REPORT DIGEST
REGIONAL OFFICE OF EDUCATION #31:
KANE COUNTY
FINANCIAL AUDIT (In accordance with the Single Audit Act and OMB Circular A-133)
For the Year Ended June 30, 2010
Release Date: June 28, 2011
Summary of Findings:
Total this audit: 2
Total last audit: 0
Repeated from last audit: 0
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 are also available on the worldwide web at www.auditor.illinois.gov
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SYNOPSIS
• The Regional Office of Education #31 did not have
sufficient internal controls over the financial reporting process.
• The Regional Office of Education #31 did not record
revenues and expenditures in the correct fiscal period in accordance with
generally accepted accounting principles.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
CONTROLS OVER FINANCIAL STATEMENT PREPARATION
The Regional Office of Education #31 is required to maintain
a system of controls over the preparation of financial statements, including
disclosures, 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 #31 did not have sufficient
internal controls over the financial reporting process. 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.
Auditors, in their review of the Regional Office’s accounting
records, noted numerous adjustments were required to present financial
statements in accordance with generally accepted accounting principles. Management did not effectively detect all the
material adjustments needed in order to present financial statements in
accordance with GAAP. (Finding 10-1,
pages 12-13)
The auditors recommended that, as part of its internal
control over the preparation of its financial statements, including
disclosures, the Regional Office of Education #31 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 #31 responded that,
beginning with the FY 2011 Audit, it will begin preparing all financial
statements in accordance with Generally Accepted Accounting Principles (GAAP)
and using all GASB Pronouncements when required. The ROE noted that additional training for
the Director of Finance through seminars and webinars will be done as needed.
CONTROLS OVER RECORDING GRANT PROGRAMS
The Regional Office of Education #31 did not record revenues
and expenditures in the correct fiscal period in accordance with generally
accepted accounting principles (GAAP).
The Regional Office of Education Accounting Manual states that separate
funds or separate source of fund codes should be used to account for resources
of a program or activity that are restricted to spending of a specified type or
for a specified purpose.
The Regional Office uses its accounting system to record
activity in its funds based on the grant period rather than the fiscal
period. The Regional Office posted grant
activity to a single fiscal year regardless of when revenue or expenditures
were actually incurred or recognized (grant period basis). As a result, revenues or expenditures that
should be posted to the current fiscal year, based on GAAP, were posted to a
prior or subsequent year.
The trial balance provided by the Regional Office of
Education #31 was not in accordance with GAAP.
ROE management uses the accounting system to record activity for an
entire grant period for some grants, as opposed to a fiscal period. (Finding
10-2, pages 14-15).
The auditors recommended that the Regional Office of
Education #31 should ensure their accounting records are maintained in
accordance with GAAP. The Regional
Office should ensure accounting records for the fiscal year include all
appropriate revenues and expenditures and exclude revenues and expenditures
that were incurred or recognized in a different fiscal year. The Regional Office should establish an
accounting system that will be able to reflect accurate activity for the fiscal
year and also allow management to monitor grant activity.
The Regional Office of Education #31 responded that,
beginning with the FY 2011 Audit, all accounting records will be maintained in
accordance with GAAP (Generally Accepted Accounting Principles). The ROE noted that all accruals for revenues
and expenses received that is specific for the fiscal year ending June 30th
will be recorded in that grant year with a reversing entry done in the next
fiscal year. The Regional Office noted
that the trial balance used by the ROE is solely intended to help prepare the
financial statements for each year’s audit.
AUDITORS’ OPINION
Our auditors state the Regional Office of Education #31’s
financial statements as of June 30, 2010 are fairly presented in all material
respects.
WILLIAM G. HOLLAND
Auditor General
WGH:KJM
AUDITORS ASSIGNED:
Winkel, Parker & Foster, CPA PC were our special assistant auditors.