REPORT DIGEST

UNIVERSITY OF ILLINOIS

FINANCIAL AUDIT
FOR THE YEAR ENDED JUNE 30, 2021

Release Date:  May 25, 2022

FINDINGS THIS AUDIT:  2

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

FINDINGS LAST AUDIT: 0

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 #41 did not have sufficient
internal controls over the financial
reporting process.

• (21-2) The Regional Office of
Education #41 lacked adequate controls
over the review of internal controls
over external service providers.

FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS

CONTROLS OVER FINANCIAL STATEMENT
PREPARATION

The Regional Office of Education #41
(ROE) did not have sufficient internal
controls over the financial reporting
process. The ROE maintained its
accounting records on the cash 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 and correct,
financial statement misstatements and
disclosure errors and omissions in a
timely manner.

Effective June 25, 2021, Public Act
102-0025 allowed a Regional Office of
Education or Educational Service
Center to 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 based financial
statements and include all disclosures
as required by the Governmental
Accounting Standards Board (GASB).

During review of the financial
information prepared by the ROE, the
following was noted:
• Several adjustments were necessary
to properly record interfund
receivables, payables, and transfers.
• Several adjustments were necessary
to properly adjust capital outlay to
actual.
• Several adjustments were necessary
to adjust individual fund cash
balances and fund balances to actual.
• An adjustment was necessary to
properly record the Teacher Health
Insurance Security (THIS)
Postemployment Benefits Other Than
Pensions (OPEB) on behalf revenue and
expense.

Regional Office management indicated
it did not effectively detect all of
the adjustments needed in order to
present financial statements in
accordance with GAAP. This was an
oversight and due in part to a change
in its accounting department during
the current fiscal year. (Finding
21-001, pages 10a – 10b)

The auditors recommended the ROE
should implement comprehensive
preparation and/or review procedures
as part of its internal control over
the preparation of financial
statements to ensure the financial
statements, including disclosures, are
complete and accurate. These
procedures should be performed by a
properly trained individual(s)
possessing a thorough understanding of
the applicable GAAP, GASB
pronouncements, and knowledge of the
ROE’s activities and operations.
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’s financial statements.

ROE Response: The Regional Office
agrees with the finding and corrective
actions are being implemented.

LACK OF ADEQUATE CONTROLS OVER THE
REVIEW OF INTERNAL CONTROLS OVER
EXTERNAL SERVICE PROVIDERS

The Regional Office of Education #41
(ROE) utilizes a service provider, via
Madison County, for its payroll
processing.

The ROE is responsible for the design,
implementation, and maintenance of
internal controls, including the
controls that are outsourced to
service providers, related to
information systems and operations to
ensure resources and data are
adequately protected from unauthorized
or accidental disclosure,
modifications, or destruction.

Generally accepted information
technology guidance endorses the
review and assessment of internal
controls related to information
systems and operations to assure the
accurate processing and security of
information.

During testing, the auditors noted the
ROE had not:
• Developed a formal process for
identifying service providers and for
either obtaining the Service
Organization Controls (SOC) report
from the service provider and related
subservice organization or performed
alternative procedures to determine
the impact of such services on its
internal control environment.
• Documented its review of the SOC
report, or performed alternative
procedures, to evaluate any issues
relevant to the ROE’s internal
controls.
• Monitored and documented the
operation of the Complementary User
Entity Controls (CUECs) relevant to
the ROE’s operations.

Regional Office management indicated
due to personnel changes in the
accounting department of the ROE and
Madison County, a review of a current
SOC report or another form of
independent internal controls reviews
did not occur. (Finding 21-002, pages
10c – 10d)

The auditors recommended the ROE
identify all third-party service
providers and determine and document
if a review of controls is required.
If required, the ROE should:
• Obtain SOC reports or perform
independent reviews of internal
controls associated with outsourced
systems, including services provided
by subservice organizations, prior to
signing agreements with the providers
and annually thereafter.
• Document its review of the SOC
report, or perform alternative
procedures, to evaluate all
significant issues to ascertain if a
corrective action plan exists, when it
will be implemented, any impacts to
the ROE, and any compensating
controls.
• Monitor and documented the operation
of the CUECs relevant to the ROE’s
operations.
• Review contracts with service
providers to ensure applicable
requirements over the independent
review of internal controls are
included.

ROE Response: The Regional Office
agrees with the finding and corrective
actions are being implemented.

AUDITORS’ OPINION

Our auditors state the Regional Office
of Education #41’s financial
statements as of June 30, 2021 are
fairly presented in all material
respects.

This financial audit was conducted by
the firm of Kemper CPA Group 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:JRB