REPORT DIGEST REGIONAL OFFICE OF EDUCATION #41 MADISON COUNTY FINANCIAL AUDIT (In accordance with the Single Audit Act and OMB Circular A-133) For the Year Ended: June 30, 2009 Summary of Findings: Total this audit 2 Total last audit 3 Repeated from last audit 1 Release Date: February 4, 2010 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 is also available on the worldwide web at http://www.auditor.illinois.gov

SYNOPSIS · The Regional Office of Education #41 did not allocate payroll based on time spent working on a grant. · The Regional Office of Education #41 did not remit unobligated and unspent interest earned on grant funds to the granting agency after the grant period had ended. {Expenditures and Revenues are summarized on the reverse page.}

REGIONAL OFFICE OF EDUCATION #41

MADISON COUNTY

FINANCIAL AUDIT

(In Accordance with the Single Audit Act and OMB Circular A-133)

For the Year Ended June 30, 2009

	FY 2009	FY 2008
TOTAL REVENUES	$4,764,621	$5,254,366
Local Sources	$2,008,524	$2,346,313
% of Total Revenues	42.15%	44.65%
State Sources	$2,027,718	$2,221,873
% of Total Revenues	42.56%	42.29%
Federal Sources	$728,379	$686,180
% of Total Revenues	15.29%	13.06%
TOTAL EXPENDITURES	$4,642,941	$5,192,482
Salaries and Benefits	$3,524,596	$3,789,625
% of Total Expenditures	75.91%	72.98%
Purchased Services	$859,540	$817,606
% of Total Expenditures	18.51%	15.75%
All Other Expenditures	$258,805	$585,251
% of Total Expenditures	5.57%	11.27%
TOTAL NET ASSETS	$2,214,099	$2,092,419
INVESTMENT IN CAPITAL ASSETS	$254,418	$225,774
Percentages may not add due to rounding.

REGIONAL SUPERINTENDENT

During Audit Period: Honorable Robert Daiber

Currently: Honorable Robert Daiber

The Regional Office of Education #41 did not allocate payroll based on time spent working on a grant.

The Regional Office of Education #41 did not remit unobligated and unspent interest earned on grant funds to the granting agency after the grant period had ended.

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

PAYROLL COSTS NOT PROPERLY ALLOCATED

The Regional Office of Education #41 did not allocate payroll based on time spent working on grants. Based on allowable cost principles, payroll of each employee who works for more than one grant must be allocated to each individual grant based on the amount of time spent on that grant.

There were nine programs that were affected by the lack of allocation of payroll costs based on actual time spent on the grant. Payroll costs for several employees were posted to the wrong funds and were incorrectly reimbursed by those grants. The total payroll amount for these programs was $519,701. Of this, one program was overcharged a total of $18,951.

Payroll costs were allocated to a grant based on a percentage of the employees’ salary. Some employees are paid over 12 months but actually work only 210 days of the year. Because payroll costs were allocated to the grants based on a percentage of their annualized salary and not actual time worked, one grant was overcharged. (Finding 09-1, pages 12-13)

Auditors recommended that the Regional Office should post all payroll costs to the correct fund based on the actual time spent on the grant project. Days not worked should not be charged to a grant.

The Regional Office of Education #41 responded that it will review payroll practices and implement procedures so that the gross pay for each employee will be allocated based on the actual hours worked during the pay period. The salaries recorded on the General Ledger will be the amounts listed on the grant expenditure reports submitted for reimbursement. The Regional Office noted that a periodic review will be held to assure the salaries for each employee are allocated to the appropriate grant and the salaries are posted to the correct funds. For each pay period, the sum of the salaries allocated to the funds for any given employee will equal the total amount of the gross pay for that pay period.

EXCESS GRANT FUNDS AND INTEREST INCOME

The Regional Office of Education #41 did not remit unobligated and unspent interest earned on grant funds to the granting agency after the grant period had ended. The Illinois Grant Funds Recovery Act (30 ILCS 705/10) states that all interest earned on grant funds held by a grantee shall become part of the grant principal when earned and be treated accordingly for all purposes unless the grant agreement provides otherwise. In addition, the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (34 Code of Federal Regulations Part 80.21) requires that interest earned in excess of $100, on federal fund balances, be remitted back to the federal granting agency promptly or at least quarterly.

The Regional Office did not remit interest earned in excess of $100 on federal fund balances back to the federal granting agency promptly or at least on a quarterly basis. Auditors identified the following amounts of excess interest revenue, which totaled $1,424:

Title I Reading First Part B SEA Funds	$ 266
Title I Reading first Technical Assistance	87
Migrant Education	9
Mathematics & Science Partnership (2007)	144
Mathematics & Science Partnership (2008)	465
McKinney-Vento Homeless Children & Youth		453

The Regional Office of Education #41 had 25 grants they administered and accounted for through separate funds. Of these, six funds had interest revenues earned of federal fund balances in excess of $100 or unspent interest earnings at the end of the grant period that were required to be returned to the grantor. The unspent grant and interest revenue of $1,424 represents questioned costs that need to be returned to the Illinois State Board of Education. The Regional Office did not monitor the interest earnings on grants due to a lack of understanding of compliance rules. (Finding 09-2, pages 14-15) This finding was first reported in 2007.

Auditors recommended that the Regional Office should track interest earnings on federal funds so that any excess funds can be returned promptly. In addition, at the end of the grant period unobligated or unspent interest on all grants plus any federal interest in excess of $100 should be returned to the grantor. The Regional Office should ensure that the bookkeeper has adequate and necessary training on compliance requirements.

The Regional Office of Education #41 responded that it will review practices and investigate the interest earnings and cash balances remaining in accounts at the end of the fiscal year to determine what actions need to be taken to close-out accounts. The Regional Office of Education will also obtain appropriate documentation from granting agencies regarding the required disposition of outstanding grant money. The Regional Office noted that it will return the outstanding grant money to the appropriate agency when required. (For previous Regional Office response, see Digest Footnote #1.)

AUDITORS’ OPINION

Our auditors state the Regional Office of Education #41’s financial statements as of June 30, 2009 are fairly presented in all material respects.

_____________________________________

WILLIAM G. HOLLAND, Auditor General

WGH:JRB

SPECIAL ASSISTANT AUDITORS

Our special assistant auditors were J.W. Boyle & Co., Ltd.

DIGEST FOOTNOTES

#1: Excess Grant Funds and Interest Income—Previous Regional Office Response

In its prior response in 2008, the Regional Office of Education #41 responded that it will review practices and investigate the interest earnings and cash balances remaining in accounts at the end of the fiscal year to determine what actions need to be taken to close-out accounts. The Regional Office of Education #41 will also obtain appropriate documentation from granting agencies regarding the required disposition of outstanding grant money and return the outstanding grant money to the appropriate agency when required.