REPORT DIGEST

REGIONAL OFFICE OF EDUCATION #39: MACON AND
PIATT COUNTIES

FINANCIAL AUDIT (IN ACCORDANCE WITH THE
UNIFORM GUIDANCE)
FOR THE YEAR ENDED JUNE 30, 2023

Release Date:  January 22, 2025

FINDINGS THIS AUDIT: 8

CATEGORY:  NEW -- REPEAT – TOTAL
Category 1:  0 -- 1 -- 1
Category 2:  2 -- 3 -- 5
Category 3:  0 -- 2 -- 2
TOTAL:  2 -- 6 -- 8

FINDINGS LAST AUDIT: 7

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, 400 West
Monroe, Suite 306, Springfield, IL
62704-9849
(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

• (23-1) The Regional Office of Education
#39 did not have sufficient internal
controls over the financial reporting
process.

• (23-2) The Regional Office of Education
#39 had inadequate controls over grant
compliance.

• (23-3) The Regional Office of Education
#39 did not provide completed financial
statements in an auditable form by the
August 31 deadline.

• (23-4) The Regional Office of Education
#39 had inadequate controls over record
keeping of equipment from Federal Funds.

• (23-5) The Regional Office of Education
#39 had inadequate controls over allowable
costs and costs principles.

• (23-6) The Regional Office of Education
#39 had inadequate controls over
subrecipient monitoring.

• (23-7) The Regional Office of Education
#39 had inadequate controls over the
preparation of the Schedule of Expenditures
of Federal Awards.

• (23-8) The Regional Office of Education
#39 had inadequate controls over the timely
submission of the data collection form and
related reporting package.

FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #39 (ROE)
did not have sufficient internal controls
over the financial reporting process. The
financial statements required material audit
adjustments in order to ensure the balances
were accurate for the basis of accounting
selected for financial statement
preparation.

The School Code 105 ILCS 5/2-3.17a allows a
Regional Office of Education or Educational
Service Center to utilize a cash basis,
modified cash basis, or generally accepted
accounting principles (GAAP) basis of
accounting to prepare financial statements
for audit. The ROE has chosen to utilize the
modified cash basis of accounting for
financial statement reporting. The ROE is
required to maintain a system of controls
over the preparation of financial statements
in accordance with its selected basis of
accounting.

Specifically, auditors noted the following
adjustments:

• Non-capitalizable assets totaling $31,512
were incorrectly recorded as capital assets.
• An incorrect depreciation policy was
applied, resulting in an overstatement of
depreciation expense by $7,742.
• In the restatement related to the
transition from the accrual basis to the
modified cash basis of accounting,
intergovernmental balances from the prior
period were not eliminated, resulting in an
understatement of $11,787 in the general
fund and an overstatement of $11,787 in the
fiduciary funds beginning balances.
• Intergovernmental balances were not
eliminated, leading to an understatement of
$4,229 in the general fund and an
overstatement of $4,229 in fiduciary fund
cash and cash equivalents.
• On-behalf payments revenues and
expenditures related to the ROE’s share of
THIS OPEB benefit was understated by
$322,632.
• Improper classification of revenue in an
unusual credit balance of $17,700 in
expenditures. The credit balance should have
been recorded as transfers in, due to other
funds covering the excess expenditures from
a grant.
• Improper classification of expenditures
resulted in an unusual credit balance of
$292,878 in expenditures. This credit
balance represents reimbursements from other
funds for salaries and benefits, purchased
services, and supplies and materials, which
should have been allocated to the
appropriate expenditure accounts rather than
solely to purchased services.
Additionally, the ROE failed to identify a
lease contract that qualifies as a lease
under Governmental Accounting Standards
Board (GASB) Statement No. 87, Leases, thus
causing an omission of a disclosure
considered necessary to achieve a fair
presentation of ROE’s modified cash basis
financial statements.

Regional Office management indicated the
above exceptions were due to oversight.
(Finding 23-001, pages 15 – 16) This finding
was first reported in 2018.

The auditors recommended that as part of
internal control over the preparation of
financial statements, the ROE should
implement comprehensive preparation
procedures to ensure the financial
statements and disclosures are complete and
accurate.

ROE Response: The ROE agrees with the
finding and will implement controls over
financial statements for both the internal
Business Office Manager and the contracted
accounting firm to prepare and review the
financial statements to ensure that balances
are reconciled and accurate for financial
statement preparation.

CONTROLS OVER GRANT COMPLIANCE

The Regional Office of Education #39 (ROE)
had inadequate controls over grant
compliance. The ROE did not submit or timely
submit the required reports to the Illinois
State Board of Education (ISBE) in
compliance with the grant award agreement.

The grant award agreement between the ROE
and ISBE requires the ROE to complete and
submit expenditure reports quarterly and
performance reports semi-annually. The
quarterly expenditure reports are due 20
calendar days after the end of the reporting
quarter while the semi-annual performance
reports are due 30 calendar days after the
reporting semi-annual period. The ROE is
also required to submit an annual
performance report describing how the ROE
used the awarded funds during the
performance period. The annual reports are
due June 6, 2024.

During testing of the ROE’s compliance with
the grant reporting requirements, auditors
noted the following:

• Sixteen of 38 (42%) quarterly expenditures
reports were submitted 1 to 112 days late.
• Two of 2 (100%) annual reports were not
submitted.

Regional Office management indicated
required reports were not submitted or
timely submitted due to oversight and
competing priorities. (Finding 23-002, pages
17 – 18).
This finding was first reported in 2019.

The auditors recommended the ROE implement
procedures to ensure adherence to the grant
reporting requirements.

ROE Response: The ROE agrees with the
findings and will provide close oversight
for the timely submission of grant
expenditures and performance reports.
Checklist, due dates, and reminders are
shared from the Regional Superintendent to
the Business Office Manager and Program
Directors. Management will review the grant
report submissions in IWAS (Illinois Web
Assistance System) for accuracy and
completion before approving and submitting
to ISBE.

DELAY OF AUDIT

The Regional Office of Education #39 (ROE)
did not provide completed financial
statements in an auditable form by the
August 31, 2023 deadline. The preliminary
draft was provided to the auditors on June
4, 2024.

The Regional Office is subject to 105 ILCS
5/2-3.17a which requires the Auditor
General’s office to cause an audit to be
made, as of June 30th of each year, of the
financial statements of all accounts, funds
and other moneys in the care, custody or
control of the regional superintendent of
schools of each educational service region
in the State and of each educational service
center established in the School Code. The
audit is to be conducted in accordance with
Generally Accepted Government Auditing
Standards (GAGAS). A Regional Office of
Education or Educational Service Center is
to utilize a cash basis, modified cash
basis, or generally accepted accounting
principles (GAAP) basis of accounting to
prepare the financial statements for audit.

In accordance with 105 ILCS 5/2-3.17a, the
Auditor General has promulgated
administrative rules and regulations to
govern this process. Those rules, 74 Ill.
Adm. Code 420.320 (c) (2), state that for
audit purposes, each regional office of
education and educational service center
shall make available to the Auditor General
or his designee all books and records deemed
necessary to make and complete the required
audits. The records shall be in auditable
form by August 15 of the succeeding fiscal
year. Financial reports are to be available
no later than August 31 in order that the
annual audit be completed by an independent
auditor selected by the Auditor General.

In addition, prudent business practices and
transparency require timely preparation and
completion of financial statements.

Regional Office management indicated the
Fiscal Year 2020, 2021, and 2022 audits were
late resulting in the delay of the Fiscal
Year 2023 audit. Previous management was not
monitoring this timeline, which led to the
audits falling behind. (Finding 23-003,
pages 19 – 20) This finding was first
reported in 2019.

The auditors recommended the ROE should
implement procedures to ensure compliance
with 105 ILCS 5/2-3.17a and 74 Ill. Adm.
Code 420.320 (c) (2). These financial
statements need to be presented to the
Auditor General’s independent auditors for
audit by the August 31 deadline.

ROE Response: The ROE agrees with the
findings and is working with their
contracted accounting firm to ensure that
the office gets back on schedule with the
yearly audit deadlines.

INADEQUATE RECORD KEEPING OVER EQUIPMENT
FROM FEDERAL FUNDS

The Regional Office of Education #39 (ROE)
did not have adequate record keeping over
its equipment acquired from federal funds.

ROE asset details in the property records
include only the description of the
property, acquisition date, and cost of the
property.  The other minimum requirements
specified by the Code of Federal Regulations
(Code) are not included in the property
records.

Moreover, the ROE was unable to properly
account for the results of its physical
inventory count and only performed a partial
reconciliation.

The Code (2 CFR § 200.313 (d)(1)) requires
that procedures for managing equipment
acquired with federal funds must maintain
property records that include the following
information:  (i) a description of the
property, (ii) manufacturer’s serial number
or other identification number, (iii) source
of the funding for the property (including
the FAIN), (iv) who holds title, (v)
acquisition date (vi) cost of the property,
(vii) percentage of federal contribution in
the project cost for the Federal award under
which the property was acquired, (viii)
location, (ix) use and condition of the
property, and (x) and any ultimate
disposition data, including date of disposal
and sale price of the property.

Moreover, the Code (2 CFR § 200.313 (d) (2))
requires that a physical inventory of the
property must be taken and the results
reconciled with the property records at
least once every two years.


In addition, the Code (2 CFR § 200.303 (a))
requires the ROE to establish and maintain
effective internal control over the federal
award to provide reasonable assurance the
ROE is managing the federal award in
compliance with federal statutes,
regulations, and terms and conditions of the
federal award.  Effective internal controls
should include record keeping and monitoring
of equipment acquired from federal funds.

Regional Office management indicated the
issue was due to oversight and lack of
training on requirements by the previous
management.  (Finding 23-004, (pages 21-22)

The auditors recommended the ROE comply with
federal regulations by monitoring equipment
acquired from federal funds and establish a
regular schedule for a comprehensive
reconciliation of physical inventory to
ensure accurate financial reporting and
enhance overall accountability.

ROE Response: The ROE agrees with the audit
findings and is implementing documents and
procedures to meet requirements in the
future.

CONTROLS OVER ALLOWABLE COSTS AND COSTS
PRINCIPLES

The Regional Office of Education #39 (ROE)
did not ensure costs or expenditures were
adequately documented, reviewed, and
approved to ensure allowability under the
federal award.

The ROE’s procedure requires the Regional
Superintendent or the Program Director to
review and approve invoices and requisitions
before forwarding to the business office for
processing.

The Code of Federal Regulations (Code) (2
CFR § 200.403 (g)) states that costs must be
adequately documented in order to be
allowable under Federal Awards.

In addition, the Code (2 CFR § 200.303 (a))
requires the ROE to establish and maintain
effective internal control over the federal
award to provide reasonable assurance the
ROE is managing the federal award in
compliance with federal statues,
regulations, and the terms and conditions of
the federal award. Effective internal
controls should include procedures to ensure
expenditures under Federal awards are
supported, reviewed, and approved.

During testing of 60 expenditures totaling
$854,868, auditors noted the following :

• Ten (17%) expenditures had invoices or
receipts that were not initialed by the
Program Director or Regional

Superintendent to indicate review and
approval of the expenditures; and,

• Two (3%) expenditures were not supported
with a requisition form.

Regional Office management indicated
expenditures were not signed by the Regional
Superintendent or Program Director due to
oversight and the supporting requisition
forms were misplaced by previous responsible
personnel. (Finding 23-005, pages 23 – 24)

The auditors recommended the ROE ensures all
expenditures are properly supported,
reviewed, and approved prior to payment.

ROE Response: The ROE agrees with the audit
findings and is implementing a new process
to ensure all expenditures have documented
approval and review.

CONTROLS OVER SUBRECIPIENT MONITORING

The Regional Office of Education #39 (ROE)
did not have adequate controls over
subrecipient monitoring in compliance with
the Code of Federal Regulations (Code).

The Code (2 CFR § 200.332 (g)) requires the
ROE to verify every subrecipient is audited
as required by Subpart F when it is expected
that the subrecipient’s Federal awards
expended during the respective fiscal year
equaled or exceeded the threshold set in 2
CFR § 200.501.

The Code (2 CFR § 200.332 (e)) requires the
ROE to monitor the activities of the
subrecipient to ensure the subaward is used
for authorized purposes, in compliance with
Federal statutes, regulations, and the terms
and conditions of the subaward, and that
subaward performance goals are achieved.

The Code (2 CFR § 200.303 (a)) requires the
ROE to establish and maintain effective
internal control over the federal award to
provide reasonable assurance the ROE is
managing the federal award in compliance
with federal statutes, regulations, and the
terms and conditions of the federal award.
Effective internal controls should include
procedures over subrecipient monitoring.

During auditor’s testing of nine
subrecipients, auditors noted the following:

• The ROE did not verify whether
subrecipients were required to be audited,
• The ROE did not have written policies and
procedures for subrecipient monitoring and
could not provide evidence the ROE monitored
its subrecipients during the audit period.

Regional Office management indicated this
was due to oversight and staffing
limitations by previous management (Finding
23-006, pages 25 – 26)

The auditors recommended the ROE establish
and implement procedures over subrecipient
monitoring.

ROE Response: The ROE agrees with the audit
findings and although some subrecipient
monitoring was conducted it may not have
been sufficiently documented. The ROE is
implementing policies and procedures to
ensure subrecipient monitoring is not only
conducted but documented as well.

CONTROLS OVER PREPARATION OF SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS

The Regional Office of Education #39 (ROE)
did not have sufficient internal controls
over the preparation of the Schedule of
Expenditures of Federal Awards (SEFA) to
ensure all federal expenditures during the
fiscal year were reported and information in
the SEFA was accurately reported.

The Code of Federal Regulations (Code) (2
CFR § 200.510 (b)), establishes criteria and
requirements related to the preparation of
the schedule of expenditures of federal
awards.

The Code (2 CFR § 200.303 (a)) requires the
ROE to establish and maintain effective
internal control over the federal award to
provide reasonable assurance the ROE is
managing the federal award in compliance
with federal statutes, regulations, and the
terms and conditions of the federal award.
Effective internal controls should include
procedures over preparation of the schedule
of expenditures of federal awards.

During the auditor’s review of the SEFA, the
following was noted:

• The Education Stabilization Fund was not
specifically categorized in the SEFA and the
total federal awards expended for the
program was not reported.
• Program title descriptions were incorrect.
• Assistance listing number was incorrectly
listed.
• Pass-through subrecipient amount was not
indicated.

Regional Office management indicated the
errors on the SEFA were due to oversight.
(Finding 23-007, pages 27 – 28)

The auditors recommended the ROE should
establish and implement internal controls
over the preparation of the SEFA to ensure
accurate reporting.

ROE Response: The ROE agrees with the audit
findings and will work with contracted
accounting firm to ensure that
the schedule of expenditures of federal
awards are accurately reported as required.

UNTIMELY SUBMISSION OF DATA COLLECTION FORM
AND RELATED REPORTING PACKAGE

The Regional Office of Education #39 (ROE)
was required to submit its June 30, 2022,
data collection form and related reporting
package to the Federal Audit Clearinghouse
by March 31, 2023; however, it was not
submitted until January 3, 2024, resulting
in a delay of 278 days.

The Code of Federal Regulations (Code) (2
CFR § 200.512 (a)(1)) requires the data
collection form and reporting package be
submitted within 30 calendar days after the
auditee receives the auditor’s report or
nine months after the end of the audit
period (whichever is earlier).

Moreover, Office of the Management and
Budget announced that it is waiving the 30-
day deadline for 2022 submissions.  Thus,
audits will be considered on time if
submitted within nine months after the
fiscal period end date.

In addition, the Code (2 CFR § 200.303 (a))
requires the ROE to establish and maintain
effective internal control over the federal
award to provide reasonable assurance the
ROE is managing the federal award in
compliance with federal statutes,
regulations, and the terms and conditions of
the federal award. Effective internal
controls should include procedures to ensure
the data collection form and related
reporting package are timely submitted.

Federal oversight agencies use the data
collection form and related reporting
package as a key tool in monitoring the
accountability of federal awards.

Regional Office management indicated that
the Fiscal Year 2022 Audit packet was
finalized late due to delays in preparing
the packets for the prior years (2020 and
2021) and was only submitted in January
2024.  This timeline issue stemmed from a
lack of monitoring in previous years,
resulting in audits falling behind. (Finding
23-008, pages 29-30)

The auditors recommended the ROE should
establish and implement internal controls
over the timely submission of the data
collection from and related reporting
package.

ROE Response: The ROE agrees with the
findings and is working with their
contracted accounting firm to ensure that
the office gets back on schedule with the
yearly audit deadlines so that the Federal
Audit Clearinghouse may be submitted on
schedule as well.

AUDITORS’ OPINION

Our auditors state the Regional Office of
Education #39’s financial statements as of
June 30, 2023 are fairly presented in all
material respects.

This financial audit was conducted by the
firm of Roth & Co., LLP.

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