REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #31: KANE
COUNTY

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  March 30, 2022

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: 1

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

• (21-1) The Regional Office of
Education #31 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 #31
(ROE) did not have sufficient internal
controls over the financial reporting
process. The ROE maintained its
accounting records on the modified
accrual 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.

Effective June 25, 2021, Public Act
102-0025 allowed that a Regional
Office of Education or Educational
Service Center may utilize a cash
basis, modified cash basis, or GAAP
basis of accounting to prepare the
financial statements for audit. The
ROE has chosen to utilize the GAAP
basis of accounting for financial
statement reporting. The ROE is
required to maintain a system of
controls over the preparation of
financial statements. 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 an adjustment in
pension and other postemployment
benefits (OPEB) balances 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 pension and OPEB balances in
accordance with GAAP. Proposed
adjusting entries were approved and
accepted by Regional Office
management.

Regional Office officials indicated
the ROE began reporting and remitting
pension and OPEB payments for another
entity, thus causing the pension and
OPEB balances of the other entity to
be included with the ROE balances. It
was determined that the ROE did not
have a legal requirement to collect
and remit payments; therefore, the
liability and related account balances
should not be reported by the ROE.
(Finding 21-001, pages 10 – 11)

The auditors recommended 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. Additionally, ROE
management should consider Public Act
102-0025 to determine if changing to
the cash or modified cash basis would
be allowable or beneficial to the ROE
and users of the ROE statements.

ROE Response: The ROE accepted
proposed changes by the auditors after
said auditors consulted with GASB to
determine the most accurate
representation of the ROE’s unique
situation.

AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #31’s financial
statements as of June 30, 2021 are
fairly presented in all material
respects.

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

FJM:BAO