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The Regional Office
of Education #35 did not examine at least once each year all
books, accounts, and vouchers of every school treasurer in its educational
service region.
The Regional Office of Education #35
utilized the same individual to prepare bank reconciliations and perform
disbursement functions.
The Regional Office of Education #35 had inadequate controls over cash
disbursements.
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FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
CONTROLS
OVER COMPLIANCE WITH LAWS AND REGULATIONS
The Illinois
School Code (105 ILCS 5/3-14.11) requires the Regional Superintendent to
examine at least once each year all books, accounts, and vouchers of every
school treasurer in its educational service region, and if he finds any
irregularities in them, to report them at once, as directed by the School
Code.
The Regional Office did not
examine at least once each year all books, accounts, and vouchers of every
school treasurer in the educational service region. Regional Office officials noted they believe the mandate is
outdated and that they are satisfying the intent of the statute by other
reviews they undertake. This mandate
has existed in its current form since at least 1953. (Finding 05-1, pages
12-13)
The Regional Office
accepted the recommendation, noting it will seek a legislative solution to
this and other obsolete passages.
BANK RECONCILIATIONS NOT COMPLETED
PROPERLY
The Regional Office of
Education #35 utilized the same individual to prepare bank reconciliations
who also performed cash receipt and disbursement functions for the
distributive and payroll bank accounts.
Bank reconciliations also did not indicate evidence of review and
approval by a person independent of the preparer. Total outstanding checks in the bank reconciliations for two
bank accounts did not agree with the total of details of the outstanding
checks and resulted in an unaccounted for difference of $597. The Regional Office of Education #35 also
did not record, as of June 30, 2005, interest income from two certificates of
deposit, which totaled $413. (Finding
05-2, pages 14-15)
Sound internal controls
require bank reconciliations to be performed accurately and promptly. Reconciling items should be investigated
immediately and adjustments made to the general ledger. Bank reconciliations should also be
reviewed and approved by a person independent of the preparer.
The Regional Office of Education #35 agreed
with the auditor’s recommendation noting that it will prepare its monthly
bank reconciliations and dispose of reconciling items on a timely basis. In addition, the bank reconciliations will
be reviewed by another individual.
INADEQUATE CONTROLS OVER
CASH DISBURSEMENTS
The Regional
Office of Education #35 had inadequate controls over cash disbursements. During testing of disbursements and
expenditures, it was noted that consulting fees amounting to $1,488 were
charged as travel expenses instead of professional services. The Regional Office of Education #35 also
had expense reimbursements totaling $5,405 that were submitted one to nine
months from the dates incurred. In
addition, the reimbursements included sales taxes of $123. (Finding 05-3, pages 16-17)
Sound
internal control requires that reimbursements are timely, properly approved
and properly recorded to the appropriate account. Prudent business practice dictates that reimbursements should
be reviewed by management in a timely manner to enhance the quality of the
review.
The Regional Office of Education #35 agreed
with the auditor’s recommendation noting that it will strengthen its controls
over these procedures. The Regional Office has also initiated a policy that
sales tax will not be reimbursed over one dollar.
AUDITORS’ OPINION
Our auditors state
the Regional Office of Education #35’s financial statements as of June 30,
2005 are fairly presented in all material respects.
WILLIAM
G. HOLLAND, Auditor General
WGH:JRB
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were E.C. Ortiz &
Co., LLP.
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