REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #27: HENDERSON,
MERCER AND WARREN COUNTIES

Financial Audit (In accordance with the Single
Audit Act and OMB Circular A-133)
For the Year Ended June 30, 2014

Release Date:  March 26, 2015

FINDINGS THIS AUDIT:  1

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

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
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 are also
available on the worldwide web at
www.auditor.illinois.gov

SYNOPSIS

• (14-1) The Regional Office of Education #27
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 #27 is
required to maintain a system of controls over
the preparation of financial statements in
accordance with generally accepted accounting
principles (GAAP).  The ROE internal controls
over GAAP financial reporting should include
adequately trained personnel with the
knowledge, skills, and experience to prepare
GAAP based financial statements and include
all disclosures as required by the
Governmental Accounting Standards Board
(GASB).

The Regional Office of Education #27 did not
have sufficient internal controls over the
financial reporting process.  The Regional
Office maintains its accounting records on the
cash basis of accounting during the fiscal
year.  While the Regional Office maintains
controls over the processing of most
accounting transactions, there are not
sufficient controls over the preparation of
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.
During review of the Regional Office of
Education #27’s financial information prepared
by the Regional Office of Education #27,
auditors noted  there were not adequate
controls over the maintenance of complete
records of accounts receivable, accounts
payable, or unearned revenue.  While the
Regional Office did maintain records to
indicate the balances of accounts receivable,
accounts payable, and unearned revenue, not
all entries were provided to reconcile the
Regional Office of Education #27’s grant
activity, such as posting grant receivables
and unearned revenue.
According to the Regional Office of Education
#27 management, they did not have adequate
funding to hire and/or train their accounting
personnel in order to maintain a system of
internal control over the preparation of
financial statements in accordance with GAAP.
(Finding 2014-001, pages 13-14) This finding
was first reported in 2007.

The auditors recommended that, as part of
internal control over the preparation of
financial statements, the Regional Office of
Education #27 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(s)
possessing a thorough understanding of
applicable GAAP, GASB pronouncements, and
knowledge of the Regional Office of Education
#27’s activities and operations.

The Regional Office of Education #27 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 management is currently
confident with the accounting staff and the
preparation of financial information.  The
Regional Office stated that when fiscally
possible, additional training will be pursued.
(For previous Regional Office response, see
Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #27’s financial statements as of
June 30, 2014 are fairly presented in all
material respects.

WILLIAM G. HOLLAND
Auditor General

WGH:KJM

AUDITORS ASSIGNED:  Sulaski & Webb, CPAs were
our special assistant auditors.

DIGEST FOOTNOTE

#1: Controls Over Financial Statement
Preparation - Previous Regional Office
Response

In its prior response in 2013, the Regional
Office of Education #27 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 management is currently confident with
the accounting staff and the preparation of
financial information.  The Regional Office
stated that additional training will be
pursued when it is considered cost beneficial
and not detrimental to the funding for
services the Regional Office provides.