation of its financial statements, including disclosures, the Regional Office of Education #25 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, GASB pronouncements, and knowledge of the Regional Office of Education’s activities and operations.

 

         The Regional Office of Education #25 responded that it accepts the degree of risk associated with this condition because the added expense of seeking additional 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.

 

         The Regional Office noted that in an attempt to correct this finding, they sent the ROE Controller to various trainings to better understand accrual accounting and reporting under generally accepted accounting principles (GAAP).

 

 

Improper Revenue Classification

 

         The Regional Office of Education #25 classified $137,028 of federal grant revenue in its general ledger system incorrectly as State and local source revenue.

 

         The Regional Office of Education #25 is required by the Illinois State Board of Education (ISBE) to maintain its accounting system consistent with the ISBE Regional Office of Education Accounting Manual.  That manual requires the Regional Office to track funding sources as federal, State or local.

 

         The Regional Office received $356,098 in federal funding, of which $131,877 and $5,151 was misclassified as local and State revenue, respectively.  As a result, revenues were not classified in accordance with the ISBE Regional Office of Education Accounting Manual.

 

         The Regional Office of Education was unaware of ISBE account classification requirements and inadvertently made errors when posting federal revenue from certain flow through entities to their general ledger. (Finding 08-02, page 12c)

 

         The auditors recommended that the Regional Office of Education #25 should identify and record revenues as local, State or federal revenue in accordance with requirements identified by the ISBE Regional Office of Education Accounting Manual.

 

         The Regional Superintendent agreed with this finding.

 

 

AUDITORS’ OPINION

 

        Our auditors state the Regional Office of Education #25’s financial statements as of June 30, 2008 are fairly presented in all material respects.

 

 

 

_____________________________________

WILLIAM G. HOLLAND, Auditor General

 

WGH:KJM

 

 

SPECIAL ASSISTANT AUDITORS

 

        Our special assistant auditors were Kemper CPA Group, LLP.